Record Results Announced - Part 1

Paragon Group Of Companies PLC
16 November 1999

Part 1
                        PARAGON ANNOUNCES RECORD RESULTS


The  Paragon  Group  of  Companies PLC ('Paragon'), today announces 
Preliminary results for the year ended 30 September 1999.  Highlights include:


     35% increase in pre-tax profits to £33.8 million (1998: £25.1 million)

     £420 million of new loans advanced to customers, 30% increase on 1998.

     Final dividend of 3.4p for the year (1998: 3.0p)

     Excellent new business performance in all Group divisions

        Mortgages loans up 12% to £260 million
        Car finance loans up 79% to £64 million
        Personal loans up 78% to £96 million
   
      32nd  public  securitisation successfully completed confirming 
Paragon's position as the market leader of asset backed securities in the UK.

Jonathan Perry, Executive Chairman of Paragon, commented:


'Profits have increased substantially and there has been considerable growth 
in assets  in all of our business areas.  By virtue of the progress which has 
been made  by  the Group in recent years, your company is now in a position
where  it has  businesses operating in three key sectors of the personal
finance  markets, each  with  opportunities for significant future growth.  We
 remain  optimistic about our trading prospects going forward.'


For further information please contact:


Nigel Terrington, Chief Executive            John Wriglesworth or
Nick Keen, Finance Director                  Olivia Cundy
The Paragon Group of Companies PLC           The Wriglesworth Consultancy
Tel: [phone]                           Tel: [phone]
                                             Mobile: [phone]

                              CHAIRMAN'S STATEMENT
                                        

Your  company  has made significant progress in the past year, building  on 
the business  foundations  laid in previous years.  We have achieved  a 
substantial increase  in profits, strong growth in assets in all of our
business areas,  and expansion  of  our activities in consumer finance with
the launch of  a  secured consumer loan product.

Profit  before tax for the year ended 30 September 1999 was £33.8 million
(1998: £25.1 million) after taking into account a £2.5m profit on the sale of
property, an  increase  of  34.7% over the year.  After a corporation tax
charge  of  £3.5 million,  the profit after tax is £30.3 million (1998: £23.9
million).  Earnings per  share were 26.1p, compared to 22.4p (adjusted for FRS
14) for the  previous year.

Reflecting  these  strong results, the Board is pleased to propose,  subject 
to approval at the Annual General Meeting, an increased final dividend of 1.9p
 per share  which, when added to the interim dividend of 1.5p, gives a total
dividend of  3.4p  per share for the year, an increase of 13% on last year's
dividend  of 3p.

Review of Results

Net  interest  income  increased to £55.4 million  (1998:  £49.5  million), 
the increase  of 11.9% reflecting the growth in loans to customers during  the
year and the inclusion of unsecured loan assets for the full year.

Other operating income increased by 14.4% to £12.7 million (1998: £11.1
million) reflecting higher insurance commissions and fees from third party
servicing.

During  the year, a total of £419.7 million of loans were advanced to
customers, 30% higher than the previous year.  Despite this increase, and the
inclusion  of a  full year's costs in the consumer finance business purchased
from Lloyds  TSB the  previous year, operating expenses of £31 million (1998:
£30.4 million) were less  than  2%  up  on  the previous year.  This reflects
the  determination  of management  to  achieve improved productivity while
ensuring that  all  business areas  are adequately resourced to provide
effective administration and  a  high quality service to customers.

Provisions for losses of £5.8 million (1998: £5.1 million) reflect charges 
made against  the car finance and personal finance assets of the Group.  The 
arrears levels in respect of the mortgages advanced since we recommenced
lending in 1994 remain  well below the industry average and no significant
loss provisions  have been required against these loans.  No further
provisioning is considered to  be required in relation to the mortgage loans
advanced prior to 1992.

The  profit  and  loss account includes, as a separate item, a  credit  of 
£2.5 million  in  respect  of the profit on the sale of the Group's  former 
freehold property  in Solihull, which I reported in my interim statement.  In 
connection with this transaction £3.9 million, being the previous surplus on
revaluation of the   property,  was  transferred  from  revaluation  reserve 
to  distributable reserves,  with the overall effect that the disposal has
increased distributable reserves by £6.4 million.

