News

Lowell Group, a leading consumer credit management company, today announced that it has increased the committed accordion on its existing revolving credit facility (“RCF”) from £83 million to £215 million, the accordion being subject to balance sheet conditions in keeping with the growth ambitions of the company.  This new funding has been achieved with the support of the company’s existing lenders the Royal Bank of Scotland (RBS), Lloyds Bank and JPMorgan together with new funding attracted from HSBC and DNB Bank ASA (“DNB”).

The increase in funding is provided at a rate of LIBOR plus 350 bps and is the largest reported RCF within its market. The additional funding also extends the term of the agreement from March 30th 2018 to February 28th 2019.  All the other terms in the credit facility, aside from the revised margin and the term, remain the same as the original agreement terms.

Colin Storrar, Lowell Group’s CFO commented: “We value the continued support of our existing lending partners and are naturally delighted that we have attracted additional funding from our new supporters – HSBC and DNB.  The increase in our RCF is a strong endorsement of our current plans and our future ambitions. We now have an even greater opportunity to build on our successes and continue our strong track record of growth as we move forward.”

Lowell Group posts strong Q2 results highlighting continued growth, prudent leverage and strong visible liquidity

Lowell Group, a UK leader in consumer debt recovery services, today announces continued strong performance in the second quarter of its 2015 financial year (1 January 2015 to 31 March 2015).

Its interim financial results for the quarter maintain the Group’s track record for delivering consistent and sustainable growth, high returns and visible earnings.

Highlights

  • Collections of £55.9 million in the quarter, up 14% compared with Q2 2014.
  • Adjusted EBITDA of £34.8 million in the quarter, up 10% compared with Q2 2014.
  • 84 month estimated remaining collections (ERC) of £742.4 million, up 19% since 31 March, 2014.
  • 48% of ERC (£353.4 million) expected to be recovered as cash within 24 months
  • Cash asset return (adjusted EBITDA/average ERC) of 19.6%for 12 months to 31 March 2015.
  • £126.1 million of free cash flow before debt and tax servicing has been generated in the last twelve months to March 2015.
  • £31.2 million of diversified portfolio investments in the quarter (97% from repeat clients) and £119.0 million already achieved or committed for FY 15.
  • Customer account numbers since inception increased to 17.0m from 13.9m as at 31 March 2014, an increase of 22% over the last 12 months.
  • As at 31 March 2015, the aggregate face value of debt purchased since inception totalled £13.7 billion, a 14% increase from the same period in 2014.
  • Loan to value ratio (net debt/ERC) reduced from 57% at original bond issuance to 50% at 31 March 2015. (51% at 31 March 2014).
  • Net debt to adjusted EBITDA is at 2.8x cover at 31 March 2015 with fixed charge cover ratio at 3.5x cover at the same date.

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

“We’ve achieved another quarter of strong financials. Compared to Q2 2014, our Q2 2015 collections were up 14% to £55.9 million and EBITDA was up 10% to £34.8 million. At the same time our balance sheet continues to grow – our 84 month estimated remaining collections (ERC) now stands at £742.4m, an increase of 19% or £117m from March 2014. In addition, we continue to see value beyond our 84 month accounting period with our 120 month ERC increasing by 18% (£128m) to £829m.

“This cash flow visibility means we are well placed to invest in further purchases to satisfy our investment appetite, while the number and volume of our forward flow agreements and the fact we purchase across financial services, home retail credit and telecommunications clearly helps us achieve our purchasing goals.

“Our business also continues to focus upon maintaining discipline in pricing new investments, harnessing the significant data asset and analytic capabilities that the business benefits from.

“Our application to the FCA for a full licence continues to gather pace, with formal submission on track by the end of August. Customer centricity will be central to our application, something recognised by Investors In Customers who recently awarded us with a 3 star assessment; the highest that is available.

“In summary, we continue to report strong financial performance, strong medium term growth prospects and the ongoing support and backing of two major investment houses in TDR Capital and Ontario Teachers’ Pension Plan.”

Lowell Group will announce its interim financial results for Q2 2015 (1 Jan 2015 – 31 March 2015) on Thursday 21 May 2015.

The results will be available for download via Lowell’s investor website:

http://www.lowellgroup.co.uk/index.php/investors

 

Investor call – 15.00hrs BST.

Lowell Group’s CFO, Colin Storrar, is scheduled to hold an audio conference presentation on the company’s performance at 15.00hrs BST on Thursday 21 May 2015.

To access this audio conference, you will need to register in advance at:

http://emea.directeventreg.com/registration/46515075

You will then be allocated the conference call number, a participant user pin, conference pin and instructions on how to join the conference call. For security purposes please do not give out these details for others to use, all participants must register individually if they wish to join the call.

