ARROW GLOBAL GROUP PLC TIDMARW
RNS Number : 9819V
Arrow Global Group PLC
09 November 2017
9 November 2017
Arrow Global Group PLC
Interim results for the nine months to 30 September 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
GBP155.0 million (Q3 2016: GBP119.3 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 GBP1,455.6 million (Q3
2016: GBP1,189.6 million)
* 64% increase in capital-light Asset Management
revenues to GBP50.6 million
* 6% reduction in financing costs to GBP33.5 million
(Q3 2016: GBP35.5 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
GBP38.9 million (Q3 2016: GBP29.1 million)
* 39% increase in statutory profit after tax to GBP16.0
million (Q3 2016: GBP11.5 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:
o High growth - a highly visible runway of significant long-term growth, underpinned by our unique origination capabilities, geographic reach and diversification by asset class
o Operational excellence - a focus on securing the right outcomes for our customers and leveraging our data, scale and track-record to drive competitive advantage
o Financial excellence - a rigorous focus on robust underwriting, selective portfolio bidding and cost management, geared towards delivering sustainable profitability
o 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 GBP200.0 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.'
Key results 30 Sept 2017 30 Sept 2016
IFRS Adjustments Underlying IFRS Adjustments Underlying
GBPm GBPm GBPm GBPm GBPm GBPm
Profit before tax 20.1 28.4 48.5 14.2 21.2 35.4
Taxation (4.1) (5.5) (9.6) (2.7) (3.6) (6.3)
Profit after tax 16.0 22.9 38.9 11.5 17.6 29.1
Basic EPS (p) 9.2 22.3 6.6 16.7
Closing net assets 177.1 177.1 152.3 152.3
Average net assets 163.4 163.4 149.6 149.6
LTM ROE % 18.9 33.9 15.2 27.4
Core collections - 244.1 - 216.1
Adjusted EBITDA - 156.7 - 159.7
Secured leverage
ratio (times) 4.0 3.7
Organic purchases
of loan portfolios
and notes - 155.0 - 119.3
Total purchased
loan portfolios
and notes - 909.0 - 696.8
84-month ERC - 1,455.6 - 1,189.6
120-month ERC - 1,690.1 1,404.6
For further information:
Arrow Global
Duncan Browne, Head of Investor
Relations +44 (0)7925 643 387
Instinctif Partners
Giles Stewart +44 (0)20 7457 2020
Forward looking statements
This document contains statements that constitute forward-looking statements relating to the business, financial performance and results of the Group and the industry in which the Group operates. These statements may be identified by words such as 'expectation', 'belief', 'estimate', 'plan', 'target', or 'forecast' and similar expressions or the negative thereof; or by forward-looking nature of discussions of strategy, plans or intentions; or by their context. All statements regarding the future are subject to inherent risks and uncertainties and various factors could cause actual future results, performance or events to differ materially from those described or implied in these statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. Further, certain forward looking statements are based upon assumptions of future events which may not prove to be accurate and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions. The forward-looking statements in this document speak only as at the date of this presentation and the Company assumes no obligation to update or provide any additional information in relation to such forward-looking statements.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the period ended 30 September 2017
Unaudited Unaudited
9 months ended 30 9 months ended 30 Unaudited 3 months Unaudited 3 months
Sept 2017 Sept 2016 ended 30 Sept 2017 ended 30 Sept 2016
Note GBP000 GBP000 GBP000 GBP000
Continuing
operations
Revenue 2 231,590 164,360 81,801 62,844
Operating expenses
Collection activity
costs (88,514) (51,549) (33,409) (20,895)
Other operating
expenses (63,680) (47,714) (22,756) (17,935)
Total operating
expenses (152,194) (99,263) (56,165) (38,830)
Operating profit 79,396 65,097 25,636 24,014
Net finance costs (33,495) (34,730) (10,935) (12,804)
Bond refinancing
costs (27,352) (17,994) - (17,994)
Total finance costs (60,853) (53,507) (10,938) (30,798)
Share of profit in
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associates 1,522 1,779 450 439
