Amigo Resources PLC (AMGO) Earnings Call Transcript & Summary

Ladies and gentlemen, hello. Welcome to the full year 2021 financial results presentation for Amigo Holdings plc. My name is Maxine, and I'll be coordinating the call today. [Operator Instructions] I will now hand you over to your host, Gary Jennison, Chief Executive Officer, to begin. Gary, please go ahead when you're ready.

Thank you, Maxine, and good morning, everybody. Thank you for joining us for Amigo Holdings full year results for the financial year to March 31, 2021. I'm Gary Jennison, Amigo's CEO, and presenting with me today is our CFO, Chief Financial Officer, Mike Corcoran. The delay to issuing these full year results has been frustrating and constituted a covenant breach in respect of our senior secured notes. With the issuance of these results within the required 30-day period following written notice from our bondholders, I'm pleased to confirm that the breach has now been rectified. So in a moment, I will give a brief overview of events during the year and a summary of our business and financial headlines before Mike takes you through the numbers in more detail. I will then give an update on where we are with our plans to implement a scheme of arrangement and how we plan to return to providing much needed financial inclusion. After the presentation, we'll open the call to questions. So if we now move on to Slide 5. It's been an extraordinary year of challenge. Before we look at the headlines, I'd like to take a moment to reflect on what an extraordinarily challenging year it's been for Amigo. As with other companies, we've had to manage the difficulties that COVID presented, including migrating our entire workforce to remote working in a matter of days and the provision of relief to help our customers in these difficult times. Specific to Amigo, we also saw many unprecedented events. Following comments made by our founder, James Benamor, the former Board were compelled to initiate a formal sale process. In June of 2020, a general meeting was called by our founders business, Richmond Group, to ask certain members of the Board. Both of these events and indeed the second general meeting called in September by Richmond Group with similar resolutions, this took up a great deal of management time, time, which, frankly, would have been better spent addressing the problems that were arising from an increasingly large number of complaints being received related to historical lending. In June of 2020, as a result of shareholders not passing the resolutions proposed by Richmond Group, our founder began the disposal of his entire 61% shareholding, which he executed with a sale of 1%, i.e., nearly 5 million shares, each trading day for 61 days. This clearly had a detrimental effect on the share price and, therefore, on our shareholders. Further challenges included a returning CEO appointed on the 1st of August, who subsequently left after only 7 weeks, resulting in my stepping up as CEO. I had previously joined the Board only 5 weeks earlier as a Nonexecutive Director, having retired from full-time work 3.5 years previously. So I found myself in the position of being CEO on the 23rd of September 2020. During the first half of the year, Amigo was also subject to a number of FCA interventions, including the initiation of an investigation into our creditworthiness and affordability assessment processes and the governance of those processes. We had a voluntary requirement around complaints. And in the second half, we had a second voluntary requirement on the distribution of our assets. In the second half of the year, the FCA also required us to appoint 2 Section 166 with skilled person reviews on our claims redress methodology and on our compliance with threshold conditions for new business lending. Also in the second half, the Board was completely changed, and we put in place a strong executive team with the aim of addressing the now significant complaints challenge and transforming the business. This new team is fighting hard to address the problems of the past. We quickly set in motion the scheme of agent process, ensuring that we were in regular contact with the FCA throughout. This