Given concerns that the credit cycle may be nearing its peak, it is unsurprising that Arrow Global (ARW) is attempting to strengthen its balance sheet. Net operating cash flow – before portfolio investments – increased by a quarter, which reduced net debt as a proportion of adjusted cash profits to a multiple of 3.7, from 3.9 in the prior year. Management plans to bring this down to between 3 and 3.5 by the end of 2019. “We are at the right point in the cycle to be reducing leverage,” says chief executive Lee Rochford.
Payments associated with historic acquisitions and costs relating to its ‘One Arrow’ improvement programme depressed pre-tax profits. The distressed debt purchasing specialist made core collections of £412m, up a fifth on the prior year and at 104 per cent of the estimated rate of collection. The portfolio was boosted by £263m in asset purchases, with almost 80 per cent bought via off-market transactions, where no competitive auction took place.
Analysts at Shore Capital expect adjusted net assets of 144p a share at the December 2019 year-end.
| ARROW GLOBAL (ARW) | ||||
| ORD PRICE: | 189p | MARKET VALUE: | £333m | |
| TOUCH: | 187.2-189p | 12-MONTH HIGH: | 398p | LOW: 166p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | £1.1bn | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 111 | 24.1 | 10 | 5.1 |
| 2015 | 165 | 39.3 | 18 | 7.1 |
| 2016 | 236 | 31.4 | 15 | 9.1 |
| 2017 | 319 | 50.6 | 23 | 11.3 |
| 2018 | 362 | 40.0 | 17 | 12.7 |
| % change | +13 | -20 | -26 | +12 |
| Ex-div: | 06 Jun | |||
| Payment: | 12 Jul | |||
| *Includes intangible assets of £52m, or 30p a share | ||||
