Arrow Global Group has announced its results for the three months ended 31 March 2017. Commenting on the results, Lee Rochford, Group chief executive officer of Arrow Global, said: “In Q1 Arrow Global delivered another impressive quarter of profitable growth. Revenues grew 45% and underlying profit after tax was up 37%.
“It was a strong start to the year for origination activity, with organic purchases of £77.4 million reflecting the strength of our European franchise where we have built leading positions in our chosen markets. Approximately two-thirds of this came from off-market trades, demonstrating the unique aspects of our business model. We continued to make progress on our strategic drive to diversify our revenue, with capital-light asset management revenues accounting for 24% of total revenues. These high-quality revenue streams add further visibility to our earnings and are accretive to ROE.”
“A robust pipeline across our geographic footprint gives us confidence in our ability to meet earnings expectations for the year. We also retain confidence in our medium-term objectives of an underlying ROE percentage in the mid-twenties, high teen EPS growth and a progressive dividend policy.”
Result highlights include:
- Growth in underlying profit after tax up 37% to £10.3 million (Q1 2016: £7.6 million)
- Loss after tax of £11.7 million (Q1 2016: £7.6 million profit). This includes post tax one-off costs associated with the re-financing in March 2017 of £22.0 million
- Growth in underlying basic earnings per share (EPS) increased 37% to 5.9p (Q1 2016: 4.3p)
- Underlying LTM Return on Equity (ROE) of 30.8% (Q1 2016: 26.2%)
- Growth in total revenues, which increased by 45% to £64.5 million (Q1 2016: £44.5 million), driven by an increase in core collections to £77.1 million (Q1 2016: £67.0 million) and asset management income to £15.7 million (Q1 2016: £7.2 million), resulting in an increase in Adjusted EBITDA of 9% to £56.5 million (Q1 2016: £51.7 million)
- Capital-light asset management revenues now constitute 24% of total revenues (Q1 2016: 16%)
- Strong organic portfolio purchases of £77.4 million (Q1 2016: £49.1 million), with the investment, spread geographically: UK 56%; Portugal 17%; Netherlands 22%; Italy 5%
- Our purchased loan portfolio asset base and loan notes increased by 6% taking total balance sheet value to £855 million (31 December 2016: £804 million), which is reflected in the increased value of the 84-month ERC from £1,339 million to £1,404 million, up 5%
- Issued €400 million senior secured notes due 2025, at a coupon of E+2.875% which is a record low rate for financing in the industry. The proceeds were used to redeem oexisting E+5.25% €335 million 2021 notes, pay the early redemption fee and transaction costs and repay drawings under our revolving credit facility
- Group’s weighted average cost of debt is now 4.0% and average debt facility maturity 6.8 years
- Commenced group-wide projects to further enhance the group’s risk, capital allocation and portfolio management capabilities, together with investment in new operating and IT platforms in Portugal and the Netherlands
- On 28 April, Arrow completed the acquisition of Zenith Service S.p.A., (“Zenith”), marking formal entry into the highly active Italian market and further enhancing mainland European capabilities. In addition, Arrow completed its first portfolio acquisition in Italy with a €4.8 million investment in a portfolio of unsecured receivables.
