Lowell Group, a UK leader in consumer debt purchase and recovery, today announced consolidated financial results for the third quarter ended 31 May 2012.

“Lowell Group’s performance continues to be strong and in line with management expectations,” said James Cornell, Lowell Group’s chief executive officer. “We showed a 13% increase in collections and 12% increase in adjusted EBITDA compared to the same period last year.

“It was another record breaking quarter. The business achieved its highest month of collections in March 2012 with £12.5 million, and its second highest month of portfolio purchases in May 2012 at £14.6 million.

“Looking forward, we are continuing our strong collections performance with June collections totaling £11.9 million, and activity in the UK debt purchase market continues to increase, especially in financial services where UK clearing banks are undertaking large portfolio disposal programmes. Opportunities presented to the company since 31 May total over £300 million face value debt from 14 different vendors.

“Furthermore, we are continuing to make calculated progress in new sectors, with the utilities portfolio purchased in the first quarter of this financial year performing strongly, and trials in the insurance sector and further utilities portfolios underway in our Preston operation.”

 

Q3 2012 highlights

Collections in the quarter were £35.8 million, a 13% increase on the £31.8 million in the corresponding period last year. Portfolios owned at the beginning of the financial year are performing at 104% year to date versus their ERC projections as of August 31, 2011.

Portfolio purchases in the quarter were £27.8 million mainly in the low-balance segments, where the company has a clear competitive advantage.

Overall servicing costs were £11.0 million, in line with management expectations and reflect the volume and type of portfolios purchased.

Estimated remaining collections (ERC) were £383.5 million at the end of the quarter, up 8% from £355.4 million as of 29 February 2012, and up 18% year on year.

Adjusted EBITDA for the quarter was £24.9 million, a 12% increase on the corresponding period last year.

Cash-flow before debt and tax servicing for the quarter was £25.2 million, a conversion rate of 101% of adjusted EBITDA (compared to 94 per cent for the same period in 2011), maintaining the business’s continued strong cash-flow conversion performance.

 

Teleconference

At 3.00pm on Thursday 19 July, Lowell Group’s CEO James Cornell and CFO Phil Screeton will hold an audio conference presentation on the company’s Q3 performance.

To access this audio conference, participants will need to register in advance at http://emea.directeventreg.com/registration/event/97614954. They will then be allocated the conference call number, a participant user pin, conference pin and instructions on how to join the conference call.

Ends

 

Editors’ notes

Non-UK GAAP financial measures

We have included certain non-UK GAAP financial measures in this quarterly report, including estimated remaining collections (“ERC”) and Adjusted EBITDA.

We present ERC because it represents our expected gross cash proceeds of the purchased debt portfolios recorded on our balance sheet (the “Purchased Assets”) over an 84-month period. ERC is calculated as of a point in time assuming no additional purchases are made. ERC is a metric that is also often used by other companies in our industry. We present ERC because it represents our best estimate of the undiscounted cash value of our Purchased Assets at any point in time, which is an important supplemental measure for our board of directors and management to assess our performance, and underscores the cash generation capacity of the assets backing our business. In addition, the instruments governing our indebtedness use ERC to measure our compliance with certain covenants and, in certain circumstances, our ability to incur indebtedness. ERC is a projection, calculated by our proprietary analytical models, which utilize historical portfolio collection performance data and assumptions about future collection rates, and we cannot guarantee that we will achieve such collections. ERC, as computed by us, may not be comparable to similar metrics used by other companies in our industry.

We present Adjusted EBITDA because we believe it may enhance an investor’s understanding of our profitability and cash flow generation that could be used to service or pay down debt, pay income taxes, purchase new debt portfolios and for other uses, and because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies generally. In addition to ERC, our board of directors and management also use Adjusted EBITDA to assess our performance. Adjusted EBITDA is not a measure calculated in accordance with UK GAAP and our use of the term Adjusted EBITDA may vary from others in our industry. For a reconciliation of Adjusted EBITDA to operating profit, see the “Key Reconciliations and Definitions” section of this document.

ERC and Adjusted EBITDA and all the other non-UK GAAP measures presented have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under UK GAAP.

 

Lowell Group plans to publish its Q3 2012 interim results on the investment section of the Lowell Group website at 8.00am BST on Thursday 19th July 2012. Access is by request via the following link:

/index.php/investors

TELECONFERENCE – In addition, at 3.00pm on Thursday 19th July, Lowell Group’s CEO James Cornell and CFO Phil Screeton plan to hold an audio conference presentation on the company’s Q3 performance.

To access this audio conference, participants will need to register in advance at:

http://emea.directeventreg.com/registration/event/97614954

They will then be allocated the conference call number, a participant user pin, conference pin and instructions on how to join the conference call.

For further information contact: Carol Wright, Head of Communications, Lowell Group. Tel. 0113 2856570, E-mail: carol.wright@lowellgroup.co.uk, Mobile 07814 430330

For further press information contact: Steve Clark at Source Marketing Communications. Tel: 0113 380 1644, E-mail: steve@sourcemc.co.uk, Mobile: 07951 536236