Interim Management Statement

RNS Number : 3945K

Paragon Group Of Companies PLC

30 July 2013

 



THE PARAGON GROUP OF COMPANIES PLC

Interim Management Statement

Updating on trading performance, lending volumes and portfolio acquisitions

The Paragon Group of Companies PLC ("Paragon" or the "Group") today publishes its Interim Management Statement based on the performance of the business from 1 April 2013 to date, including a commentary on the unaudited financial information for the period from 1 October 2012 to 30 June 2013.

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 £75.5 million for the nine months to 30 June 2013, compared with £68.9 million for the corresponding period in the previous year.  Pre-tax profits, inclusive of a credit of £1.1 million for fair value hedging items, were £76.6 million for the period. 

Significant progress has been achieved in the growth of the business with new buy-to-let lending in the third quarter representing a 164% increase on the average of the first two quarters of the year.  Furthermore, investments by Idem Capital, the Group's investment division, increased during the quarter by a further £35.1 million bringing the total invested in the year to date to £92.7 million.

Trading

The Group's loan portfolio continues to perform well, generating strong profits and cash flows.  Redemptions across the loan books remain low and the credit performance across the portfolio, including legacy buy-to-let and consumer assets, newly originated buy-to-let assets and the acquired books, remains in line with our expectations.  At 30 June 2013 arrears of three months or more on the buy-to-let portfolio, including acquired loans and receivership cases but excluding properties held for sale, were 38bp (40bp at 31 March 2013).

Cash generation from the Group's securitisation SPVs and from the acquired portfolios, remained strong over the period, financing further investment in loan portfolios and credit enhancement for mortgage originations.  At 30 June 2013, free cash balances were £140.3 million (£173.8 million at 31 March 2013).

Business Activity

Loan completions by Paragon Mortgages during the quarter were £135.4 million, compared with £102.3 million for the first six months of the year, resulting in year to date advances of £237.7 million.  The pipeline of new business at 30 June 2013 was £220.2 million, which augers well for strong completion volumes in the fourth quarter.  The credit quality of the new lending business written in the period remains high.

The loan portfolios acquired by Idem Capital have continued to perform well.  During the quarter, Idem invested £35.1 million in the acquisition of a further portfolio of unsecured loans, bringing the total investments in the year to date to £92.7 million. We expect further investment opportunities to arise through the ongoing process of financial institutions disposing of loan assets and a number of opportunities are currently under consideration.

During the quarter the servicing of a further 20,400 accounts commenced and a number of other potential servicing arrangements are currently under review.

The Group is continuing to prepare for a return to new consumer finance lending, which is likely to be undertaken within a banking subsidiary.  Further information on the progress of this business line will be provided in due course.

Funding

With total warehouse capacity of £450 million, the Group is well placed to support the increased origination levels now being seen within our buy-to-let lending business.  In due course, additional warehouse capacity may be sought to support further growth in this business.

Outlook

During the period, the Group's loan portfolio has performed well, new buy-to-let lending has increased significantly and Idem has acquired another loan portfolio and further increased its servicing of third party loans.  The Group will continue to pursue the strategy of prudent management of the existing and acquired books whilst seeking growth through new buy-to-let and, in due course, consumer finance originations and through portfolio acquisitions.

For further information, please contact:

Nigel S Terrington                    0121 712 2024

Chief Executive

Nicholas Keen                          0121 712 2000

Finance Director

Paul Farrow                             0207 544 3040/3042 

Fishburn Hedges

 

END

 

 

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