Interim Results

Provident Financial PLC 24 July 2002 Interim report for the half-year ended 30 June 2002 HIGHLIGHTS • Good progress in the six months to 30 June 2002 • Strong growth: turnover up 13% to £451 million, customers up 9% to 3.2 million and net customer receivables up 10% to £677 million • Pre-exceptional profit before tax up 6.2% to £74.6 million • Pre-exceptional earnings per share up 6% to 21.76 pence • Interim dividend up 6% to 12.46 pence per share • Steady growth in UK home credit • Go-ahead announced for national roll-outs in Hungary and Slovakia • Excellent performance in international home credit with strong profit growth in Poland and Czech Republic • Better than expected performance in motor insurance 'The group has performed as expected and made good progress in the first half of the year. The excellent performance of our international home credit business was particularly pleasing and we have given the go-ahead to ambitious new expansion plans in Hungary and Slovakia. Our view of the outlook for 2002 is unchanged and we expect further good progress in the second half of the year.' John van Kuffeler Chairman 24 July 2002 Enquiries: Today Thereafter Media 0207 628 5646 01274 731111 David Stevenson Investor Relations 0207 628 5646 01274 731111 Elizabeth Bottomley Chairman's statement - July 2002 Overview The group has made good progress in the six months to June 2002. We continue to see strong growth in our established central European businesses in Poland and the Czech Republic, along with steady progress in the UK home credit division. The performance of our pilot operations in Hungary and Slovakia has been excellent and we have decided both will now be rolled out nationally. Motor insurance made a better than expected start to 2002, helped by top of the cycle conditions in the marketplace. Turnover for the first half of 2002 increased by 13% to £451 million, while customer numbers grew by 9% to 3.2 million and net customer receivables by 10% to £677 million. Profit before tax, prior to the exceptional loss on the sale of Colonnade Insurance Brokers Limited ('Colonnade'), increased by 6.2% to £74.6 million, resulting in a 6% increase in pre-exceptional earnings per share to 21.76 pence per share. An interim dividend of 12.46 pence per share has been declared (June 2001 11.75 pence), an increase of 6%. Operations The results for the first half of 2002 are set out below: Unaudited Unaudited Half-year ended 30 June 2002 2001 £m £m UK home credit 62.0 61.3 International home credit 1.1 (1.6) Motor insurance 18.0 17.9 Businesses sold or closed* 1.0 (1.0) Central costs (7.5) (6.4) ________ ________ Pre-exceptional profit before tax 74.6 70.2 ________ ________ * - includes Provident balance and Provident South Africa which were closed during 2001 and Colonnade which was sold during 2002. UK home credit division Trading in the first half of the year has been in line with our expectations. Turnover for the UK home credit division rose by 3.5% to £232.0 million and profit before tax increased by 1.1% to £62.0 million (June 2001 £61.3 million). Customer numbers have increased by 2.2% compared to June 2001. During last year, we introduced a home shopping catalogue, both to attract new customers and to increase sales to existing customers. This has proved successful, providing 44,000 new customers and sales of £10.5 million in the 12 months to 30 June 2002. In the first half of this year, we have improved the order-taking and supply processes and in May we launched a further mailing of our home shopping catalogue. We expect that this initiative will benefit the second half of this year and that the catalogue will continue to be an important contributor to sales and customer recruitment. Credit issued and collections both grew over the corresponding period of 2001, by 1.4% and 2.7% respectively. As expected, bad debts increased but, as a percentage of credit issued, remained within the 8-9% range (June 2002 8.9%; June 2001 8.2%). International home credit division Since its formation almost five years ago, our international team has built a substantial, profitable business that now has 12,600 agents, over 800,000 customers and accounts for almost a quarter of the group's credit issued. In our established markets of Poland and the Czech Republic we have profitable, market leading businesses with high brand awareness and national infrastructures in countries with a total population of nearly 50 million people. The focus of our international home credit division for 2002 is to build on our success in central Europe, growing profits in Poland and the Czech Republic and continuing to develop our new businesses in Hungary and Slovakia. I am pleased to report good progress on all our objectives in the first half of the year, with the division as a whole reporting a half-year