REG - Paragon Grp Co PLC - Half-year Report <Origin Href="QuoteRef">PARA.L</Origin> - Part 5

Paragon BankingAnnouncement

23/05/2017 07:07

- Part 5: For the preceding part double click  ID:nRSW8984Fd 

(305.3)        (310.1)            
 Net cash generated / (utilised) by investing activities  4.9            (285.9)        (278.6)            
 
 
29.  NET CASH FLOW FROM FINANCING ACTIVITIES 
 
                                                Six months to  Six months to  Year to            
                                                31 March2017   31 March2016   30 September 2016  
                                                £m             £m             £m                 
                                                                                                 
 Shares issued                                  1.5            0.1            -                  
 Dividends paid (note 21)                       (25.4)         (21.7)         (33.9)             
 Issue of asset backed floating rate notes      -              460.3          531.0              
 Repayment of asset backed floating rate notes  (561.6)        (601.3)        (1,137.2)          
 Issue of corporate bonds                       -              -              149.0              
 Sterling monetary framework drawings           345.0          -              -                  
 Movement on bank facilities                    (125.6)        84.4           145.5              
 Purchase of shares (note 22)                   (27.0)         (40.0)         (59.9)             
 Net cash (utilised) by financing activities    (393.1)        (118.2)        (405.5)            
 
 
30.  RELATED PARTY TRANSACTIONS 
 
In the six months ended 31 March 2017, the Group has continued the related party relationships described in note 66 on page
291 of the Annual Report and Accounts of the Group for the financial year ended 30 September 2016. Related party
transactions in the period comprise the compensation of the Group's key management personnel, transactions with the Group
Pension Plan and fees paid to a non-executive director in respect of his appointment as a director of the Corporate Trustee
of the Group Pension Plan. There have been no changes in these relationships which could have a material effect on the
financial position or performance of the Group in the period. 
 
Save for the transactions referred to above, there have been no related party transactions in the six months ended 31 March
2017. 
 
31.  CONduct 
 
Over recent years, in common with other financial services firms, the Group has followed guidance issued by the FCA in
respect of redress to customers in respect of the misselling of payment protection insurance ('PPI'), though the sums
involved have not been material. 
 
In November 2014 the UK Supreme Court handed down its decision in Plevin v Paragon Personal Finance Limited ('Plevin'),
which addressed potential liability in respect of PPI claims under section 140 of the Consumer Credit Act 1974, where
commission charged to the customer was particularly high. On 2 October 2015, the FCA published a statement outlining
proposed rules addressing the handling of PPI cases in the light of the Plevin decision and including a deadline beyond
which no further new PPI claims would be required to be considered. These rules were finalised in a policy statement issued
in March 2017. 
 
A balance of £1.1m is recognised in other liabilities in respect of such claims and other section 140 related issues. 
 
The Group has reviewed its current exposure to such matters in the light of the Court's judgement in Plevin and the FCA
proposals and its current expectation is that it will suffer no material additional costs from such claims. However, this
assessment is based on our current interpretation of both the Plevin judgement and the rules, while interpretations may
develop as both the judgement and the rules are implemented. Therefore, it is possible that the maximum possible liability
may be greater. 
 
INDEPENDENT REVIEW REPORT 
 
TO THE PARAGON GROUP OF COMPANIES PLC 
 
Introduction 
 
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 31 March 2017 which comprises the income statement, the statement of comprehensive income, the
balance sheet, the cash flow statement, the statement of movements in equity and related notes 1 to 31. We have read the
other information contained in the half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed set of financial statements. 
 
This report is made solely to the Company in accordance with the terms of our engagement to assist the company in meeting
the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK
FCA'). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in
this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company for our review work, for this report, or for the conclusions we have reached. 
 
Directors' responsibilities 
 
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 
 
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 
 
Our responsibility 
 
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review. 
 
Scope of Review 
 
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of
Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board
for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion. 
 
