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Provident Financial swings to profit and resumes dividend as it seeks to fend off hostile takeover

Published: 19:45 13 Mar 2019 AEDT

Provident
The improved results reflected narrowed losses in the troubled home credit division

Provident Financial PLC (LON:PFG) swung to a full-year profit and resumed a final dividend as it tries to fend off a hostile takeover bid from rival Non-Standard Finance.

The subprime lender said statutory pre-tax profit came to £90.7mln last year, up from a £123mln loss in 2017.

READ: Provident once again lambasts “financially flawed” hostile bid as Non-Standard Finance posts offer document just days before final results

Adjusted pre-tax profit increased 82% to £153.3mln.

In January the company warned that adjusted profit would be at the lower end of its earlier forecasts of £151-166mln but the final number beat market forecasts.

The growth was largely due to narrowed losses in the traditional home credit business, which was hit by botched restructuring in 2017.

Adjusted pre-tax profit in Provident’s car finance division, Moneybarn, and Vanquis bank gained.

The issues in the home credit division hurt the wider group, forcing it to scrap its dividend for the first time ever.

Dividend reinstated

In its full-year results on Wednesday, the company confirmed it would re-instate a final dividend at 10p each.

Chief executive Malcolm Le May said the results were a “testament to the immense progress the group has made over the past 18 months”.

“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,” he said.

“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.”

Hostile bid 'not in best interest of shareholders'

Le May said the group continues to believe that an unsolicited £1.3bn offer from Non-Standard Finance is not in the interests of shareholders.

Non-Standard Finance, which is run by Provident’s former boss John van Kuffeler, has criticised Provident’s “disappointing” financial performance following three profit warnings and thinks it would do a better job at turning the company around.

Its hostile bid has been backed by three major shareholders who hold stakes in both Provident and Non-Standard Finance including star fund manager Neil Woodford, his former employer Invesco and hedge fund Marathon.

Peel Hunt maintained a 'hold' rating on the stock, saying results were marginally ahead of expectations, with significant progress made in a number of areas.

"Focus will be on the hostile NSF offer, which in our view presents execution risk," it said.

 

 

 

 

  

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