Provident Financial, the doorstep lender, known to many of its users as ‘the Provvy,’ revealed a loss of £123m for 2017.  It was a difficult year and the share price was slashed after a series of profit warnings. The figures reveal adjusted profit before tax was £109m, down 67% from £334m in 2016. However, the group reported a pre-tax loss of £123m, compared with profit of £344m in 2016. This worked out at a loss per share of 90.7p, compared with earnings per share of 181.8p in 2016.

The company suspended its dividend last year when it first flagged that it would be recording a loss for the year. The stock jumped 33 per cent in early trading last Tuesday and was up 71 per cent by late afternoon after the company confirmed it wants to raise £331m through a rights issue. This comes after the shares had fallen to a 22year low after reports that bankers were mulling over a £500m rights issue.

The group said it is “taking necessary action to raise additional capital to meet the costs of resolving the investigation by the FCA into Vanquis Bank’s repayment option plan”. Vanquis, a subsidiary of Provident, is being investigated by the Financial Conduct Authority (FCA) over the potential mis-selling of the PPI style product.

Provident Group’s Chief Executive, Malcom Le May said, “When I became group CEO, I stated my key objective was to execute a turnaround of the group. Today we have made progress on that objective by agreeing a resolution with the FCA in relation to Vanquis Bank and we now have a clear view on the estimated cost of the FCA investigation of Moneybarn.”

“To grow the business and deliver long-term sustainable returns to our shareholders, PFG needs to strengthen its balance sheet. Today we have announced a proposed rights issue to raise net proceeds of £300m which the board believes will allow the group to implement its strategy and restart paying a progressive dividend in 2019.”

For Provident Financial’s shareholders there was a much-needed boost after these announcements.

The Markets were waiting for news on two separate investigations by the Financial Conduct Authority. Fines and redress totalling £190m was £100m less than many had feared and a £300m rights issue was well below the £500m reported over the weekend. The money raised will be used to pay the fines with the rest held to bolster capital buffers.

The biggest challenge for Provident’s new chief executive Malcolm Le May, as with any rights issue, was to get institutional investors on board. In this instance, however, half of the company is owned by star fund manager Neil Woodford and his previous employer Invesco. Get them signed up and it was job done.

Provident stressed yesterday that they had the support of these both. What assurances did Britain’s biggest doorstep lender give them? “None,” Le May “I went to see them and told them where we were. I think they saw the merits of the case and were supportive. But no assurances given.”