Lowell GFKL Group acquires leading German third party collections company Tesch Inkasso strengthening its position in a core market.

Lowell GFKL Group, a European leader in credit receivables management backed by the Permira Funds and Ontario Teachers’ Pension Plan, today announces that it has entered into an agreement to acquire Tesch Inkasso Group from Avedon Capital Partners and the other existing shareholders. Closing is subject to certain regulatory approvals.

After acquiring Austrian IS Inkasso Service in April, this is Lowell GFKL Group’s second acquisition since its formation in October 2015. This complementary addition strengthens the Group’s position in its core German market. It underlines the Group’s ambition to build a pan-European business with leadership positions in each of its markets. The transaction further improves diversification in terms of addressed verticals and business mix. It will deliver a range of synergies to the enlarged Group.

Tesch Inkasso is a leading German 3PC company with several thousand unique clients and a volume of receivables serviced of c. €2 billion. Founded in 1985, it was acquired by Avedon Capital Partners in 2012 and has itself acquired Transcom CMS and Mediafinanz in recent years.

Lowell GFKL Group is considering various forms of financing to fund the transaction including loans and debt securities.

Tesch Inkasso has a leading position in the utilities and eCommerce sectors and has complementary expertise to the Lowell GFKL Group in many other sectors. It shares the Group’s commitment to building long-term client relationships and respectful, fair engagement with consumers. The CEO of Tesch Inkasso, Thomas Dold, will join the Group having delivered strong organic growth and an impressive new client win rate over the past few years.

Thomas Dold, CEO Tesch Inkasso, said: “I am delighted that Tesch Inkasso will join forces with the Lowell GFKL Group and I look forward to combining our areas of expertise to drive growth in the attractive German market.”

James Cornell, CEO Lowell GFKL Group, said: “I’m very pleased to welcome Thomas and the team at Tesch Inkasso to our Group. This combination significantly strengthens our collective position in Germany and, together with our pioneering approach to consumer insight, gives us the platform to serve even more clients and consumers with our products and services, which span the credit management value chain.”

 

 

Investor Relations contact:

Jon Trott

Telephone:    44 7551 153 793

Email:             investors@garfunkelux.com

 

Media contacts:

UK:

Lisa Caswell

Telephone: + 44 7393 236925

Email: MediaEnquiries@lowellgroup.co.uk

Germany:

Michaela Heitkemper

Telephone : + 49 201 102 1198

Email:  pr@gfkl.com

 

Notes to Editors:

About Lowell GFKL

The Lowell GFKL Group was created in October 2015 following the merger of German and UK market leaders GFKL and the Lowell Group. This union created one of the largest credit management companies in Europe. It benefits from the backing of global investment company Permira Funds and Ontario Teachers’ Pension Plan (OTPP).

The Group’s experience, expertise and core strengths in data analytics and operational efficiency underpin its vision to be the most reputable and trusted partner in the European credit management sector.

http://investors.garfunkelux.com

https://www.gfkl.com

http://www.lowellgroup.co.uk/

 

About Tesch Inkasso

Tesch Inkasso was founded in 1985 by Siegward Tesch, has around 400 colleagues and is based in Gummersbach, Germany – in proximity to the GFKL headquarters in Essen. The company was acquired in 2012 by Avedon Capital Partners, the Dutch-German mid-market PE firm. Within 3PC, the business is a market leader in Utilities and has a strong presence in the Insurance, Financial Services, eCommerce, Telco, Travel and Public sectors.

Recently the business has moved into Debt Purchasing (DP) through proprietary portfolio acquisitions from its existing asset base. Avedon Capital Partners has pursued a market consolidation strategy with recent acquisitions including Transcom CMS and Mediafinanz.

www.tesch-gruppe.com

LOWELL GFKL GROUP ANNOUNCES IMPRESSIVE TRADING PERFORMANCE DURING SECOND QUARTER 2016

Lowell GFKL Group, a European leader in credit receivables management, today announces impressive results for its second quarter ended 30 June 2016.
Financial Highlights

  • Q2 cash EBITDA* increased by 19% year on year to £60m
  • NPL portfolio acquisitions up 27% to £247m in the last 12 months – well diversified across originating verticals
  • 120 month gross Estimated Remaining Collections (ERC) at a record £1.5bn, up 20% from June 2015 and up 11% since Q4 2015
  • In excess of £175m of portfolio acquisitions already closed and contractually committed for 2016
  • Long-term forward flow agreements signed in H1 give visibility of in excess of £320m spend out to FY-21
  • Pricing and collections performance in line with underwriting and model assumptions

*Cash EBITDA as quoted is defined as Garfunkelux Holdco 2 S.A.’s operating profit excluding exceptional items, depreciation and amortization, and adjusted for acquired debt portfolio write ups and amortization amounts as reflected in the unaudited consolidated statement of financial position for Garfunkelux Holdco 2 S.A.

Operational Highlights

  • Acquisition of IS Inkasso Service successfully completed in May
  • Integration of Lowell, GFKL and IS Inkasso Service continues to make good progress
  • Focus on value creation remains paramount:
  • o Sharing best practice to increase competitiveness
  • o Building a strong platform for future Pan-European expansion
  • o Maintaining a disciplined approach to pricing and investment
  • Extension of our value proposition to clients continues through the development of our one stop shop offering
  • Compliance with the regulatory environment and the customer experience remain at the forefront of all activities

Outlook

The outlook for the Group remains positive and the Group is well placed to benefit from the structural drivers of growth in the UK, German and Austrian consumer credit markets.

Commenting on the results, Colin Storrar CFO said:
“I am delighted to announce impressive results for the Group this quarter. Cash EBITDA performance in the quarter is particularly pleasing, as is the step change in medium-term, forward flow acquisition visibility. The combination of our H1 trading, along with the future NPL acquisitions we’ve secured to date, means we look to the second half of 2016 and beyond with optimism.”

 

 

 

For further information, please contact:
Investor Relations enquiries:
Jon Trott, Head of Investor Relations
Telephone: +44 7551 153 793
Email: investors@garfunkelux.com

Media enquiries:
UK:
Lisa Caswell
Telephone: + 44 7393 236 925
Email: MediaEnquiries@lowellgroup.co.uk

Germany:
Michaela Heitkemper
Telephone: + 49 201 102-1198
Email: pr@gfkl.com

About GFKL Lowell Group:
The GFKL Lowell Group was created in October 2015 following the merger of German and UK market leaders GFKL and the Lowell Group. This union created one of the largest credit management companies in Europe. It benefits from the backing of global investment company Permira Funds and Ontario Teachers’ Pension Plan (OTPP). The Group’s experience, expertise and core strengths in data analytics and operational efficiency underpin its vision to be the most reputable and trusted partner in the European credit management sector. For more information on the Group, please visit our investor website: investors.garfunkelux.com.
For information on the individual companies, please visit:
www.gfkl.com
www.lowellgroup.co.uk

Non- IFRS financial measures
We have included certain non-IFRS financial measures in this trading update, including estimated remaining collections (“ERC”) and Cash 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 the 84-month, 120-month and 180-month periods. 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 utilise 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 Cash 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 Cash EBITDA to assess our performance. Cash EBITDA is not a measure calculated in accordance with IFRS and our use of the term Cash EBITDA may vary from others in our industry. For a reconciliation of Cash EBITDA to operating profit, see the “Reconciling the Q2 Interim Numbers to this Presentation” page within the Investor Presentation document.

ERC and Cash EBITDA and all the other non-IFRS 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 IFRS.