Provident Fin. PLC. - Group Developments Update and Offer by NSF plc

As stated on 25 February 2019, the Board of Provident Financial plc, ("Provident", the "Company" or, with its subsidiaries, the "Group") continues to believe strongly that the Offer is not in the best interests of Provident's shareholders and should be firmly rejected. The Board believes it has a clear plan to maximise value for all Provident shareholders by executing its strategy to deliver growth and attractive returns through its complementary, synergistic and industry leading businesses. As well as undervaluing the Group and its prospects, the Offer presents significant operational and execution risks due to the changing regulatory environment, NSF's track record of value destruction and NSF's limited experience across the full breadth of Provident's businesses. In addition, the Offer has major strategic flaws and appears to be based upon a misguided view that the regulatory approach to Provident would be different if the Group was owned by NSF. The Board is committed to maximising value for all Provident shareholders and will explore all appropriate alternatives to achieve that objective.

Summary

 

Provident announces the following recent developments ahead of its preliminary results for the year, which will be announced on 13 March 2019.

1.   The Board believes that Provident has substantially resolved all material outstanding regulatory issues with the FCA and has completed the search for a new Managing Director and a new Chairman for Vanquis

 

2.   The Group has a clear strategy to deliver attractive and sustainable shareholder returns 

3.   We believe that NSF's unsolicited Offer for Provident has significant flaws and would have long-lasting detrimental consequences for the Group's shareholders and customers

4.   NSF has an acquisition history of value destruction and its Offer presents significant risk

Further Detail

 

1.   The Board believes that Provident has substantially resolved all material outstanding regulatory issues with the FCA and it has completed the search for a new Managing Director and a new Chairman for Vanquis

The Group has made further progress with a number of important items which management has previously highlighted. These developments further strengthen the Board's confidence in the overall resilience and business prospects of the Group, including its ability to deliver attractive and sustainable shareholder returns.

2.   The Group has a clear strategy to deliver attractive and sustainable shareholder returns

Provident is a leading provider of credit products which provide financial inclusion for the 10 to 12 million consumers who are not well served by mainstream lenders. As a leader in credit cards, home credit and motor finance for this industry segment and with a strong trajectory in digitally originated and delivered instalment loans, the Group has strong growth potential and attractive product line diversification. Given our breadth of customer base and product offering and through our core capabilities of credit, collections, distribution, data and analytics, the Board believes the Group is very well positioned to deliver attractive and sustainable shareholder returns and further strengthen our sector-leading positions through greater capture of the commercial and financial synergies that exist between our businesses. Continuing to develop our digital capability will be central to maintaining our sector-leading positions and will also allow enhanced management of the customer journey and greater collaboration across divisions.

3.   NSF's hostile Offer for Provident has significant flaws and would have long-lasting detrimental consequences for the Group's shareholders and customers

 

4.   NSF's history of acquisitions has been value destructive and its Offer presents significant risk

NSF's Offer has been made on a hostile basis where its corporate restructuring and integration plans have been developed entirely in isolation. The Board therefore believes the NSF Offer represents a significant level of execution, integration, and consequent shareholder value risk, given its hostile nature and NSF's acquisition history.

The Board continues to urge shareholders to take no action with respect of the NSF Offer, and re-iterates its commitment to maximise value for all Provident shareholders.  Provident confirms that it is exploring all appropriate alternatives to achieve that objective.

Provident will announce full year results on Wednesday 13 March 2019 and intends to engage further with its shareholders both prior to and following that announcement.

Malcolm Le May, Chief Executive Officer of Provident said: 

"Today's announcement illustrates how we have put the company's legacy issues behind us and strengthened our relationship with our customers, regulators and other stakeholders.  This, together with the considerable momentum we have in Provident's outstanding portfolio of complementary businesses, gives us confidence that our shareholders can expect continued focus on improving our performance and returns.  We look forward to updating the market on the progress made in 2018 in more detail at our upcoming results."

Patrick Snowball, Chairman of Provident said:

"As stated on 25 February, the Board believes strongly that the Offer made by NSF is not in the interests of all shareholders.  Its Offer undervalues Provident, has major strategic flaws, contains a number of misguided assumptions about the Provident business and includes future plans which we consider to be fraught with execution risk and which, as NSF themselves state, are subject to a post-completion review.

The existing management team has stabilised the business in a very turbulent period over the past 18 months, which has required addressing managerial mistakes of the past, and now has a clear strategy for delivering attractive returns to shareholders. Now is not the time to be distracted from delivering on the potential of the Group for all of our shareholders by an unattractive offer, which reveals a lack of commercial logic and regulatory understanding and would have significant execution risk."