Paragon Mortgages’ new lending volumes are significantly higher than in the previous year and the new business pipeline is at record levels. New lending by Britannic Money is ahead of our expectations at the time of the purchase, despite the fact that the commodity mortgage products were withdrawn shortly after the acquisition. The buy-to-let sector has continued to display all the robust characteristics that make this a defensive sector and the Board is confident of its prospects as we enter the new financial year.
Secured personal finance new lending has also experienced lending volumes significantly higher than last year. The Group’s strategic focus in recent years has been to expand its involvement in more defensive areas such as buy-to-let and secured personal finance. In pursuing this objective, we have continued to limit originations within the retail and car finance areas.
The Group’s various portfolios have continued to perform well with the arrears performance of both Paragon Mortgages and Britannic Money buy-to-let portfolios being exemplary.
Following the acquisition of Britannic Money at the end of June, the Group undertook a review with the intention of restructuring the business to restore it to profitability. Progress has been good and a number of plans have been implemented earlier than expected. Unprofitable products have been withdrawn and the company will be rebranded on 29 September 2003 to Mortgage Trust. A major restructuring has been announced which will see the majority of functions being relocated to the Group’s operations in either Solihull or London, primarily over the next three to six months. It is likely that virtually all of the restructuring costs will now be borne in the year to 30 September 2003.
Paragon has consistently reduced its cost income ratio over a number of years. There has been further progress compared to the same period last year, even allowing for the acquisition of Britannic Money. Further substantial savings are expected to arise as a result of the restructuring exercise, which should further benefit the cost income ratio in future.
The Directors are pleased to report that overall our expectations for the year ending 30 September 2003 remain unchanged.
The Board of Directors intends to announce the preliminary results for the year ending 30 September 2003 on 26 November 2003 and a full report on the progress achieved by the Group, including further detail of the integration of Britannic Money, will be issued at that time.
