Paragon produces record revenues and hikes dividend

The Paragon Group produced record profits for the full year, enabling a 50 per cent hike in its dividend and the promise of a progressive payout policy.

For the year ended September 30th, this specialist buy-to-let and consumer finance group saw total operating income of £170.2m (2011: £150.9m), producing pre-tax profits of £95.5m (£80.8m).

Earnings per share were 24.2p (2011: 20.2p), an increase of 19.8% from last year reflecting the improved profits earned by the group and a reduction in the tax rate. The increase in profit has also improved Paragon's return on equity to 9.3% from 8.3% for the previous year.

The company said that its strategic focus has remained unchanged; to generate growth through its buy-to-let origination franchise, through investment in loan portfolios and by exploiting new opportunities; and to maintain close management of the existing loan portfolio, which performed well in the year.

Idem Capital, its dedicated investment subsidiary, successfully built on the five portfolios purchased in prior years with further investments during the financial year totalling £115.4m.

Paragon Mortgages and Mortgage Trust, its buy-to-let origination brands, now fully re-established following the recommencement of new lending in 2010, advanced new loans of £184.3m (2011: £127.0m).

In addition, a strong pipeline of business was in place at the end of the year, which, combined with the 125% increase in warehouse capacity (a short-term revolving credit facility extended by a financial institution to a mortgage loan originator for the funding of mortgage loans), illustrates its belief that lending volumes will increase in the new financial year.

It has proposed a final dividend of 4.50p per share (2011: 2.65p) which, when added to the interim dividend of 1.50p, gives a total dividend of 6.00p per share for the year (2011: 4.00p), an increase of 50%.

It intends to pursue a progressive dividend policy so that, by 2016 and thereafter, dividend cover will be maintained in the range 3.0 to 3.5 times.

CM