21st Sep 2005 07:00
Paragon Group Of Companies PLC21 September 2005 The Paragon Group of Companies PLC TRADING STATEMENT ----------------- The Paragon Group of Companies PLC will shortly be meeting analysts ahead of itsclose period for the year ending 30 September 2005. The following is an updateof the trading position of the Group ahead of the year end and follows theinterim results which were announced on 25 May 2005. The Board expects the results for the year to 30 September 2005 to be in linewith market expectations. Trading activity has strengthened over the course of the financial year after acomparatively slow first half, with loan advances in the second half of the yearexpected to be significantly ahead of first half volumes. This is attributableto a strong second half performance by the buy-to-let division, where secondhalf advances will be well ahead of both the first half and the second half of2004. As anticipated in our interim statement, consumer finance advances arelikely to be broadly flat between the first and second halves of the year,leaving them overall below the level for 2004. Consumer finance lending as aproportion of total lending continues to decrease, reflecting the Group'sstrategy to emphasise growth in the buy-to-let lending business. The year end pipeline of mortgage loans awaiting completion is also expected tobe greater than at the half year end, auguring well for mortgage advances as theGroup moves into the next financial year. Total loan assets are expected to be materially higher than a year ago, thestrong growth in the buy-to-let portfolio more than compensating for thecontinuing run off of the owner-occupied mortgage and unsecured consumer books.Margins across the business are comparable with 2004 and, given a larger loanbook, shareholders should expect to see strong growth in net interest income forthe year. The Group has maintained its conservative stance on credit across the lendingbusinesses and the performance of the buy-to-let book remains exemplary. Theperformance of the consumer books has improved from the first half of the year,although the charge for provisions for losses will be higher in 2005 than in2004. As a percentage of assets, the charge for provisions for losses isexpected to be similar to 2004. Costs remain well controlled across the Group. A year on year improvement in thecost:income ratio is expected. The outlook for landlords remains positive. Survey evidence continues to pointto strong rental demand, which serves to improve returns to landlords and, forthe Group, underpins the credit performance of the mortgage portfolio. Therecent reduction in money market rates, with the prospect of more to come infuture, will serve to improve net yields and we expect seasoned landlords tocontinue to take advantage of market weakness in building their portfolios. In the interim report the Board outlined its proposals for capital managementgoing forward. In line with that policy shareholders should expect a significantincrease in dividend as dividend cover is moved towards the market level. TheBoard also announced at that time a share buyback programme of up to £20million. To date, 1,790,000 shares have been repurchased at an average price of£4.64 per share. The Board of Directors intends to announce the preliminary results for the yearending 30 September 2005 on 23 November 2005 and a full report on the progressof the Group will be issued at that time. The results for the year ending 30 September 2005 will be the last preparedunder UK GAAP. The Board expects to provide a comparative report to shareholderssetting out the impact of the introduction of International Financial ReportingStandards ("IFRS") on the 2005 results in advance of the 2006 interim results,which will be prepared under IFRS. For further information, please contact: The Paragon Group of Companies PLC The Wriglesworth ConsultancyNick Keen, Finance Director Mark Baker Tel: 0121 712 2000 Tel: 020 7845 7900 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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