We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Arrow Global Group Plc | LSE:ARW | London | Ordinary Share | GB00BDGTXM47 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 307.00 | 307.00 | 307.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMARW
RNS Number : 0330T
Arrow Global Group PLC
12 November 2019
12 November 2019
Arrow Global Group PLC
Results for the nine months ended 30 September 2019
Strong cash generation and continued focus on developing the fund management business
Arrow Global Group PLC (the "Company", and together with its subsidiaries the "Group"), a leading European investor and asset manager in secured and unsecured defaulted and non-core loan portfolios and real estate, announces its results for the nine months ended 30 September 2019.
Key Highlights
-- Free cashflow grew 14.7% to GBP174.4 million (Q3 2018: GBP152.0 million) -- Profit before tax increased by 65.6% to GBP42.4 million (Q3 2018: GBP25.6 million)
-- Underlying profit before tax decreased 5.4% to GBP50.4 million (Q3 2018: GBP53.3 million) - including a 15.1% increase in finance costs relating to deferred consideration costs and IFRS 16
-- Cost efficiency program on track - actions to deliver 40% of run rate savings complete
-- Strong focus on the development of the fund management business with the build out of AGG Capital Management
Hot Features
Premium
-- Trading is in line with market expectations for the full year
Group financial highlights 30 September 30 September Change
2019 2018 %
------------------------------- ------------- ------------- ----------
Portfolio purchases (GBPm) 221.9 200.1 10.9
Core collections (GBPm) 312.5 288.5 8.3
Total income (GBPm) 256.9 255.3 0.6
Third party AMS income (GBPm) 68.7 63.3 8.5
Operating profit (GBPm) 82.8 79.3 4.4
Profit before tax (GBPm) 42.4 25.6 65.6
Underlying profit before tax
(GBPm) 50.4 53.3 (5.4)
Underlying LTM ROE % 29.5 33.4 (3.9)ppts
Basic EPS (p) 17.1 11.7 46.2
Leverage (x) 3.7 3.8 (0.1x)
84-month ERC (GBPm) 1,725.8 1,635.6 5.5
120-month ERC (GBPm) 2,036.7 1,968.9 3.4
Commenting on today's results, Lee Rochford, Group Chief Executive Officer of the Company, said:
"Returns in the investment business remain attractive and collections and cash generation both increased strongly during what is traditionally a quieter quarter.
"The primary focus of the Group continues to be to build out our fund management capabilities and good progress has been made following the formation of AGG Capital Management Limited announced in the Group's interim results. Our clear objective is to build a fund management business which will drive substantial growth in AMS revenues and, when combined with the cost efficiency programme, will see the Group evolve to become a more capital light, high margin business with less leverage.
"The Group's highly cash generative characteristics mean we continue to have the flexibility to allocate capital between investment for growth, dividends and deleveraging. We therefore remain confident that we can continue to grow the business, reward shareholders and finish the year within our new targeted lower leverage range of 3.0x-3.5x."
Conference call
There will be a conference call for analysts and investors at 08.30 (UK time).