has been a process that's taken considerable management time and it won significant creditor support, with 95% of creditors supporting the scheme of arrangement. After the year-end, the FCA notified us that it would in fact appear in court to object to the scheme, and the High Court subsequently rejected our proposals. As we believe a scheme is the only way to ensure an equitable way forward for our customers and to prevent insolvency, we are now pursuing a scheme. I will return to you -- I will return to this in a moment. But as you can see, it's been a difficult 12 months and not an easy start to the new financial year either. The new team, however, has made significant progress with a clear vision of what we need to do to address these challenges. So let's move over to Slide 6 now and look at some of the business headlines. Although our proposed scheme of arrangement was not approved by the High Court back in May, despite the support of more than 95% of our creditors who voted and almost 75,000 customers and included the financial ambient service supporting the scheme, we are continuing to pursue a new scheme now. Our engagement with the FCA on this on complaints and on our return to lending is ongoing. Securing a scheme is critical to the future of our business as without a scheme, Amigo faces insolvency as we told the court back in May, although they did not accept that. I will go into what we are doing to secure a new scheme later in the presentation. Some of the challenges we faced this year have been broadly felt by all companies with the onset of the COVID-19 pandemic at the start of the financial year. I'm incredibly proud of how we, as a firm, and particularly our people were aiming to respond swiftly to support our customers and to protect our people and our business. We provided more than 66,000 customers with payment holidays of up to 6 months with the first 3 months including a break in interest as well. That's real customer support. With our cap on total payments, our customers never pay more than they originally agreed to, no matter how long that term is extended for. We want to get back to providing vital financial inclusion. Lending has remained paused now with no new lending since March 2020, almost 18 months, other than a small number of loans provided to key workers last year. We have, however, been developing a new lending proposition that seeks to meet the needs of our customers and deliver the right positive customer outcomes. We have shared this with the FCA when we have revised policies, procedures, systems and controls in place to ensure that the problems of the past do not reoccur. Looking at the financial headlines on Page 7. Slide 7. Amigo faces significant financial challenges. As you can see from this slide, and as we have said before, without a scheme, the value of Amigo's assets is less than our liabilities. And whilst our cash position is strong, nearly GBP 178 million as of the end of the financial year 31st of March, we have net liabilities of over GBP 120 million. The net loan book has reduced by 47%. This reduction has been accentuated by a continued robust rate of collections at 82% of pre-COVID expectations. This encouraging rate is an improvement on what we had projected within our modeling for the original proposed scheme of arrangement. The level of participation in the recent scheme creditor vote and extensive work into redress methodology has resulted in both a material increase in future expected volumes of complaints and an uplift in the uphold rate. As a result, we are today reporting an increase in complaints provision to GBP 344.6 million and an associated cost of GBP 318.8 million for the full year. Amigo is therefore reporting a pretax loss for the full year to 31st of March '21 of GBP 283.6 million. This clearly demonstrates the urgent need for us to implement a new scheme to address the complaint liability. Encouragingly though, owing to our strong cash position, we have repaid more than GBP 167 million of debt during the year, and we currently have unrestricted cash of around GBP 205 million. I will now hand over to Mike Corcoran, who will go through the numbers in more detail. Mike?

