When we announced our full year results for 2021 last week, it wasn’t just the record numbers that made them so important. It also marked a milestone for the business in its push for great sustainability – and how we are leading the industry to make a positive impact on society.
Eight months after launching our Sustainability Strategy, we’re delighted to publish our first annual Sustainability Report. We want to show that these strong financial results are a consequence of how we work, and that we are going about our operations in the right way.
The report is a key part of our mission to ‘make credit work better for all’ and build a more inclusive and sustainable future together. Sustainability is hugely important to us, our customers, and our clients. This report is a stepping-stone for Lowell as we seek to make it the business we all know it can be.
For Lowell, a sustainable business is a better business, delivering better returns for all our stakeholders. We believe in creating a stronger society through fostering better financial wellbeing, promoting inclusive work opportunities, and providing support for our communities.
Alongside that, the Performance Scorecard shows that environmental matters are non-negotiable for Lowell. We have hugely ambitious goals. We aim to be carbon neutral by 2025 and net-zero by 2030. We’ll do that by pledging to use 100% renewable energy in all of our offices in the next three years and build upon the achievement in certain regions of sending zero waste to landfill.
We’re proud of the work we do and we’re proud of the report we have produced to show that. This is a market-leading sustainability report, and now we want to develop it and keep making progress.
2021 was a year of impressive delivery for Lowell, across all metrics, from collections to cash EBITDA, from margins, and adjusted EBITDA to cash generation.
Cash EBITDA hit £531m and debt purchase performance was very strong, as 106% of our static pool of 2020 was collected in 2021. At the same time, cash income benefitted from resilient collections on the backbook across the regions.
Adjusted EBITDA rising 49% to £251m was down to the continued growth of the business as well as the restart of litigation, which the company paused for two quarters after the first lockdown in 2020.
We also introduced our Overdales business, an evolution of Lowell Solicitors, we launched in March and we’ve seen some really excellent progress, growing to a significant contributor for Lowell UK last year.
The work conducted in 2021 to acquire Hoist Finance UK (completed in April 2022), which has a big portfolio of non-performing loans, was a great moment, as we’re confident we’re well placed to deliver on the ERC projects and generate a good return.
Another standout in the 2021 results was the way we have managed our costs effectively. From a margin of around 52% two years earlier, in 2021 it hit a high of 59%. This follows a streamlining of the business, with the digitisation of our processes and the streamlining of the back office to make it more efficient and deliver more value.
That investment in digital continues to pay off, especially by offering more choice to our consumers. In the UK, we launched an app that offers free credit score access, giving users better understanding of how they can manage their finances. Since then, more than 5,700 have registered and are now actively using the app. We continue to offer a whole programme of enhancements – including the launch of live chat and the one-off payment facility– which has seen digital uptake increase across our whole company.
At Lowell we strive to support our customers to the highest standard by putting them at the heart of everything we do. We really saw that over the past 12 months with 2 million customers becoming debt free with Lowell. At Lowell Financial Limited, over 1.7 million customers have contacted us, while in Overdales and LSL, over 480,000 customers have interacted with us.
Offering individual solutions to our customers is what helps drive the business, and the way we do it meant many advocated what we did to help them, our clients have recognised this which is backed up with our excellent client satisfaction scores.
Beyond doing the best we can for our individual customers and their journeys to becoming debt free with Lowell, we want to do more. We also want to promote, debate, and start the dialogue about debt and indebtedness with policymakers and politicians.
We’ve produced research to help policymakers better understand financial vulnerability and the impact of the pandemic. We’ve also sought to propose solutions, such as the idea that came from our Nordic business, that over-indebted Nordic consumers should be able to opt-out of marketing materials for new credit to give themselves space to focus on rehabilitation.
A great place to work
Looking to our own operations, we want to make Lowell a place where everyone wants to work. We made great progress in the past year – including increasing holidays from 25 days a year to 28 on top of statutory holidays, and improvements to sick pay provisions – with colleague engagement scores increasing and some fantastic feedback from colleagues on how we’ve progressed.
There has been a big drive around the importance of diversity and creating a culture of inclusion and belonging. We have a fantastic diversity and inclusion group who have done a great job of raising awareness and has developed a reverse mentoring programme for the UK executive members and non-execs to help them see things from different perspectives. This will be adopted across Lowell in the future.
We’ve achieved a huge amount throughout 2021 and we’re incredibly proud of our results and are really well placed for success as we look out over the next few years.
Last year we saw impressive results, we had tremendous success around helping our customers recover from their financial difficulties and the launch of the Sustainability Report was a key moment in the company’s history. It provides the fundamental message to our stakeholders, investors and regulators about where we stand as an organisation and the contribution that we can make to society and our broader communities.