John Pears reflects on H1 results and looks forward to exciting future developments

Posted by: Lowell|September 09 2021


In a frustratingly stop-start year for the country as it sought to leave lockdown and return to some sort of normality, there has been nothing stop-start about Lowell’s strong performance in 2021 so far.


One of the driving factors of the great performance in 2021 has been the strength of our collections business. Across all three regions, collections performed at 111% in the six months to June, surpassing the forecasts.


This shows we’re doing the right thing by customers. We are setting the right payment amounts and we’re reaching and engaging the number of customers needed to ensure those collection numbers continue to grow. 


The outstanding cost control also made a huge difference to our financial performance and we are confident that will continue. LTM operating expenses are down £19m year-on-year, and the LTM cash EBITDA margin has increased 100bps to 56%. 


That collections resilience and focus on cost control and efficiency led to the strongest ever quarter for cash EBITDA in the UK: £85m for the three months to the end of June. The Nordics have also shown a strong start to the year, with cash EBITDA up almost a tenth. 


There were green shoots as the market showed signs of opening up, and we deployed £163m of capital in the six months to the end of June, £130m of which came in the second quarter. The strength of our balance sheet sat at £655m at the end of June, putting us in a very comfortable position.


As we seek to make the business ever more efficient and streamlined, we have continued to invest in our digital services. This has proved hugely successful with customers; this year the number of those self-serving through the website hit 62%, which brings down the cost of collections and allows the engagement centre to focus on customers with more complex needs. In the UK, digital-led payments rose a third year-on-year. 


Part of our digital investment was in the new app. Even though it has just launched, and we haven’t been promoting it yet as it is still in testing with customer panels, there have already been 1,000 downloads and rising. Our next feature release is scheduled in a matter of weeks, given our customers live access to their credit score. This will add to the growing set of digital tools available to help improve their financial health. Digital is clearly a really important part of our growth story in the future, and one that customers have embraced.


Customers have always been at the heart of our approach. We provide support and personalised debt support and help the them in the most vulnerable of circumstances. That we helped 1.5 million people clear their debt with us last year is impressive, but we’ve always been about more than just numbers. We want to be judged on how our customers feel about us, and the customer net promoter score of plus-71 in the UK is hugely impressive. 


Lowell is a responsible business. We believe responsible businesses are good businesses and deliver better returns for all of stakeholders, and in turn our investors. A responsible business is also a sustainable business. 


So, we are delighted to talk about our new sustainability framework for the first time, which will give us greater insight into how we work. We believe our environmental, social and governance disclosures will now lead the industry for transparency. 


Our focus on sustainability is nothing new. We’ve always wanted to make credit work better for all, and now we are going further than ever before with our new framework. Sustainability is about way more than just the financial numbers and it’s time we committed to go further than ever before. 


So we have drawn up a new sustainability strategy based on four pillars. The first is to be better for our customers, be supportive and offer personalised debt resolution for all. The second is about adhering to the highest ethical standards. To promote understanding of the complexities of debt and commit to raising the standards the industry should hold itself to. 


The third pillar is about being better for society – we want an inclusive culture for our colleagues and also to contribute to the communities our colleagues and customers come from. Underpinning all of that, we want to be a responsible business with strong governance and do our share for the environment. 


Ultimately, we want to do more and go further. We have drawn up a series of key performance indicators – some of which are qualitative but many more are quantitative – to provide greater amounts of data and understanding of how we operate sustainably as a business.


Our plan is to report on those numbers at least once a year. But we’ve always wanted to do more than just publish the numbers – we want to focus on the ‘hows’ as well as the ‘whats’. We think this framework will give us the structure to continue to talk more broadly about sustainability.


We are really proud of the H1 results announced earlier this month. We are encouraged by the strength of our business and the talent of our people. After building up a great head of steam in the first half of the year, we are focused on maintaining that standard of resilience, efficiency and delivery as we head into the second.