Profit before tax 20,071 14,152 15,151 (6,345)
Taxation charge (4,073) (2,664) (2,883) 1,323
Profit after tax 15,998 11,488 12,268 (5,022)
Other comprehensive
income:
Foreign exchange
translation
difference arising
on revaluation of
foreign operations 3,524 7,800 352 2,314
Hedging movement 299 (576) (217) 832
Total comprehensive
income for the
period 19,821 18,712 12,403 (1,876)
Profit attributable
to:
Owners of the
Company 15,987 11,457 12,257 (5,041)
Non-controlling
interest 11 31 11 19
15,998 11,488 12,268 (5,022)
Total comprehensive
income attributable
to:
Owners of the
Company 19,810 18,681 12,392 (1,895)
Non-controlling
interest 11 31 11 19
19,821 18,712 12,403 (1,876)
Basic EPS (p) 9.2 6.6 7.0 (2.8)
Diluted EPS (p) 8.9 6.4 6.9 (2.8)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2017
Unaudited Audited Unaudited
30 Sept 31 Dec 30 Sept
2017 2016 2016
Note GBP000 GBP000 GBP000
Assets
Non-current assets
Goodwill 141,331 128,081 128,150
Other intangible assets 43,756 39,144 41,289
Property, plant and equipment 6,075 3,584 3,860
Investment in associates 9,537 10,371 16,787
Deferred tax asset 4,509 3,692 3,337
Total non-current assets 205,208 184,872 193,423
Current assets
Cash and cash equivalents 36,150 23,203 22,432
Other receivables 49,297 35,484 48,871
Derivative asset - - 7,006
Purchased loan portfolios 3 875,573 782,792 696,809
Loan notes 33,869 21,315 -
Total current assets 994,889 862,794 775,118
Total assets 1,200,097 1,047,666 969,541
Equity
Share capital 1,753 1,744 1,744
Share premium 347,436 347,436 347,436
Retained earnings 99,442 92,327 76,238
Hedging reserve (333) (632) (1,878)
Other reserves (271,315) (273,484) (271,638)
Total equity attributable
to shareholders 176,983 167,391 151,902
Non-controlling interest 138 - 425
Total equity 177,121 167,391 152,327
Liabilities
Non-current liabilities
Senior secured notes 4 759,478 681,158 687,172
Trade and other payables 5,867 - -
Deferred tax liability 16,289 14,859 13,655
Defined benefit liability - 1,721 -
Total non-current liabilities 781,634 697,738 700,827
Current liabilities
Trade and other payables 95,397 76,261 53,113
Current tax liability 2,217 5,469 4,986
Derivative liability 1,654 1,433 -
Revolving credit facility 4 126,234 74,169 41,385
Bank overdrafts 4 1,323 7,698 13,326
Other borrowings 4 13,307 12,077 -
Senior secured notes 4 1,210 5,430 2,577
Total current liabilities 241,342 182,537 115,387
Total liabilities 1,022,976 880,275 816,214
Total equity and liabilities 1,200,097 1,047,666 968,541
The interim results were approved on 9 November 2017 by the board of directors and are signed on its behalf by:
Robert Memmott
Group Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 September 2017
Own
Ordinary Share Retained Hedging share Translation Merger Non-controlling
shares premium earnings reserve reserve* reserve* reserve* Total interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January 2016 1,744 347,436 76,916 (1,302) (1,936) (541) (276,961) 145,356 - 145,356
Profit for the
period - - 11,457 - - - - 11,457 31 11,488
Exchange
differences - - - - - 7,800 - 7,800 - 7,800
Net fair value
losses cash
flow hedges - - - (625) - - - (625) - (625)
Tax on hedged
items - - - 49 - - - 49 - 49
Total
comprehensive
income for the
period - - 11,457 (576) - 7,800 - 18,681 31 18,712
Non-controlling
interest on
acquisition - - - - - - - - 394 394
Share-based
payments - - 1,988 - - - - 1,988 - 1,988
Dividend paid - - (14,123) - - - - (14,123) - (14,123)
--------- -------- --------- -------- --------- ------------ ---------- --------- ---------------- ---------
Balance at 30
September 2016
(unaudited) 1,744 347,436 76,238 (1,878) (1,936) 7,259 (276,961) 151,902 425 152,327
Profit for the
period - - 14,848 - - - - 14,848 (30) 14,818
Exchange
differences - - - - - (1,846) - (1,846) 20 (1,826)
Net fair value
gains cash flow
hedges - - - 1,452 - - - 1,452 - 1,452
Tax on hedged
items - - - (206) - - - (206) - (206)
Remeasurement of
long term
employee
benefits - - (10) - - - - (10) - (10)
Total
comprehensive
income for the
period - - 14,838 1,246 - (1,846) - 14,238 (10) 14,228
Settlement of
non-controlling
interest - - - - - - - - (415) (415)
Share-based
payments - - 1,251 - - - - 1,251 - 1,251
Balance at 31
December 2016 1,744 347,436 92,327 (632) (1,936) 5,413 (276,961) 167,391 - 167,391