Thanks, Gary, and good morning, everyone. As Gary said, Amigo has faced an extremely challenging year. There were 3 fundamental drivers of financial performance in the year, the pause in lending, the issuance of COVID-19 payment holidays to over 66,000 customers and the volume of customer complaints, both the received and forecast and the associated redress settled during the year. Revenue reduced by 42% due to the loan book reduction and to the recognition of modification losses relating to the COVID payment holidays. While we've seen some increase in arrears from customers exiting those payment holidays, the ratio of impairment to revenue has improved 3 percentage points, owing to the poor and lending, which reduced the upfront provisioning required under IFRS 9. As you've just heard, the complaint cost in the year has increased to GBP 318.8 million, which reflects an increase in the expected future volumes of complaints following on from the data we received during the recent scheme process as well as the higher uphold rate applied to the provision for future complaints. We'll come back to this and cover this in more detail in a minute. Without this level of complaints redress, the loan book is currently being collected profitably. We will shortly release results for the first quarter, which will reflect this position. Slide 10 shows the breakdown of our balance sheet. Without a scheme in place, the complaints liability as of 31st of March is reflected in our balance sheet in full. Redress is paid either in cash or via a balance adjustment. It's important to note that with or without a scheme, balance adjustments will be settled in full. It's the cash liability that's the variable. Without a scheme, we estimate the complaints cash liability to be around GBP 240 million, including FOS fees with potential for variability in this number driven primarily by future complaint volumes and the uphold rate. Under a scheme, the level of cash liability would be set based on the expected cash available. The other provision on the balance sheet of GBP 1 million relates to 2 rounds of redundancies, which were completed shortly after year-end. With a customer base at March 2021 38.7% lower than a year ago, the Board took the difficult but necessary decision to restructure the staff cost base through 2 formal redundancy programs. Redundancies were focused across operations, including the collections and complaints functions as well as IT and engineering. In total, the redundancies, including general attrition, reduced current headcount to 220 in August, a reduction of 45% versus the head count of 401 at the end of the year. We expect this to provide savings in operating costs of approximately GBP 3.6 million in FY '22. The net liability position at the end of March 2021 was GBP 121.4 million. This compares to net assets of GBP 167.4 million at the prior year-end. This movement is largely all attributable to complaints redress. Slide 11 shows the extent of the complaints challenge and the unsustainable levels that led us to pursue a scheme. Between March 2020 and October 2020, the monthly volume of complaints that we were receiving increased by over 500%. This was driven in large part by the activity of claims management companies, which also led to a significant increase in complaints being referred to the FOS. The FOS charges a fee currently GBP 750 and previously GBP 650 million for every complaint that it handles regardless of whether that complaint is upheld or not. This was not only costly from a redress point of view, but also from a people resource and management time perspective. On redress, in the year, we have processed a total of GBP 91.3 million in redress. This breaks down to GBP 56.7 million of cash redress and GBP 34.6 million of balance adjustments. We processed around 36,000 complaints and utilized the team of more than 300 people to do this. This was exceptional, and the team was mobilized quickly at a total cost of around GBP 12 million in the year. Once it became clear that complaint volumes and redress costs would exceed Amigo's ability to fund them, the cost of the complaint handlers were paused pending agreement on a scheme. Until we have greater certainty around a future scheme, we must account for both known and expected future complaint liabilities on the basis that they will be settled in full. The provision has therefore been prepared on a consistent basis with prior periods, but with changes in assumptions related to both volumes and projected uphold rates. The complaints provision has increased in the year by GBP 227.1 million to GBP 344.6 million. Estimating the liability for class redress is challenging. It involves key assumptions which remain inherently uncertain, in particular, the volume of potential future complaints. The provision reflects an increase in expected future volumes given the close to 80,000 customers who participated in the recent scheme voting process who will presumably have considered themselves to have a valid complaint. Additionally, the provision reflects an increase in the uphold rate that is applied to this increased future volume. Throughout Amigo's progress towards a scheme, substantial work has gone into reviewing and enhancing our future claims handling methodologies aligning with the expectations of our regulator and resetting expectations of how claims will be assessed moving forward regardless of whether a potential new scheme is successful. This has resulted in the uplift of the expected future uphold rate to a rate of 65%. As of 31st of March 2020, the complaints provision was GBP 117.5 million. The increase to GBP 344.6 million at March '21 is primarily due to an increase in the volume of complaints provided for and the increase in the estimated uphold rate. Also partially contributing to the increase are the FOS invoice costs, which, as I said, rose from GBP 650 to GBP 750 for each complaint referred to the FOS effective 1st of April 2021. Sensitivity analysis of the key assumptions relating to the provision, including the volume of claims is set out in the notes to the financial statements. Let's