profit of £1.1 million (June 2001 loss of £1.6 million). This result is after doubling the investment in start-up losses in Hungary and Slovakia (June 2002 £2.6 million; June 2001 £1.3 million). It represents an excellent performance, achieved despite a slower than expected start to the year due to unusually heavy snowfall in January in Poland and the Czech Republic. Since June 2001, customer numbers for the division have increased by 204,000 (34%) to 806,000. Compared to the first half of 2001, turnover increased by 45%, credit issued by 21% and collections by 44%. Poland has continued to grow strongly. As compared to the first half of 2001, credit issued increased by 15%. Collections grew by 46%, driving turnover up by 44%. Pre-tax profit was up by £3.5 million to £4.4 million (June 2001 £0.9 million) and the pre-tax profit margin has increased from 3% to 9%. Customer numbers have grown substantially, up by 35% from 416,000 to 561,000 since June 2001. Bad debt as a percentage of credit issued was 9.3% and credit quality is stable with the bad debt ratio remaining in the 9-10% range. We have also seen good growth in the Czech Republic. Turnover increased by 31%, credit issued by 18% and collections by 24% compared to the first half of 2001. Pre-tax profits were up by £1.1 million to £1.9 million (June 2001 £0.8 million) and the pre-tax profit margin has increased from 7% to 12%. After relatively slow customer growth for much of the second half of last year, we have seen a return to good growth with customer numbers up 12% from 184,000 to 206,000 since June 2001. Bad debt as a percentage of credit issued was 11.3%. Credit quality in the Czech Republic is also stable with the bad debt ratio remaining in the 11-12% range. The results of our pilot-scale operations in Hungary and Slovakia have been very encouraging with excellent customer growth, good collections and low bad debts. In the first six months of the year, customer numbers have increased from 10,000 to 27,000 in Hungary and from 5,000 to 12,000 in Slovakia. I am delighted to announce that the group has decided to go ahead with a controlled roll-out to achieve national branch coverage in both these countries. We expect to build substantial value-adding businesses, just as we have done in Poland and the Czech Republic. Motor insurance division The motor insurance division, excluding broking, reported a profit for the first six months of the year of £18.0 million (June 2001 £17.9 million). 2001 was a record year, but we said earlier this year that we expected a cyclical downturn in margins to begin in 2002. Although, in the first half of this year, we have seen a reduction in our profit margin as a result of both lower investment yields and a rise in claims costs as a percentage of earned premium, the growth in policyholder numbers and the increases in premiums have been better than expected. Since June 2001, policyholder numbers have risen by 2.6% and average premium rates by 5%. Claims inflation was 7%. We have seen strong growth in gross written premiums, up by 18% to £146.9 million (June 2001 £124.4 million) and in gross earned premiums which are 19% higher at £132.6 million (June 2001 £111.4 million). The benefit of rising policyholder numbers and higher premium rates is reflected in the size of our investment fund. This has increased by 20% to £462 million (June 2001 £386 million). Investment income from this fund grew more slowly, up 5.6% to £11.8 million (June 2001 £11.1 million) as a result of lower yields. These fell from 6.2% in the first half of 2001 to 5.4% in the first half of 2002. The division's financial performance remains excellent. In the 12 months to 30 June 2002, it achieved a pre-tax profit of £35.2 million - a pre-tax return of 40% on an average equity capital employed in this period of £88 million. On 29 May 2002 we sold our insurance broking business, Colonnade, for a total cash consideration, including the repayment of inter-company debt, of £27 million. The sale resulted in a profit on disposal of Colonnade and a consequent increase in net assets of £4.1 million. In addition, goodwill of £14.8 million that had previously been charged to reserves has been written back to the profit and loss account, resulting in a net loss on disposal of £10.7 million. This loss has been separately disclosed, on the face of the profit and loss account, as an exceptional item. Prospects Our view of the outlook for 2002 is unchanged. The UK home credit division has shown steady growth and we expect this to continue throughout 2002, at rates similar to those of 2001. In our motor insurance division we have started the year well, but we continue to expect that a downturn in policyholder numbers and a further reduction in margins may occur in the second half of the year. The prospects for our international home credit