Lowell announces 2020 results

Debt purchaser Lowell has announced its full-year results for 2020 results which indicate that collections have continued to demonstrate resilience with cumulative performance against its December 19 static pool forecast improving to 94% in December 2020, up from 93% in September 2020.

The results demonstrated that its cash EBITDA stayed at just under £500 million, despite a 29% fall in portfolio acquisitions to £281 million.

The company says that the results are consistent with its Quarter 3 2020 update. Since June, the UK business has increased outbound customer contact activity to volumes more in line with Quarter 1 2020, prior to the outbreak of the pandemic, and since August, it has resumed new legal collections, and together these actions have driven the strong performance.

Focus on cost control delivered a 300bps expansion of Cash EBITDA margin to 55%. Margin expansion has been driven by increased operational leverage of the indirect cost base together with improved collections efficiency. We estimate the temporary reduction in legal fees to have contributed to a short-term margin expansion of 1% during the year. Additional cost initiatives enacted in Q3-20 are principally focussed on indirect cost efficiencies to support 200bps of further margin expansion over the next 24 months. These initiatives are expected to generate annualised cost savings of c£50m by the end of 2021. We expect to incur a total of c£30m of cost to achieve these savings: £10m of which were incurred in FY20.

Commenting on the companies results Colin Storrar, Group Chief Executive Officer, at Lowell said “I am very happy with the financial performance last year both in terms of the profit delivery but also the strengthening of the balance sheet in the face of the global pandemic. The ability and resilience of our teams to transition in a seamless manner to working from home while continuing to service our customers and clients in a highly professional, engaged and empathetic way demonstrates the values Lowell lives by.”

“As we approach the end of the first quarter of 2021, we are encouraged by the strength of our business as we take advantage of the transformational year that was 2020. In addition to being well-positioned to participate in a positive market environment, we are set to build on existing efficiency initiatives in order to continue to deliver robust collections performance, expand our margins and further improve our cash flow.”

“Our continuing focus will be on building trust amongst our colleagues, consumers, clients, communities and investors as we develop greater engagement through our digital initiatives. We believe that our commitment to delivering ease of access, personalised journeys, and highly-rated services provides a strong and sustainable platform for growth. We are confident in the outlook for Lowell in 2021.”