Arrow Global returns to first quarter profit

Lee Rochford

Arrow Global, the Manchester-based debt purchase and management specialist, revealed strong cashflow generation, deleveraging and further funding diversification from its first securitisation, today.

Reporting first quarter results to March 31, it confirmed a pre-tax profit of £15.753m, compared with a pre-tax loss of £7.594m the previous year.

Organic portfolio purchases of £56.4m compared with £79.9m a year ago, while core collections increased 22.7% to £105.5m.

Free cashflow grew 32% to £57.8m, and there was a significant reduction in leverage ratio to 3.4x from 4.0x at the same point a year ago.

Underlying profit before tax increased 14.1% to £16.2m, against £14.2m last time, and the company said securitisation in April further diversifies the funding structure.

Chief executive Lee Rochford said: “Our strong focus on returns and an improving pricing environment means that we took the decision in the first quarter to purchase fewer portfolios, conserving investment firepower for later in the year.

“Our strong pipeline visibility means that we remain confident in achieving around £250m of portfolio purchases at our target returns.”

He said: “Arrow Global is a highly cash generative business and this is evident when purchases are scaled back, driving the three-point reduction in leverage from 3.7x at the full year to 3.4x at the end of Q1.

“While leverage is likely to modestly rise from here as purchases increase, before trending down again by year end, we remain confident that our target leverage range of 3.0x-3.5x is a sustainable level for the business.”

He added: “The announcement today of our first securitisation of loan portfolios via a £100m revolving commitment adds an important element of diversification to our funding structure at attractive cost and modest scale.

“We are pleased with the investment returns we have achieved so far in Q1 and believe that the pricing environment will continue to improve.

“Cash generation will continue to be a major priority through a heavy focus on delivering strong returns and our cost efficiency agenda.”

Click here to sign up to receive our new South West business news...
Close