Conclusion 
 
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 March 2017 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA. 
 
Andrew Walker 
 
for and on behalf of KPMG LLP 
 
Chartered Accountants 
 
One Snowhill 
 
Snow Hill Queensway 
 
Birmingham 
 
B4 6GH 
 
23 May 2017 
 
The Paragon Group of Companies PLC 
 
ADDITIONAL FINANCIAL INFORMATION 
 
For the six months ended 31 March 2017 
 
A.   COST:INCOME RATIO 
 
Cost: income ratio is derived as follows: 
 
                              31 March 2017  31 March 2016  30 September 2016  
                                                                               
 Operating expenses (£m)      50.4           49.4           92.5               
 Total operating income (£m)  123.7          122.3          244.0              
 Cost ¸ Income                40.7%          40.4%          37.9%              
 
 
B.   UNDERLYING PROFIT 
 
Underlying profit is determined by excluding from the operating result fair value accounting adjustments arising from the
Group's hedging arrangements. 
 
                                                     31 March 2017  31 March 2016  30 September 2016  
                                                     £m             £m             £m                 
 Paragon Mortgages                                                                                    
 Profit before tax for the period (note 6)           33.8           44.6           89.5               
 Exclude:    Fair value (gains) / losses             (0.2)          0.1            0.4                
                                                     33.6           44.7           89.9               
 Idem Capital                                                                                         
 Profit before tax for the period (note 6)           22.3           25.5           45.4               
 Exclude:    Fair value losses / (gains)             -              -              -                  
                                                     22.3           25.5           45.4               
 Paragon Bank                                                                                         
 Profit / (Loss) before tax for the period (note 6)  13.3           (0.6)          8.3                
 Exclude:    Fair value losses / (gains)             0.9            (0.2)          0.2                
                                                     14.2           (0.8)          8.5                
 Total                                                                                                
 Profit before tax for the period                    69.4           69.5           143.2              
 Exclude:    Fair value losses / (gains)             0.7            (0.1)          0.6                
 Underlying profit before tax                        70.1           69.4           143.8              
 
 
C.   INCOME STATEMENT RATIOS 
 
The average net interest margin is calculated as follows: 
 
                                                                  Six months to  Six months to  Year to            
                                                                  31 March2017   31 March2016   30 September 2016  
                                                                  £m             £m             £m                 
                                                                                                                   
 Opening loans to customers (note 14)                             10,737.5       10,062.4       10,062.4           
 Closing loans to customers (note 14)                             10,940.2       10,853.1       10,737.5           
 Average loans to customers                                       10,838.9       10,457.8       10,400.0           
 Net interest                                                     113.5          109.8          223.2              
 Annualised net interest margin                                   2.11%          2.11%          2.15%              
                                                                                                                   
 Impairment provision                                             3.2            3.5            7.7                
 Impairment as a percentage of average loan balance (annualised)  0.06%          0.07%          0.07%              
 
 
D.   Net asset value 
 
                                                 Note  Six months to  Six months to  Year to            
                                                       31 March2017   31 March2016   30 September 2016  
                                                                                                        
                                                                                                        
 Total equity (£m)                                     994.2          964.4          969.5              
                                                                                                        
 Outstanding issued shares (m)                   19    296.5          309.6          295.9              
 Treasury shares (m)                             22    (21.9)         (22.9)         (15.3)             
 Shares held by ESOP schemes (m)                 22    (2.2)          (3.2)          (3.6)              
                                                       272.4          283.5          277.0              
                                                                                                        
 Net asset value per £1 ordinary share                 £3.65          £3.40          £3.50              
                                                                                                        
 Tangible equity (£m)                            4     889.6          877.4          864.1              
                                                                                                        
 Tangible net asset value per £1 ordinary share        £3.27          £3.09          £3.12              
 
 
This information is provided by RNS
The company news service from the London Stock Exchange