Interim Management Statement

RNS Number : 2125L

Paragon Group Of Companies PLC

28 July 2011

 



THE PARAGON GROUP OF COMPANIES PLC

Interim Management Statement

The Paragon Group of Companies PLC today publishes its Interim Management Statement based on the performance of the business from 1 April 2011 to date, including a commentary on the unaudited financial information for the period from 1 October 2010 to 30 June 2011.

The financial performance of the Group remained strong during the period, in line with management's expectations, contributing to operating profits (before fair value items) of £58.9 million for the nine months to 30 June 2011.  Pre-tax profits, inclusive of a credit of £0.6 million for fair value hedging items, were £59.5 million for the period. 

The performance of the Group since the end of the third quarter has been consistent with that quarter.

Trading

The Group's loan portfolio continues to perform in line with our expectations.  Redemptions across the loan books remain low, whilst customer payment performance in both the buy-to-let and secured consumer loan businesses continues to be superior to industry data.  At 30 June 2011 arrears over three months on the buy-to-let portfolio, including acquired loans and receivership cases, were 69bp (75bp at 31 March 2011), continuing the downward trend in the percentage of the portfolio experiencing payment difficulty.

Cash generation from the Group's SPVs remained strong over the period.  At 30 June 2011, free cash balances were £178.8 million after investing in new business flows and acquiring assets.

Business Activity

Following the Group's return to new lending in September 2010, application levels have increased as the distribution base has been expanded.  As we anticipated at the half year, new lending completions grew strongly over the third quarter, with £65.7 million of completions in the quarter, taking the total advanced to 30 June 2011 in respect of the Group's new products to £95.3 million.  In addition, £3.7 million of further advances were made to existing borrowers.  The credit quality of the new lending business written in the period has remained excellent.

Preparations for the Group's next securitisation issuance are well advanced.  Lead managers for the issue have been appointed, who will advise in due course on appropriate timing for the issue, taking account of market conditions.

The loan portfolios acquired during 2009 and 2010 have continued to perform well and our Idem Capital team has been active in the quarter in reviewing and investing in loan portfolios.   As well as the investment made in May, as previously reported, a number of other portfolio opportunities are currently under review.   In addition, the Group's loan servicing business has in July assumed the administration of approximately 50,000 additional loan accounts on behalf of a third party.

Outlook

During the period, the Group has continued to build on the excellent progress made during the first half of the year, successfully managing the existing and acquired loan books whilst attracting increasing new lending volumes, portfolio investment and loan servicing opportunities. We continue to pursue portfolio acquisition opportunities and loan administration contracts to supplement our growth potential.

For further information, please contact:

Nigel S Terrington                   0121 712 2024

Chief Executive

Nicholas Keen                         0121 712 2000

Finance Director

Andy Berry                              0207 839 4321

Fishburn Hedges

 

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