Much has been written on the pitfalls of low interest rates, but they can also bring opportunities. For Arrow Global (ARW) this means refinancing its outstanding £220m bond - currently yielding around 7.9 per cent - which it hopes will reduce its average cost of debt. "As corporate bond rates come down it does help the high-yield bond market, with people coming into that space in the search for yield," says group chief executive Tom Drury.
The group bought debt portfolios with a face value of £1.05bn during the first half of the year for a purchase price of £131m. Arrow's in-house data systems once again demonstrated their worth, with core collections increased by more than a third to £139m. As a result, the underlying return on equity for the past 12 months grew to 27.4 per cent from 25.5 per cent a year before.
May's acquisition of Netherlands and Belgian consumer debt purchaser and collector InVesting brought with it €107m (£90.8m) in expected debt collections. To finance the acquisition and to improve its liquidity in the run-up to the EU referendum, management raised €230m in floating rate notes.
Analysts at Shore Capital expect a net asset value per share of 93.7p at December 2016, rising to 118.2p a year later (from 83.5p at the end of 2015).
ARROW GLOBAL (ARW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 258p | MARKET VALUE: | £449m | |
| TOUCH: | 257-258p | 12-MONTH HIGH: | 290p | LOW: 171p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 91p* | NET DEBT: | £739m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 76.7 | 16.4 | 7.4 | 1.7 |
| 2016 | 102 | 20.5 | 9.5 | 2.7 |
| % change | +32 | +25 | +28 | +59 |
Ex-div: 15 Sep Payment: 13 Oct *Includes intangible assets of £168m, or 96p a share | ||||
