Provident Financial plc is the market-leading provider of home credit in the UK and Ireland and the market-leading provider of credit cards to non-standard consumers in the UK. Its operations consist of the Consumer Credit Division (CCD) and Vanquis Bank.

Group performance supports further dividend increase
First half pre-tax profit before exceptional restructuring cost up 7.0% to £76.5m1  (2012 restated2: £71.5m).
Adjusted earnings per share up 7.9% to 43.5p1 (2012 restated2: 40.3p).
Customer numbers up 5.5% to 2.7m (2012: 2.6m) and average receivables up 13.3% to £1,441.7m (2012: £1,273.0m).
Interim dividend per share up 7.6% to 31.0p (2012: 28.8p).
Annualised capital generated3 of £116.7m, in excess of dividends payable of £108.3m.
Strong funding and capital position
Group now fully funded into 2016.
Gearing stable at 3.1 times (2012: 3.1 times).
CCD experiencing challenging market conditions
Pre-tax profit of £36.1m1 (2012 restated2: £49.3m).
Customer numbers and average receivables down by 5.8% and 3.6% respectively with credit issued tempered by persistent inflationary pressure on household disposable incomes and weak consumer confidence.
Gross cost savings of £10m secured for second half of year, rising to £18m in 2014, including benefit from recent field restructuring completed at a one-off cost of £4.5m.
Investment in business development initiatives fully protected.
Strong growth and returns in Vanquis Bank
UK pre-tax profit up by 70.7% to £50.2m (2012: £29.4m).
UK customer and average receivables growth of 29.1% and 40.3% respectively, reflecting continued strong momentum from addressing the under-served non-standard credit card market.
UK risk-adjusted margin4 of 34.4% (2012: 34.9%), well ahead of minimum target of 30% with arrears levels remaining stable at record lows.
Pilot credit card operation in Poland developing well with a cost of £3.6m in first half (2012: £1.2m) and a firm business plan to be established during second half of year.
Key financial results
     H1 2013    H1 2012
(restated)    Change
Customer numbers    2.7m    2.6m    5.5%
Average receivables    £1,441.7m    £1,273.0m    13.3%
Profit before tax and exceptional items1    £76.5m    £71.5m    7.0%
Profit before tax    £72.0m    £71.5m    0.7%
Adjusted earnings per share1    43.5p    40.3p    7.9%
Basic earnings per share    41.0p    40.3p    1.7%
Interim dividend per share    31.0p    28.8p    7.6%
Peter Crook, Chief Executive, commented:
“I am pleased to announce a 7.6% increase in the interim dividend which is fully supported by adjusted earnings per share growth of 7.9%, strong capital generation and a very robust funding and liquidity position.

Vanquis Bank has produced another excellent performance with first half UK profits up over 70%. The business continues to generate strong customer growth and margins through developing the under-served non-standard credit card market whilst continuing to apply tight credit standards.

CCD is experiencing weaker demand from the home credit customer base, with the persistent rise in day-to-day living costs putting pressure on household disposable incomes and reducing confidence. In view of lower activity levels, action has already been taken to reduce the cost base which will benefit the financial performance of the business in the second half and beyond.

The group overall has performed in line with its internal plan in the first half of 2013 and expects to do so for the year as a whole. ”

Enquiries:    Today    Thereafter
David Stevenson, Provident Financial    020 7404 5959    01274 351351
Gill Ackers/Eilis Murphy, Brunswick    020 7404 5959    020 7404 5959
Investor Relations          
Gary Thompson, Provident Financial    020 7404 5959    01274 351351

2013 first half profit before tax is stated before an exceptional cost of £4.5m in respect of a restructuring of the field management force within CCD.
First half profit before tax in 2012 has been restated from £72.9m to £71.5m following the mandatory adoption of the amended IAS 19, ‘Employee Benefits’ from 1 January 2013. The impact on the first half of 2012 has been to reduce profit before tax by £1.4m and increase the actuarial gain taken through the consolidated statement of comprehensive income by £1.4m with no impact on the balance sheet.
Capital generated is calculated as net cash generated from operating activities, after adding back 80% of the growth in customer receivables funded by borrowings, less net cash used in investing activities.
Revenue less impairment as a percentage of average receivables for the 12 months ended 30 June.