As I reported in my interim statement, the increasing profitability of the
Group makes  it necessary to sustain a tax charge of 10% in respect of the
year  ended 30  September  1999.   It is likely that the charge, as a 
percentage  of  Group profits, will rise in the next two years towards normal
corporation tax rates.

During  the  year  total loans to customers increased to £1,482.5  million 
from £1,379.2  million at 30 September 1998.   Our strategy in seeking 
customers  of high  credit  quality  in niche markets is intended to develop 
the  asset  base required  to  underpin  the long term profitability of the 
Group  and  maximise shareholder  value.  The rate of progress has been
encouraging and as  the  old, poorer quality assets, including the old NHL
portfolio, run off, they are  being replaced  by  a portfolio of much higher
quality but which nevertheless  carries good lending margins.  I comment in
further detail below on the growth in assets in the three business areas.

In  June the Group completed its thirty-second public securitisation issue
under the  name of Paragon Mortgages (No1) PLC.  £185 million was raised,  the
senior notes  being  rated  AAA  by Standard & Poor's and Aaa by  Moody's.  
The  issue securitised  a  portfolio  consisting entirely of loans  originated
by  Paragon Mortgages.

Advances to customers are initially funded by a 'warehouse' facility provided
by a  banking syndicate.  The assets are held in the warehouse until the
volume  of lending  has  reached a level where it becomes cost effective to 
transfer  them into a securitisation vehicle company.  As a result of the rate
of growth in our business volumes and the diversity of the products now
offered by the Group, the terms  of  the  warehouse were renegotiated during
the year to  permit  improved flexibility for product changes and the size of
the facility was increased  from £150  million  to  £300 million.  The
additional warehouse capacity  will  allow economies of scale in future
securitisations, thereby reducing the frequency  of securitisation issues.

Review of activities

First Mortgages

The  building  of  a  mortgage  book of high quality,  profitable  loans  is 
an important  element  in  our plans for future sustained profitability  and 
I  am delighted at the progress that has been made.

The volume of first mortgage loans during the year increased by 11.7% to
£259.9m (1998:  £232.6m).   Aggregate loans outstanding at  30  September 
1999  on  the Paragon  Mortgages  book  amounted  to  £632.9m,  having 
eclipsed  the   amount outstanding on the old NHL mortgage portfolio during
the year.  At 30  September 1999,  balances  on  the  NHL  portfolio  were 
£512.5m,  the  rate  of  natural redemptions  having  been 21% in the year. 
Whilst arrears remain  high  in  the portfolio,  efficient collections
activity has ensured that cash  receipts  from customers  in  arrears  have 
improved  in  the  year  to  96%  of  the  amounts contractually due.

During  the year, the product focus of Paragon Mortgages has remained firmly 
on niche  markets and, as in the previous year, loans to the private rented 
sector were  the largest contributors to volumes.  In the Spring, we announced
a number of  changes  to  our  products, including the withdrawal  of  all 
new  borrower incentives.   These  measures have further enhanced  the 
profitability  of  our mortgage originations without having a negative impact
on business volumes.

I  commented last year on the very relaxed underwriting terms being offered by
a number  of our competitors and I reported that we saw no virtue in relaxing 
our credit quality merely to achieve low margin, low quality business.  Our
strategy of  maintaining  high credit and underwriting standards has  been 
reflected  in Paragon  Mortgages enjoying very low arrears, significantly
below  the  industry average.

During the year, Paragon Mortgages has built further on its reputation for 
high standards  of  customer  service.  This is monitored  by  the  completion
of  a quarterly  customer  survey, which has given very encouraging  feedback 
on  the level of our service both relative to previous periods and also
relative to  our competitors.   Notwithstanding this, we continually  focus 
on  improvements  to achieve  even  higher  levels  of  customer 
satisfaction.   This  approach  has undoubtedly  been a factor in improvements
that we have seen in  the  conversion rate of applications to advances this
year.

