News

• Progression of successful partnership brings market leading collection businesses together to offer fully integrated solutions bringing additional strength and value-added services to clients
• Each business unit to operate separately, continuing to develop bespoke skills and specialisms
• Shared commitment to compliance, performance, innovation, investment in people and client relationships

Lowell Group, a leading purchaser of non-performing consumer debt portfolios in the United Kingdom, has today announced the acquisition of Interlaken Group, including its widely known Fredrickson International brand. The deal, for an undisclosed sum, will see ownership of the Surrey-based debt collection agencies group transfer to Lowell Group, along with the 300 plus employees. It is a union of two well-established innovators in the debt recovery industry in the United Kingdom.

The two companies have worked together successfully over many years. Both are widely recognised as leaders in their respective fields, sharing a commitment to compliance, developing market-leading technologies and investing in their people, as well as forming strategic partnerships with clients in order to drive long-term value.

Recognising the importance of maintaining and developing the intellectual property of both businesses, Lowell Group intends to run its operations and the operations of the Interlaken Group separately, in order for each group to continue to develop its bespoke specialisms and skills. At the same time, the combined group will seek to develop and realise its range of value added services, enhancing its all-round client proposition. The combined group will also benefit from economies of scale and sharing of best practice.

The move follows Lowell Group’s initial entry into contingent collections in January 2011 when it set up an ‘outsource to sell’ operation, Lowell Preston (Tocatto). It was set up as a research and development hub, offering clients the chance to work with the Lowell Group on a commission basis initially, before committing to a full debt sale and supporting decisions on pricing and strategies. However, it became much more of a strategic benefit for both the Lowell Group and its partner clients. Its success demonstrated the size and potential of the opportunity to operate distinct and separate debt collection and debt purchase businesses under one umbrella company, providing the rationale for today’s deal.

Commenting on the deal, James Cornell, Lowell Group CEO said:
“We have always respected the Interlaken Group as market-leaders in their field and are very excited about the opportunities to be gained from bringing the two businesses together. Our move into contingent collections in 2011 helped us realise the potential of today’s deal; the opportunity to deliver best-in-class service to our clients whether it be through contingent collections or debt purchase. Through our partnership we will also be able to provide long-term value to our clients by delivering new, creative and innovative solutions beyond debt collection and debt purchase, and offer a ‘one-stop’ shop of services to drive operating profit and balance sheet objectives of our clients.”
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James continued:

“There is plenty of synergy in terms of clients, sector experience and skills and also plenty of opportunities for each business to expand into new areas and learn from each other. Fredrickson International, for example, are highly skilled across all debt and balance types, whilst Lowell’s strengths have traditionally been in lower balance accounts. Lowell will also be sharing its strength in data analysis and tracing to help boost collections performance in the new businesses.

“With many clients seeking value beyond contingent collections or debt purchase activities, the combination of Lowell and Interlaken will enable us to deliver integrated solutions on a far larger and more advanced scale.

“Interlaken has a strong track record and 17 year history, but importantly we also have a shared belief about what makes our businesses strong – our people, practices and technologies. Not only are we an excellent fit culturally, both taking pride in family values, but we each bring a range of complementary skills and experience. The initial reaction from clients is supportive of our approach, which is hugely encouraging as we build and develop more strategic client relationships. Following this deal, Lowell will be even better placed to deliver on our clients’ needs with new and innovative solutions as we continue to develop the intellectual property we hold in each business.”

James Cornell also stressed that this will not become an exclusive relationship and both parties will continue to work with existing partners across the debt recovery industry.

Simon Jones, Group Managing Director of Interlaken Group, and Roy Jones, Group Chairman, founded Fredrickson International in 1992 and the Interlaken Group in 1996. Their decision to stand down from the Group preceded today’s deal. Simon will remain with the business in the short-term to ensure a smooth transition.

Simon Jones commented:
“Today is the end of an era. Roy and I are exceptionally proud of the company we have built together. Since we established the Interlaken Group 17 years ago we have gone from employing just a handful of people to over 300 people today with annual collections now exceeding £100m.

“We are delighted to pass the reins across to the Lowell Group. We hand them a company with a strong leadership team, talented and dedicated staff, an enviable client base, the highest standards of compliance and ethics and an exceptionally strong performance. We could not think of a better company to take our business forward and take it to the next level.

“We would like to thank our staff and clients for all their support and trust during the past 20 years. We wish all concerned the very best of luck for the future.”
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Frank Hanafin, Group Commercial Director, Interlaken Group, will remain with the Interlaken Group.

Frank commented:
“Like Lowell, we’ve never been short of ideas to innovate, develop and grow our business. What the combined group will bring is the funding and investment to help us realise these ambitions and continue to grow. Importantly, by joining forces with Lowell we are confident that we will be able to continue to deliver the best possible levels of service and performance in contingent collections and forge stronger more effective partnerships with our clients.

“Being a family business, we have naturally deliberated extensively about the best option for the future. We recognise that Lowell shares our approach to people, compliance, ethics and the technologies and data systems that underpin each of our businesses, which makes this combination the best option for our businesses, our people and our clients.”