Profit for the
period - - 15,987 - - - - 15,987 11 15,998
Exchange
differences - - - - - 3,524 - 3,524 - 3,524
Net fair value
gains cash flow
hedges - - - 351 - - - 351 - 351
Tax on hedged
items - - - (52) - - - (52) - (52)
Total
comprehensive
income for the
period - - 15,987 299 - 3,524 - 19,810 11 19,821
Non-controlling
interest on
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acquisition - - - - - - - - 187 187
Shares issued in
the period 9 - - - - - - 9 - 9
Repurchase of
own shares - - - - (1,355) - - (1,355) - (1,355)
Share-based
payments - - 2,326 - - - - 2,326 - 2,326
Dividends paid
to NCI - - - - - - - - (60) (60)
Dividend paid - - (11,198) - - - (11,198) - (11,198)
--------- -------- --------- -------- --------- ------------ ---------- --------- ---------------- ---------
Balance at 30
September 2017
(unaudited) 1,753 347,436 99,442 (333) (3,291) 8,937 (276,961) 176,983 138 177,121
========= ======== ========= ======== ========= ============ ========== ========= ================ =========
* Other reserves total GBP271,315,000 deficit (31 December 2016: GBP273,484,000 deficit, 30 September 2016: GBP271,638,000 deficit)
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
The merger reserve represents the reserve generated upon consolidation of the Group following the Group reconstruction as part of the IPO where Arrow Global became the parent Company.
The own share reserve comprises the cost of the Company's ordinary shares held by the Group. At 30 June 2017 the Group held 303,614 ordinary shares of 1p each, held in an employee benefit trust. This represents less than 0.1% of the Company share capital at 30 June 2017.
The hedging reserve comprises the net cumulative fair value adjustments on the derivative contracts used in the Group's hedging activities which are deemed to be effective.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 September 2017
Unaudited period ended Unaudited period ended
30 Sept 2017 30 Sept 2016
GBP000 GBP000
Net cash used in operating activities 741 (4,815)
Investing activities
Purchase of property, plant and equipment (534) (363)
Purchase of intangible assets (7,370) (6,422)
Dividends received from associates 2,737 -
Investment in associates - (1,305)
Acquisition of subsidiary, net of cash acquired (4,102) (62,465)
Acquisition of subsidiary, deferred consideration (8,888) (16,068)
Net cash used in investing activities (18,157) (86,623)
----------------------- -----------------------
Financing activities
Proceeds/ (repayment) from additional loans 42,587 (26,255)
Early redemption of bonds costs (17,631) (8,664)
Proceeds from senior notes (net of fees) 340,510 173,069
Redemption of senior notes (290,866) -
Repayment of interest on senior notes (28,687) (31,521)
Proceeds of loan notes - 938
Net other interest (2,604) (3,673)
Repurchase of own shares (1,355) -
Issued share capital 9 -
Payment of dividends (11,258) (9,415)
Settlement of deferred consideration interest (608) (594)
----------------------- -----------------------
Net cash flow generated by financing activities 30,097 93,885
----------------------- -----------------------
Net increase in cash and cash equivalents 12,681 12,077
----------------------- -----------------------
Cash and cash equivalents at beginning of period 23,203 10,183
Effect of exchange rates on cash and cash equivalents 266 172
----------------------- -----------------------
Cash and cash equivalents at end of period 36,150 22,432
======================= =======================
Notes
1. Statutory information
Arrow Global Group PLC (the 'Company') is a company incorporated in England and Wales. The condensed consolidated financial statements of the Company as at and for the nine months ended 30 September 2017 comprises the Company and its subsidiaries (the 'Group'). The Group's principal activity is to identify, acquire and manage secured and unsecured defaulted loan portfolios from financial institutions, such as banks and credit card companies, as well as retail chains, student loans, motor credit, telecommunication firms and utility companies. In addition, the Group enters into contractual servicing agreements with other third parties to collect the receivables, to administer and disburse the proceeds of the receivables.