Investors and analysts wishing to dial-in to the call can register using the following link:
https://bit.ly/2PcMZEm
Notes:
A glossary of terms can be found on pages 15 to 17. More details explaining the business can be found in the Annual Report & Accounts 2018 which is available on the Company's website at www.arrowglobalir.net
For further information:
Arrow Global Group PLC
Duncan Browne, Head of Investor Relations +44 (0) 7925 643 385
Dbrowne@arrowglobal.net
FTI Consulting
Neil Doyle +44 (0)20 3727 1141 arrowglobal@fticonsulting.com
Tom Blackwell
Laura Ewart
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 the 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, the Group 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 and the Group assume no obligation to update or provide any additional information in relation to such forward-looking statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the period ended 30 September 2019
Unaudited Unaudited
Unaudited Unaudited three months three months
nine months ended nine months ended ended ended
30 September 2019 30 September 2018 30 September 2019 30 September 2018
GBP000 GBP000 GBP000 GBP000
Continuing operations
Income from portfolio
investments at amortised
cost 142,703 149,837 47,696 53,694
Fair value gain on
portfolio investments at
FVTPL 27,634 10,609 6,510 4,501
Net impairment gains on
portfolio investments at
amortised cost and real
estate inventories 17,440 30,795 1,719 7,514
Income from real estate
inventories 118 - 118 -
------------------- ------------------- ------------------- -------------------
Total income from portfolio
investments 187,895 191,241 56,043 65,709
Income from asset
management and servicing 68,680 63,336 23,041 21,984
Profit on sale of property - 731 - 731
Other income 292 - 90 -
------------------- ------------------- ------------------- -------------------
Total income 256,867 255,308 79,174 88,424
------------------- ------------------- ------------------- -------------------
Operating expenses:
Collection activity costs (83,124) (90,331) (29,107) (30,391)
Other operating expenses (90,953) (85,668) (26,300) (30,923)
------------------- ------------------- ------------------- -------------------
Total operating expenses (174,077) (175,999) (55,407) (61,314)
------------------- ------------------- ------------------- -------------------
Operating profit 82,790 79,309 23,767 27,110
Net finance costs (40,394) (35,101) (13,884) (12,307)
Refinancing costs - (18,658) - -
Profit before tax 42,396 25,550 9,883 14,803
Taxation charge (10,177) (5,016) (2,008) (2,782)
------------------- ------------------- ------------------- -------------------
Profit after tax 32,219 20,534 7,875 12,021
=================== =================== =================== ===================
Other comprehensive income:
Items that are or may be
reclassified subsequently
to profit or loss:
Foreign exchange
translation difference
arising on revaluation of
foreign operations (1,402) 431 (769) 882
Movement on the hedging
reserve 38 (279) 95 96
------------------- ------------------- ------------------- -------------------
Total comprehensive income
for the period 30,855 20,686 7,201 12,999
=================== =================== =================== ===================
Profit attributable to:
Owners of the Company 30,010 20,489 7,906 12,008
Non-controlling interest 2,209 45 (31) 13
------------------- ------------------- ------------------- -------------------
32,219 20,534 7,875 12,021
=================== =================== =================== ===================
Basic EPS (p) 17.1 11.7 4.5 6.8
=================== =================== =================== ===================
Diluted EPS (p) 16.6 11.5 4.4 6.8
=================== =================== =================== ===================
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2019
Unaudited 30 September Unaudited 31 December Unaudited 30 September
2019 2018 2018
Note GBP000 GBP000 GBP000
Assets
Cash and cash equivalents 97,828 92,001 62,073
Trade and other receivables 98,132 94,206 80,245
Portfolio investments -
amortised cost 2 927,306 869,056 870,671
Portfolio investments - FVTPL 2 175,354 217,974 180,830
Portfolio investments - real
estate inventories 2 59,877 - -
Property, plant and equipment 27,542 7,761 6,846
Other intangible assets 38,388 44,264 44,448
Deferred tax asset 8,697 8,113 -
Goodwill 275,211 262,679 224,203
Total assets 1,708,335 1,596,054 1,469,316
======================= ====================== =======================
Liabilities
Bank overdrafts 3 2,477 2,696 3,624
Revolving credit facility 3 247,975 242,121 185,024
Derivative liability 642 502 77
Trade and other payables 215,291 197,657 149,314
Current tax liability 8,873 7,915 3,231
Other borrowings 3 3,384 11,635 13,468
Asset-backed loans 3 91,620 - -
Senior secured notes 3 916,096 926,340 916,060
Deferred tax liability 15,305 14,930 9,411
----------------------- ---------------------- -----------------------
