7th May 2019 11:02
LONDON (Alliance News) - Non-Standard Finance PLC said Tuesday the trading update issued by Provident Financial PLC on Friday contains "a number of important issues related to historic performance and current trading".
Provident issued a clarification Tuesday regarding its future performance targets and told shareholders it is confident of delivering returns.
Non-Standard Finance, however, believes those promises "remain uncertain".
The rival home credit lenders have been trading insults since Non-Standard Finance launched a GB1.3 billion hostile takeover for Provident in early March.
Based on Provident's trading update on Friday, Non-Standard Finance said Provident "continues to fall far short of its potential".
"In contrast, our offer and clear transformation plan present a brighter future for customers and employees whilst unlocking substantial value for shareholders," added Non-Standard Finance.
On Friday, Provident stated that at Vanquis Bank, its credit card company, the rate of increase in delinquency has "remained consistent with the first quarter of 2018". Non-Standard Finance, on Tuesday, noted that this means the rate is continuing to increase, which Non-Standard Finance believes is a "matter of considerable concern".
Non-Standard Finance also noted that Provident's home credit business has lost customers every quarter since the fourth quarter of 2017, resulting in an overall decline from the end of 2017 to the end of March 2019 of 21% to 419,000.
Non-Standard Finance believes this is an issue because in February, Provident said its home credit business is expected to break even. But Non-Standard Finance believes the unit will remain loss-making in 2019.
This is problematic, Non-Standard Finance argued, as Provident has previously indicated its dividend policy will be tied to the ongoing recovery of its home credit business.
"The Non-Standard Finance board believes that, under the existing leadership and strategy, there can be no certainty as to when Provident would be able to pay meaningful dividends on a sustainable basis," the company said.
Non-Standard Finance made clear its concern over the "absence of any comment" on the profitability of Provident's consumer loan business Satsuma.
As a result of these issues, Non-Standard Finance reiterated its belief that Provident shareholders should accept its takeover offer.
"Provident's ability to deliver on its promises remains uncertain: the business is not performing anywhere near its potential and 'more of the same' is not working. This is reinforced by the clarification Provident has been required to make this morning regarding its future performance targets issued only last week. Change is required and the time for such change is now. As we approach May 15, we urge all shareholders that have not yet accepted our offer to do so as soon as possible," said Chief Executive John van Kuffeler.
Shares in Non-Standard Finance were up 0.6% Tuesday at 51.92 pence each. Provident was trading 1.3% lower at 511.70p.
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