Tuesday, 27 February 2018 ()
Provident Financial has revealed a £123m loss for 2017, after a difficult year during which the doorstep lender's share price was slashed amid a series of profit warnings. *The figures*
Adjusted profit before tax was *£109m*, down *67 per cent* from £334m in 2016. However, the group reported a pre-tax loss of *£123m*, compared with profit of £344m the previous year.
This worked out at a loss per share of *90.7p*, compared with earnings per share of 181.8p in 2016.
The company suspended its dividend last year, when it first flagged that it would be recording a loss for the year.
The stock jumped 33 per cent in early trading.
*Why it's interesting*
Shares in Provident plunged to a 22-year low yesterday on reports that bankers were mulling a £500m rights issue. Today, the company confirmed it wants to raise £331m through a rights issue.
The group said it is "taking necessary action to raise additional capital to meet the costs of resolving the investigation by the FCA into Vanquis Bank's repayment option plan". Vanquis, a subsidiary of Provident, is being probed by the watchdog over potential mis-selling of the PPI-style product.
*What Provident said*
"When I became group CEO, I stated my key objective was to execute a turnaround of the group. Today we have made progress on that objective by agreeing a resolution with the FCA in relation to Vanquis Bank and we now have a clear view on the estimated cost of the FCA investigation of Moneybarn," said Malcolm Le May, the group's chief executive.
"To grow the business and deliver long-term sustainable returns to our shareholders, PFG needs to strengthen its balance sheet. Today we have announced a proposed rights issue to raise net proceeds of £300m which the board believes will allow the group to implement its strategy and restart paying a progressive dividend in 2019."