This condensed set of consolidated interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2016 and the interim financial statements for the 6 months ended 30 June 2017, in particular the strategic report, principal risks and uncertainties and significant accounting policies.
The consolidated financial statements of the Group as at and for the year ended 31 December 2016 are available upon request from the Company's registered office at Belvedere, 12 Booth Street, Manchester, M2 4AW or online at www.arrowglobalir.net.
2. Revenue
Period Period ended
ended 30 30 Sept
Sept 2017 2016
GBP000 GBP000
Income from purchased loan portfolios 173,977 132,783
Profit on portfolio sales 660 610
Income from loan notes 1,018 -
Fair value gain on loan notes 5,298 -
----------- -------------
Total revenue from portfolios
and loan notes 180,953 133,393
Income from asset management 50,637 30,967
----------- -------------
Revenue 231,590 164,360
=========== =============
Notes (continued)
3. Financial assets
Purchased loan portfolios
The Group recognises income from purchased loan portfolios in accordance with IAS 39. At 30 September 2017, the carrying amount of the purchased loan portfolio asset was GBP875,572,000 (31 December 2016: GBP782,792,000; 31 September 2016: GBP696,809,000).
The movements in purchased loan portfolios were as follows:
Period Ended Year Ended Period Ended
30 Sept 2017 31 Dec 2016 30 Sept 2016
GBP000 GBP000 GBP000
As at the period brought forward 782,792 609,793 609,793
Portfolios acquired during the period* 141,389 224,640 121,414
Purchased loan notes resold - (23,519) (23,519)
Portfolios acquired through acquisition of subsidiaries - 35,343 35,343
Collections in the period (235,678) (285,960) (216,051)
Income from purchased loan portfolios 173,977 188,914 132,783
Exchange gain on purchased loan portfolios 12,906 32,880 36,436
Profit on disposal of purchased loan portfolios 660 701 610
Purchase price adjustment relating to prior year (474) - -
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As at the period end 875,572 782,792 696,809
============== ============= ==============
* inclusive of capitalised acquisition expenditure
Loan notes
Period Ended Year Ended Period Ended
30 Sept 2017 31 Dec 2016 30 Sept 2016
GBP000 GBP000 GBP000
As at the period brought forward 21,315 - -
Loan notes acquisition expenditure* 14,264 21,315 -
Changes in Fair Value 5,298 - -
Collections in the period (8,439) - -
Income from loan notes 1,018 - -
Exchange gain on loan notes 413 - -
--------------
As at the period end 33,869 21,315 -
============== ============= ==============
* inclusive of capitalised acquisition expenditure
Notes (continued)
4. Borrowings and Facilities
30 Sept 2017 31 Dec 2016 30 Sept 2016
Secured borrowing at amortised cost GBP000 GBP000 GBP000
Senior secured notes (net of transaction fees of GBP16,144,000, 31
December 2016: GBP20,562,000,
30 September 2016: GBP21,202,000) 759,478 681,158 687,172
Revolving credit facility (net of transaction fees of GBP2,815,000,
31 December 2016: GBP2,756,000,
30 September 2016: GBP3,615,000) 126,234 74,169 41,385
Senior secured notes interest 1,210 5,430 2,577
Bank overdrafts 1,323 7,698 13,326
Other borrowings 13,307 12,077 -
------------- ------------ -------------
901,552 780,532 744,460
============= ============ =============
Total borrowings
Amount due for settlement within 12 months 142,074 87,297 57,288
Amount due for settlement after 12 months 759,478 693,235 687,172
------------- ------------ -------------
901,552 780,532 744,460
============= ============ =============
On 30 March 2017, the Group issued EUR400 million senior secured floating rate notes due 2025 (the '2025 Notes') at a coupon of EURIBOR +2.875% per annum with EURIBOR being not less than 0%. Interest is paid quarterly in arrears. The 2025 Notes can be redeemed in full or in part on or after 1 April 2019 at the Group's option. Prior to 1 April 2019 the Group may redeem, at its option, some or all of the 2025 Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus an applicable make-whole premium.
The proceeds from the 2025 Notes were used to redeem the existing 2021 Notes, pay the early redemption and transaction fees payable in respect of the 2021 Notes and repay drawings under the RCF.
