At a glance

Chairman’s statement

I am pleased with the progress that the Group has made in 2018 under challenging circumstances. We still have a lot to deliver in 2019 to fully turnaround the Group but I am confident that we are now well placed to deliver a successful PFG for all our stakeholders.

Chief Executive's review

PFG is the leading provider of credit products which provide financial inclusion. We serve 2.4 million customers through our four brands all of which have market-leading positions. There remains a significant opportunity for us to enhance our market-leading positions through our businesses working much more collaboratively.

5,700
Number of employees
£133.6m
Total tax contribution
£1.7m
Community investment
2.4m
Number of customers

Our businesses

Home credit

Provident offers home credit loans, typically of a few hundred pounds, to consumers on low incomes and tight budgets who require affordable credit to manage the household budget or one‑off items of expenditure.

  • Customers

    0.4m

  • Employees

    3,800

  • Adjusted profit before tax 1,2

    £(38.7)m

  • Loan range

    £100–£2,000

Online lending

Satsuma is our online instalment loan product. We give new customers a small‑sum, short‑term loan and collect repayments by continuous payment authority either weekly or monthly.

  • Customers

    117,000

  • Loan range

    £100–£1,000

Credit cards

Vanquis Bank is the leading supplier of credit cards to those not well served by mainstream lenders. We provide new customers with a low credit limit and only increase it when we have sufficient experience of the customer handling their account responsibly.

  • Customers

    1.8m

  • Employees

    1,600

  • Adjusted profit before tax 1

    £184.3m

  • Loan range

    £250–£4,000

Vehicle finance

Moneybarn is the market leader in the provision of vehicle finance for people well‑served by mainstream lenders.

  • Customers

    62,000

  • Employees

    300

  • Adjusted profit before tax 1

    £28.1m

  • Loan range

    £4,000–£25,000

  • 1. Before exceptional items and, in respect of Moneybarn, prior to the amortisation of acquisition intangibles.
  • 2. Represents CCD as a whole.

Strategy

Our KPIs are helpful in assessing progress but are not exhaustive as management also takes account of a wide range of other measures in assessing underlying performance. Adjusted measures are presented where management feel this is more representative of the underlying business performance as opposed to the statutory equivalent.

Growing sustainable, customer-centric businesses that deliver attractive returns in non-standard markets Growing sustainable, customer-centric businesses that deliver attractive returns in non-standard markets

Acting responsibly and with integrity in all we do Acting responsibly and with integrity in all we do

Maintaining a secure funding and capital structure Maintaining a secure funding and capital structure

Generating consistent and sustainable shareholder returns Generating consistent and sustainable shareholder returns

Apply exacting standards in allocating capital to organic and acquisition opportunities to invest in businesses that:

  • Deliver a target return on assets for the group of approximately 10%. Attractive returns are available in the non‑standard market to those companies that have developed tailored business models and focus on delivering good customer outcomes.
  • Are sustainable and maintain attractive levels of regulatory compliance at all times.
  • Have good growth potential to deliver future earnings and dividends growth.
  • Enjoy a strong market position, preferably a top‑ three market position in each segment of the non‑standard market in order to develop the market in a responsible manner.
  • Have sustainable management and cultural fit.

Our focus for 2019

  • Continue to monitor and maintain tight underwriting standards given the current uncertain economic and outlook in the UK.
  • Complete the ROP refund programme in Vanquis Bank and conclude the FCA investigation at Moneybarn in the first half of 2019.
  • Stabilise the rate of decline in the credit customer base and continuing to reduce CCD’s cost base.
  • Build on the Group’s digital capability, including the further development of digital apps to help customers better manage their interaction with the Group.
  • Improve the collaboration between divisons and share best practice across the Group.
  • Embed the Group’s Blueprint, including definition of the KPI’s to monitor progress.
  • Deliver growth and operational efficiency to maintain the progression towards the Group’s target ROA of approximately 10%.
  • Operating our core business of lending to our customers in a responsible and sustainable manner, putting their needs at the heart of everything we do.
  • Acting responsibly and sustainably in all our stakeholder relationships in order to:
    • Putting our customers on a path to a better everyday life;
    • Create a working environment that is safe, inclusive and meritocratic;
    • Treat our suppliers fairly; and
    • Support our communities.

Our focus for 2019

  • Embed the Group’s Blueprint and our purpose – “We help put people on a path to better everyday life” – throughout the Group.
  • Continue to enhance our products and services to meet the changing needs of our customers, including trials of personal loans in Satsuma and an extension of the home credit product, subject to FCA approval.
  • Maintain or improve customer satisfaction levels in all businesses.
  • Investment in the community through various community programmes, money advice programmes and social research.
  • Maintain borrowing facilities which, together with Vanquis Bank’s retail deposits programme, meet contractual maturities and fund growth over at least the next 12 months.
  • Maintain a CET 1 ratio for the Group of 25.5% together with headroom of between £50m and £100m.
  • Continue to diversify the Group’s sources of funding.

