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Arrow Global Group PLC - Results for the nine months ended 30 September 2016 PDF Print E-mail
Wednesday, 09 November 2016
Arrow Global Group PLC (the “Company”) and its subsidiaries (together the “Group”), a leading European purchaser and manager of debt portfolios, is pleased to announce its results for the nine months ended 30 September 2016 (“Q3 2016”). 

Commenting on today’s results, Tom Drury, Group chief executive officer of Arrow Global said: “Arrow Global continues to expand its European footprint and client offering across attractive markets where the Group is targeting leadership positions. This coupled with a high-quality and diversified investment portfolio, has enabled us to achieve another strong set of results.

“Total revenue for the period increased to £164.4 million, up 37.0% compared to the same period last year. Adjusted EBITDA increased 55.5% to £161.5 million and underlying net income increased 23.7% to £29.1 million. Following the successful integration of our Vesting Finance business, asset management revenues increased to £31.0 million (2015: £9.2 million).

“During the period, we saw good opportunities to invest and increased organic portfolio loan acquisitions for the year to £119.3 million, of which 51% were in mainland Europe. This excludes the Netherlands deal we announced in September that will see us co-invest €25 million in underlying loan assets of €1.7 billion from RNHB Hypotheekbank, which we expect to complete later in the year.

“In Q3 we achieved a material improvement in our funding, refinancing our £220 million bond with a coupon reduction of 2.75%. At the same time we reduced the cost of our revolving credit facility by 100bps and extended the availability to July 2021. As part of these activities we incurred pre-tax, non-recurring finance costs of £18.0 million, of which £8.7 million is cash. The Group’s overall cost of debt is now just 5%.

“As European banks continue to delever, we see a strong pipeline of opportunities, a trend that we expect to persist. Including the anticipated completion of the RNHB Hypotheekbank deal, we have a pipeline of over £38 million of portfolio purchases which have already been awarded for the rest of the year.

“Our portfolio purchases year-to-date, the good visibility on our pipeline and the continued strong performance of our enlarged asset management business, continue to lay the foundation for future earnings growth and means we are on track to deliver overall full-year earnings in line with our expectations.”

Highlights
· Total revenue up 37.0% to £164.4 million (Q3 2015: £120.0 million), driven by core collections up 38.9% to £216.1 million (Q3 2015: £155.5 million) and income from asset management up 236.6% to £31.0 million, leading to an increase in Adjusted EBITDA up 55.5% to £161.5 million (Q3 2015: £103.9 million)

· Profit attributable to shareholders of £11.5 million (Q3 2015: £20.4 million), including £17.6 million net non-recurring costs

· Underlying net income of £29.1 million (Q3 2015: £23.5 million), representing growth of 23.7%

· Interim dividend of 2.7p per share (H1 2015: 1.7p)

· Increased total purchased loan portfolios to £696.8 million (31 December 2015: £609.8 million) with 120-month ERC up 14.7% to £1,404.6 million (31 December 2015: £1,224.5 million) and 84-month ERC up 15.7% to £1,189.6 million (31 December 2015: £1,028.6 million)

· £154.6 million invested during the period, including organic portfolio purchases of £119.3 million

· Net debt £766.0 million and Net Debt to LTM Adjusted EBITDA ratio1 of 3.6x (31 December 2015: 3.8x)

· Material improvement in our funding, refinancing our £220 million fixed rate notes with coupon reduction of 2.75% and extended the maturity of the RCF on a reduced cost basis. As part of these activities we incurred pre-tax, non-recurring finance costs of £18.0 million, of which £8.7 million is cash

· Agreed terms to take ownership of an additional specialist servicing capability and enter into a five-year servicing agreement in the Netherlands to acquire the platform and loan book which comes from the real estate financing activities of RNHB Hypotheekbank
 

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