21st Feb 2006 07:01
Paragon Group Of Companies PLC21 February 2006 TRADING STATEMENT AND IFRS UPDATE --------------------------------- The Paragon Group of Companies PLC today announces an update on its currenttrading. It also announces that it will be briefing investors and analysts onthe key impacts of its adoption of International Financial Reporting Standards('IFRS'). The Group has adopted IFRS for the year ending 30 September 2006. Trading Statement Lending activity has been strong in the year to date, with completions alreadyin excess of £1 billion, some 60% higher than a year ago. This growth isprincipally attributable to the buy-to-let business, where application flows andcompleted loans are significantly ahead of the comparable period last year,whilst activity in the consumer finance businesses remains at similar levels tolast year in accordance with our expectations. The Board is confident, at this stage, that our objectives for this year will beachievable and we expect to be able to report good progress in our interimreport to shareholders during May. IFRS Update The IFRS briefing published today includes Income Statements for the six monthsended 31 March 2005 and the year ended 30 September 2005, Balance Sheets as at 1October 2004, 31 March 2005, 30 September 2005 and 1 October 2005, Statements ofRecognised Income and Expense for the periods ended 31 March 2005 and 30 September 2005 and Reconciliations of Movements in Equity for the periods ended 31 March 2005 and 30 September 2005 converted from UK GAAP to IFRS together with detailed explanations of the key changes. In accordance with the exemptions available in IFRS 1, the Group has notrestated its 2005 results for the effects of the adoption of IAS 32 and 39,dealing with financial instruments. The figures which will be shown ascomparatives in the 2006 accounts and interims are: 30 September 2005 31 March 2005 IFRS UK GAAP IFRS UK GAAPProfit for the period, excludingamortisation of goodwill £71.8m £72.7m £33.5m £33.9m* Profit after tax £55.8m £60.7m £25.9m £28.5m* Basic earnings per share 48.9p 53.3p 22.7p 24.9pNet assets £312.8m £308.0m £295.3m £291.3m * The UK GAAP figures include a credit to the profit and loss account of £4.1million for the year ended 30 September 2005, (£2.2 million for the six monthsended 31 March 2005) in respect of amortisation of negative goodwill, which isexcluded from the IFRS comparatives. The principal changes reflected above are: •Negative goodwill from the acquisition of Mortgage Trust no longer carried in the balance sheet and amortised. •Recognition of defined benefit pension scheme deficit in liabilities. •Dividends payable not recognised until approved. •Changes in treatment of leasehold assets. •Additional charges for share based payment. Whilst the effects of IAS 32 and 39 are not included in the statutorycomparatives, the Group has prepared pro forma comparatives which include theimpairment and amortised cost provisions of these standards. On this basis thereported figures would have been as follows: 30 September 2005 31 March 2005 IFRS UK GAAP IFRS UK GAAPProfit for the period, excludingamortisation of goodwill £71.7m £72.7m £34.5m £33.9m* Profit after tax £55.7m £60.7m £26.6m £28.5m* Basic earnings per share 48.8p 53.3p 23.3p 24.9pNet assets £244.4m £308.0m £227.7m £291.3m * The UK GAAP figures include a credit to the profit and loss account of £4.1million for the year ended 30 September 2005, (£2.2 million for the six monthsended 31 March 2005) in respect of amortisation of negative goodwill, which isexcluded from the IFRS comparatives. The IFRS pro forma profit is similar to the IFRS comparative profit shown aboveand results, through the application of IAS 32 and 39, from a £6.6 millioncredit from income recognition being offset by a £6.7 million increase inimpairment charges. On a divisional breakdown, a benefit of £6.6 million arisesin the Group's ongoing buy-to-let and consumer finance businesses, offset by areduction in profit within the Group's discontinued businesses (comprisingprimarily the unsecured personal loan book and the residual owner-occupiedmortgage portfolios) of £6.7 million against the comparative. The reduction in net worth as a result of the application of IAS 32 and 39arises principally from a reduction in the value of loans to customers withinthe Group's discontinued business areas, particularly the unsecured personalloan book where a high discount rate has been applied to expected cash flows. Accounting under IFRS does not affect the fundamentals of the Group's business,but reflects a different basis of measurement and presentation of itsperformance in any one accounting period. The business, its cash flows andhedging policies are unaffected by what is principally an issue of the timing ofrecognition of income, costs, assets and liabilities. For further information please contact: Nigel S TerringtonChief Executive - Telephone 0121 712 2024 or Nicholas KeenFinance Director - Telephone 0121 712 2060 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Paragon Group