Our focus for 2019

  • Manage regulatory capital in accordance with PRA regulations whilst maintaining headroom of between £50m and £100m, in line with the Board’s current risk appetite.
  • Manage liquidity in accordance with PRA regulations as well as maintaining a prudent level of liquid resources.
  • Continue to manage the flow of retail deposits in Vanquis Bank at appropriate rates to meet funding requirements.
  • Review and consider additional funding options to support growth in CCD and Moneybarn and to fund growth and maturities.
  • Refinance the current syndicated bank facility maturing in May 2020, 12 months in advance of its maturity, in line with the Group’s treasury policy.
  • Generate sustainable growth in profits and dividends to deliver increasing shareholder returns.
  • Adopt a progressive dividend policy whilst maintaining a dividend cover of at least 1.4 times

Our focus for 2019

  • Maintain the ongoing recovery of the Group by delivering growth in earnings per share and a positive TSR.
  • Adopt a dividend policy of maintaining a dividend cover of at least 1.4 times taking into account the ongoing recovery of home credit, the transitional impact of IFRS 9 on regulatory capital levels and maintaining a regulatory capital buffer of between £50m and £100m, in line with the Board’s current risk appetite.

Our Business model

We provide our customers with tailored and affordable products that match their specific needs, and we help them to handle the inevitable challenges that life throws their way.

Consumer credit

£100 - £2k

Consumer loan range

Vehicle finance

£4k – 25k

Vehicle loan range

We create value for customers by generating high satisfaction and loyalty.

We develop tailored products to meet customers’ needs

We focus on the UK credit market, developing simple, transparent products with flexibility to help customers not well served by mainstream lenders cope with life.

Customer needs

138 years

experience

Credit cards

£250 – £4k

Credit card limits

Attractive offers

2.4m

Customers

We create value for customers through offers of financial inclusion, and for colleagues and brokers through the income and commission they earn.

We attract customers who we can serve

We use many ways to reach consumers. We target our offers using increasingly digital methods, as well as face-to-face and partners such as field colleagues, agents and brokers.

Great service

5,700

Employees

Data analytics

Enhanced affordability

1 November 2018

Implementation date

We create value for customers by ensuring loans are appropriate to their situation, and thereby generate sustainale returns for shareholders.

We carefully assess customer affordability and creditworthiness

We use internal and external data, including face-to-face interactions, taking into account both the current situation and the likely future.

Face-to-face interaction

Building credit scores

We create value for customers by helping them access credit, stay in control and build their credit score to improve future access and choice.

We lend responsibly

We tend to lend smaller amounts over shorter periods and take a ‘low and grow’ approach as customers demonstrate sustainability.

From £100

Corporate responsibility

£1.7m

Community investment

We manage arrears and customer difficulties

We establish early contact and an ongoing dialogue with customers who have difficulties, with a sympathetic approach, to understand and offer forbearance.

We create value for customers by helping them minimise the impact of any difficulties in an understanding way

  • Sympathetic approach
  • Dialogue with customers

We collect payments due

We offer many ways to pay in cash and remotely, maintaining frequent customer contact. We stay close to customers through call centre, digital communications and face-to-face meetings in the home.

We create value for customers by helping them stay on track and adapt to life’s challenges whilst building their credit score.

  • Call centre communications
  • Digital communications
  • Face-to-face meetings

Financial highlights

Adjusted profit before tax 2 £m

£153.5m

+40.7%

bar
  • Adjusted profit before tax
2014
  • 234.4
2015
  • 292.9
2016
  • 334.1
2017
  • 109.1
2018
  • 153.5

Statutory profit/(loss) before tax £m

£90.7m

+173.74

bar
  • Statutory profit/(loss) before tax
2014
  • 224.6
2015
  • 273.6
2016
  • 343.9
2017
  • -123.0
2018
  • 90.7

Adjusted basic earnings per share 2,3 p

46.6p

+1.97%

bar
  • Adjusted basic earnings per share
2014
  • 132.6
2015
  • 162.6
2016
  • 177.5
2017
  • 45.7
2018
  • 46.6

Basic earnings/(loss) per share 2,3 p

25.2p

+137.95%

bar
  • Basic earnings/(loss) per share
2014
  • 126.5
2015
  • 151.8
2016
  • 181.8
2017
  • -66.4
2018
  • 25.2

