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I have to say, this came as a surprise to me:

The Paragon Group of Companies PLC will shortly be meeting analysts ahead of its close period for the year ending 30 September 2005. The following is an update of the trading position of the Group ahead of the year end and follows the interim results which were announced on 25 May 2005.

The Board expects the results for the year to 30 September 2005 to be in line with market expectations.

Trading activity has strengthened over the course of the financial year after a comparatively slow first half, with loan advances in the second half of the year expected to be significantly ahead of first half volumes. This is attributable to a strong second half performance by the buy-to-let division, where second half advances will be well ahead of both the first half and the second half of 2004. As anticipated in our interim statement, consumer finance advances are likely 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 a proportion of total lending continues to decrease, reflecting the Group’s strategy to emphasise growth in the buy-to-let lending business.

The year end pipeline of mortgage loans awaiting completion is also expected to be greater than at the half year end, auguring well for mortgage advances as the Group moves into the next financial year.

Total loan assets are expected to be materially higher than a year ago, the strong growth in the buy-to-let portfolio more than compensating for the continuing run off of the owner-occupied mortgage and unsecured consumer books. Margins across the business are comparable with 2004 and, given a larger loan book, shareholders should expect to see strong growth in net interest income for the year.

The Group has maintained its conservative stance on credit across the lending businesses and the performance of the buy-to-let book remains exemplary. The performance 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 in 2004. As a percentage of assets, the charge for provisions for losses is expected to be similar to 2004.

Costs remain well controlled across the Group. A year on year improvement in the cost:income ratio is expected.

The outlook for landlords remains positive. Survey evidence continues to point to strong rental demand, which serves to improve returns to landlords and, for the Group, underpins the credit performance of the mortgage portfolio. The recent reduction in money market rates, with the prospect of more to come in future, will serve to improve net yields and we expect seasoned landlords to continue to take advantage of market weakness in building their portfolios.

In the interim report the Board outlined its proposals for capital management going forward. In line with that policy shareholders should expect a significant increase in dividend as dividend cover is moved towards the market level. The Board also announced at that time a share buyback programme of up to £20 million. 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 year ending 30 September 2005 on 23 November 2005 and a full report on the progress of the Group will be issued at that time.

The results for the year ending 30 September 2005 will be the last prepared under UK GAAP. The Board expects to provide a comparative report to shareholders setting out the impact of the introduction of International Financial Reporting Standards (“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

Nick Keen, Finance Director - 0121 712 2000

The Wriglesworth Consultancy

Mark Baker - 020 7845 7900

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Don't be surprised. Paragon's analyses make them a laughing stock in the property world.

They are the ultimate vested interest - claiming that all is well in the world of BtL as it collapses around their ears. Their creativity with financial figures knows no bounds.

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the trading statement comes as no surprise. If predictions of more people choosing to rent longer and putting off buying for a bit are true, then they have to live somewhere which is where the BTL landlords come in.  So it stands to reason those that can afford it will buy properties to rent out to those that can't afford to buy them. Hence Paragon's chosen main business getting stronger.

Its a little more comlplicated than that, you and brainclamp shoudl get together for a beer :)

People will buy property and rent them out to others when there is money to be made, they sure as hell wont do it as a favour.

So far we have seen everyman and his dog jump on the BTL bandwagon without even knowing what the term 'yield' means, they have completly relied on capital appreciation which when in a geared investment seems very attractive.

You take away capital appreciation and have to subsidise a tennant for living in 'your' house,what are you left with? Will all the so called rich folk keep pouring thier money down the drain? It, like all free markets has reached bubble proportion because of greater fool theory, now though there are less and less greater fools.

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ummm ... my comment was not tryig to justify anything though.  I was just saying trying to give a logicla explanation to why Paragon are doing well when people would expect them not to in the current slowdown.

you know me, any chance to blabber on abit :lol:

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I'm surprised because I would have thought that at current housing price levels, BTL would increasingly be less attractive and the number of mortgages arranged by Paragon would be slipping - irrespective of fudging (and to be frank its difficult to fudge the value of your loan book), and as a housing bear, I still think it is bullish that more BTL mortgages are being arranged by the company now compared to H2 2004 and H1 2005 - whichever way you want to look at it, I read that BTL'ers are certaintly not running out of the market.

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The recent reduction in money market rates, with the prospect of more to come in future, will serve to improve net yields and we expect seasoned landlords to continue to take advantage of market weakness in building their portfolios.

Begs the question of how best to season a landlord - salt and pepper or something more exotic?

:P

More to the point - they do at least admit market weakness

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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