Provident Financial plc (PFG or ‘the Group’) is the leading provider of credit products which provide financial inclusion for those consumers who are not well served by mainstream lenders. The Group serves 2.4 million customers and its operations consist of Vanquis Bank, the Consumer Credit Division (CCD) comprising Provident home credit and Satsuma, and Moneybarn.

The Group’s results are being reported under IFRS 9 ‘Financial instruments’ for the first time in 2018 following the mandatory adoption of the standard from 1 January 2018.

Key financial results








IAS 39

Adjusted profit before tax2





Statutory profit/(loss) before tax





Adjusted basic earnings per share2,3





Basic earnings/(loss) per share3





Annualised return on assets4





Final dividend per share





Total dividend per share





Malcolm Le May, Group Chief Executive, commented:

“Today’s results are testament to the immense progress that the Group has made over the past 18 months, having delivered adjusted profit before tax growth of 82.3% in 2018. I am very pleased to announce that, in line with our commitment at the time of the rights issue, the Board have declared a nominal dividend of 10.0p per share for 2018.

We have delivered against each of the objectives we set ourselves for 2018 and have strengthened our relationship with our customers, regulators and other stakeholders. We aim to build on the considerable momentum within the Group in 2019 and beyond, with a focus on delivering attractive and sustainable returns to our shareholders as we execute on our strategy.

We continue to believe that the offer made by NSF is not in the interests of all shareholders.”

Excellent progress made in delivering the Group’s 2018 operational objectives 

CCD obtained full authorisation from the Financial Conduct Authority (FCA) in November 2018 and has recently received agreement from the FCA to the implementation of enhanced performance management of Customer Experience Managers (CEMs) which is a key tool in returning the business to run-rate profitability in due course.
Vanquis Bank Repayment Option Plan (ROP) refund programme is over 99% complete and has been delivered within the previously announced provisions for balance reductions and refunds and the timetable agreed with the FCA.
Moneybarn has made significant progress with the FCA regarding the redress to be paid to resolve the issues arising in respect of the investigation into affordability, forbearance and termination options within the previously announced financial provisions.
We have reached agreement to appoint a new Vanquis Bank Managing Director who will join in April 2019 and expect to announce a new Vanquis Bank Chairman shortly, both subject to regulatory approvals, who will bring significant relevant retail banking and consumer finance experience and further strengthen the Board and senior management team.
The Group’s capital position and liquidity are both robust following completion of the rights issue in April 2018 and the refinancing of the senior bond in June 2018.
The Board proposes a final dividend in respect of 2018 of 10.0p per share (2017: nil), in line with our commitment at the time of the rights issue.
As previously announced, the Board continues to believe that the offer made by Non-Standard Finance plc (NSF) on 22 February 2019 is not in the best interests of all PFG shareholders:
The Board has a clear plan to maximise value for all PFG shareholders by executing its strategy to deliver growth and attractive returns through its complementary, synergistic and market leading businesses.
As well as undervaluing the Group and its prospects, the offer from NSF presents significant operational and execution risks given NSF's track record of value destruction and NSF's limited experience across the full breadth of PFG’s businesses.
The offer has major strategic flaws and appears to be based upon a superficial and misguided view that the regulatory approach to PFG would be different if the Group was owned by NSF.
The Board is committed to maximising value for all PFG shareholders and will explore all appropriate alternatives to achieve the objective. 

Vanquis Bank has delivered stable profits whilst adapting to changes in regulatory requirements 

Vanquis Bank has delivered a 1.6% increase in IFRS 9 adjusted profit before tax1,2 to £184.3m (2017: Unaudited pro forma IFRS 9 adjusted profit before tax1,2 of £181.4m, IAS 39 adjusted profit before tax2 of £206.6m). 
New customer accounts of 366,000 (2017: 437,000) primarily reflect the impact from the tightening of underwriting during the third quarter of 2017.
IFRS 9 impairment rate was broadly stable at 16.3% of average receivables (2017: 16.4%1):
Reflects some pressure in the second half of the year from increased payment arrangements due to enhanced forbearance, despite tighter underwriting standards.
The rate of increase in payment arrangements has moderated in early 2019.
CCD authorised in November 2018 following implementation of the home credit operational recovery plan 

Significant reduction in IFRS 9 adjusted loss before tax1,2 to £38.7m (2017: Unaudited pro forma IFRS 9 adjusted loss before tax1,2 of £106.3m, IAS 39 adjusted loss before tax2 of £118.8m) following implementation of the recovery plan.
Further actions to align the cost base with the reduced size of the business continue:
Recent announcement of a voluntary redundancy programme in central support functions which, together with other cost actions, is expected to reduce the cost base in 2019.
Total headcount reduction over the last 12 months is now around 1,000 (c.20% of headcount). 

Moneybarn delivers further strong growth in new business 

IFRS 9 adjusted profit before tax1,2 up 28.3% to £28.1m (2017: Unaudited pro forma IFRS 9 adjusted profit before tax1,2 of £21.9m, IAS 39 adjusted profit before tax2 of £34.1m) reflecting improved credit quality and investment in strengthening the senior management team and increasing resource in customer services and collections. 
Demand for used cars and residual values have remained robust which, together with operational enhancements that have improved service to customers and introducers, has resulted in strong growth in new business volumes of 18%, notwithstanding tighter credit standards.
Default rates and arrears levels remain stable and the credit quality of new business being written is now materially better than two years ago following the tightening of underwriting in 2017 and 2018.

Richard King/Jade Byrne, Provident Financial    01274 351 900
Nick Cosgrove, Simone Selzer, Brunswick    020 7404 595959
Investor Relations     
Gary Thompson/Vicki Turner, Provident Financial    01274 351900

The Group has adopted IFRS 9 from its mandatory effective date of 1 January 2018 and made an opening balance sheet adjustment to restate the IAS 39 balance sheet onto an IFRS 9 basis at that date. However, 2017 statutory prior year comparatives have not been restated due to the IFRS 9 requirement in respect of de-recognition of financial assets which would require loans terminated prior to 1 January 2018 to remain under IAS 39 in the prior year. As this would distort comparability with the 2018 income statement and 2018 balance sheet which are on a full IFRS 9 basis, the Group has also provided unaudited pro forma 2017 income statement and balance sheet comparatives as though IFRS 9 had been implemented from 1 January 2017. 
Adjusted profit before tax is stated before: £7.5m of amortisation in respect of acquisition intangibles established as part of the acquisition of Moneybarn in August 2014 (2017: £7.5m) and exceptional charges of £55.3m (2017: £224.6m) comprising: (i) £29.9m (2017: £32.5m) in respect of intangible and tangible asset write offs, redundancy and consultancy costs associated with the implementation of the home credit recovery plan following the poor execution of the migration to the new operating model in July 2017; (ii) £18.5m (2017: £nil) in respect of the 8% premium and fees paid on the redemption of 89% of the £250m senior bonds maturing in October 2019; and (iii) £6.9m (2017: £nil) of non-cash pension charges in respect of the equalisation of Guaranteed Minimum Pensions following the High Court judgement against Lloyds Bank PLC and others in October 2018. 2017 exceptional costs also included £172.1m in respect of the resolution of the FCA investigation into ROP in Vanquis Bank and £20.0m in respect of the FCA investigation into affordability, forbearance and termination options at Moneybarn.
The weighted average number of shares in the period prior to the rights issue in April 2018 has been adjusted to take account of the bonus element of the rights issue of 1.367 and EPS comparatives restated.
Annualised return on assets is calculated as adjusted profit before interest after tax as a percentage of average receivables for the 12 months ended 31 December.