Vanquis Banking Group PLC · LSE:VANQ
Vanquis Banking — Provident Financial — FY2001 Earnings Presentation
36 slides from Vanquis Banking's earnings presentation, 2002
Slide 1: Provident Financial
PROVIDENT FINANCIAL
Slide 2: Full year results to 31 December 2001
Provident Financial Full year results to 31 December 2001 Provident continues to make good progress
Slide 3: Highlights: Overview
Provident Financial Highlights Overview > UK home credit division - steady growth > International division - substantial increase in profitability > Motor insurance division - record profits > Group - good overall progress
Slide 4: Highlights: Financial results
Provident Financial Highlights Financial results > Group customers up by 9% > Turnover up by 14% > Pre tax profit up 5.9% to £169.6m > Earnings per share up 6.0% to 50.39 pence > Dividend per share up 7.5% to 29.35 pence
Slide 5: Divisional results
Provident Financial Divisional results Profit before tax (£m) 2001 2000 change UK home credit 150.4 147.0 2.3% International home credit 0.8 (5.9) --- Motor insurance 36.6 32.0 14.2% Central costs (13.2) (10.6) 23.8% Profit before tax from ongoing operations 174.6 162.5 7.5% balance TM (1.4) (1.5) -
Slide 6: Free cash flow and surplus capital generated
Provident Financial Free cash flow and surplus capital generated (£m) 2001 2000 UK home credit free cash flow 77.3 84.7 International home credit free cash flow (62.0) (52.7) Home credit free cash flow 15.3 32.0 Add back: debt funding of loan book growth 60.5 54.1 Home credit surplus capital 75.8 86
Slide 7: Uses of surplus capital
Provident Financial Uses of surplus capital (£m) 2001 2000 Net surplus capital generated 86.2 83.9 Dividends paid (69.4) (63.4) Share buy-backs (23.2) (49.1) Other 0.4 2.7 Net distribution of surplus (6.0) (25.9) Year ended 31 December
Slide 8: Capital structure and gearing
Provident Financial Capital structure and gearing 2001 Receivables £729m Borrowings £484m Insurance capital £102m Home credit capital £195m Group capital £297m Home credit capital % net receivables 27% Home credit gearing 248% Group gearing 163%
Slide 9: Full year results: UK home credit
Provident Financial Full year results UK home credit
Slide 10: UK home credit highlights
Provident Financial UK home credit highlights > Steady growth > Agents up 1.4% to 12,225 > Customers up 2.0% to 1.61m > New initiatives added 44,000 customers > Credit issued up 3.6% > Profit before tax up 2.3% to £150.4m
Slide 11: UK home credit marketing initiatives
Provident Financial UK home credit marketing initiatives
Slide 12: UK home credit: A year of steady growth
UK home credit A year of steady growth 2001 2000 change Customers (000s) 1,611 1,580 2.0% Credit issued £915.5m £883.9m 3.6% Collections £1,273.1m £1,239.1m 2.7% Turnover £465.5m £448.4m 3.8% Bad debt £76.3m £71.5m 6.8% Bad debt % credit issued 8.3% 8.1% Operating costs £218.6m £210.5m 3.8% Interest
Slide 13: Bad debt as a percentage of credit issued
UK home credit Bad debt as a percentage of credit issued 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 90 91 92 93 94 95 96 97 98 99 00 01 19 19 19 19 19 19 19 19 19 19 20 20 Year ended 31 December
Slide 14: Full year results: Motor insurance
Provident Financial Full year results Motor insurance
Slide 15: Motor insurance highlights
Provident Financial Motor insurance highlights > Another record year > Market premium rates up 7%, our premium rates up 6% > Policyholders up 8.5% to 855,000 > Gross written premiums up 16% to £255m > Claims inflation up an average of 7% over the last 2 years > Combined ratio steady at 95% > Investm
Slide 16: Motor insurance: 2001 results
Motor insurance 2001 results Profit before tax (£m) 2001 2000 change Underwriting profit 12.0 9.4 28% Investment income 23.1 20.7 12% Profit from motor underwriting 35.1 30.1 17% Broking 1.5 1.9 (24%) Total 36.6 32.0 14% Year ended 31 December
Slide 17: Full year results: International home credit
Provident Financial Full year results International home credit
Slide 18: International home credit highlights
Provident Financial International home credit highlights > Customers up 42% from 500,000 to 708,000 > Poland - profit £6.7m > Czech Republic - profit £2.5m > Hungary and Slovakia successfully opened > South Africa closed in December - £3.6m loss in 2001 > Pre South Africa - a divisional profit of £0
Slide 19: Strong customer growth continues
International home credit Strong customer growth continues Customers at 31 December 708,000 15,000 189,000 Hungary and Slovakia 466,000 Czech Republic 161,000 Poland 504,000 305,000 138,000 66,000 72,000 1999 2000 2001
Slide 20: Divisional profit/(loss) before tax
International home credit Divisional profit/(loss) before tax (£m) change 2001 2000 (£m) Poland 6.7 (2.8) +9.5 Czech Republic 2.5 0.1 +2.4 Hungary (2.3) - -2.3 Slovakia (1.3) - -1.3 Divisional overhead (4.8) (3.2) -1.6 Profit/(loss) from ongoing operations 0.8 (5.9) +6.7 South Africa (3.6) (0.8) -2.
