Lowell Group, a UK leader in consumer debt purchase and recovery, today announces a strong set of interim financial results for the third quarter 2013 (1 March 13 – 31 May 13) delivering growth across assets and earnings.

Highlights
• Continued growth across key financial metrics
• Acquisition of Interlaken group providing significant potential for further expansion
• Continued strong market dynamics and portfolio purchase pipeline

Financial Performance as at 31 May
• Estimated remaining collections (ERC) of £473.2 million, up 24% since May 31, 2012
• Adjusted EBITDA of £28.4 million in the quarter, up 14% compared with Q3 2012
• Collections of £39.9 million in the quarter, up 11% compared with Q3 2012
• Strong Unlevered Net IRR on portfolios owned of 22.4% (35.5% after deducting collection activity costs only)

Operational Performance
• Portfolio purchases of £19.3 million in the quarter, with a record £30.3 million achieved in June taking ERC to £512.7 at 30 June 2013
• Spending and committed portfolio purchases as at June 2013 now in excess of £110 million for FY13
• Account base tops 11 million for the first time and Lowell now has a relationship with 8 million individual customers
• Purchase of Interlaken Group completed May 16, 2013 – funded entirely through cash
• Forward flow arrangements continue to provide greater certainty of spend – over 50% of total spend in the quarter came from forward flow arrangements

Commenting on the results, Colin Storrar, CFO, said:
“I’m pleased to report that today’s results continue our solid track record of delivery. Our sustained financial strength is once again evident with growth across all key performance metrics underpinned by strong ERC, collections and EBITDA, with significant liquidity resources available to support further growth.

“ERC was £473 million by the end of the quarter and increased further to £512.7 million by the end of June 2013, up 33% on prior year. Adjusted EBITDA in the quarter was £28 million, up 14% on the same period last year, and we achieved £39.9 million of collections, up 11% on last year.
“In terms of portfolio acquisitions, we continue to benefit from strong client relationships, with 25% of spot purchases coming from ‘off market’ transactions in the quarter. Portfolio purchases in the quarter were £19.3 million and we followed this up with a record month in June where we saw acquisitions of over £30 million. As a result, our customer account base has topped 11 million for the first time. Forward flow arrangements also continue to provide greater certainty of spend, with over 50% of total spend in the quarter coming from this type of arrangement.

“Whilst increasing our diversification, we have also successfully maintained our financial services and communications market positions. And, as part of our drive to increase our competitive positioning across all debt types and balances, as well as build on our existing core strengths in data-driven collections, we successfully acquired 100% equity of the Interlaken Group and its subsidiaries Fredrickson International Limited and SRJ Debt Recoveries Limited.

“Importantly, this deal also facilitates the Group’s strategic move into the emerging sector of Government debt, an area with significant growth opportunity.

“We plan to run Interlaken as a standalone debt collection operation. We believe running the business in this way is key to maintaining the integrity of independent client relationships whilst still leveraging common sector knowledge and transferable collections skills.

“Looking to the future, we are well positioned to convert what continues to be a strong pipeline of opportunities, with a number of large financial services debt sales expected in the next six months and further opportunities continuing across communications and home retail. We remain committed to ongoing pricing discipline and will continue to focus on low balance non performing debt portfolios while also diversifying into new debt types and higher balance portfolios enabled by our Interlaken acquisition. Furthermore, the partnership with Interlaken means we are now better placed than ever to maximise the potential of our value accretive service and enhance existing client propositions. The management teams at Lowell and Interlaken are relishing the prospect of working together to execute the growth strategy of the newly enlarged Lowell Group.”