Non-Standard Finance PLC (LON:NSF) reported higher profits in 2018 as it reiterated its bid for a hostile takeover of FTSE 250 firm Provident Financial PLC (LON:PFG).
For the year ended 31 December 2018, the subprime lender reported a normalised pre-tax profit of £14.8mln, up from £13.2mln the previous year, while normalised revenues jumped to £166.5mln from £119.7mln.
NSF’s total net loan book was up 29% in the year to £310.3mln, with growth in all three of its divisions. Branch based lending was up 25% in the year while guarantor loans and home credit rose 61% and 2% respectively.
The company also upped its final dividend to 2p per share from 1.7p, taking the total dividend to 2.6p from 2.2p the year before.
Hostile bid reiterated amid FCA warning
In its outlook for 2019, NSF reiterated its hostile offer for Provident, which was originally unveiled in late-February, saying it had already received acceptances accounting for about 49.4% of the company’s shares.
NSF is offering Provident investors 8.88 shares for each of their existing shares, valuing the firm at around £1.3bn.
READ: Provident Financial hits back at hostile offer from Non-Standard Finance, says it has resolved regulatory issues
The continued push for a takeover followed a warning delivered to NSF on Thursday afternoon by the UK’s regulator, the Financial Conduct Authority (FCA), that its effort to acquire Provident and improve its profitability could potentially violate consumer protection rules.
The FCA’s director of retail lending, Philip Salter, said in a letter to NSF chief executive John Van Kuffeler that the watchdog would act “immediately” if there were any shifts in the company’s culture following a takeover that resulted in the rise of unaffordable lending.
Aside from the Provident bidding battle, NSF said 2019 had “started well” and that it “remained positive” about its full-year performance.
Results miss broker forecasts
In a note to clients, analysts at broker Peel Hunt said the profits had missed their own forecasts of £15.3mln, although the 2.6p total dividend had been higher than their 2.4p prediction.
The broker also said that the “key focus” in the short term would be the Provident offer, with the FCA’s warning highlighting the challenges for NSF.
In mid-morning trading Friday, NSF shares were up 1% at 60p, while Provident shares dropped 1.5% to 566.6p.