Interim Management Statement

RNS Number : 1442A

Paragon Group Of Companies PLC

27 January 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 October 2010 to date, including a commentary on the unaudited financial information for the period from 1 October to 31 December 2010.

The financial performance of the Group remained strong during the period, in line with management's expectations, generating operating profits (before fair value items) of £18.1 million.  Pre-tax profits, inclusive of a credit of £0.6 million for fair value hedging items, were £18.7 million for the period. 

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 31 December 2010 arrears over three months on the buy-to-let portfolio, including the portfolio acquired in September 2010, were 83bp (76bp excluding the acquired portfolio), continuing the downward trend in the percentage of the portfolio experiencing payment difficulty.

In accordance with the Group's normal practice, the buy-to-let loan portfolio acquired on 30 September 2010 is now fully integrated and managed entirely by Paragon employees.  Together with the other portfolios acquired previously, it is performing well, in line with our expectations.

Cash generation from the Group's SPVs remained strong over the period, with free cash balances increasing during the quarter to 31 December 2010 to £164.6 million, from £147.8 million at 30 September 2010.

Business Activity

In September 2010 the Group announced a return to new buy-to-let mortgage lending following the signing of a £200 million warehouse facility.  Our target market remains the experienced landlord, although those with smaller, high quality, portfolios are also considered. 

Activity in the first quarter has focused on re-activating our mortgage distribution network, including individual specialist buy-to-let intermediaries and larger mortgage networks.  In addition, we have maintained close contact with existing customers, providing a complementary and efficient channel for the direct distribution of our mortgages.

We are encouraged by the steady growth in the level of applications in the four months since our return to new lending was announced and the current pipeline of applications stands at approximately £75 million.  To date, £8.8 million of loans have been advanced and we expect this number to increase as pipeline applications complete.

Outlook

During the period, the Group has continued to build on the excellent progress made during the previous year, successfully managing the existing and acquired books whilst developing new lending products and distribution as the basis for future organic growth.  In addition, we continue to pursue portfolio acquisition opportunities and new third party loan administration contracts to supplement this 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

 

END

 

 

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