News

Lowell Group, a UK leader in consumer debt purchase and recovery, today announces a strong set of consolidated annual results for the period ended 30 September 2013*. The results demonstrate consistent and predictable growth, high returns and visible earnings.

*During the period Lowell Group 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.

Highlights

To allow historical comparisons figures quoted are for 12 months to end Aug 2013 (with 13 month figures to end September in brackets)

  • Estimated remaining collections (ERC) up 24 per cent to £531 million at 31 August 2013 (£530 million at end of Sept)
  • Unlevered net IRR at 35.6 per cent as at end 30 September (after deducting collections activity costs)
  • Cash collections up 18 per cent at £160 million (£174 million at 13 months to end Sept)
  • Adjusted EBITDA (excluding exception items) for the year up 17 per cent to £111 million (£119 million at 13 months to end Sept)
  • Portfolio purchases up 22 per cent at £121 million (£124 million at 13 months to end Sept)
  • Sector diversification with a continued specialism in non-paying low balance accounts
  • FCA preparation progressing well with external endorsement for ‘outstanding’ customer service and positive net promoter score
  • Continued investment in the three pillars of our business, our people, practices and systems, building on an already strong and accomplished team with a number of new high calibre recruits from blue chip organisations

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

“Today’s results add to the longevity of our successful track record, with strong growth, strong returns and ongoing liquidity all evident.

“Given we’ve moved to a September year end to align our quarterly reporting with calendar quarters, comparison to prior periods is best done by considering the 12 months to August 13. This allows for like for like comparison and the growth of our business is clearly evident in our posting of an 18 per cent increase in cash collections, a 17 per cent increase in Adjusted EBITDA with a 24 per cent increase in ERC.

“Over the year we invested a record £121 million in portfolio acquisitions taking the face value of our purchases to over £11bn. In the process we have amassed an industry leading data asset of over 12.3 million accounts and 7 million individual customers.

“Significantly, 85 per cent of our collections come from our own UK-based contact centre which we have spent 10 years refining. The size, scale and sophistication of in house activities allow us to reduce our costs, price more effectively and pinpoint our resources more accurately. It also provides transparent oversight of all our functions and points of customer engagement. We send out four million letters each month, receive and make over 100,000 calls and set up in the region of 5,000 new arrangements a day.

“Our focus on building long-term strategic relationships with clients is once again evident. 96 per cent of portfolio purchases in the year came from repeat sellers, with 32 per cent from forward flow deals.

“We also continued to deliver predictable cash flows.

“In an environment where compliance requirements are already greater than ever before we continue to seek to do the right thing for our clients and our customers. Our customer service received the strongest possible endorsement, with an outstanding rating from the UK’s leading customer experience consultancy Investor in Customers. We remain the only organisation in our industry to achieve this recognition, one which is based on robust research involving our customers and employees as well as desk research.

“Looking forward, we expect debt sale volumes to remain buoyant with financial services ‘business as usual’ disposals augmented by deleveraging-led additional spot sales. We also expect stable volumes of sales to emanate from telecoms and home retail credit as well as further volumes to begin to come from emerging markets such as insurance and utilities.”

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.

 

Highlights

  • 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.

Lowell Group, a UK leader in consumer debt purchase and recovery, announces that it has changed its accounting reference date and financial year end from 31 August to 30 September. The Board has taken this decision to align the Company’s external reporting quarters with the more usual calendar quarters.

As a result of this change, the Company’s reporting calendar will be as follows:

  • Unaudited results for the fourth quarter ending 31 August 2013 to be announced on Thursday 17 October
  •  Audited results for the 13 month period to 30 September 2013 to be announced before 28 January 2014

The new accounting reference date will also be applied to the recently acquired Interlaken Group, facilitating one single reporting calendar across the wider Lowell corporate entity.

Access to Lowell Group’s Q4 2013 Unaudited Financial Results Announcement

Lowell Group’s unaudited financial results for the fourth quarter 2013 (1 June-31 August 2013) will be published on the investment section of the Lowell Group website at 9.00am on Thursday 17 October. Access is by request via the following link: http://www.lowellgroup.co.uk/index.php/investors

TELECONFERENCE – In addition, at 1.00pm on Thursday 17 October, 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/67099917

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

Ends

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.”