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).

Highlights
• 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.”

Lowell Group plans to publish its interim financial results for the second quarter 2013 (1 Dec 12–28 Feb 13) on the investment section of the Lowell Group website at 8.00am BST on Friday 26th April 2013. Access is by request via the following link:

/index.php/investors
TELECONFERENCE – In addition, at 11.00am BST on Friday 26th April, 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/21467969

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

Lowell Finance Holdings Limited (“Lowell”) today announced the pricing of £75 million aggregate principal amount of additional 10.75% senior secured notes due 2019 to be issued by its subsidiary, Lowell Group Financing plc. The notes will constitute a further issuance of the 10.75% Senior Secured Notes due 2019 issued by Lowell Group Financing plc on March 30, 2012. Lowell anticipates that the offering will close on February 11, 2013 and intends to use the proceeds from the offering to repay certain of its outstanding drawings under its revolving credit facility and for additional cash funding.

The notes are being offered in a private placement outside the United States to non-U.S. persons in reliance on Regulation S under the U.S. Securities Act.  The notes will not be registered under the U.S. Securities Act or securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act and any other applicable securities laws.  This press release does not constitute an offer to sell or the solicitation of an offer to buy the notes, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

This announcement does not constitute a public offering, nor an invitation to the public in connection with any offer, within the meaning of the Prospectus Directive.  The offer and sale of the notes will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus for offers of securities.  “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the any relevant member state of the European Economic Area.  “2010 PD Amending Directive” means Directive 2010/73/EU.

Forward-Looking Statements

Statements in this announcement that are not historical facts are forward-looking statements.  All forward-looking statements involve risks and uncertainties that could affect Lowell’s actual results and could cause its actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, Lowell.

 

For further information, please contact our investors’ relations:

Carol Ord

Tel: +44 (0)113 285 6570

E-mail: investors@lowellgroup.co.uk

Lowell Group, a UK leader in consumer debt purchase and recovery, today announces its interim financial results for the first quarter 2013 (1 Sept 12-30 Nov 12).

Highlights

  • Estimated remaining collections (ERC) of £442.1 million, up 31% since November 30, 2011
  • Strong Unlevered Net IRR at 24.2% (37.9% after collection activity costs)
  • Collections of £37.1 million in the quarter, up 18% compared to the three months ended November 30, 2011
  • Collections on portfolios owned at August 31, 2012 performing at 105% of ERC projections from August 31, 2012
  • Adjusted EBITDA of £26.1 million in the quarter, up 21% compared to the three months ended November 30, 2011
  • Portfolio purchases of £14.8 million in the quarter, up 43% compared to the three months ended November 30, 2011
  • Continued very strong performance in December 2012 with ERC increasing to £467.5 million and portfolio purchases to £43.5 million year to date (4 months), 30% and 72% up on prior year, respectively

Commenting on the results, James Cornell, CEO, said:

“I am pleased to report continued strong progress with significant growth across all our key performance indicators, including collections, portfolio acquisitions, adjusted EBITDA, and ERC.

“Adjusted EBITDA for the period of £26.1 million was up 21% on the corresponding period last year. We achieved quarterly collections of £37.1 million, up 18% on last year, while our portfolio purchases totalled £14.8 million – a 43% increase.

“We are achieving this growth while continuing to deliver high and resilient return on capital and cash flow generation from our asset base.

“The result of our strong all round performance is that ERC, which underpins the balance sheet value of our debt portfolios, has increased 31% over the last 12 months to £442.1 million.

“We remain focused on low balance portfolios in our core market sectors – financial services, communications and home retail credit – and on building an asset base well-diversified across numerous portfolios, sectors, clients and debt types. We continue to make calculated progress in new sectors, including utilities and government debt where we are active in emerging debt sales and trials.

“At the same time, we are maintaining our investments in the development of our systems to enhance operational efficiency, including increased use of email to reduce postage costs and the roll-out of speech analytics software to allow on-going monitoring of calls.

“Compliance continues to be of paramount importance and we have already taken steps to comply with the OFT’s revised guidance on debt collection, which was published in November 2012.

“Figures for December, which included significant portfolio purchases of £28.7 million, show the business is extending its track record of strong performance. Looking forward, prospects remain very attractive.  Since the end of November, we have seen a substantial volume of debt sale activity with opportunities presented to the company totalling over £2.2 billion of debt at face value from 17 different vendors. We are also continuing our sector diversification with the majority of December purchases in home retail credit.

“We benefit from significant visibility on our portfolio purchases for the year, as a result of the high percentage of forward flow agreements we have with clients and completed spot purchases year to date. The majority of our budgeted portfolio purchases for the year was already committed by December 2012.

“Furthermore, we have strengthened our ability to take advantage of these opportunities, and thereby enhance our ERC, by increasing our revolving credit facility from £40 million to £55 million with an uncommitted accordion option for a further £15 million. This also demonstrates the continued support of our senior lenders.”

Ends