move on now to look at how we've helped customers through COVID-19 and how this has impacted the business. It's important for us to have been able to help our customers during this very difficult time and to provide the right assistance. Customers could apply for a payment holiday of up to 6 months. For the first 3 months of this, no interest was charged. There is no increase in the customer installments paid once the customer transitions off the payment holiday. And as a result of Amigo's own interest cap, there is no increase in the total amount that the customer repays. Final COVID payment holidays were granted in March 2021. In total, we have provided COVID-related relief to over 66,000 customers. By the end of July, there are currently no active payment holidays. The third quarter saw the first of our customers exit the maximum 6-month payment holiday, and we've seen a marked increase in arrears as a result. We're continuing to work with our customers to help them transition back to regular payments and to help them through this challenging period. On Slide 14, we see the impact of these payment holidays on revenue and the accounting treatment required by IFRS 9. Whilst no capital or interest is waived as part of the relief plans by deferring contractual repayments without increasing the value of future monthly installments, the present value of the future cash flows for customers with payment holidays is reduced. In line with IFRS 9, a modification loss has been recognized based on the estimated change in the present value of contractual cash flows. Total modification losses of GBP 35.5 million were recognized during the period, of which GBP 27.2 million were recognized in revenue and GBP 8.3 million as part of the impairment charge. These losses are based on the estimated change in the present value of the cash flows that arise from all COVID payment holidays granted. Final payment holidays were granted, as I said, in March 2021. As a result, no material modification losses are expected in future periods. The modification losses recognized in the consolidated income statement are purely accounting adjustments. The expected timing of future cash flows has altered, but the total interest and principal due from each loan remains unchanged. And currently, collections have remained robust despite the impact of COVID at 82% of our pre-COVID expectations. This also includes an element of early settlements. This is better than we had projected within our original scheme modeling. Cash collections show an overall decline in volume, but this is really reflecting the reducing loan book. Moving on to Slide 16, which shows the impairment charge as a percentage of revenue. This stands at 35.5% for the year. Despite an increase in arrears as customers exited payment plans, the reduction in originations over the period and the subsequent lower upfront provisioning required under IFRS 9 have seen the ratio decrease from the prior year. Because experience to date shows that customers exiting payment holidays have a higher propensity to fall into arrears, the impairment provision includes a GBP 6 million overlay in respect of this elevated credit risk associated with this specific cohort of customers. Significant uncertainty remains in respect to future customer behavior as payment holidays unwind and as government support measures are fully withdrawn. On Slide 17, we have the impairment provision with on the left-hand side, the staging components; and on the right-hand side, the loan book aging. The overall balance sheet provision decreased to GBP 82 million at the end of the year. The provision declined during the first half of the year as the loan book reduced and a significant portion of the book was on COVID holiday plans. However, in Q3, around 30,000 customers exited those payment holidays, and we've seen a deterioration in the aging of these customer loans. Because of increased levels of arrears from customers exiting the COVID plans, we have seen an increase in the proportion of the gross loan book greater than 61 days past due to 11.8% compared to 5.6% a year ago, with a corresponding increase in the Stage 2 and Stage 3 IFRS 9 provision. The aging of the loan for customers who have not had COVID plans remains stable. The provision coverage has now increased to 19.4% of the gross loan book. Slide 18 demonstrates the continued strong cash generation of the business with GBP 120 million positive cash flow in the year. We continue to conserve cash as a consequence of pausing lending and controlling our operating expenses. Cash balance at the end of the year was GBP 184.2 million in total, despite GBP 167.2 million being repaid towards the securitization facility and GBP 64.6 million paid out in complaints, cash redress and related costs. This compares with a cash balance of GBP 64.3 million in the prior year. The final slide, Slide 19, looks at our net debt and funding structure. The group is financed from a combination of cash generated from operations, senior secured notes of GBP 234.1 million and a securitization facility of up to GBP 100 million. In June 2021, we confirmed a further extension to the waiver period on asset performance triggers for the securitization facility, which was first negotiated in light of the potential impact of COVID-19 on asset performance. The waiver runs 24th of September 2021 and enabled us to maintain the facility while we develop a new scheme and progress Amigo 2.0. During the waiver period, performance triggers will remain waived and all collections and securitized assets will continue to be used to pay down the outstanding borrowings. The drawn securitization facility was reduced to GBP 64.4 million as of the end of March 2021. Since the end of the year, this facility has been reduced to approximately GBP 2 million today. Net debt has reduced significantly by GBP 280 million compared to the prior year. Robust collections and diligent cash management have enabled us to build a strong cash position while allowing the paying down of the securitization facility. With that, thank you, and I'll now hand back over to Gary.