Total liabilities 1,501,663 1,403,796 1,280,209
----------------------- ---------------------- -----------------------
Equity
Share capital 1,769 1,763 1,763
Share premium 347,436 347,436 347,436
Retained earnings 124,730 116,589 113,196
Hedging reserve (546) (584) (622)
Other reserves (274,956) (273,547) (274,486)
Total equity attributable to
shareholders 198,433 191,657 187,287
----------------------- ---------------------- -----------------------
Non-controlling interest 8,239 601 1,820
----------------------- ---------------------- -----------------------
Total equity 206,672 192,258 189,107
----------------------- ---------------------- -----------------------
Total equity and liabilities 1,708,335 1,596,054 1,469,316
======================= ====================== =======================
Note - the balance sheet has been presented on a reducing liquidity basis, and prior periods have been represented accordingly on this basis.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 September 2019
Ordinary Other equity reserves Total Non-controlling interest Total
shares
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January 2018 1,753 193,395 195,148 173 195,321
Impact of adopting IFRS 9 - (14,000) (14,000) - (14,000)
Impact of adopting IFRS 15 - (199) (199) - (199)
Balance post IFRS adjustments at
1 January 2018 1,753 179,196 180,949 173 181,122
Profit for the period - 20,489 20,489 45 20,534
Exchange differences - 431 431 - 431
Net fair value gains on cash flow
hedges - (355) (355) - (355)
Tax on hedged items - 76 76 - 76
--------- ---------------------- --------- ------------------------- ---------
Total comprehensive income for
the period - 20,641 20,641 45 20,686
Shares issued in the period 10 - 10 - 10
Repurchase of own shares - (2,509) (2,509) - (2,509)
Share-based payments - 2,384 2,384 - 2,384
Non-controlling interest on
acquisition - - - 1,645 1,645
Dividend paid - (14,156) (14,156) - (14,156)
Dividend paid by NCI - - - (43) (43)
Balance at 30 September 2018 1,763 185,556 187,319 1,820 189,139
Adjustment to IFRS 15 impact
through profit - (32) (32) - (32)
Balance post IFRS 15 adjustment
at 30 September 2018 1,763 185,524 187,287 1,820 189,107
--------- ---------------------- --------- ------------------------- ---------
Profit for the period - 9,512 9,512 - 9,512
Exchange differences - 2,141 2,141 - 2,141
Recycled to profit after tax - (1,202) (1,202) - (1,202)
Net fair value losses on cash
flow hedges - 64 64 - 64
Tax on hedged items - (26) (26) - (26)
Total comprehensive income for
the period - 10,489 10,489 - 10,489
Share-based payments - 883 883 - 883
Dividend paid - (7,002) (7,002) - (7,002)
Non-controlling interest on
acquisition - - - (1,219) (1,219)
Balance at 31 December 2018 1,763 189,894 191,657 601 192,258
Impact of adopting IFRS 16 - (947) (947) - (947)
Balance post IFRS adjustments at
1 January 2019 1,763 188,947 190,710 601 191,311
Profit for the period - 30,010 30,010 2,209 32,219
Exchange differences - (1,402) (1,402) - (1,402)
Net fair value losses on cash
flow hedges - 49 49 - 49
Tax on hedged items - (11) (11) - (11)
--------- ---------------------- --------- ------------------------- ---------
Total comprehensive income for
the period - 28,646 28,646 2,209 30,855
Shares issued in the period 6 - 6 - 6
Repurchase of own shares - (6) (6) - (6)
Share-based payments - 2,024 2,024 - 2,024
Non-controlling interest on
acquisition - - 5,429 5,429
Dividend paid - (22,947) (22,947) - (22,947)
Balance at 30 September 2019 1,769 196,664 198,433 8,239 206,672
--------- ---------------------- --------- ------------------------- ---------
UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
For the period ended 30 September 2019
Unaudited period ended Unaudited period ended
30 September 30 September
2019 2018
GBP000 GBP000
Net cash flows from operating activities before purchases of
portfolio investments 202,298 180,556
Purchase of portfolio investments (221,885) (203,150)
Net cash used in operating activities (19,587) (22,594)
Net cash used in investing activities (20,227) (61,630)
Net cash flows generated by financing activities 47,003 110,511
----------------------- -----------------------
Net increase in cash and cash equivalents 7,189 26,287
Cash and cash equivalents at beginning of period 92,001 35,943
Effect of exchange rates on cash and cash equivalents (1,362) (157)
----------------------- -----------------------
Cash and cash equivalents at end of period 97,828 62,073
----------------------- -----------------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Significant accounting policy updates
These financial statements are unaudited and do not include all of the information required for full annual or interim financial statements and therefore are not fully compliant with IAS 34 - Interim financial reporting. These quarterly results should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2018.
