Lowell Group, a UK leader in consumer debt purchase and recovery, today announces its interim financial results for the second quarter 2013 (1 December 12 – 28 February 13).
• Collections of £42.7 million in the quarter, up 35% compared to Q2 2012
• Portfolio purchases of £41.5 million in the quarter, up 95% compared with Q2 2012
• Adjusted EBITDA of £30.0 million in the quarter, up 34% compared with Q2 2012
• Continued strong Unlevered Net IRR on portfolios owned as at 28 February 2013 of 22.4% (35.7% after collection activity costs)
• Continued deleveraging – LTV reduced from 57% at bond issuance to 44% as at February 28, 2013
• Cash flow conversion remains consistently over 90% for all periods
• Estimated remaining collections (ERC) of £458.3 million, up 29% since February 29, 2012
• £75 million additional bond placement successfully realised on February 11, 2013
Commenting on the results, Colin Storrar, CFO, said:
“Our sustained financial strength is once again evident with continued strong growth across all our key performance metrics; strong collections performance, growing economies of scale, strong portfolio acquisitions and improving EBITDA. All of this contributes to an increasingly strong balance sheet position with improvements in our funding ratios, strong cash reserves and increasing ERC.
“Moreover, the additional £75 million bond placement, which we completed in February, puts the Group in a very strong position to take advantage of strong market opportunities and enhance its growth going forward
“Adjusted EBITDA was £30.0 million, up 34% on the same period last year, and we achieved £42.7 million of collections, up 35% on last year. It was also an excellent quarter for portfolio purchases, up 95%. With these recent acquisitions we now have some 10.8 million customer accounts with a face value of £9.8 billion.
“The result of this continued strong all round performance is that ERC, which underpins the balance sheet value of our debt portfolios, has increased 29% over the last 12 months to £458.3 million.
“I am also pleased to report that performance in March, the last full reportable month of performance, has continued in the same positive vein. We spent £8.3 million on portfolio acquisitions during the month taking our year-to-date spend on portfolios to £64.5 million, 68% higher than the figure for the same period last year. At the end of March our ERC now stands at £468.2 million, up £9.9 million on the previous month, and more than £100 million up on the previous year.
“Compliance, as ever, continues to be of paramount importance. We have initiated a series of client consultation days to share best practice and are well advanced in our preparations for regulation by the Financial Conduct Authority, which starts in April 2014. We are totally focused on the need to deliver fair customer outcomes through sustainable individual solutions and one measure of success is that default rates are reducing.
“We continue to invest in our systems to further develop our competitive advantage and during the quarter we introduced further improvements to our already market-leading in-house trace system.
“Looking to the future we have a very strong pipeline for future acquisitions and following the recent £75 million bond tap we are well-placed to take advantage of these opportunities.
“We continue to diversify into ‘un-tapped’ opportunities in new sectors and are focusing on government, utilities and insurance. We also continue to harness our skills and expertise to deliver value added services that develop our strategic relationships and facilitate further growth opportunities. To put the importance of this into context, of the £41.5 million acquisition spend during the quarter, two thirds had an element of value added services in our proposal.
“Our core markets are performing well, we are well placed to maximise opportunities to enter new sectors, and we are excited about our opportunities to develop value added services to enhance our existing client propositions.”