Share Name Share Symbol Market Type Share ISIN Share Description
Provident Financial Group LSE:PFG London Ordinary Share GB00B1Z4ST84 ORD 20 8/11P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +71.50p +12.13% 661.00p 675.50p 676.50p 684.00p 540.00p 597.50p 12,744,072 16:35:06
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Nonequity Investment Instruments 1,183.2 343.9 181.8 3.6 976.81

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Date Time Title Posts
15/8/201713:25good for a short on tonights PANORAMA?7
08/4/200510:24An expanding company13

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Provident Financial Daily Update: Provident Financial Group is listed in the Nonequity Investment Instruments sector of the London Stock Exchange with ticker PFG. The last closing price for Provident Financial was 589.50p.
Provident Financial Group has a 4 week average price of 426.60p and a 12 week average price of 426.60p.
The 1 year high share price is 3,402p while the 1 year low share price is currently 426.60p.
There are currently 147,776,911 shares in issue and the average daily traded volume is 4,082,428 shares. The market capitalisation of Provident Financial Group is £976,805,381.71.
spob: Paul Scott Small Cap Value Report from yesterday Tuesday, Aug 22 2017 Good Evening, it's Paul here. Sorry my report is late today. Provident Financial (LON:PFG) Share price: 589.5p (down 66.2% today) No. shares: 148.2m Market cap: £873.6m Trading statement - this is such an interesting announcement that I feel obliged to mention it. This company is a UK sub-prime consumer lender. Its divisions include Vanquis Bank, the Consumer Credit Division (comprising Provident and Satsuma), and Moneybarn. Looking back to its 2016 results, the group made an adjusted profit of £334.1m, and paid 134.6p in dividends to shareholders. The share price was riding high, at about 3000p in late 2016. Compare that with today, at just 589.5p - that's a share price fall of about 80% this year. Its interesting how, when a share really collapses, there are often clear warning signs in previous announcements. That seems the case here. The most recent interim results were poor. They also contained worrying comments about several FCA reviews affecting the company. Also, disruption was reported from a change in the business model at the CCD - moving from self-employed, to employed operational staff. This was supposed to be a compelling change in business model. EDIT - a couple of brokers have flagged up that competitors are saying that large numbers of the best sales agents are jumping ship from PFG, to join competitors such as Morses, and NSF. This sounds ominous to me, and could mean that profits may not necessarily recover at PFG. Today's announcement has to be one of the worst profit warnings I've seen. The wheels seem to have completely come off at the CCD. This bit from today's announcement sounds awful; The rate of progress being made is too weak and the business is now falling a long way short of achieving these objectives. Collections performance and sales are both showing substantial underperformance against the comparable period in 2016. The routing and scheduling software deployed to direct the daily activities of CEMs has presented some early issues, primarily relating to the integrity of data, and the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritise resource allocation during this period of recovery. Things don't get a lot worse than that. It sounds as if the new business model has been an unmitigated disaster. Unsurprisingly, the CEO has now gone. As a result of these problems, debtor collections have fallen a long way short; Collections performance is currently running at 57% versus 90% in 2016 and sales at some £9m per week lower than the comparative weeks in 2016. The extent of this underperformance and the elongated period of time required to return the performance of the business to acceptable levels invalidates previous guidance. The pre-exceptional loss of the business is now likely to be in a range of between £80m and £120m. It looks as if the customers are possibly taking advantage of the lender being in a shambles, to decline to repay their borrowings? This raises a big question mark over whether bad debt provisions are adequate? That's the inherent weakness with sub-prime lenders. They can report big profits for a while, then often it becomes clear that many debts have gone bad, and won't ever be collected. So a huge write-off then has to be done. That's the main reason why I would never invest in any sub-prime lender. Divisional profits - to get my head round the numbers, I've looked back at the 2016 results, and this shows the group's profitability as follows; Vanquis Bank £204.5m CCD £115.2m Moneybarn £31.1m Central costs -£16.7m As you can see, Vanquis was the biggest profit earner within the group. Interestingly, today's statement says that Vanquis is still trading alright; The trading performance of Vanquis Bank, Moneybarn and Satsuma remain in line with internal plans. Therefore I'm wondering if the problems are confined to the CCD part of the business, there could possibly be a value opportunity here? FCA investigation into ROP - this is the product from Vanquis Bank called Repayment Option Plan. New sales of this were suspended in Apr 2016. However, Vanquis is currently generating £70m in revenues from this product, which seems to have been sold between 1 April 2014 to 19 April 2016. EDIT - one broker suggests that the ROP product generates 20-25% of Vanquis's profits, this issue is of considerable significance. It's not clear what the outcome of this investigation will be. However, it sounds like there could be a risk of some kind of customer compensation liabilities, if the FCA decides that the product was flawed. Dividends - are off the table for the time being; In view of the substantial deterioration in the trading performance of the home credit business, together with the uncertainty created by the FCA's investigation at Vanquis Bank, the Board has determined that the group must protect its capital base and financial flexibility by withdrawing the interim dividend declared on 25 July 2017 and indicate that a full-year dividend is unlikely. Sounds sensible, in the circumstances. Will it go bust? That's the key question. I've looked back to the latest balance sheet, and it's actually not bad. You would expect this type of business to be groaning with bank debt. Its business model is to borrow cheaply, on a large scale, then lend very expensively, on a small scale, to people who are desperate, hence can be ripped