On 24 February 2017 the commitments under the RCF were increased from GBP180 million to GBP215 million. Upon redemption of the 2021 Notes on 30 March 2017, the maturity of the facility was extended to 31 March 2022.
Additional Information
UNDERLYING PROFIT
Unaudited Unaudited Unaudited Unaudited
9 months ended 9 months ended 3 months ended 3 months ended
30 Sept 2017 30 Sept 2016 30 Sept 2017 30 Sept 2016
GBP000 GBP000 GBP000 GBP000
Continuing operations
Revenue 231,591 164,360 81,801 62,844
---------------- ---------------- ---------------- ----------------
Operating expenses
Collection activity costs (88,104) (51,549) (32,999) (20,895)
Other operating expenses (63,051) (44,454) (22,127) (17,406)
---------------- ---------------- ---------------- ----------------
Total operating expenses (151,155) (96,003) (55,126) (38,301)
---------------- ---------------- ---------------- ----------------
Operating profit 80,436 68,357 26,675 24,543
---------------- ---------------- ---------------- ----------------
Net finance costs (33,495) (34,730) (10,935) (12,804)
Share of profit in associates 1,522 1,779 450 439
---------------- ---------------- ---------------- ----------------
Underlying profit before tax 48,463 35,406 16,190 12,178
Taxation charge on underlying
activities (9,538) (6,324) (3,083) (2,166)
---------------- ---------------- ---------------- ----------------
Underlying profit after tax 38,925 29,082 13,107 10,012
Non-controlling interest (11) (31) (11) (19)
---------------- ---------------- ---------------- ----------------
Underlying profit attributable to
owners of the company 38,914 29,051 13,096 9,993
Underlying basic EPS (p) 22.3 16.7 7.5 5.8
================ ================ ================ ================
Reconciliation between IFRS profit and Underlying profit
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept
2017 2017 2017 2016 2016 2016
Profit Profit Profit Profit
before after before after
tax Tax tax tax Tax tax
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
IFRS Profit 20,060 (4,073) 15,987 14,121 (2,664) 11,457
Adjustments:
Collection activity
costs 410 (79) 331 - - -
Other operating
expenses 630 (121) 509 3,260 (561) 2,699
Bond refinancing
costs 27,352 (5,265) 22,087 17,994 (3,099) 14,895
-------- -------- -------- -------- -------- --------
28,392 (5,465) 22,927 21,204 (3,660) 17,594
Underlying profit 48,452 (9,538) 38,914 35,375 (6,324) 29,051
======== ======== ======== ======== ======== ========
Adjusting items are those items that by virtue of their size, nature or incidence (i.e. outside the normal operating activities of the group) are not considered to be representative of the ongoing performance of the Group and these items are excluded from underlying profit. Underlying profit after tax is considered to be a key measure in understanding the Group's ongoing financial performance. The collection activity and other operating expenses adjusted in the period ended 30 September 2017 above, relate to the One Arrow programme. The other operating expenses adjusted in the period ended 30 September 2016 relate to costs incurred on acquisitions.
Additional Information (continued)
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Adjusted EBITDA
Period ended Period ended
30 Sept 2017 30 Sept 2016
GBP000 GBP000
Reconciliation of net cash flow to adjusted EBITDA
Net cash flow used in operating activities 741 (4,815)
Purchases of loan portfolios 141,389 119,303
Purchase of loan notes 14,264 -
Purchase price adjustment relating to prior year (474) -
Income taxes paid 7,510 2,495
Working capital adjustments (10,752) 29,444
Dividends received from associates 2,735 -
Amortisation of acquisition fees 206 207
Effect of exchange rates on cash and cash equivalents - 172
One Arrow programme costs 1,040 3,260
------------- -------------
Adjusted EBITDA 156,659 159,696
============= =============
Reconciliation of core collections to adjusted EBITDA
Income from loan portfolios and loan notes 174,995 132,783
Portfolio amortisation 69,120 83,268
------------- -------------
Core collections 244,115 216,051
------------- -------------
Asset management income 50,638 30,967
Operating expenses (152,194) (99,263)
Depreciation and amortisation 8,387 6,099
Foreign exchange (gains)/losses (593) 387
Amortisation of acquisition fees 206 207
Share based payments 2,325 1,988
Dividends received from associates 2,735 -
One Arrow programme costs 1,040 3,260
------------- -------------
Adjusted EBITDA 156,659 159,696
============= =============
Glossary
'Adjusted EBITDA'means profit before interest, tax, depreciation, amortisation, foreign exchange gains or losses and non-recurring items.
