Provident takes a £24m hit after takeover battle

Bradford-based Provident announced the total cost as it published first half results which showed adjusted pre-tax profit was unchanged at £74.9m in the six months to June 30.

CEO Malcolm Le May said: “We didn’t agree with NSF’s bid and so the fact it is over is a relief.

“My worry about it more than anything else was these transactions can prove an enormous distraction to the underlying business. One of the great things about the team at Provident, whether it’s the guys in the middle or the guys running the businesses, is that they were able to crack on with it and they kept the show on the road.”

He said earnings would have been £23.6m higher if NSF had not made its hostile offer and the group would have reported a 77 per cent jump in profit if not for the bid costs.

Mr Le May said the group is on track to return its home credit division to profit in the second half of 2020.

Provident has been working hard to revive its doorstep lending after a badly-executed reorganisation led to the departure of former CEO Peter Crook, a profit warning and the suspension of its dividend for the first time in 2017.

“We sadly had to take some really tough decisions around that business,” said Mr Le May.

“Since I became CEO we’ve had to take in total 1,000 people out - not all in Bradford, but as a whole.

“The recovery programme is very much in line with our plans. Clearly we have done an awful lot to the business since the difficulties we ran into in 2017 and we are making steady progress against that.”

The company has reinstated an interim dividend of 9p per share, which Goodbody analyst John Cronin said “is well ahead of consensus expectations and should be well received by the market”.

Mr Le May said: “I think probably most importantly from our shareholders’ perspective is we’ve declared an interim dividend of 9p per share as a sign of confidence in the business. This is the first interim dividend we’ve paid since 2016.

“There’s a lot more to do obviously. There’s a lot of wood still to chop, but we’re moving in the right direction.”

Provident said gains in customer addition seen in the last quarter of 2018 had continued into the first half and were about 15 per cent higher from a year earlier.

Mr Le May said: “I’m pleased with our position bearing in mind the distraction that the bid could have caused. I think we’ve actually put in a solid performance that is in line with our internal plans.

“All three of the businesses, in their own way, have delivered strong new business volumes.”

The biggest part of the group is now Vanquis, which produced profits of £85m.

“Vanquis is a very, very good business,” said Mr Le May.

“It occupies a space in the market where it hasn’t got that much competition. We are mindful of the regulatory line of travel so we are taking customers on a journey to a better place obviously. It’s the market leader.

“Moneybarn did exceptionally well and its profits are up 46 per cent to £115m and then CCD (Consumer Credit Division) is continuing in the right direction in terms of restoring itself to good health after the events of 2017.”

Asked how a no-deal Brexit could affect Provident, Mr Le May said: “Obviously we are conscious of Brexit, but because we are a UK business we don’t feel particularly exposed to Brexit. Clearly where a business like ours would suffer is if there was a catastrophic recession, but actually, sadly, our customer base spend of lot of time living in adversity so they’re pretty well equipped for it. Clearly it would have effect, but it wouldn’t be an immediate effect.”