The annual financial statements of the Group are prepared in accordance with IFRS as adopted for use in the EU, and therefore comply with Article 4 of the EU IFRS Regulation. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, these financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated annual report for the year ended 31 December 2018, other than IFRS 16, which has been applied for the first time this year. Changes to significant accounting policies in 2019 have been disclosed below.
The consolidated financial statements of the Group for the year ended 31 December 2018 are available upon request from the Company's registered office at Belvedere, 12 Booth Street, Manchester, M2 4AW and can also be found online at www.arrowglobalir.net.
IFRS 16 is effective from 1 January 2019 and the Group has adopted it from this date.
IFRS 16 replaces the previous standard IAS 17 'Leases', bringing a number of leases on balance sheet, which were previously off-balance sheet and accounted for as operating leases under IAS 17.
The Group is not required to restate comparatives on the initial adoption of IFRS 16 and has therefore applied the modified retrospective approach. The Group has applied exemptions where appropriate for short-term leases of twelve months or less and low value assets to be expensed and has also applied 'grandfathering' to all IAS 17 judgements previously made. The incremental borrowing rates used to measure lease liabilities at initial application ranged between 4.2% and 7.2%.
The standard transition has led to a one-off opening 2019 reserves reduction of GBP0.9 million, a right-of-use asset disclosed in property, plant equipment of GBP23.8 million, a lease liability of GBP27.3 million and a release of lease accruals of GBP2.6 million, all of which are disclosed in trade and other payables.
The Group now holds a number of material real estate portfolio investments which are being held for immediate sale or being developed with a view to sell immediately once such development work is completed. As such, the Group has assessed that it should account for such investments under 'IAS 2 - Inventories'.
Under IAS 2 these investments are held at their original cost plus any subsequent capital expenditure and are not subject to revaluations on a periodic basis. Such assets will be assessed for impairment at each reporting date, but any gain on these investments will not be recognised until they are sold and derecognised from the balance sheet.
2. Portfolio investments
The movements in portfolios investments were as follows:
Period ended 30 September 2019
Amortised FVTPL Real Estate Total
cost Inventories
GBP000 GBP000 GBP000 GBP000
As at 1 January 2019 869,056 217,974 - 1,087,030
---------- --------- ------------- ----------
Portfolios purchased
during the period 172,417 24,302 25,166 221,885
Transfer between categories 9,954 (44,021) 34,067 -
Collections in the period (264,002) (48,164) (328) (312,494)
Income from portfolio
investments at amortised
cost 142,703 - - 142,703
Fair value gain on portfolios
at FVTPL - 27,634 - 27,634
Income from real estate
inventories - - 118 118
Net impairment gains/(losses) 17,446 - (6) 17,440
Exchange and other movements (7,107) (2,371) 860 (8,618)
Portfolio restructure (13,161) - - (13,161)
As at 30 September 2019 927,306 175,354 59,877 1,162,537
========== ========= ============= ==========
Transfer between categories represents positions where the Group has originally held one type of instrument relating to a portfolio, and subsequently increased or changed its interest in the portfolio, leading to the requirement to consolidate the underlying structure onto the Group's balance sheet. This leads to a change in the classification of the portfolio investment held. The 'portfolio restructure' represents the restructure of a leveraged structured deal to move to a de-levered position, and hence change the nature of the holding whist extinguishing related liabilities.