division remain excellent. We expect much stronger profit growth in the second half of this year as a result of increasing volumes and improving profit margins. The prospects for the future are excellent with customer numbers, credit issued and profits expected to grow strongly. The initial successes of our new operations in Hungary and Slovakia are encouraging and we will now begin a controlled roll-out of further branches in these countries. Our target is to achieve national coverage in both countries by 2005 and to move into profitability by 2006. Overall, the group has made good progress in the first half of 2002 and we expect this to continue during the second half of this year. John van Kuffeler Chairman 24 July 2002 Consolidated profit and loss account for the half-year to 30 June 2002 Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Turnover 450,450 398,951 833,178 ________ ________ ________ Operating profit 74,551 70,210 169,610 Exceptional loss on disposal of business (note 3) (10,700) - - ________ ________ ________ Profit before taxation 63,851 70,210 169,610 Taxation (note 4) (21,620) (19,659) (45,795) ________ ________ ________ Profit after taxation 42,231 50,551 123,815 Dividends (note 5) (30,327) (28,946) (71,788) ________ ________ ________ Retained profit 11,904 21,605 52,027 ________ ________ ________ Earnings per share (note 6) - Basic 17.36p 20.52p 50.39p - Pre-exceptional 21.76p 20.52p 50.39p - Diluted 17.27p 20.37p 50.08p ________ ________ ________ Dividend per share (note 5) 12.46p 11.75p 29.35p ________ ________ ________ The results shown in the profit and loss account derive wholly from continuing activities. Operating profit includes the results of Provident balance and Provident South Africa which were closed during 2001 and Colonnade Insurance Brokers which was sold during 2002. There is no material difference between the retained profit shown above and the historical cost equivalent. Statement of total recognised gains and losses for the half-year to 30 June 2002 Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Profit after taxation 42,231 50,551 123,815 Currency translation differences (11) 654 (120) ________ ________ ________ Total recognised gains and losses relating to the 42,220 51,205 123,695 period ________ ________ ________ Segmental analysis of turnover for the half-year to 30 June 2002 Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 UK home credit 232,007 224,267 465,539 International home credit 65,050 44,837 99,615 Motor insurance 142,699 117,622 244,369 ________ ________ ________ 439,756 386,726 809,523 Businesses sold or closed Provident balance - 37 37 South Africa - 1,331 1,964 Colonnade Insurance Brokers 10,694 10,857 21,654 ________ ________ ________ 10,694 12,225 23,655 ________ ________ ________ 450,450 398,951 833,178 ________ ________ ________ Segmental analysis of operating profit for the half-year to 30 June 2002 Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 UK home credit 62,015 61,329 150,376 International home credit 1,053 (1,568) 758 Motor insurance 18,010 17,912 35,119 Businesses sold or closed 1,000 (1,068) (3,562) Central costs (7,527) (6,395) (13,081) ________ ________ ________ 74,551 70,210 169,610 ________ ________ ________ The operating profit/(loss) for businesses sold or closed can be analysed as follows: Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Provident balance - (1,828) (1,432) South Africa - (779) (3,608) Colonnade Insurance Brokers 1,000 1,539 1,478 ________ ________ ________ 1,000 (1,068) (3,562) ________ ________ ________ The international home credit turnover and operating profit/(loss) can be analysed as follows: Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Turnover Poland 47,630 33,014 74,131 Czech Republic 15,488 11,794 24,851 Hungary 1,456 13 448 Slovakia 476 16 185 ________ ________ ________ 65,050 44,837 99,615 ________ ________ ________ Operating profit/(loss) Poland 4,423 900 6,746 Czech Republic 1,923 820 2,455 Hungary (1,642) (770) (2,257) Slovakia (1,045) (492) (1,293) Divisional overheads (2,606) (2,026) (4,893) ________ ________ ________ 1,053 (1,568) 758 ________ ________ ________ Consolidated balance sheet as at 30 June 2002 Unaudited Unaudited Audited as at as at as at 30 June 2002 30 June 2001 31 Dec 2001 £'000 £'000 £'000 Fixed assets 48,593 50,227 52,938 ________ ________ ________ Current assets Amounts receivable from customers (note 8) - due within one year 668,246 606,133 719,637 - due in more than one year 8,523 8,091 9,614 Debtors 173,584 171,165 173,216 Investments - realisable within one year 467,920 365,000 430,621 Cash at bank and in hand 64,999 69,396 44,623 ________ ________ ________ 1,383,272 1,219,785 1,377,711 ________ ________ ________ Current liabilities Bank and other borrowings (20,562) (20,891) (42,969) Creditors - amounts falling due