Business expansion doubles Arrow Global’s profit
European asset manager Arrow Global today revealed that profit after tax more than doubled this year, driven by business expansion.
The figures
Profit after tax rose by more than 100 per cent to £8.5m in the first half of this year, compared to £3.7m in the same period in 2017.
In the six months to 30 June 2018 total income from portfolio investments has risen by 8.6 per cent to £125.5m from £115.6m in the first half of last year, and the portfolio asset base increased to £1.03bn from £951.5m.
Read more: Avast sets sail on substantial maiden results
The underlying return on equity over the last year is 33.5 per cent, up from 32.8 per cent in the first half of last year, while earnings per share stood at 4.9p, compared to 2.1p in 2017.
Total income for the period ended 30 June 2018 was £166.9m, with £125.5m generated by the investment business and £59.6m by the asset management and servicing arm of the firm.
The asset management business, which is the fastest growing part of the group, has been strengthened by the acquisition of business services firm Zenith last year, mortgage company Mars Capital in November and Italian loan manager Parr credit in March, the company said.
The group expects to complete the acquisition of Europa Investimenti by the end of the third quarter this year, and of Portuguese property investment manager Norfin by the end of 2018, it confirmed.
What the CEO said:
Arrow Global group chief executive officer Lee Rochford said: "Momentum at Arrow remains strong. Our broad sourcing capabilities are operating platform have enabled the investment business to continue to achieve consistent returns, with unlevered net internal rate of returns in the mid-teens across a range of asset types.
"When combined with our capital-light asset management and servicing income, financial performance continues to be highly value accretive.
"Since our IPO in 2013, we have grown significantly, establishing a pan-European footprint with market-leading positions across six key geographies.
"We believe we now have the optimal platform to position us well to generate strong earnings, cash flow and de-leveraging as we realise the full benefit of this foot print and the investments we have made to enhance efficiency.
"Trading continues to be strong and we remain on track to finish the year in line with market expectations."
What shares did
Shares lifted slightly to £2.59 in early morning trading on the news, but remain far below the group's 2018 peak of £4.35 in January.
What the analyst said:
Shore Capital Markets investment analyst Gary Greenwood said that the group had "published a good set interim results".
"The group has also provided new disclosure on divisional profitability, splitting the business between the investment and asset management and servicing businesses," he said.
"This highlights that both divisions make a healthy contribution to group profitability prior to deducting costs associated with group functions.
"We believe this data will be help investors to better understand the different drivers of the business and allow for a more enlightening sum-of-the-parts valuation to be performed which we believe will help to support a higher valuation," Shore Capital Markets said.
Read more: Ocado delivers mixed results