Lowell Group will announce its interim financial results for Q1 2015 (1 Oct 2014 – 31 December 2014) on Tuesday 24 February 2015.

The results will be available for download via Lowell’s investor website:

http://www.lowellgroup.co.uk/index.php/investors

 

Investor call – 14.00hrs GMT.

Lowell Group’s CFO, Colin Storrar, is scheduled to hold an audio conference presentation on the company’s performance at 14.00hrs GMT on Tuesday 24 February 2015.

To access this audio conference, you will need to register in advance at:

http://emea.directeventreg.com/registration/83332606

You will then be allocated the conference call number, a participant user pin, conference pin and instructions on how to join the conference call. For security purposes please do not give out these details for others to use, all participants must register individually if they wish to join the call.

 

Lowell Group, a UK leader in debt recovery services, today announces a strong set of consolidated annual results for the period ended 30 September 2014. The results demonstrate consistent and sustainable growth, high returns and visible earnings.

Highlights

To allow historical comparisons figures quoted for the prior financial year* are for the 12 months to end September 2013.

*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.

  • Estimated remaining collections (ERC) on a 84 months basis up 34 per cent to £714 million at 30 September 2014
  • Estimated remaining collections (ERC) on a 120 months basis up 35 per cent to £801 million at 30 September 2014
  • Gross Cash-on-Cash multiple held steady at 2.3x (on a rolling 120 month basis) at 30 September 2014
  • Cash collections up 21 per cent at £197 million to 30 September 2014
  • Adjusted EBITDA (excluding exceptional items) for the year up 14 per cent to £126 million
  • Portfolio purchases up 32 per cent at £162 million
  • Sector diversification with a continued specialism in non-paying low balance accounts
  • FCA preparation continues to progress well with external endorsement for ‘exceptional’ customer service (building on our ‘outstanding’ award in 2013) and positive net promoter score
  • Attracted new equity investment from Ontario Teachers’ Pension Plan and raised £115m of new debt finance at a market leading rate
  • Investing for the future across the three pillars of our business, our people, practices and systems;
    • People – a number of new high calibre recruits joined Team Lowell, building on an already strong and accomplished team, in addition to augmenting our resource across  the Analytics and Change functions
    • Practices – co-sourcing of Internal Audit function with PWC, together with the bolstering of resource within our Compliance function
    • Systems – successful outsource of our IT infrastructure to Rackspace and achieved accreditation of the ISO27001 Information security industry standard

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

“Today’s results see Lowell deliver another year of record and sustainable results, with strong growth, strong returns and ongoing liquidity all evident.

“Given we moved to a September year end in 2013 to align our quarterly reporting with calendar quarters, comparison to prior periods is best done by considering the 12 months to September 2013. The sustainable growth of our business is clearly evident on this like-for-like comparison, with a 21 cent increase in cash collections, a 14 per cent increase in Adjusted EBITDA and a 34 per cent increase in ERC.

“Over the year we invested a record £162 million in portfolio acquisitions taking the face value of our purchases to over £13bn. In the process we have amassed an industry leading data asset of over 15.6 million accounts with 8 million individual customers.

“The vast majority of our collections continue to come from our own UK-based contact centre which we have spent 11 years refining. The breadth and expertise of our in house activities allow us to work more efficiently, price more effectively and pinpoint our resources more accurately. It also provides transparent oversight of all our functions and points of customer engagement. Across the Group, we send out over three million letters each month, and receive and make over 150,000 calls. We also set up in the region of 5,000 new arrangements a day. 

“Our focus on compliance continues to be central to our thinking and our actions. We have further embedded our FAIR (Focused, Accessible, Informed and Reasonable) culture into our organisational DNA – listening and understanding circumstances is central to all our customer conversations. Our approach of understanding their income and expenditure and setting up affordable payment plans is clearly working with the level of defaults reduced to the lowest levels we’ve ever seen. Our customer service efforts have been recognised and endorsed in the strongest way possible – through the award of an exceptional rating from the UK’s leading customer experience consultancy Investor in Customers (building on the outstanding rating we received in 2013).”

 

Editors’ notes

Non-IFRS financial measures

We have included certain non-IFRS financial measures in this annual report, including estimated remaining collections (“ERC”) and Adjusted 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 an 84-month period. 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 utilize 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 Adjusted 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 Adjusted EBITDA to assess our performance. Adjusted EBITDA is not a measure calculated in accordance with IFRS and our use of the term Adjusted EBITDA may vary from others in our industry.

ERC and Adjusted 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.