within one year (146,560) (170,842) (173,047) Insurance accruals and deferred income (488,872) (408,843) (438,838) ________ ________ ________ (655,994) (600,576) (654,854) ________ ________ ________ Net current assets 727,278 619,209 722,857 ________ ________ ________ Total assets less current liabilities 775,871 669,436 775,795 ________ ________ ________ Non-current liabilities Bank and other borrowings (446,364) (377,142) (473,231) Provision for liabilities and charges - deferred taxation (5,961) (2,566) (6,016) ________ ________ ________ (452,325) (379,708) (479,247) ________ ________ ________ Net assets 323,546 289,728 296,548 ________ ________ ________ Capital and reserves Called-up share capital 25,439 25,814 25,433 Share premium account 52,142 52,405 51,840 Revaluation reserve 1,641 1,641 1,641 Other reserves 4,358 3,967 4,358 Profit and loss account 239,966 205,901 213,276 ________ ________ ________ Equity shareholders' funds (note 7) 323,546 289,728 296,548 ________ ________ ________ Consolidated cash flow statement for the half-year to 30 June 2002 Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Net cash inflow from operating activities 148,059 145,314 159,713 Taxation (17,429) (15,867) (46,436) Capital expenditure and financial investment (6,313) (8,816) (6,487) Acquisitions and disposals 27,000 (2,510) (2,510) Equity dividends paid (42,823) (40,401) (69,360) Management of liquid resources (37,299) (35,000) (110,621) Financing (50,984) (22,328) 81,000 ________ ________ ________ Increase in cash in the period 20,211 20,392 5,299 ________ ________ ________ The cash flow statement above has been prepared in accordance with FRS1 (Revised 1996) 'Cash Flow Statements'. As required by that standard, the statement aggregates the cash flows arising from motor insurance and home credit divisions. However, the cash and investments held by the motor insurance division are required by its regulators to be strictly segregated from the rest of the group and are not available to repay group borrowings. At 30 June 2002 the cash and investments held by the insurance division amounted to £462 million (30 June 2001 £386 million). Reconciliation of net cash flow to movement in net (debt)/funds Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Increase in net cash for the period 20,211 20,392 5,299 Cash outflow from increase in liquid resources 37,299 35,000 110,621 ________ ________ ________ 57,510 55,392 115,920 Cash outflow/(inflow) from decrease/(increase) in 51,292 23,111 (103,045) debt ________ ________ _________ Change in net debt resulting from cash flows 108,802 78,503 12,875 Loans relating to business acquired - (975) (975) Exchange adjustments (1,853) (5) (1,696) Net debt at start of period (40,956) (51,160) (51,160) ________ ________ ________ Net funds/(debt) at end of period 65,993 26,363 (40,956) ________ ________ ________ Analysis of changes in net (debt)/funds 31 Dec Exchange 30 June 2001 Cash flows Other changes adjustments 2002 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 44,623 20,211 - 165 64,999 Overdrafts - - (2,541) - (2,541) _______ _______ _______ _______ _______ 44,623 20,211 (2,541) 165 62,458 Investments realisable within one 430,621 37,299 - - 467,920 year Bank and other borrowings: - less than one year (42,969) 23,462 2,541 (1,055) (18,021) - more than one year (473,231) 27,830 - (963) (446,364) _______ _______ _______ _______ _______ (516,200) 51,292 2,541 (2,018) (464,385) _______ _______ _______ _______ _______ Net (debt)/funds (40,956) 108,802 - (1,853) 65,993 _______ ______ _______ _______ _______ Cash, borrowings and overdraft balances shown above at 31 December 2001 and 30 June 2002 agree to the balance sheets at those dates. Investments realisable within one year exclude those current asset investments which are not considered to be liquid resources (being those investments with more than one year to maturity when acquired, but less than one year to maturity at the balance sheet date, other than investments which are traded on an active market). Reconciliation of operating profit to net cash inflow from operating activities Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Operating profit 74,551 70,210 169,610 Depreciation and amortisation 4,337 3,549 8,217 (Profit)/loss on sale of tangible fixed assets (75) 124 451 Decrease/(increase) in amounts receivable from 54,420 33,381 (80,661) customers Increase in debtors (33,844) (8,144) (8,124) Increase in insurance accruals and deferred income 50,023 34,232 64,211 (Decrease)/increase in other creditors (1,353) 11,962 6,009 ________ ________ ________ Net cash inflow from operating activities 148,059 145,314 159,713 ________ ________ ________ Net cash inflow from operating activities can be analysed as follows: Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 UK home credit 117,411 124,644 