Year ended 31 December 2018
Amortised FVTPL Real Estate Total
cost Inventories
GBP000 GBP000 GBP000 GBP000
As at 1 January 2018 920,578 30,889 - 951,467
Impact of adopting IFRS
9 at 1 January 2018 (93,734) 76,734 - (17,000)
---------- --------- ------------- ----------
Brought forward after
impact of IFRS 9 opening
adjustment 826,844 107,623 - 934,467
Portfolios purchased
during the period 169,514 93,836 - 263,350
Portfolio additions from
acquired entities 3,339 8,514 - 11,853
Collections in the period (387,699) (23,889) - (411,588)
Income from portfolio
investments 188,862 5,070 - 193,932
Fair value gain on portfolios
at FVTPL - 24,745 - 24,745
Net impairment gain 50,727 - - 50,727
Exchange and other movements 17,469 2,075 - 19,544
---------- --------- ------------- ----------
As at 31 December 2018 869,056 217,974 - 1,087,030
========== ========= ============= ==========
Period ended 30 September 2018
Amortised FVTPL Real Estate Total
cost Inventories
GBP000 GBP000 GBP000 GBP000
As at 1 January 2018 920,578 30,889 - 951,467
Impact of adopting IFRS
9 at 1 January 2018 (93,734) 76,734 - (17,000)
---------- --------- ------------- ----------
Brought forward after
impact of IFRS 9 opening
adjustment 826,844 107,623 - 934,467
Portfolios purchased
during the period 134,283 65,845 - 200,128
Portfolio additions from
acquired entities 2,409 8,514 - 10,923
Collections in the period (270,973) (17,540) - (288,513)
Income from portfolio
investments at amortised
cost 144,767 5,070 - 149,837
Fair value gain on portfolios
at FVTPL - 10,609 - 10,609
Net impairment gain 30,795 - - 30,795
Exchange and other movements 2,546 709 - 3,255
As at 30 September 2018 870,671 180,830 - 1,051,501
========== ========= ============= ==========
3. Borrowings and facilities
30 September 31 December 30 September
2019 2018 2018
GBP000 GBP000 GBP000
Senior secured notes (net of transaction fees of GBP13.3m, 31
December 2018: GBP14.4m, 30
September 2018: GBP15.3m) 916,096 926,340 916,060
Revolving credit facility (net of transaction fees of GBP3.9m, 31
December 2018: GBP4.0m,
30 September 2018: GBP3.3m) 247,975 242,121 185,024
Asset backed loan (net of transaction fees of GBP1.6m) 91,620 - -
Bank overdrafts 2,477 2,696 3,624
Other borrowings 3,384 11,635 13,468
------------- ------------ -------------
Total borrowings 1,261,552 1,182,792 1,118,176
============= ============ =============
Amount due for settlement within 12 months 274,923 259,045 198,575
Amount due for settlement after 12 months 986,629 923,747 919,601
------------- ------------ -------------
1,261,552 1,182,792 1,118,176
============= ============ =============
Asset Backed Securitisation
On 30 April 2019 the Group entered into a GBP100m non-recourse committed asset backed securitisation facility with an advance rate of 55% of 84-month ERC. On the same date, the Group sold GBP137m of ERC into AGL Fleetwood Limited, a wholly owned Group subsidiary and borrowed an initial amount of GBP75m non-recourse funding at Libor +3.1%, under the facility. On 31 July 2019 the Group sold a further GBP44m of ERC into AGL Fleetwood Limited and subsequently borrowed an additional GBP25m non-recourse funding on the same terms under the facility. The facility has a five-year term comprised of an initial two-year revolving period followed by a three-year amortising period with an option to extend the revolving period by one year subject to lender consent.
Revolving credit facility
On 26 February 2019, the maturity of the facility was extended by one year to 4 January 2024 with no change in margin.
4. Acquisition of subsidiary undertakings
On 8 April 2019, the Group acquired 100% of the share capital of Drydens. Drydens is a provider of legal services, the acquisition of which has and will broaden the Group's UK range of servicing capabilities and skills across consumer and commercial litigation, probate and insolvency. The total undiscounted consideration for the acquisition was GBP11,115,000 (including deferred and contingent consideration).
Contingent consideration is payable at various times within two years from completion of the transaction upon the satisfaction of three mutually exclusive conditions which are based upon the business achieving certain targets around future volumes and the successful migration of Group account.
