At Lowell, we’ve always prided ourselves on our resilience, and that resilience has never been more in evidence as we’ve continued to thrive despite the increasingly difficult business environment.
Over the last two quarters we’ve made valuable steps forward through the acquisition of Hoist UK and the issuing of our first European publicly rated European ABS. These successes will form part of the durable foundation for Lowell’s growth in the months and years ahead.
With the cost-of-living rising for many, Lowell’s mission to make credit work better for all has never been more crucial. Our emphasis on affordability and fairness has helped us support our customers on the journey back to financial health despite challenging circumstances.
At Lowell we aim to foster better financial wellbeing, promote inclusive work opportunities and provide support for our communities. We’ve continued to drive progress in this area in H1 with the latest iteration of Lowell’s Financial Vulnerability Index welcomed by MPs from across the political spectrum for the insight it offers into the financial health of the UK.
H1 also saw the launch of the Centre for Social Justice’s On the money – a roadmap for lifelong financial learning report, which was supported by Lowell and drew on evidence from our customer panel to offer a radical vision for financial education in the UK. The report was hailed as ‘timely and important’ by Robert Halfon MP, Chair of the Education Select Committee.
Alongside that, the outlook on sustainability remains positive across the business as we performed strongly against our KPIs. 10 sites across the business have switched to renewable energy while Lowell volunteers have performed 500 hours of community work since the launch of the program.
Durable performance
Our results held firm in the first half of 2022 despite the pressures of rising inflation and falling consumption facing the economy as a whole. Cash EBIDTA across the firm held steady demonstrating the durability and cost-effectiveness of our model.
Key to our success in H1 has been our ability to keep costs down with the firm retaining its record cash EBITDA margin of 59% despite inflationary pressures. This is down to the streamlining of the business, with the digitisation of our processes and a more efficient back office helping us to better deliver value.
Lowell’s UK customer base remains resilient as our flexible model has allowed us to continue setting up payment plans for more than 90% of our customers who have completed affordability assessments.
This comes despite challenges as reduced operational capacity led to a deferral of collections in the UK. However, we’re well on the way to tackling these problems through a data-led and digital-first approach.
Lowell has also strengthened its balance sheet in the first half of 2022 through the issuance of the first European publicly rated ABS via Wolf Receivables Financing Plc with the sale of £100m ‘A’ rated ABS notes to Senior Investors. In August 2022 it also agreed the sale of 51% of Junior Notes held in the structure for £10m. We expect to continue to trim leverage across H2.
We’ve also made progress on the transformative acquisition of Hoist Finance UK which will catalyse future growth by deepening and broadening our back book by adding over 2m customer accounts. The Hoist acquisition will also energise future growth in the banking subsector in line with Lowell’s Growth Strategy. An additional funding facility has also been agreed to support the Hoist UK asset purchase, with a £170m securitisation commitment.
Innovation
Lowell has always prided itself on our appetite for embracing digital innovation. Our industry leading customer app, which offers a range of support from payment plans to credit checking, now has 80,000 users and is growing fast. The app is part of a range of services available from Lowell that we use to empower our customers to make the long-term financial choices that are right for them.
A great place to work
Lowell’s success over H1 is down to the incredible hard work and dedication seen across the business. Great people deserve a great place to work and that’s why we’re working harder than ever to ensure that Lowell welcomes diversity in all its forms. Central to this is our reverse mentoring programme where employees from diverse backgrounds are given the opportunity to mentor senior leaders at the firm.
Looking forward
Lowell’s performance over the first half of 2022 has been nothing short of incredible and has set us up brilliantly for H2. With tight control of costs and a growing backbook we’re in an excellent position to make further strides forward as a company.
Alongside this our talented staff are working harder than ever to make Lowell a more sustainable and welcoming company. Our ESG team is hard at work ensuring that our second sustainability report is ready for our next annual results, demonstrating the progress we’ve made in a clear and transparent way. Lowell’s diversity and inclusion group are also working to ensure that Lowell doesn’t rest on its laurels and continues to grow and change for the better.