Proposed dividend p

8p

0%

bar
  • Proposed dividend
2014
  • 98.0
2015
  • 120.1
2016
  • 134.6
2017
  • 0
2018
  • 8.0

Dividend cover times

5.8 times

0%

bar
  • Dividend cover
2014
  • 1.35
2015
  • 1.35
2016
  • 1.32
2017
  • 0
2018
  • 5.8

Return on assets 1,4 %

7.5%

+8.7%

bar
  • Return on assets
2014
  • 15.1
2015
  • 16.1
2016
  • 15.3
2017
  • 6.9
2018
  • 7.5

Customer numbers m

2.4m

-4%

bar
  • Customer numbers
2014
  • 2.445
2015
  • 2.400
2016
  • 2.448
2017
  • 2.550
2018
  • 2.4

Community investment £m

£1.7m

-34.62%

bar
  • Community investment
2014
  • 2.4
2015
  • 3.1
2016
  • 3.1
2017
  • 2.6
2018
  • 1.7

Total tax contribution £m

£133.6m

-20.48%

bar
  • Total tax contribution
2014
  • 124.5
2015
  • 135.5
2016
  • 155.6
2017
  • 168.0
2018
  • 133.6
  1. The Group has adopted IFRS 9 from 1 January 2018. Statutory prior year comparatives have not been restated. The Group has provided unaudited pro forma 2017 income statement and balance sheet comparatives as though IFRS 9 had been implemented from 1 January 2017.
  2. Adjusted profit before tax is stated before: £7.5m of amortisation in respect of acquisition intangibles established as part of the acquisition of Moneybarn inAugust 2014 (2017: £7.5m) and exceptional charges of £55.3m (2017: £224.6m).
  3. 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.
  4. 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.
  5. Common equity tier 1 (CET1) ratio is measured against a fully loaded total capital requirement of 25.5%.

Customer Stories

  • Jennie's day

    Close

    "With the help of Vanquis Bank I have built up my credit score."

    "I have been with Vanquis Bank for quite a few years and have built my credit profile up over that period. I saw a leaflet initially and applied as my credit was not very good and I had been refused credit elsewhere. I received a card with a £200 limit and was able to meet my repayments so qualified for further credit. With the help of Vanquis Bank I have built up my credit score and now use their Black card. The customer service is really good and I would recommend it. I have now recommended to my son who is looking to take credit for the first time”.

    Jennie
    Vanquis Bank customer, London

  • Bianca's day

    Close

    "The credit card from Vanquis Bank gave me flexibility at a time when no one else would help me with money."

    “Due to being sick, awaiting surgery and unable to work, I wasn’t able to build up a good credit rating and was refused credit from many lenders. The credit card from Vanquis Bank gave me flexibility at a time when no one else would help me with money. The online application process was really simple, and the credit has been invaluable for paying for courses for future work and learning to drive!”

    Bianca
    Vanquis Bank customer, London

  • Paul's day

    Close

    "When I needed a loan... I knew who I could trust and turn to."

    “I first came across Provident as a child and I remember my mum giving me Provident clothes vouchers. When I needed a loan later in life, I knew who I could trust and turn to. I can’t speak highly enough of my CEM Nikki, and although very professional, she has a personal touch. The loan was explained very clearly and methodically and it has come in use for bits and pieces around the house.”

    Paul
    Home credit customer, Portsmouth

  • Jess's day

    Close

    "I want to use the card to build my credit score to secure cheaper credit in the future."

    “Having just left university, I had no credit history and I was unable to get credit from many lenders. After a search on the internet, I found Vanquis Bank and then applied. The application process was straightforward and the paperwork was clear. I was able to check my credit profile when applying and I found that they started me with a low limit so I could learn how to manage my budget. I want to use the card to build my credit score to secure cheaper credit in the future."

    Jessica
    Vanquis Bank customer, London

  • Judith's day

    Close

    "I have a very friendly CEM who visits every week which I find really supportive"

    "I have been using the Provvy for years and years. I have a very friendly CEM who visits every week which I find really supportive. I have found them obliging and the money has helped with things around the home and day to day costs.”

    Judith
    Home credit customer, Winchester

  • Shirley's day

    Close

    "I found Satsuma on the internet, the application was straightforward and I was able to use the loan quickly."

    "I work as a freelance photographer which is great but has its downfalls – my customers may not pay straight away and therefore I don’t always have a regular income which meant I was refused credit by other lenders. I found Satsuma on the internet, the application was straightforward and I was able to use the loan quickly to pay my expenses whilst waiting for customers to pay me. I found the people nice and would recommend for short-term lending."

    Shirley
    Satsuma customer, London

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