Lowell Group, a UK leader in consumer debt purchase and contingent collections, today announces its interim financial results for the fourth quarter ending August 2013 (1 June 2013 – 31 August 2013), demonstrating a consistent track record as the Group continues to execute its strategic plan and benefits from a diversified portfolio and highly cash generative business model.
Lowell has moved its financial year end 2013 by one month from August to September 2013 to align the company’s reporting quarters with the more usual calendar quarters.
Lowell Group will issue audited year end results for the 13 months to 30 September before 28 January 2014.
- Estimated remaining collections (ERC) of £531.5 million, up 24% since 31 August, 2012
- Unlevered Net IRR on portfolios owned of 35.9% (after deducting collection activity costs)
- £45.5 million of capital deployed on new portfolio acquisition in the quarter; revolving credit facility remained undrawn as at 31 August 2013
- £70 million portfolio purchases for FY14 already committed through forward flow arrangements
- Account base surpasses 12 million, enhancing the Group’s strategic advantage further
- Collections of £40.4 million in the quarter, up 9% compared with Q4 2012
- Adjusted EBITDA of £28.8 million in the quarter, up 14% compared with Q4 2012
- Interlaken integration progressing well; diversified sector expertise, litigation and economies of scale
- Customer service independently rated as ‘outstanding’
Commenting on the results, Colin Storrar, CFO, said:
“Q4 has been another successful quarter with growth across all key performance metrics underpinned by our strong balance sheet position with ERC of £531 million, up 24% since last year, predicated on a new record quarter of portfolio acquisition.
“Strong operational performance, low cost collections expertise and growing economies of scale continue to support the strong cash generation of our assets, which is highlighted by the “cash asset return”. Lowell’s cash asset return is at an industry-leading level of 23.6%.
“These strong collections and positive cashflows helped us achieve the record quarter for acquisitions without the need to draw on our revolving credit facility.
“Alongside the cash generative nature of our business we continue to generate enviable returns. Our unlevered net IRR is 35.9%, meaning we’re growing the business while protecting our return as both elements of performance are consistent with our Q3 performance.
“The strategic depth of our client relationships is evident by the high percentage of portfolio purchases allocated to forward flows, in fact over £70 million is already committed to forward flow arrangements for the financial year 2014. Furthermore, our purchasing strategy has allowed us to defend our pre-eminence in the mobile and home shopping markets whilst aiding diversification by covering different industries, high and low balance, as well as paying and non-paying.
“Away from the figures, our internal cultural programme FAIR, which forms part of our preparation for FCA regulation, continues to receive positive feedback from customers and clients alike. There are many tangible deliverables within the project, but the primary focus has been strengthening our affordability assessments during our customer calls, something which has contributed to our continued low default rate at 17.9%. Earlier this month the FCA issued its second and more substantive piece of consultation on the transfer of consumer credit licence to the FCA. The paper validated much of the approach we are taking.
“Also, last month Lowell Group was awarded an ‘outstanding’ rating for customer service by Investor in Customers. We are the only provider in our industry to achieve this recognition, one which is based on robust research involving our customers and employees as well as desk research. It indicates the strong relationships we have with our customers based on our strong understanding of their circumstances and, along with our financial performance, demonstrates that our long-standing approach of working with our customers to negotiate a mutually acceptable payment plan tailored to their personal financial circumstances is not only the right thing to do for our customers, but the right thing to do for our business.
“Looking to the future, the acquisition pipeline continues to be very strong across our core sectors of Financial Services, Communications and Home Retail providing a regular flow of portfolio sales. Our acquisition of Interlaken will boost our competitive strength in the Financial Services high balance sector and we remain well-positioned to capitalise on the lower balance accounts typically associated with Communications and Home Retail.