'Adjusted EBITDA ratio' means the ratio of Adjusted EBITDA to core collections.
'Adjusting items' are those items that by virtue of their size, nature or incidence (i.e. outside the normal operating activities of the Group) are not considered to be representative of the ongoing performance of the Group and are therefore excluded from underlying profit after tax.
'Average net assets' is calculated as the average quarterly net assets from Q3 2016 to Q3 2017 as shown in the quarterly and half yearly statements.
'Cash interest cover' represents interest on senior secured notes, utilisation and non-utilisation RCF fees to Adjusted EBITDA.
'Cash result' represents current cash generation on a sustainable basis and is calculated as Adjusted EBITDA less cash interest, income taxes and overseas taxation paid, purchase of property, plant and equipment, purchase of intangible assets and average replacement rate.
'Collection activity costs' represents the direct costs of collections related to the Group's purchased loan portfolios, including internal and third party costs such as employee costs, commissions paid to third party outsourced providers, credit bureau data costs and legal costs associated with collections.
'Core collections' or 'core cash collections' mean cash collections on the Group's existing portfolios and loan notes including ordinary course portfolio sales and put backs. The breakdown of core collections for the periods ended 30 September 2017 and 30 September 2016 is as follows: -
Period Period
ended ended
30 Sept 30 Sept
2017 2016
GBP000 GBP000
Collections from purchased loan
portfolios 235,678 216,051
Collections from loan notes 11 -
Collections from loan notes at 8,426 -
Fair Value
Core collections 244,115 216,051
========= =========
'Cost-to-collect ratio' is the ratio of collection activity costs to core collections.
'Creditors' means financial institutions or other initial credit providers to consumers, certain of which entities choose to sell paying accounts or non-paying accounts receivables related thereto to debt purchasers (such as the Group).
'Customers' means consumers whose unsecured loan obligation is owed to the Group as a result of a portfolio purchase made by the Group.
'EBITDA' means earnings before interest, taxation, depreciation and amortisation.
Glossary (continued)
'EIR' means effective interest rate (which is based on the loan portfolio's gross internal rate of return) calculated using the loan portfolio purchase price and forecast 84-month gross ERC at the date of purchase. On acquisition, there is a short period that is required to determine the EIR, due to the complexity of the portfolios acquired.
'EPS' means earning per share
'84-Month ERC' and '120-Month ERC' (together 'Gross ERC'), mean the Group's estimated remaining collections on purchased loan portfolios over an 84-month or 120-month period, respectively, representing the expected future core collections on purchased loan portfolios over an 84-month or 120-month period (calculated at the end of each month, based on the Group's proprietary ERC forecasting model, as amended from time to time).
'Existing Portfolios' or 'purchased loan portfolios' are on the Group's balance sheet and represent all debt portfolios that the Group owns at the relevant point in time.
'Diluted EPS' means the earnings per share whereby the number of shares is adjusted for the effects of potential dilutive ordinary shares, options and LTIP's.
'FCA' means Financial Conduct Authority.
'FVTPL' - Financial instruments designated at fair value with all gains or losses being recognised in the profit or loss.
'Gross money multiple' Gross money multiple means core collections to date plus the 84-month gross ERC or 120-month gross ERC, as applicable, all divided by the purchase price for each portfolio, excluding REO purchases and purchase price adjustments relating to asset management fees.
'IFRS' means EU endorsed international financial reporting standards.
'Income from asset management' includes commission income, debt collection, due diligence, real estate management and advisory fees.
'IPO' means initial public offering.
'Lending Code' means the voluntary code of practice issued by the Lending Standards Board and describes minimum standards of good practice for banks, building societies, credit card providers and their agents.
'Loan to Value ratio' or 'LTV ratio' represents the ratio of 84-month ERC to net debt.
'LTIP' means the Arrow Global long-term incentive plan.
'LTM' means Last Twelve Months and is calculated by the addition of the consolidated financial data for the year ended 31 December 2016 and the consolidated interim financial data for Q3 2017, and the subtraction of the consolidated interim financial data for Q3 2016.
