Paragon increases its 2014 full year dividend by 25%. Announces £50m buyback.

HIGHLIGHTS

Underlying profits increased by 18.1% to £122.2 million from £103.5 million in 2013

Strong progress in buy-to-let and debt purchase divisions. Banking franchise established. All divisions showing strong growth prospects

Buy-to-let completions increased by 82.5% to £656.6 million (2013: £359.8 million); pipeline increased by 78.9% to £414.8 million (2013: £231.9 million)

Idem Capital increased its investments, net of debt, by 89.3% to £175.7 million (2013: £92.8 million)

Paragon Bank launched car finance, second mortgage and buy-to-let operations

Significant progress achieved in Group's funding diversification strategy

Paragon Bank's retail deposit taking activities commenced in June 2014, with £60.1 million of deposits by the year end

Second retail bond completed, taking cumulative issuance to £185.0 million

Two bespoke financing packages, totalling £185.6 million raised to support Idem Capital

Warehouse facilities for buy-to-let lending increased to £550.0 million

Securitisation issuance totalled £929.7 million over the last 12 months

Capital management

Strong increase of 20.2% in net cash generation to £157.8 million (2013: £131.3 million)

Group capital ratios remain strong with Core Tier 1 ratio of 19.7% and leverage ratio of 8.3%

2014 dividend cover ratio at top of the targeted range of 3.0 to 3.5 times, two years ahead of expectations

Initial £50.0 million share buy-back programme announced

Outlook

Strong new lending and debt purchase pipelines, together with the development of Paragon Bank, present significant growth prospects

Funding diversification programme and improving debt capacity underpin sustainable growth

Shareholder returns enhanced by higher dividends and capital management programme

Commenting on the results, Nigel Terrington, Chief Executive of Paragon, said:

"The past year has seen considerable progress in the Group's strategic plans and in the performance of its businesses. Paragon Mortgages and Idem Capital have witnessed significantly increased new business and are well positioned for further growth. Significant progress has also been achieved in diversifying further the Group's funding sources. In particular, the formation of Paragon Bank has provided us with the opportunity to diversify further both income streams and funding and we expect it to play an important role in the Group's future plans.

The Group benefits from a strong capital position and I am pleased to announce a 25% increase in the dividend, as well as an initial £50 million share buy-back programme, as we seek to complement strong and sustainable growth with improving shareholder returns."