Debt purchaser Arrow Global has announced pre-tax losses of £114.8 million for 2020 loss as lockdown restrictions across the UK and Europe affected cash collections and portfolio acquisitions.
The pre-tax loss for the year to 31 December 2020, is down from a £51.3 million profit in 2019. The group said the loss was driven by non-cash impairment from estimated remaining collections (ERC) asset write-down taken in the first half of 2020.
The company reported cash collections of £338.9 million, down from £442.3 million in the prior year. Despite the fall into loss, Arrow said it had managed to be cash positive with liquidity headroom of £174.6 million.
It said the economic outlook looked ‘more positive’ than original forecasts used to inform ERC write-down. However, it said economic dislocation is expected to present increased investment and asset servicing opportunities.
Arrow Global CEO Lee Rochford said “Despite the disruption from COVID-19, the Group performed resiliently in 2020.”
“Decisive management action taken early in the year ensured the maintenance of strong liquidity levels and the business registered a clear return to profitability in H2 2020 following the non-cash impairment in H1 2020 relating to the ERC asset write-down.”
“It is exciting to see a notable increase in investment returns available in the market as economic dislocation generates new opportunities.”
“We are therefore confident that we will continue to increase investment volumes and win new servicing contracts, driving further capital-light revenue increases and positioning us well to start raising the ACO 2 fund faster than originally planned.”
“Trading in 2021 has started the year strongly. Our new set of five-year targets demonstrate our confidence in our ability to grow both the quantum and quality of the Group’s earnings significantly as we look to raise new funds and grow funds under management.”