Paragon Group of Companies Q1 results in line with expectations

22nd Jan 2015 09:48

Specialist lending firm Paragon Group of Companies said its performance remained "strong" during the first quarter of the financial year. with results in line with forecasts.Specialist lending firm Paragon Group of Companies said its performance remained "strong" during the first quarter of the financial year and met management's expectations.The company, which offers buy-to-let mortgages to property investors in the UK, saw profit before tax increase to £30.2m from £27.1m in the same time period last year, while buy-to-let completions rose 58.4% to £222.1m.Paragon said it increased its available cash balances to £221.7m from £177.3m last year, thanks to strong cash generation from several loan portfolios.Paragon Bank continued to develop its retail savings proposition with deposit balances of £94.1m, which the firm said "will support the group's strategy to diversify its income streams and funding sources over time".The £50m share buyback programme announced in November has resulted in the acquisition of 1m shares so far at an individual price of £4.03.The Idem Capital division continued to perform well, the firm said, with cash recoveries coming in ahead of expectations for underwriting. There is also a strong pipeline in place for the purchase of larger portfolios of paying/performing loans. However, that means the timing of investment flows remained "unpredictable" given its intention to carry out further such acquisitions.Chief executive Nigel Terrington said: "The group is well placed to generate further growth in each of its target markets and continues to focus on improving shareholder returns through active capital management."Very mixed verdict from analystsShore Capital analysts have a 'buy' recommendation on the stock and a 412p target price as the "upbeat" results showed "continued strong momentum in key business metrics".However, broker Numis has the shares at a 'sell' with a target price of 268p, as they believe the mark-to-market net asset value is "substantially lower than that disclosed"."The return on equity remains about the worst in the sector with unsustainable below the margins flow margins, almost no impairment and exceptional returns from Idem," the broker continued.Shares were up 1.36% to 417.8p on Thursday at 10:17.