Profits at mortgage group Pepper up sharply to €6.6m

Profits at Pepper Ireland, the mortgage provider that also manages loan portfolios for other groups, rose by 61 per cent in 2014 to €6.6 million, according to its latest financial statements.

The accounts also show that Pepper is in dispute with the Revenue Commissioners about the use of an unspecified amount of deferred tax assets. Pepper Finance Corporation (Ireland) Ltd utilised tax losses of €840,773 to help reduce its corporation tax bill for 2014 to €73,604.

Revenue appeal

In a note to the accounts, the company said it had received a “determination” from the Revenue Commissioners in relation to the availability of certain trading losses. This has been appealed and the “appeals process is ongoing”. No additional comment was available from the company yesterday on this matter.

Pepper’s revenues rose by 41 per cent to just more than €27 million while administrative expenses increased by 43 per cent to under €25 million. This gave it an operating profit of €1.2 million for the year. A €2.5 million gain on the sale of an investment along with net interest income of just more than €2 million left it with a pre-tax profit of €6.6 million. It did not pay a dividend in 2014, unlike 2013 when it paid €7 million to its Australian parent company.

Its payroll costs rose to €11 million from €7.2 million in 2013. Total remuneration for its five directors, including its chief executive Paul Doddrell, rose by 32 per cent to just under €1.2 million.

Portfolio

Pepper’s net assets increased to €19.6 million from €13 million and at the end of 2014, its assets under management stood at €11 billion compared with €2.9 billion in the previous period.

Australian financial group Pepper set up in Ireland in 2012, acquiring about 3,000 mortgages from GE Capital Woodchester Home Loans Ltd. It secured a number of new mandates in 2014, including Project Sand, which requires servicing on residential mortgage loans acquired by an affiliate of the Lone Star Funds from the liquidators of Irish Bank Resolution Corporation. It is managing a portion of the Project Stone portfolio of commercial loans acquired by CarVal Investors and Goldman Sachs from IBRC. Pepper was a co-investor in this transaction.

In addition, it is servicing 14,000 residential mortgage and personal loan customers for Danske Bank and is managing 2,000 buy-to-let mortgage accounts from Project Parasol.