Lowell Group, a UK leader in consumer debt purchase and recovery, today announces interim financial results for the first quarter of its 2014 financial year (1 October 2013 to 31 December 2013).

The Group continues to report strong performance with continued collections growth, high liquidity and returns, record committed portfolio purchases and a very encouraging pipeline of opportunities for the remainder of the year.

Highlights

  • Estimated remaining collections (ERC) of £549 million, up 17% since 31 December, 2012
  • Collections of £43 million in the quarter, up 19% compared with Q4 2013
  • Adjusted EBITDA of £29 million in the quarter, up 16% compared with Q4 2013
  • Unlevered Net IRR on portfolios owned strong at 34.5% (before direct costs of collections)
  • 50% of ERC (£274 million) expected to be recovered as cash within 24 months
  • Cash asset return of 23.2% for 12 months to December 2013
  • £79 million portfolio purchases for FY14 already committed, including £60 million from forward flow arrangements with 11 key clients
  • New business trials underway with commercial and public sector clients
  • FCA preparations ahead of schedule – interim permissions applied for and granted
  • Industrialisation of IT infrastructure complete with a secure and stable cloud based solution in place

Commenting on the results, Colin Storrar, CFO, said:

“The Group continues to deliver consistently strong results based on solid fundamentals of a proven business model and effective management. Compared to the same quarter last year, our collections were up 19 per cent to £43 million, EBITDA was up 16 per cent to £29 million, and our estimated remaining collections (ERC) were up 17 per cent to £549 million, of which we expect to collect around 50 per cent – £274 million – within 24 months, offering significant cash flow visibility.

“The prospects for the rest of the year are very encouraging. Already in the first quarter of this year we have made, or are committed to, £79 million of portfolio purchases, which represents 64 per cent of our total spend last year. This figure includes £60 million from forward flow agreements with 11 different clients, which reflects the strategic depth of our client relationships. It is the largest committed portfolio purchase level ever achieved at this point in a financial year, indicative of the strength of our client relationships and wider market conditions. Our capital is being deployed in areas we know well and where we believe we can achieve high returns. 90% of these purchases were made with repeat clients and all are in our core sectors.

“Looking to the future, a strong pipeline of opportunities bodes well for the rest of the year. Strong growth is forecast in consumer credit lending across credit cards, car finance and unsecured loans. Focusing on our core markets, financial services, home retail credit and communications, and there are opportunities across the board. We believe there is a £27bn backlog of debt in financial services and anticipate that the capital de-leveraging requirements will force European institutions to sell debt. Continued growth is forecast in home retail credit and we are seeing a shift upstream for debt sales in communications as companies look to release cash for marketing. This fresher debt will give rise to increased spend opportunities.

“Also, the synergies of our acquisition of contingent collections specialist Interlaken are already reaping rewards in terms of opening up new market sector opportunities, including higher balance financial services and government debt. New business trials are underway with a number of commercial and public sector clients.

“Alongside continued strong performance and predictable growth we have maintained a strong investment in our future operational platforms and strategic direction, a highlight of which is the successful industrialised our IT infrastructure establishing a secure and stable virtual platform for growth.

“Finally, away from the figures, our preparations for FCA regulation are ahead of schedule and have progressed well. We applied for and were granted interim permissions in November 2013, while our internal cultural programme FAIR, which forms part of our preparation for FCA regulation, continues to receive positive feedback from customers and clients alike. A primary focus has been strengthening our affordability assessments during our customer calls, something which has contributed to our continued low default rate for what were previously non-performing accounts.” 

A copy of the results presentation is available via www.lowellgroup.co.uk/investor

Lowell Group plans to publish its interim financial results for the first quarter 2014 (1 Oct 1–31 Dec 13) on the investment section of the Lowell Group website on the morning of Friday 28th February 2014. Access is by request via the following link:  http://www.lowellgroup.co.uk/index.php/investors

TELECONFERENCE – In addition, at 11.00hrs GMT on Friday 28th February, Lowell Group’s CEO, James Cornell, and CFO, Colin Storrar, plan to hold an audio conference presentation on the company’s performance.

To access this audio conference, participants will need to register in advance at:  http://emea.directeventreg.com/registration/2806359

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