Thank you very much, Mike. I'd like to take the next few slides to talk about the real need in society that we, as a firm, seek to meet. And to give you an update on what's happening with our new scheme of arrangement and to tell you what we, as a new Board and new executive team are doing differently, to fix this business and to return us to providing vital financial inclusion. So if we move on to Slide 21. Let's look at the need for financial inclusion in a bit more detail. The pandemic undoubtedly has accelerated the rates of financial exclusion in the U.K. And according to the inclusion foundation, 1 in 4 adults now experience financial exclusion at some point in their lives. Latest information released by the government last week shows that there are 5 million households still on universal credit. Regulatory pressures and the difficulties presented by the increased and often egregious activity from claims management companies over the past year has seen many lenders exit this space. And without a functioning regulated consumer credit sector, there is a real danger that the increasingly sophisticated illegal money lenders will move in to exploit this demographic. We know that there is a need for more mid-cost solutions for nonprime customers. And despite Amigo withdrawing from lending and all marketing activity for more than a year now, our brand continues to attract potential customers with around 26,000 customers a month speculatively visiting our loan application page. So how are we planning to meet this need? We have a very new exciting proposition designed to serve the needs of our customers post pandemic, and I'm really excited about it. We plan to introduce a new mid-cost non-guarantee personal loan product and we have revised our policies and improved the customer journey. More of this in a moment. Amigo 2.0, as we're calling it internally is entirely focused on delivering positive customer outcomes. All Amigo 2.0 loans will reward good payment behavior by reducing the interest rate on the loan, and we will do this by 5 percentage points up to 3x over the life of the loan. We will also offer an annual penalty-free payment holiday. To ensure that affordability can be assessed accurately, we will be using open banking technology for all applications for the first time, and we will equip our customers with tools, features and content on our website to help them boost their financial health. Looking at Slide 22, let's say a few words about our new scheme of arrangement plans. As we have seen, to enable us to return to providing vital financial inclusion, we first need to address the significant liability that Amigo faces from historical lending complaints. Back in December of 2020, with complaints volumes rising, the Board concluded that the most equitable way to resolve complaints was to pursue a scheme of arrangement. We wanted to ensure that all of our customers who have a valid complaint against Amigo could receive some redress and not just those complainants at the front of the queue. As I have said, the process has been long and costly, but we continue to believe it's the only way in which customers will be able to receive cash redress. Without a scheme of arrangement, Amigo is insolvent. The High Court judge gave his judgment on the 24th of May. As 3 months away now, and I know that our shareholders and indeed our employees have found the lack of information we've been able to give to the market since then, very frustrating. And I regret that we have not been able to provide more information more quickly. But I can assure you that our Board and the management team have been working constantly to send that data on resolving what is a complex situation. A key recommendation from the judge who gave us some very helpful guidance on what we need to do next was to increase customer involvement in deciding how a potential scheme would work and what options are the most attractive for customers. As a direct response to this, we put together an independent customer committee. It has 8 members selected at random, a mix of customers, past and present, borrowers and guarantors. Our largest creditor, the financial ombudsman service was invited to attend but they declined. The independent customer committee is an important initiative that will ensure the voice of customers is heard as we shape a new scheme. As announced, the committee has met several times already in August with its independent chair, an ex-Deloitte partner to review and debate the possible options for a new scheme of arrangement, and the preferred scheme is likely to incorporate either a share of future profits or a potential equity raise. We are still waiting guidance from the committee on its final requirements. Getting this right is critical. We're very aware that the delay that has resulted from the rejection of the first scheme is impacting our customers and intensifying uncertainty for employees and for shareholders. We're working hard to resolve this as quickly as possible and are in the process of drawing up the new practice statement letter for the new scheme. We will continue to liaise with the FCA as we move through the process, and we will update you with further information as soon as we can. Moving on to Slide 23 and our strategic focus for the future. Our immediate focus is on implementing a new scheme. As soon as we're able to do so, we will return to providing much needed financial inclusion with our new customer-focused lending proposition. As we prepare to bring this to market, our strategic focus will be on our people and on operating efficiently within a robust conduct and risk framework. Firstly, our people. It's our people that will determine the future success of Amigo. It's important we attract, develop and retain the right people. It's been an exceptionally difficult year for our staff, and I'd like to thank all our employees who have worked so hard and shown incredible commitment throughout. As we move back to a more normal working environment post COVID-19, we will support our employees in their transition back to the office in a way that best suits them as individuals. Our second focus is on operational efficiency and on process improvements. In January 2021, we introduced Lean Six Sigma to the business to drive customer focus, to improve productivity and to deliver efficient, robust and compliant processes within Amigo. Lean Six Sigma is focused on the removal of waste and the elimination of variations in the process. To date, we've trained more than 30 employees to Yellow Belt standard and 9 have gone on to achieve Green Belt certification assessed by the British Standards Institute. All of them passed successfully last month. I'm really excited about the possibilities of Lean Six Sigma within Amigo. I've delivered this in many previous organizations, and it has achieved real people growth, effectively achieving a change in the people without changing the people and providing great motivation at the same time. By deploying Lean Six Sigma, we've seen a major shift in culture already within our Amigo teams, having passion for excellence within the customer and the regulatory framework, which brings me to the third focus on the slide, conduct and risk framework. This is and must be central to the way we operate. We have a new team, and we will not repeat the mistakes of our predecessors. We have enhanced our policies and our processes. We've had a positive report from the FCA skilled person review, and we are confident that when we return to lending, we have the framework in place to meet our regulatory requirements and deliver the right customer care focused on individual needs and positive customer outcomes. Finally, on Slide 24, let's finish with the summary and the outlook. As you have seen, there are material uncertainties that remain for Amigo. For us to continue in business is dependent on a number of things, namely a successful scheme of arrangement, our ability to raise cash in the future to support further lending and a satisfactory resolution of the FCA investigations. But we are a new team, Board and Executive Committee, and we are determined to get this right. We have taken steps in line with a clear direction given by the judge back in May to deliver a scheme that will win court approval. We have a strong cash position, which will, in the short term, fund our restart of lending with what I believe is a very exciting customer offer. We want to get back to providing vital financial inclusion and position our business for the long term. So with that, I will now open the call to questions. We'll first take questions from the phone line, moving on to addressing questions from the webcast. Thank you very much.

