Provident Financial plc is the market-leading provider of home credit in the UK and Ireland, with a successful, growing credit card business. Its operations consist of the Consumer Credit Division (CCD) and Vanquis Bank.
Strong group performance and dividend increase
Profit before tax and exceptional credit up 11.7% to £181.1m1 (2011: £162.1m).
Adjusted earnings per share up 13.8% to 102.0p1 (2011: 89.6p).
Customer numbers up 8.7% to 2.74m (2011: 2.52m) and average receivables up 12.1% to £1,322.1m (2011: £1,178.9m).
Total dividend per share up 11.9% to 77.2p (2011: 69.0p).
Capital generated2 of £107.7m, in excess of dividends in respect of 2012 of £104.3m.
Very robust group funding and liquidity position
Group fully funded into 2015.
Gearing stable at 3.2 times (2011: 3.2 times).
Stable CCD result
Pre-tax profit of £125.1m (2011: £127.5m).
Year-on-year receivables and customer numbers flat with credit issued tempered by pressure on household disposable incomes.
Trading result achieved through stable collections performance, continued application of tight credit standards and effective cost control.
Senior management strengthened to support growth initiatives.
Very strong, profitable growth in Vanquis Bank
UK pre-tax profit up by 61.3% to £71.3m (2011: £44.2m).
UK customer and average receivables growth of 30.1% and 37.4% respectively, reflecting step-up in customer acquisition programme targeted at under-served non-standard credit card market.
UK risk-adjusted margin3 of 34.8% (2011: 35.0%), well ahead of minimum target of 30% with arrears levels running at record lows.
Guidance for medium-term potential size of UK business increased to between 1.3 and 1.5 million customers due to higher penetration of target market (previously between 1.0 and 1.2 million).
Pilot credit card operation in Poland progressing to plan with cost of £3.3m in 2012 and conclusion expected by the half year.
Key financial results
2012 2011 Change
Customer numbers 2.74m 2.52m 8.7%
Average receivables £1,322.1m £1,178.9m 12.1%
Profit before tax and exceptional credit1 £181.1m £162.1m 11.7%
Adjusted earnings per share1 102.0p 89.6p 13.8%
Final dividend per share 48.4p 42.3p 14.4%
Total dividend per share 77.2p 69.0p 11.9%
Peter Crook, Chief Executive of Provident Financial, commented:
"I am very pleased to announce adjusted earnings per share growth of 13.8% in 2012 and an 11.9% increase in the dividend for the year which is fully supported by strong capital generation. We have now delivered cumulative earnings per share growth of 42.9% over the last three years.
Our performance is underpinned by the strength of our funding position and lending responsibly through very close attention to credit quality. This has allowed us to generate a stable stream of profits from CCD during a period when customers' household incomes have been under pressure. At the same time, we have continued to invest significantly in growing the customer base and profits from addressing the UK's under-served non-standard credit card market through Vanquis Bank.
We have also revised our assessment of the medium-term potential size of the Vanquis Bank business in the UK to between 1.3 and 1.5 million customers, representing an increase of some 30% on previous guidance.
CCD's collections performance has been sound through the first two months of the year and Vanquis Bank has continued to trade strongly, putting the group in a position to make further good progress in 2013."
Enquiries: Today Thereafter
David Stevenson, Provident Financial 020 7404 5959 01274 351351
Gill Ackers/Nick Cosgrove, Brunswick 020 7404 5959 020 7404 5959
Gary Thompson, Provident Financial 020 7404 5959 01274 351351
2012 earnings are stated before an exceptional credit of £15.6m (see note 2) comprising: (i) a £17.7m curtailment credit in respect of the defined benefit pension scheme; and (ii) a £2.1m charge relating to the impairment of goodwill in respect of Cheque Exchange Limited, a business originally acquired in 2001 and now subsumed within CCD. Statutory profit before tax, including the exceptional credit, amounts to £196.7m (2011: £162.1m).
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 year ended 31 December.