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Arrow Global Group PLC - Preliminary results for the year ended 31 December 2017 PDF Print E-mail
Thursday, 01 March 2018
Arrow Global Group PLC (the “Company” or the “Group”), a leading European credit management services provider focusing on loan purchases and specialist asset management, announces its results for the year ended 31 December 2017. 


High growth
Revenue growth of 35.2%, driven by a 19.7% increase in core collections and a 53.5% increase in Asset Management income Assets under management increased from €41.3 billion to €53.4 billion
Acquisition of Mars Capital completed, providing entry into the attractive Irish and UK secured markets and a strategic partnership with Oaktree Capital
Continued to execute on our Italian strategy following the acquisition of Zenith; the number of Italian portfolio acquisitions was ahead of forecast and have outperformed underwriting estimates
Announcement of two bolt-on business acquisitions in Italy covering high value niches that will enhance the Group’s franchise and materially expand its servicing offering to clients
Announcement of a co-investment partnership with a tier one institutional investor, marking a further incremental step in our strategy to offer specialist discretionary asset management services for clients
The outlook for Non-Performing Loan (NPL) supply across Arrow’s markets remains highly attractive, driven by the European Central Bank (ECB) guidance on accelerated provisioning for NPLs, and IFRS 9

Operational excellence
· Overall collections performance remained strong at 103% of original underwriting forecasts, underlining the quality of our data, analytics and consistent track record of outperformance Record portfolio acquisitions of £223.9 million, with over £50.0m committed for Q1, demonstrates the depth of our origination network and reflects the pan-European nature of our flow, with 63.3% ex-UK
· Market-leading platforms now in place across 6 European markets
· Strength and breadth of origination platform led to a record number of portfolio purchases, highly diversified by geography and asset class, with over 70% of portfolio purchases transacted off-market
· Maintained stable, attractive returns across all geographies

‘One Arrow’ investment programme launched across the Company creating a platform for sustainable growth and the prospect of a more efficient Pan-European Group

New Executive Committee structure implemented, with further depth added by the appointment of a new Group Chief Operating Officer and Group Chief Risk Officer

Financial excellence
· 84-month ERC increased to £1,516.9m (FY 2016: £1,339.1m)
· 53.5% increase in capital-light Asset Management revenues to £71.1m (FY 2016: £46.3m)
· Successfully raised €400 million senior secured floating rate notes due 2025, at a coupon of E+2.875%, reducing the Group’s weighted average cost of debt to 3.9% (FY 2016: 4.9%) and increasing average debt facility maturity to 6.1 years (FY 2016: 5.8 years)
· Secured net debt to adjusted EBITDA reduced to 3.9x, within guided range
· IFRS 9 to have minimal balance sheet impact

Strong returns
· 24.1% increase in underlying profit after tax to £56.6m (FY 2016: £45.6m)
· 51.7% increase in statutory profit after tax to £39.9m (FY 2016: £26.3 m)

24.1% increase in underlying basic earnings per share (EPS) to 32.4p (FY 2016: 26.1p)

51.0% increase in basic earnings per share to 22.8p (FY 2016: 15.1p)

Underlying Return on Equity (ROE) of 32.9% (FY 2016: 29.1%)

Commenting on today’s results, Lee Rochford, Group Chief Executive Officer of Arrow Global, said: “2017 was a transformational year for Arrow Global. Our strong underwriting performance and specialised asset management capabilities meant that we have again delivered strong returns to shareholders. The shape of our earnings is also continuing to evolve, with higher quality, capital light revenues from our asset management operations growing by over 50%.

With the acquisition of Mars Capital in the UK and Ireland, we added another country to our geographic portfolio. The strategic partnership with a tier-one institutional investor, and the two Italian acquisitions we have announced today, also mark an important step in our European expansion strategy and progress towards building a track record of running discretionary assets for fund clients. There has been strong demand for this offering from our clients, and we are focused on fulfilling their operational needs.

The Arrow model is highly differentiated. We are a sophisticated investor and asset manager, underpinned by our strong institutional investor client relationships and unique servicing capabilities; we are not a bulk buyer of loans with vanilla servicing platforms. Looking ahead, I’m confident that this approach will support medium term EPS growth in the high teens, and I look forward to updating the market further on strategy at our capital markets day on 8 November 2018.”

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