9th May 2019 12:11
LONDON (Alliance News) - Credit manager Arrow Global Group PLC said Thursday it swung to a profit in the first quarter with core collections rising sharply.
In the three months to March 31, Arrow Global - which buys debt from banks, credit card companies and telecommunications businesses - reported a pretax profit of GBP15.8 million compared to a loss of GBP7.6 million the year before.
Arrow's core collections in the first quarter were up 23% year-on-year to GBP105.5 million from GBP86.0 million the year before. The company's third party asset management & servicing income increased 22% to GBP23.0 million.
The company's total income increased 12% to GBP86.6 million from GBP77.1 million. Arrow's income from portfolio investments increased 9.1% in the period to GBP63.6 million.
"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 GBP250 million of portfolio purchases at our target returns," said Chief Executive Lee Rochford.
Arrow's leverage at March 31 reduced to 3.4% from 4.0% the year before. The ratio stood at 3.7% at December 31. Leverage is a ratio showing secured net debt to last twelve months earnings before interest, taxes, depreciation, and amortization.
Rochford continued: "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 the end of the first quarter. 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 3.0% to 3.5% is a sustainable level for the business."
The company's 84-month estimated remaining collections stood at GBP1.60 billion at March 31 compared to GBP1.56 billion the year before, a 2.6% rise.
Arrow Global's 120-month estimated remaining collections stood at GBP1.94 billion at March 31 compared to GBP1.85 billion the year before, a 4.9% rise.
"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," Rochford added.
Shares in Arrow Global were down 1.7% Thursday at 191.70 pence each.
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