25th Aug 2020 10:29
(Alliance News) - Shares rose in Arrow Global Group PLC on Tuesday as the credit manager announced a confident outlook for the rest of 2020 despite reporting a loss and decline in collections for the first half.
Shares in Arrow Global were 16% higher at 92.60 pence on Tuesday morning in London.
For the six months to the end of June, Arrow Global - which buys debt from banks, credit card companies and telecommunications businesses - reported a pretax loss of GBP135.4 million, compared to a profit of GBP32.5 million the year before.
This was due to non-cash impairment losses of GBP133.6 million, compared to gains of GBP36.8 million the year prior, as a result of the write-down in the value of assets on the balance sheet relating to Covid-19.
In addition, core collections in the first half were down 13% to GBP175.8 million from GBP202.1 million, although Arrow Global noted an improved trend in collections in the second quarter, and an overall improvement in secured collections and real estate markets reopen.
As a result of this, total income fell sharply by 98% to GBP3.5 million from GBP177.7 million the year before, as Arrow posted a loss from portfolio investments of GBP42.4 million, although income from asset management was edged lower to GBP45.5 million from GBP45.6 million.
Arrow's leverage as at June 30 rose to 3.8% from 3.6% the year before. Leverage is a ratio showing secured net debt to last twelve months earnings before interest, taxes, depreciation, & amortization.
Arrow Global has not declared an interim dividend, and plans to return to regular payout once the short term increase in leverage has reduced to within the group's "risk appetite".
The company's 84-month estimated remaining collections stood at GBP1.57 billion at June 30, down from GBP1.75 billion the year before.
Arrow Global's 120-month estimated remaining collections stood at GBP1.76 billion at June 30, lower than GBP2.08 billion the year before.
Looking ahead, Arrow Global said its Fund Management business and Investment business are "well-placed" to take advantage of investment opportunities that are set to emerge from the economic dislocation of Covid-19.
This was attributed to high levels of liquidity during the second quarter of 2020, through actions taken to preserve cash, and securing EUR100 million in funding from the ABS facility.
Arrow Global expects to return to profitability in the second half of 2020, as it continues to manage its costs, recover cash collections and deploy its funds.
"I am proud of Arrow's response to the challenges posed by the pandemic. We have protected our people, strengthened our funding and balance sheet, maintained robust operational performance and supported our customers," said Chief Executive Officer Lee Rochford.
"As we exit the crisis, European banks will be under significant pressure to provision for non-performing loans. With EUR1.1 billion of discretionary undeployed fund management capital, we are extremely well placed to be a leading investor in this huge market with increasingly attractive returns," Rochford added.
By Dayo Laniyan; [email protected]
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