Provident Financial swings to profit, reinstates dividend
Doorstep lender Provident Financial - which is currently fending off a hostile £1.3bn bid from smaller rival Non-Standard Finance - said on Wednesday that it swung to a profit in 2018 as it restored its dividend.
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The group swung to a statutory pre-tax profit of £90.7m in 2018 from a loss of £147.9m the year before. Meanwhile, adjusted pre-tax profit rose 82.3% to £153.5m. The company had warned in a trading update in January that profit for the year would be towards the lower end of the range of market expectations of £151m to £166m.
During the year, losses in the company's consumer credit division narrowed to £38.7m from £106.3m. Profits at Moneybarn, the car finance business, were up 28.3% to £28.1m and Vanquis Bank profit edged 1.6% higher to £184.3m.
Provident, which suspended its dividend back in 2017, declared a nominal dividend of 10p a share for the year.
Chief executive Malcom Le May said: "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.
"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."
Le May also took the opportunity to reiterate his opposition to the NSF bid, which he said "is not in the interests of all shareholders".
At 1250 GMT, the shares were down 0.5% to 560.20p.
Numis said pre-tax profit of £153.5m was a little ahead of its estimate of £151.6m, while the 10p dividend was significantly ahead of its 3.3p forecast.
In addition, the broker said the consumer credit division looks "well on track to return to profitability and reach the group target of a return on assets of 10%".
Canaccord Genuity said the results were in line, with the exception of the dividend, which was ahead of its 4.6p estimate and consensus of 8.2p.
"We do not see NSF's offer as ideal. We have a number of concerns/questions regarding the proposal and it certainly carries risk, one of which is capital strength, as it is for PFG as a standalone entity," it said. "However, we think it is unlikely that there will be a competing offer for PFG, either in part or whole and therefore would recommend that PFG shareholders accept the NSF offer and benefit from the potential upside that exists."