Paragon's chief executive Nigel Terrington was in an upbeat mood after the specialist buy-to-let lender pushed operating profits ahead by 45.9 per cent to £66.1m. And, by and large, he has succeeded in meeting the three targets the group set itself at the beginning of the year. These were to arrange a warehouse facility to allow new lending to recommence, protect shareholders' equity and develop new sources of income.
During the year, Paragon secured a £200m warehouse facility with Macquarie Bank which it will use to finance new mortgage lending. And there is plenty of demand, too, especially with more and more potential first-time house buyers opting instead to rent because of the mortgage scarcity. Protecting shareholders' funds has been achieved by maintaining a strict lending criteria, so that impairment provisions fell 40.5 per cent to £39.2m. In fact, loan arrears stood at just 0.83 per cent of the portfolio compared with a market average of 2.45 per cent. Paragon has also been busy developing new sources of revenue, including the purchase of buy-to-let portfolios from other lenders.
Broker Arden Partners is forecasting 2011 adjusted pre-tax profits of £72m and diluted EPS of 17.2p (from £66m and 17.8p in 2010).
PARAGON (PAG) | ||||
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ORD PRICE: | 162p | MARKET VALUE: | £484m | |
TOUCH: | 161-162p | 12-MONTH HIGH: | 183p | LOW: 113p |
DIVIDEND YIELD: | 2.2% | PE RATIO: | 9 | |
NET ASSET VALUE: | 232p |
Year to 30 Sep | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|
2006 | 82.8 | 61.2 | 17.0 |
2007 | 91.0 | 56.8 | 8.0 |
2008 | 53.7 | 17.9 | 3.0 |
2009 | 54.3 | 13.9 | 3.3 |
2010 | 71.8 | 18.3 | 3.6 |
% change | +32 | +32 | +9 |
Ex-div: 12 Jan Payment: 14 Feb |