123,535 International home credit (7,591) (31,923) (52,523) Motor insurance 51,498 56,699 99,429 Central (13,259) (4,106) (10,728) ________ ________ ________ 148,059 145,314 159,713 ________ ________ ________ Notes to the financial information 1. The financial information has been prepared on the basis of the accounting policies set out in the group's 2001 statutory accounts except that in these accounts the group has adopted Financial Reporting Standard ('FRS') 19 - Deferred Tax. The impact of applying FRS 19 is not material to the results of the group. This financial information does not constitute a set of statutory accounts and is unaudited. This document (the 2002 interim report) will be published on the company's website in addition to the normal paper version. The maintenance and integrity of the Provident Financial website is the responsibility of the directors and the work carried out by the auditors does not involve consideration of these matters. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 2. The information relating to the full year ended 31 December 2001 is an extract from the latest published accounts on which the auditors gave an unqualified opinion and which have been delivered to the Registrar of Companies. 3. Exceptional loss on disposal of business On 29 May 2002, the company sold its subsidiary, Colonnade Insurance Brokers Limited. The resulting loss on disposal comprises: Unaudited Half-year to 30 June 2002 £'000 Consideration after the repayment of inter-company borrowings and net of disposal costs 10,097 Net assets at disposal (6,000) ________ Profit on disposal prior to write-back of goodwill 4,097 Goodwill previously written off to reserves (14,797) ________ Exceptional loss on disposal (10,700) ________ There was no tax impact of the disposal on the results for the period. 4. Taxation The taxation charge has been calculated by applying the directors' best estimate of the effective tax rate for the year, which is 29% (30 June 2001 28%), to the pre-exceptional profit for the period. 5. Dividends paid and proposed Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Interim dividend declared 12.46p (30 June 2001 30,327 28,946 28,971 11.75p) Final dividend paid - 17.60p - - 42,817 ________ ________ ________ 30,327 28,946 71,788 ________ ________ ________ Dividend cover 1.39 1.75 1.72 ________ ________ ________ The interim dividend for 2002 is 1.75 times covered by pre-exceptional earnings. 6. Earnings per share The basic and diluted earnings per share figures have been calculated using the profit for the period attributed to ordinary shareholders of £42,231,000 (30 June 2001 £50,551,000) and the weighted average number of shares in issue during the period. The pre-exceptional earnings per share figures have been calculated using a profit after tax result, excluding the exceptional item, of £52,931,000 (30 June 2001 £50,551,000) and the weighted average number of shares in issue during the period. The weighted average number of shares in issue during the period can be reconciled to the number used in the basic and diluted earnings per share calculations as follows: Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 Weighted average number of shares In issue during the period 245,431,284 248,965,864 248,147,454 Held by the QUEST (2,126,663) (2,643,915) (2,456,807) ___________ ___________ ___________ Used in basic earnings per share calculation 243,304,621 246,321,949 245,690,647 Issuable on conversion of outstanding options 1,263,466 1,821,287 1,546,712 ___________ __________ ___________ Used in diluted earnings per share calculation 244,568,087 248,143,236 247,237,359 ___________ ___________ ___________ The movement on the number of shares in issue during the period is as follows: Number At 1 January 2002 245,413,339 Shares issued pursuant to the exercise of options 93,416 ___________ At 30 June 2002 245,506,755 ___________ 7. Reconciliation of movement in equity shareholders' funds Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Profit attributable to equity shareholders 42,231 50,551 123,815 Dividends (30,327) (28,946) (71,788) ________ ________ ________ Retained profit 11,904 21,605 52,027 New share capital issued 308 783 1,135 Share capital cancelled on share buy-back - - (907) Share buy-back - - (22,273) Goodwill on disposal (note 3) 14,797 - - Currency translation differences (11) 654 (120) ________ ________ ________ Net addition to equity shareholders' funds 26,998 23,042 29,862 Equity shareholders' funds at beginning of period 296,548 266,686 266,686 ________ ________ ________ Equity shareholders' funds at end of period 323,546 289,728 296,548 ________ ________ ________ 8. Amounts receivable from customers Unaudited Unaudited Audited As at As at As at 30 June 2002 30 June 2001 31 Dec 2001 £'000 £'000 £'000 a) Instalment credit receivables