An intangible asset of GBP688,000 has been recognised at acquisition, being the fair value (after appropriate discounting) of expected cash flows arising from existing customer relationships.
Goodwill of GBP14,519,000 was created as a result of this acquisition. The primary reason for the acquisition was to broaden the Group's range of servicing capabilities in the UK.
In the period from acquisition to 30 September 2019, Drydens contributed income of GBP2,508,000 and profit after tax of GBP696,000 to the consolidated results for the period. If the acquisition had occurred on 1 January 2019, Group total income would have been higher by an estimated GBP1,167,000 and profit after tax would have been lower by an estimated GBP24,000.
ADDITIONAL INFORMATION (UNAUDITED)
'Underlying profit' is considered a key measure in understanding the Group's ongoing financial performance.
Adjusting items are those items that management deem by virtue of their size, nature or incidence (i.e. outside the normal operating activities of the Group) to not be representative of the ongoing performance of the Group and these items are excluded from underlying profit.
Reconciliation of reported to underlying costs
Period ended 30 September 2019 Period ended 30 September 2018
Reported Adjustments Underlying Reported Adjustments Underlying
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Continuing operations
Income 256,867 - 256,867 255,308 - 255,308
---------- ------------ ----------- ---------- ------------ -----------
Operating expenses
Collection activity costs (83,124) - (83,124) (90,331) 920 (89,411)
Other operating expenses (90,953) 7,984 (82,969) (85,668) 8,135 (77,533)
---------- ------------ ----------- ---------- ------------ -----------
Total operating expenses (174,077) 7,984 (166,093) (175,999) 9,055 (166,944)
---------- ------------ ----------- ---------- ------------ -----------
Operating profit 82,790 7,984 90,774 79,309 9,055 88,364
Net finance costs (40,394) - (40,394) (53,759) 18,658 (35,101)
Underlying profit before tax 42,396 7,984 50,380 25,550 27,713 53,263
Taxation charge (10,177) (1,704) (11,881) (5,016) (5,310) (10,326)
---------- ------------ ----------- ---------- ------------ -----------
Underlying profit after tax 32,219 6,280 38,499 20,534 22,403 42,937
Non-controlling interest (2,209) - (2,209) (45) - (45)
---------- ------------ ----------- ---------- ------------ -----------
Underlying profit attributable to
owners of the Company 30,010 6,280 36,290 20,489 22,403 42,892
========== ============ =========== ========== ============ ===========
Underlying Basic EPS (p) 20.6 24.5
=========== ===========
Underlying effective tax rate 23.6% 19.4%
=========== ===========
Adjusting items in the period relate to business acquisition related costs of GBP1.7 million, costs related to the expansion of the Group fund management business of GBP1.0 million and other costs of GBP5.3 million related to the Group's simplification programme, including redundancy and IT decommissioning costs.
Prior period adjusting items within collection activity costs and other operating expenses in the period related to 'One Arrow' costs of GBP6.0 million and business acquisition and other costs of GBP3.1 million.
Financing costs adjusting items in the prior period relate to costs associated with restructuring the Group's long-term financing.