[Operator Instructions] Our first question comes from Mandeep Jagpal from RBC Capital Markets.

A few questions from me, please. Firstly, on the scheme of arrangement and, in particular, the recently established independent customer committee. Are you able to provide any further details on what this committee will be focused on to help on deliver a theme that will be more viable -- a scheme arrangement that will be more viable? And associated with this, has there been any material change in the cash available for the scheme due to the strong collections mentioned in the presentation?

Thanks, Mandeep. We took very clear direction from the judge and what he wanted us to do. So we developed a range of options, which Scheme 2 might look like, and we put those options to the independent customer committee led by the independent Chairman, and they have been working on those options. We gave them a number. And we said, if you like, one is great, if you want to come up with your own great, just tell us what you think is the best solution. So they've had a number of meetings already in the last few weeks. And we're very hopeful that they'll come back with the final recommendations in the next couple of weeks, but it's out of our hands to an extent, because we need to work in accordance with that time scale. So there's a whole range of options that they may consider. And when we get back from them what they want to do, we will then issue the new practice statement letter, which will kick off the process for Scheme 2. The second part of your question was, is there more cash available. The only possible improvement we've got is that when we did our first scheme, and we were assessing the financials back at Christmas time last year, we -- as it's turned out, we were less positive than we should have been really. So like a lot of businesses, we're quite cautious about the impact of COVID, and we were quite worried about how that might manifest itself in customer payment behavior. So we've now got a situation where customers actually paid us better in 2021 than we thought they would do. So there's a little bit more cash upfront to put into the scheme, yes.

And sorry, just a second question I had on Amigo 2.0. Thank you for any additional detail on the proposition. What are current thoughts on the benefits of retaining the recognized Amigo brand versus the benefit of a new brand when lending restarts, particularly if products other than guarantor loans are offered?