There has been considerable public debate in recent months in regard to the
need for  statutory regulation for the mortgage industry.  It now seems 
likely  that this  will  be  introduced by statute at some stage in the 
future  and  we  are confident  that  any regulation of the mortgage market
will be  accommodated  by Paragon  Mortgages  with relative ease in view of
the high standards  we  adopt. As a member of the Council of Mortgage Lenders
(CML), we fully support the CML's proposal  to  HM  Treasury that the industry
should fall within  the  regulatory framework of the FSA.

Car Finance

This  division has continued the strong growth reported at the half  year, 
with completions of £63.8m for the year, an increase of 78.7% on last year's
level of £35.7m.  During the year particular emphasis has been placed on the
roll-out  of new  products  for  the dealer market, maintenance of margins by 
focussing  our approach to dealers on selected elements of their business,
customer service and on a steady expansion of the distribution base.

By  30 September 1999 the number of dealers signed up by Paragon Car Finance
had increased  to 1,300, from less than 900 a year before.  Dealer business 
quality is  monitored carefully to ensure that our dealer profile is
consistent with the high  quality  of  business  on which the division  has 
been  established.   In addition to expanding the dealer base, considerable
emphasis is being placed  on increasing the productivity of the existing
dealer network.

In  achieving this, a high standard of customer service is essential.   In 
this regard,  it  is  particularly pleasing to report that Paragon  Car 
Finance  was nominated  for  the ITM Car Finance Company of the Year from  a 
poll  of  1,000 franchised dealers.

Personal Finance

A  total  of  £95.6 million was advanced by Paragon Personal Finance during 
the year, compared with £54.3 million (inclusive of originations by Universal
Credit (UCL)   following  its  acquisition  in  March  1998)  in  the 
previous   year. Completions  in  the  second half year of £57.7 million
represent  a  very  good recovery  in  lending  volumes from the temporary 
impact  of  the  underwriting changes on which I commented in my interim
report.

Worthy  of  particular  note is the timeshare lending,  where  monthly 
advances during  the  last  quarter of the year consistently exceeded  £2 
million.   The increased  volume  has come not only from our established
connections  producing more business but also from a more active programme to
encourage other timeshare operators to introduce business to Paragon.

The  volume  of affinity sales has increased steadily and we have  improved 
the quality  of  this  business  through  underwriting  changes.   During  the
year relationships  with seven new affinity partners were established.   This 
is  an area with exciting opportunities for Paragon.

A  secured  loan  product was launched towards the end of  the  year, 
initially piloted  through one introducer and early indications of volumes and
quality  of lending in this area are encouraging.  Expansion of our activities
in this  area will  be  supported by a number of introducers with whom we
already have  strong relationships through our unsecured loan products, and a
roll-out programme  has commenced.

Responsibility for the administration and collection of the loan assets
acquired with  UCL  was transferred away from UCL in October 1998 to Paragon's
operations division  in Solihull, which is experienced in collecting on
various classes  of personal financial obligations.  During the year ended 30
September 1999,  there has been significant improvement in the cash collected
from the arrears accounts in  this  portfolio  and  it  is expected that this
trend  will  continue  going forward.

The  sales and underwriting side of this business continue to operate from
UCL's old  offices in Victoria although we intend to transfer all remaining 
parts  of the business to Solihull within the next eighteen months.

Conclusion

By virtue of the progress which has been made by the Group in recent years,
your Company  is  now in a position where it has businesses operating  in 
three  key sectors of the personal finance markets, each with opportunities
for significant future growth.

The  strategic direction which was determined two years ago remains
appropriate; our  new  businesses  draw on the core skills of the  Group  and 
each  has  the potential to grow and to generate profits which will build
Paragon strongly  and enhance  shareholder  value in the years ahead.  The 
economic  environment  and outlook,  both  in the UK and in the UK's major
trading partners overseas,  seem sufficiently  encouraging that we have set
strong attainable growth  targets  in our  three  year  forward plans.  This
planned growth has implications  for  the funding of the business in the
longer term which we shall address in due course. In  the  meantime,  our
policy of securitising all new assets generated  by  our businesses  will 
continue and this process still offers the most  prudent  long term, matched
and cost effective funding of our assets.

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