The adjusted EBITDA reconciliations for the periods ended 30 September 2019 and 30 September 2018 are shown below:
30 September 30 September
2019 2018
GBP000 GBP000
Reconciliation of net cash flow to adjusted EBITDA
Net cash used in operating activities (19,587) (22,594)
Purchase of loan portfolios 221,885 203,150
Income taxes paid 9,091 6,505
Working capital adjustments 6,367 1,769
Amortisation of acquisition and bank facility fees 72 206
Proceeds from sale of property - 3,759
Adjusting items 7,984 9,055
Adjusted EBITDA 225,812 201,850
------------- -------------
Reconciliation of core collections to EBITDA
Income from loan portfolios including revaluations 187,895 191,241
Portfolio amortisation 124,599 97,272
Core collections (includes proceeds from disposal of loan portfolios) 312,494 288,513
Other income 68,972 63,336
Operating expenses (174,077) (175,999)
Depreciation and amortisation 14,509 10,696
Foreign exchange losses/(gains) 660 (100)
Amortisation of acquisition and bank facility fees 72 206
Disposal of intangible asset 2,051 -
Share-based payments 2,024 2,384
Proceeds from sale of property - 3,759
Adjusting items 7,984 9,055
Provision releases (8,877) -
Adjusted EBITDA 225,812 201,850
------------- -------------
Reconciliation of Operating Profit to EBITDA
Profit after tax 32,219 20,534
Underlying net finance costs 40,394 35,101
Taxation charge on ordinary activities 10,177 5,016
Adjusting financing costs - 18,658
------------- -------------
Operating profit 82,790 79,309
Portfolio amortisation 124,599 97,272
Depreciation and amortisation 14,509 10,696
Foreign exchange losses/(gains) 660 (100)
Amortisation of acquisition and bank facility fees 72 206
Disposal of intangible asset 2,051 -
Share-based payments 2,024 2,384
Profit on sale of property - (731)
Proceeds from sale of property - 3,759
Adjusting operating expenses 7,984 9,055
Provision releases (8,877) -
Adjusted EBITDA 225,812 201,850
------------- -------------
The table below reconciles the reported profit for the period to the free cash flow result. For completeness we also split out other adjusting items.
Reconciliation of profit after tax to the free cash flow result
Reported profit Adjusting items Underlying Other items Free cash flow
Income (4) profit
GBP000 GBP000 GBP000 GBP000 GBP000
Income from
portfolio
investments at Collections in
amortised cost 142,703 - 142,703 169,791 312,494 the period
Fair value gain
on portfolio
investments at
FVTPL 27,634 - 27,634 (27,634) -
Net impairment
gains on
portfolio
investments at
amortised cost
and real
estate
inventories 17,440 - 17,440 (17,440) -
Income from
real estate
inventories 118 - 118 (118) -
Income from 68,680 - 68,680 - 68,680 Income from
asset asset
management and management and
servicing servicing
Other income 292 - 292 - 292
---------------- ---------------- ---------------- ------------ --------------- ---------------
Total income
(1) 256,867 - 256,867 124,599 381,466 Cash income
Total operating Cash operating
expenses (174,077) 7,984 (166,093) 10,437(2) (155,656) expenses
---------------- ---------------- ---------------- ------------ --------------- ---------------
Operating Adjusted
profit 82,790 7,984 90,774 135,036 225,810(5) EBITDA
Net financing
costs (40,394) - (40,394) 3,554(3) (36,840)
---------------- ------------ ---------------
Profit before
tax 42,396 7,984 50,380 138,590 188,970
Taxation charge
on ordinary
activities (10,177) (1,704) (11,881) 2,790 (9,091)
Profit after
tax 32,219 6,280 38,499 141,380 179,879
================ ================ ================ ============ =============== ===============
(5,448) Capital
expenditure
(138,292) Replacement
rate (6)
36,139 Cash result
=============== ===============
(1) Total income is largely derived from income from portfolio investments plus income from asset management and servicing, being commission on collections for third parties and fee income received. The other items add back loan portfolio amortisation to get to core collections. Amortisation reflects a reduction in the statement of financial position carrying value of the portfolio investments arising from collections which are not allocated to income. Amortisation plus income from portfolio investments equates to core collections
(2) Includes non-cash items including depreciation and amortisation, share-based payment charges and FX
(3) Non-cash amortisation of fees and interest
(4) The cash result is viewed on an underlying basis which excludes certain items. These items have been excluded to provide a more comparable basis for assessing the Group's performance between financial periods
(5) This is the adjusted EBITDA for the business, which is a key driver to the cash result. This measure allows us to monitor the operating performance of the Group. See page 13 for detailed reconciliations of adjusted EBITDA
(6) Replacement rate is the rate of portfolio investments purchases, at our target portfolio returns, required over the next 12 months to maintain the 84-month ERC as at 30 September 2019
GLOSSARY
'Adjusted EBITDA' means profit for the period attributable to equity shareholders before interest, tax, depreciation, amortisation, foreign exchange gains or losses and adjusting items.