Yes. It's a really good question. It's one that we've been debating internally a lot. I mean, certainly, if we do a -- we will be offering loans, which are not guarantor loans. So we will be offering independent unsecured loans to an individual without a guarantor. I guess on that basis, the word Amigo doesn't make a lot of sense, because Amigo was a great name for a guarantor lending business. But if you're doing independent loans, then probably Amigo doesn't make sense. So yes, we surely will come up with a different brand identity, which we haven't confirmed yet for the non-guarantor loans when we're allowed to start lending again, of course. But we know there's a big demand out there, both for guarantor loans and for nonguarantor loans, and we intend to fill that gap required by the marketplace.

[Operator Instructions] Our next question comes from Neill Morgan from BlueBay Asset Management.

Congratulations on the results. A quick admin question. What were the Q1 numbers for FY '22 be coming out? Are they going to come out in the next few days? Or it will be coming in September?

Yes, that's a very good question, Neill. I mean we would normally have been issuing Q1 numbers by now, but of course, our year-end results have been delayed. So we're going to be issuing Q1 numbers as soon as possible. But clearly, we have to get this today is out of the way first, but expect something shortly on that.

The next question comes from Angus McMahon from Sariyah Credit Opportunity.

Just a couple of questions. The first thing I wanted to get my mind right was whether you intend to involve bondholders at all in this process. You don't have to know that you sure bridge, but do you see any scope there?

Yes. I mean we've got a number of different stakeholders in this situation that we're trying to keep everybody satisfied on. And clearly, bondholders are a very important constituent for us to consider. I mean as Mike said earlier, we owe the senior secured note holders GBP 234.1 million, which is not due for repayment until January of '24. But the bondholders are broadly -- we've virtually paid off the securitization. As Mike said earlier, we're down to below GBP 3 million now. So that will be paid off very soon, and bondholders are our funders at the moment. So yes, we want to engage with bondholders. The other factor for us to consider, and I hope people will give us some comfort here, is we're wrestling with a lot of difficult challenges here, and we've been very focused on making sure we get the right numbers out there, both for Scheme 2 and indeed for delivering the financial year results. So we're a small team here. We're a limited resource. The amount of time we can spend satisfying everybody as much as they want, it's very difficult to do, because we're -- all of us are working very long hours as it is. But we don't want to ignore the bondholders. But by the same token, we don't want to spend excessive amount of time with the bondholders, because it means something has to give somewhere else.

I guess what I'm trying to get at here as well is within the account of [indiscernible] and kind of acknowledgment that cash will be -- will need to be raised as part of Amigo 2.0, maybe not immediately, but will need to be raised to grow the business. What sort of timetable are you talking about on that?

Yes, it's a good question. It's not one I can answer right now. I mean it's also something that the customers committee is talking about. It was one of the options we presented to them, and it may be a solution they'll present to us that they think they want an equity raise. It was a very clear message from the FCA. It was a very clear message from the judge that they both felt that shareholders should be asked to contribute into the future. So we're looking at all different options. As you can tell, we've got a number of different competing stakeholder requirements here, and we are genuinely trying to satisfy as many people as we can here. But not everybody is going to get exactly what they want out of this, I'm afraid, and we have to accept compromises every single one of us.

[Operator Instructions] There are no further questions on the telephone lines at this time.

Thank you, Maxine.

We do have some questions on the webcast. So I'll read those out. Firstly, we have a question from Arden Financial. Will the bondholders be expected to take part in any scheme 2 or to recapitalize the business via debt for equity swap to restart lending? And it's one part. And the second part of the question is in the absence of the scheme, who has first claim of the cash, redress payment or bondholders?

Thank you, Kate. Maybe I can invite Mike to take that question if you can deal with that. Mike, please.

Sure, Gary. I mean -- so the first part of it is straightforward. The priority would be with the bondholders and secured creditors that would be ahead of any unsecured creditors, which would include the redress customer claims. I think the first part of the question, I'm sorry, Kate, refresh my memory, the first part was about?