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Arrow Global Group PLC Interim results for the nine months to 30 September 2017 PDF Print E-mail
Thursday, 09 November 2017
Arrow Global Group PLC (the “Company”) and its subsidiaries (together the “Group”), a leading European credit management services provider, focusing on loan purchases and specialist asset management, announces its results for the nine months ended 30 September 2017 (“Q3 2017”). 

Highlights

High growth

Strong organic portfolio purchases, increasing 30% to £155.0 million (Q3 2016: £119.3 million) with significant diversification by geography and asset class
Revenue growth of 41% supported by a 13% increase in core collections and a 64% increase in Asset Management income
Zenith performing well and continuing to increase the Group’s Italian market expertise and build valuable relationships
Attractive outlook for NPL supply across Arrow’s markets, with support from recent ECB guidance on accelerated provisioning

Operational excellence

· Overall collections performance at 103% of original underwriting forecasts, underlining the quality of our data and analytics and consistent track record of outperformance
· One Arrow launched and on track to drive future efficiency gains and sustained growth

Legal collection investment continuing to drive value of the back book and additional ERC

Financial excellence

· 84-month ERC increased to £1,455.6 million (Q3 2016: £1,189.6 million)
· 64% increase in capital-light Asset Management revenues to £50.6 million
· 6% reduction in financing costs to £33.5 million (Q3 2016: £35.5 million) as benefits of refinancing begin to flow through
· Long debt duration with average facility maturity of 6.4 years as at 30 September 2017 (30 September 2016: 6.2 years)
· Secured net debt to adjusted EBITDA reduced to 4.0x, within guided range

Strong returns
· 34% increase in underlying profit after tax to £38.9 million (Q3 2016: £29.1 million)
· 39% increase in statutory profit after tax to £16.0 million (Q3 2016: £11.5 million)
34% increase in underlying basic earnings per share (EPS) to 22.3p (Q3 2016: 16.7p)
Underlying LTM Return on Equity (ROE) of 33.9% (Q3 2016: 27.4%)

Outlook

Continue to see attractive opportunities across core markets
Sustained pressure for banking reform across Europe provides growth opportunities
One Arrow investment programme on track to deliver enhanced operational capabilities and efficiency gains from 2019 onwards
Continued confidence in ability to meet earnings expectations for the year, deliver a medium-term underlying ROE percentage in mid-twenties, high-teens EPS growth and a progressive dividend policy
Focus for last quarter of 2017 remains consistent:
High growth – a highly visible runway of significant long-term growth, underpinned by our unique origination capabilities, geographic reach and diversification by asset class
Operational excellence – a focus on securing the right outcomes for our customers and leveraging our data, scale and track-record to drive competitive advantage
Financial excellence – a rigorous focus on robust underwriting, selective portfolio bidding and cost management, geared towards delivering sustainable profitability
Strong returns – a high-return business model, enabling future growth and capital distribution

Lee Rochford, Group Chief Executive Officer, commented: “In the first nine months of the year, Arrow continued to grow strongly and profitably. Portfolio purchases in the period increased by 30%, and we are on track to meet our guidance of completing total purchases of approximately £200.0 million by the year end. The capital light asset management business has also seen excellent growth, and we expect this to continue into 2018 following the close of the acquisition of Mars Capital later this year.

We are delivering on our One Arrow initiative, investing in the people, processes and systems that the business requires to enhance performance and future efficiency. As previously guided, the benefit of this programme will start to be realised in 2019.

Our focus on consistent, high returns has meant underlying LTM ROE increased to 33.9% - ahead of our guidance of mid-twenties over the medium-term. We are also executing efficiently on our strategy of diversifying by geography, asset class and revenue stream. Our consistent delivery, and the growing opportunity across all of our core markets, gives us confidence that we will deliver on expectations for the full year.”
 

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