off. The high customer default rate should in theory be more than covered by the huge profits made from customers who do repay their borrowings. In an economic downturn, customers often default en masse, and this type of business therefore often goes bust in a recession. We're not actually in a recession, although there's little doubt that household incomes are feeling the pinch somewhat right now. Interestingly, PFG had (relative to its receivables book) fairly low bank debt - a £450m syndicated bank facility. It seems to be mainly financed through taking retail deposits into Vanquis Bank - which was a larger figure of £941.2m at end Dec 2016. So Vanquis Bank looks a fairly ordinary savings & loans type of bank. Therefore, to my mind, the main risk to this group is if depositors are scared off, and withdraw their deposits. As we saw with Northern Rock, once such a bank run starts, it can't usually be stopped without a Government bailout. PFG looks much too small for a bailout (if needed), so who knows? EDIT - this risk may not be as bad as I feared. Apparently Vanquis takes term deposits (e.g. 1 -5 years). So that should limit the damage from depositors withdrawing funds. I think the key question is whether depositors can withdraw funds before the term has expired. Often that is possible, but carries an interest penalty. Therefore I think the ability of depositors to withdraw funds is an absolutely key question mark here. My opinion - this is one I'll be watching from now on. What interests me, is that the key value in the share seems to be Vanquis Bank. That doesn't seem to be affected by the problems in the CCD part of the business. Although if the FCA review goes badly, then more, potentially serious bad news could be on the way. I loathe this type of business. The way I see it, they prey on financially weak people, by offering loans to people who really shouldn't be borrowing at all - because they are poor. I have friends who have (stupidly) borrowed from Vanquis, and I ended up bailing them out, because the high interest charges compounded so rapidly, that my friends soon ended up being overwhelmed by what was initially only a small debt. So personally I have zero sympathy for shareholders here. As far as I am concerned, the losses that PFG shareholders have suffered here are a well-deserved punishment for trying to enrich themselves at the expense of the poorest people in society. I know some readers disagree with me on this, as we've discussed it here in previous reports. There are some good lessons from this situation; 1) Selling on the first profit warning is usually the best course of action, when it looks as if something serious, and structural is going wrong. Looking back, there were clear signs in Jun 2017 that something was going badly wrong at PFG, with the reorganisation of the CCD. 2) Management were clearly foolish to tamper with a previously highly profitable business model. So I'll certainly be wary in future, of any company where a big change in business model is being implemented. Do management have the skills to control, and change a business? Clearly in this case, no they didn't. 3) Regulatory risks - the FCA seem to be looking much more closely at businesses like this, which essentially rip-off the poorest consumers. So to my mind, sensible investors really should avoid any business which is over-charging the poorest part of society. The regulatory risks could blow up at any time. Who knows where & when the next mis-selling scandal will blow up? 4) Big dividend yields are often a signal from the market that something is going wrong - and those big divis may not be sustainable. So I would look very carefully indeed at any share where the divi yield is above say 6% - that seems to be roughly the cut-off point where we have to tread much more carefully. Stockopedia is showing an 8.16% forecast dividend yield as of last night, just before the profit warning. Such a figure is well into danger territory. Overall though, I think this share is probably too risky to have a punt on now, without doing a lot more research. Although I think the value in Vanquis could now be more than the entire group market cap, maybe? That depends on how much profit is derived from the ROP product, which is not disclosed in today's announcement. Also, would I really want to hold shares in an exploitative business like this? No. I see that Woodford funds own 19.9% of PFG. Another disaster for them. I do wonder how much real due diligence they're doing? If it's just a scatter-gun approach, with little original research, then investors can do that themselves, without needing a fund manager. 599c7b84d613aPFG_chart.PNG EDIT - my thanks to Clouds, who kindly flagged up Neil Woodford's blog, with his response to the PFG profit warning. He reckons it's ridiculously cheap now, and should recover. Hmmm... we all say that, don't we. Interesting to see that a top fund manager is suffering from the same behavioural biases that novice private investors are often criticised for - averaging down on losing positions. The trouble is, big funds with big positions, often can't sell, even if they want to. Plus, the moment an RNS comes out, showing a big fund manager selling, then confidence in the share slips further. It will be interesting to see whether Woodford recoups his client funds on this one, or not. It will also be interesting to see how long his blog will continue to allow comments, given how critical a lot of them are (understandably)!
irenekent: I think this is likely to drift for the next few months. There is bound to be another 'kitchen sink' statement in the near future once the total extent of the situation is clearer. There will probably be more board changes, maybe some suggested by Barnett & Woodford. When directors sell as these did in concert it usually means something is up. The FCA should investigate this; the public should have been notified of the dire state of trading much earlier. If this company is to survive there is much work to be done and this will take time. As happened with St Ives, shares can fall very quickly off a cliff but rebuilding investors confidence takes a long time. There will have to be comprehensive restructuring of their Sales and Marketing division as the current strategy of distancing the sales force from the punter obviously doesn't work. In other words, people like to know who they are dealing with. Time to get rid of management speak and the men & women in suits. I wiould not be surprised to see the share price falling below £3 in the meantime before a turnaround takes place. Watch the 200 day moving average.
