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.
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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.
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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