Glossary (continued)
'LTM Pro Forma Adjusted EBITDA' means 'LTM Adjusted EBITDA' inclusive of full twelve months impacts of acquisitions that occurred within the last twelve months and exclusive of any items deemed non-recurring within the last twelve months to give a twelve months pro forma Adjusted EBITDA operating level at the reported date.
'Net debt' means the sum of the outstanding principal amount of the senior secured notes, interest thereon, amounts outstanding under the revolving credit facility and deferred consideration payable in relation to the acquisition of loan portfolios, less cash and cash equivalents including transaction fees. Net debt is presented because it indicates the level of debt after taking out of the Group's assets that can be used to pay down outstanding borrowings, and because it is a component of the maintenance covenants in the revolving credit facility. The breakdown of net debt for the period ended 30 September 2017 is as follows:
30 Sept 2017 31 Dec 2016
GBP000 GBP000
Cash and cash equivalents (36,150) (23,203)
Senior secured notes * 775,622 701,720
Revolving credit facility * 129,048 76,925
Secured bank overdrafts - 6,419
Secured net debt 868,520 761,861
Deferred consideration 41,830 35,401
Senior secured notes interest 1,210 5,430
Bank overdrafts 1,323 1,279
Other borrowings 13,307 12,077
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Net debt 926,190 816,048
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2017 02:00 ET (07:00 GMT)
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*pre- transaction fee net off
'Off market' means those loan portfolios that were not acquired through a process involving a competitive bid or an auction like process.
'Organic purchases of loan portfolios' means those purchased through the ordinary course of business, not through acquisition. The breakdown of organic purchases for the period is as follows:
30 Sept 30 Sept
2017 2016
GBP000 GBP000
Portfolios acquired during the period 141,389 121,414
Purchases of loan notes 14,264 -
Capitalised acquisition expenditure (648) (2,111)
-------- --------
Organic purchases of loan portfolio and loan
notes 155,005 119,303
======== ========
'Paying Account' means an account that has shown at least one payment over the last three months.
'Purchased loan portfolios' see 'existing portfolios'.
'Putback' means an account that is to be sold back to or replaced by the original creditor.
'Purchases of loan portfolios resold/to be resold' relates to a portfolio of assets, which has been acquired at the period end, and will shortly be resold to an investment partner. These are separately disclosed from other purchased loan portfolios, as an investment partner is intending to complete their acquisition from us.
'RCF' means revolving credit facility.
Glossary (continued)
'Replacement rate' means the level of purchases of portfolio and loan notes needed during the subsequent year to maintain the current level of ERC.
'ROE' means the return on equity as calculated by taking profit after tax divided by the average equity attributable to shareholders. Average equity attributable is calculated as the average quarterly equity from Q3 2016 to Q3 2017 as shown in the quarterly and full year statements.
'Secured loan to value' or 'secured LTV ratio' represents the ratio of 84-month ERC to Secured Net Debt.
'Secured Net Debt' means the sum of the outstanding principal amount of the senior secured notes, amounts outstanding under the revolving credit facility, less cash and cash equivalents. Secured Net Debt is presented because it indicates the level of secured debt after taking out the Group's assets that can be used to pay down outstanding secured borrowings, and because it is a component of the incurrence tests in the senior secured notes. The breakdown of secured net debt for the period ended 30 June 2017 is shown in Net Debt above.
'SIP' means the Arrow Global all-employee share incentive plan.
'Underlying basic EPS' represents earnings per share based on underlying profit after tax, excluding any dilution of shares.
'Underlying profit after tax' means profit for the period attributable to equity shareholders after tax adjusted for the post-tax effect of adjusting items. The Group presents underlying profit after tax because it excludes the effect of these adjusting items which are not considered representative of the Group's ongoing performance, (and the related tax on such items) on the Group's profit or loss for a period.
'Underlying return on equity' represents the ratio of underlying profit for the period attributable to equity shareholders to average shareholder equity post restructure.
This information is provided by RNS
The company news service from the London Stock Exchange
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November 09, 2017 02:00 ET (07:00 GMT)
Arrow Global Group plc published this content on 09 November 2017 and is solely responsible for the information contained herein.
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Original documenthttp://www.arrowglobalir.net/news/rns/id/758
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