jurgenklopp: RBC Capital Markets said: "While Provident is down nearly 40% year-to-date, we expect ongoing substantial losses in the share price, and would not be buyers at any price. While the share correction was making us warm to Provident, this quadruple whammy (another profit warning, no dividend, FCA investigation and CEO departure) lead us to now believe that the shares are not investible until greater clarity is received, which may not be until next year at the earliest."
fenners66: The share price is trying its best to make my ill timed sale at 2150 ( 2 years ago) - look like a smart move.... he who waits Rodney .....
bench2: I think part of the problem is a general derating of unsecured consumer credit companies . Even if the PFG board had stuck with the old system and we were looking at say an EPS estimate of 185-190p , the multiple attached to the forecast EPS has been shrinking . Just look at SUS , share price down from 2600p and just broken £20 support level . With the BOE warning about the increase in consumer debt levels , particularly car loans , it is hardly surprising investors are trying to de-weight this sector .
robinnicolson: I still wince when I remember an investment in 'city darling' Independent Insurance. A black hole was discovered in the accounts, the share price collapsed and the company went into liquidation. The CEO got 7 years inside for fraud. 16 years later IIG customers and employees are receiving some financial compensation but there is nothing for shareholders.
wad collector: Last weeks Sunday Times say sell; bizarre that Liberum come up with a £23.99 value (bizarre in itself to choose such a precise but non-multiple number - almost as if somebody had got hold of Daddy's computer) I am too old to take much notice of one broker's sell note but it would explain the dip this week. Inside the City: Provident must pray economy won’t catch cold Danny Fortson Published: 25 October 2015 Print If you happen to be a sub-prime lender like Provident Financial, these are the best of times Alamy If you happen to be a sub-prime lender like Provident Financial, these are the best of times Alamy HOW depressing. The clocks went back this morning, signalling even shorter days, longer nights, and bad weather. If you happen to be a sub-prime lender like Provident Financial, these are the best of times. For it is around now that we venture online for bouts of retail therapy and Christmas gift scouting. Provident has been on an absolute tear, as you can see from our chart. Its share price has surged an astonishing 71% in the past year to close on Friday at £35.57, valuing the company at £5.2bn. The dividend yield is better than 4% to boot. What’s not to like? Well, a lot. Last year, non-mortgage household debt in the UK surged by 9%, the fastest rate in a decade, according to PwC. By the end of this year, the average household will owe more than £10,000 on credit cards, personal loans and overdrafts. After seven years of record-low interest rates, Britain has fallen back in love with debt. But what happens when interest rates start ticking up? Or if wage growth softens? Provident’s debt collectors visit 1m households a week. Those visits will be less welcome — and less profitable — when the economic weather changes. Chief executive Peter Crook has done a fine job of spreading Provident’s tentacles into just about every corner of the market for debtors who can’t get credit from the banks. Its star performer is Vanquis Bank, which offers credit cards. But it also has car finance arm Moneybarn and Satsuma, purveyor of 1,575% rate personal loans. Next year the company will launch Glo, a guarantor loan arm that offers bigger lines of credit guaranteed by a friend or family member. Provident’s shares now trade at more than 18 times 2016 earnings estimates. When the financial reckoning comes, a lot of debts will go unpaid. Provident has proved adept at managing in that tricky world, but investors are giving it a bit too much credit, so to speak. Liberum Capital thinks the stock is worth £23.99. I’m not sure that is the right number, but I agree that now is the time to take profits. Sell.
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ganthorpe: An IMS due tomorrow. Is this the cause of the modest fall in the share price? It is hard to see what bad news can be in it. The progressive reduction in the cost of borrowing must be positive and the weakness in the traditional business is well known, whist Vanquis seems to be going strongly. The Eastern European developments may not be up to plan but they seem unlikely to be big enough to make a significant difference. Shares still include the 31P interim divi till Oct 30. GAN
wad collector: The Independent was advising Sell last week, because the hedge funds are betting the shares will fall."Provident is secretive about its cash position and analysts suspect it can't afford its dividend". However ; Peter Crook, chief executive, said: "People who shorted the stock have lost a lot of money as the share price has rallied since November. "We have very tight lending criteria. There are lots of people carrying too much debt ... we don't lend to them." He said the cuts would affect about 1 per cent of customers. Funds including Odey Asset Management, Adelphi Capital and Fortelus Capital have reduced their positions in the last few days, according to the company. The proportion of shares in Provident shorted has fallen from 20.7 per cent in January to 17 per cent but it remains the most shorted stock in the FTSE 250, according to Data Explorers. Hedge funds shorting seems to be a self -fulfilling prophecy these days, but to a long term holder are largely irrelevant.More fool those who sell at the dips.The balance sheet looks strong enough to me.Happy to hold, and hoping that the shorters can let me buy some back cheaper soon.
Provident Financial share price data is direct from the London Stock Exchange
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