Slide 21: Czech Republic: key statistics
International home credit Czech Republic: key statistics 2001 2000 change Staff numbers 525 493 6% Agent numbers 2,549 2,548 0% Customer numbers 188,684 161,284 17% Net receivables at year end £27.5m £21.2m 30% Credit issued £53.2m £42.2m 26% Average credit issued per customer £190 £152 25% Bad debt
Slide 22: Czech Republic: key statistics
International home credit Czech Republic: key statistics 2001 2000 change Staff numbers 525 493 6% Agent numbers 2,549 2,548 0% Customer numbers 188,684 161,284 17% Net receivables at year end £27.5m £21.2m 30% Credit issued £53.2m £42.2m 26% Average credit issued per customer £190 £152 25% Bad debt
Slide 23: Czech Republic: profit and loss account
International home credit Czech Republic : profit and loss account 2001 2000 change Credit issued £53.2m £42.2m 26% Collections £68.0m £39.8m 71% Turnover £24.9m £14.2m 75% Operating costs £14.4m £11.3m 27% Bad debt £6.0m £1.7m 260% Interest payable £2.0m £1.1m 83% Profit £2.5m £0.1m Year ended 31 D
Slide 24: Poland: key statistics
International home credit Poland: key statistics 2001 2000 change Staff numbers 1,594 1,048 52% Agent numbers 8,415 5,200 62% Customer numbers 503,920 304,874 65% Net receivables at year end £82.4m £38.5m 114% Credit issued £157.9m £74.1m 113% Average credit issued per customer £213 £152 40% Bad deb
Slide 25: Poland: profit and loss account
International home credit Poland : profit and loss account 2001 2000 change Credit issued £157.9m £74.1m 113% Collections £179.9m £67.9m 165% Turnover £74.1m £26.0m 185% Operating costs £45.0m £22.2m 103% Bad debt £11.8m £2.9m 311% Interest payable £10.6m £3.7m 185% Profit/(loss) £6.7m (£2.8m) Year
Slide 26: How does Poland and Czech profitability compare to UK?
Provident Financial Full year results How does the profitability of Poland and the Czech Republic compare to that of the UK home credit division?
Slide 27: Relative profit performance
International home credit Relative profit performance % of turnover Poland Czech UK Commission 13.2 13.0 23.2 Expenses 47.6 45.0 23.8 Bad debt charge 15.9 24.0 16.4 Interest payable 14.2 8.1 4.3 Pre tax profit 9.1 9.9 32.3 Adjusted pre tax profit 14.2 13.9 30.4 Post tax return on average receivables
Slide 28: Impact of operational gearing
International home credit Impact of operational gearing Overhead expenses as a % of turnover % 160 134.5% 140 120 110.5 % 100 80 71.5 % Czech Republic 67.8 % 60 47.6 % 44.9 % Poland 40 20 0 1999 2000 2001
Slide 29: Poland and Czech Republic move strongly into profit in 2001
International home credit Poland and Czech Republic move strongly into profit in 2001 Poland (£m) Czech Republic (£m) 6.7 2.5 0.1 l l l l l l l l l l (0.6) (1.5) (0.2) (2.6) (1.1) (2.8) (2.7) 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001
Slide 30: National TV campaigns in Poland and Czech Republic
International home credit National TV campaigns in Poland and Czech Republic
Slide 31: Group prospects for 2002
Provident Financial Group prospects for 2002
Slide 32: Group prospects for 2002: UK home credit
Provident Financial Group prospects for 2002 UK home credit > steady progress in relatively mature market > excellent returns and cash generation > growth similar to 2001
Slide 33: Group prospects for 2002: Motor insurance
Provident Financial Group prospects for 2002 Motor insurance > outlook for market premiums uncertain > reinsurance costs fixed until mid 2003 > claims inflation may exceed premium increases > lower investment yield > reduced margins likely in 2002
Slide 34: Group prospects for 2002
Provident Financial Group prospects for 2002 International home credit > excellent prospects > focus on further building profitability in Poland and Czech Republic > develop businesses in Hungary and Slovakia
Slide 35: Group prospects for 2002
Provident Financial Group prospects for 2002 Provident has an excellent record of growth and we expect this to continue in 2002
Slide 36: Provident Financial
PROVIDENT FINANCIAL