'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 by the Board to be representative of the ongoing performance of the Group and are therefore excluded from underlying profit after tax.
'AMS' means asset management and servicing.
'Collection activity costs' represents the direct costs of collections related to the Group's portfolio investments, such as internal staff 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 including ordinary course portfolio sales and put backs.
'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.
'Drydens' means Drydens Limited, a company incorporated in England with company number 06765260.
'EBITDA' means earnings before interest, taxation, depreciation and amortisation.
'EPS' means earnings per share.
'84-month ERC' and '120-month ERC' (together 'gross ERC'), mean the Group's estimated remaining collections on portfolio investments over an 84-month or 120-month period, respectively, representing the expected future core collections on portfolio investments 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).
'Free cashflow' means Adjusted EBITDA after the effects of capital expenditure, financing and tax cash impacts and before the replacement rate.
'FVTPL' - means financial instruments at fair value with all gains or losses being recognised in the profit or loss.
'IFRS' means EU adopted international financial reporting standards.
'Gross AMS income' includes commission income, debt collection, due diligence, real estate management, advisory fees and intra-group income for these services.
30 September
2019
GBP000
Third party AMS income 68,680
Intra-Group AMS income 34,010
-------------
Gross AMS income 102,690
=============
'Gross income' includes commission income, debt collection, due diligence, real estate management, advisory fees and intra-group income for Asset Management and Servicing, total income for the Investment Business and other income.
30 September
2019
GBP000
Third party AMS income 68,680
Intra-Group AMS income 34,010
-------------
Gross AMS income 102,690
Investment Business income 187,895
Other income 292
-------------
Gross income 290,877
=============
'Leverage' is secured net debt to LTM Adjusted EBITDA.
'LTIP' means the Group 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 2018 and the consolidated financial data for the nine months to 30 September 2019, and the subtraction of the consolidated financial data for the nine months to 30 September 2018.
'Net debt' means the sum of the outstanding principal amount of the senior secured notes and asset-backed loans, interest thereon, amounts outstanding under the revolving credit facility and deferred consideration payable in relation to the acquisition of portfolio investment, less cash and cash equivalents. Net debt is presented because it indicates the level of debt after removing 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 2019 is as follows:
30 September 31 December
2019 2018
GBP000 GBP000
Cash and cash equivalents (97,828) (92,001)
Senior secured notes (pre-transaction fees net off) 928,046 935,567
Revolving credit facility (pre-transaction fees net off) 251,909 245,587
Asset-backed loans (pre-transaction fees net off) 93,098 -
------------- ------------
Secured net debt 1,175,225 1,089,153
------------- ------------
Deferred consideration - acquisitions 43,386 59,922
Deferred consideration - portfolios 31,293 12,031
Senior secured notes interest 1,379 5,542
Asset backed loan interest 129 -
Bank overdrafts 2,477 2,696
Other borrowings 3,384 11,635
------------- ------------
Net debt 1,257,273 1,180,979
============= ============
'NCI means non-controlling interest.
'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 2018 to Q3 2019 as shown in the quarterly, half year and full year statements. In the comparative period this is calculated as the average annual equity attributable.
'Secured net debt' means the sum of the outstanding principal amount of the senior secured notes and asset-backed loans, 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 September 2019 is shown in net debt above.
'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 year attributable to equity shareholders adjusted for the post-tax effect of certain adjusting items. The Group presents underlying profit after tax because it excludes the effect of items (and the related tax on such items) which are not considered representative of the Group's ongoing performance, on the Group's profit or loss and forms the basis of its dividend policy.
'Underlying ROE' represents the ratio of underlying profit for the period attributable to equity shareholders to average shareholder equity.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
QRTGGGQPGUPBGMG
(END) Dow Jones Newswires
November 12, 2019 02:00 ET (07:00 GMT)
1 Year Arrow Global Chart |
1 Month Arrow Global Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