Gross instalment credit receivables 1,055,589 945,475 1,105,511 Less: provision for bad and doubtful debts (103,487) (91,196) (86,251) ________ ________ ________ Instalment credit receivables after provision for bad and doubtful debts 952,102 854,279 1,019,260 Less: deferred revenue thereon (275,333) (240,055) (290,009) ________ ________ ________ 676,769 614,224 729,251 ________ ________ ________ Analysed as: - due within one year 668,246 606,133 719,637 - due in more than one year 8,523 8,091 9,614 ________ ________ ________ 676,769 614,224 729,251 ________ ________ ________ At 30 June 2002 the net amounts receivable from UK home credit customers were £549.9 million (30 June 2001 £520.3 million) and from international home credit customers were £126.9 million (30 June 2001 £93.9 million). Unaudited Unaudited Audited Half-year to Half-year to Full year 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 b) Bad and doubtful debts Gross provision at end of period 103,487 91,196 86,251 Less: deferred revenue thereon (33,384) (28,560) (27,589) ________ ________ ________ Net provision at end of period 70,103 62,636 58,662 Net provision at start of period (58,662) (54,820) (54,820) ________ ________ ________ Increase in provision (net of deferred revenue) 11,441 7,816 3,842 Amounts written off (net of deferred revenue) 49,054 42,499 92,204 ________ ________ ________ Net charge to profit and loss account for bad and 60,495 50,315 96,046 doubtful debts ________ ________ ________ Analysed as: - UK home credit 46,739 41,008 76,345 - International home credit 13,756 9,307 19,701 ________ ________ ________ 60,495 50,315 96,046 ________ ________ ________ c) The figures for receivables, provisions and bad and doubtful debts at 30 June 2002 should be compared with the equivalent information at 30 June 2001 in view of the long established seasonal patterns in lending and collections. 9. Credit issued Unaudited Unaudited Half-year to Half-year to 30 June 2002 30 June 2001 Growth £'000 £'000 % UK home credit 396,217 390,601 1.4% ________ ________ ________ International home credit Poland 87,887 76,652 14.7% Czech Republic 31,794 26,942 18.0% Hungary 4,142 91 Slovakia 1,473 86 ________ ________ ________ 125,296 103,771 20.7% South Africa - 3,163 ________ ________ ________ 521,513 497,535 4.8% ________ ________ ________ 10. Collections Unaudited Unaudited Half-year to Half-year to 30 June 2002 30 June 2001 Growth £'000 £'000 % UK home credit 651,087 634,108 2.7% ________ ________ ________ International home credit Poland 116,543 80,056 45.6% Czech Republic 40,097 32,384 23.8% Hungary 3,540 12 Slovakia 1,385 38 ________ ________ ________ 161,565 112,490 43.6% South Africa - 3,629 ________ ________ ________ 812,652 750,227 8.3% ________ ________ ________ 11. Customer numbers Unaudited Unaudited as at 30 June as at 30 June 2002 2001 Number Number Growth '000 '000 % UK home credit 1,574 1,540 2.2% Motor insurance 855 833 2.6% ________ ________ ________ International home credit Poland 561 416 34.9% Czech Republic 206 184 12.0% Hungary 27 1 Slovakia 12 1 ________ ________ ________ 806 602 33.9% ________ ________ ________ 3,235 2,975 8.7% South Africa - 39 Colonnade Insurance Brokers - 343 ________ ________ ________ 3,235 3,357 (3.6%) ________ ________ ________ Independent review report to Provident Financial plc Introduction We have been instructed by the company to review the financial information which comprises the consolidated profit and loss account, statement of total recognised gains and losses, consolidated balance sheet, consolidated cash flow statement and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2002. PricewaterhouseCoopers Chartered Accountants and Registered Auditors Leeds 24 July 2002 Shareholder information 1. The shares will be marked ex-dividend on 18 September 2002. 2. The interim dividend will be paid on 18 October 2002 to shareholders on the register at the close of business on 20 September 2002. 3. Dividend warrants/vouchers will be posted on 16 October 2002. 4. The interim report will be posted to shareholders on 2 August 2002. 5. The Provident Financial Company Nominee Scheme ('the scheme') enables shareholders who are eligible, namely individuals, to take advantage of the CREST system for settling transactions in shares in the company by means of a low-cost dealing service. It includes a dividend reinvestment scheme for those who wish to use this facility. Shareholders who wish to take advantage of the scheme should contact the company's registrar, Capita IRG Plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, (telephone: 0870 162 3100) to request an information pack. The registrar's website is www.capita-irg.com. This information is provided by RNS The company news service from the London Stock Exchange

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