Press Release: CURO Group Holdings Corp. -10-
Canada non-Single-Pay revenue increased $14.6 million, or 9.7% ($16.1 million, or 10.8%, on a constant-currency basis), to $164.4 million, compared to $149.8 million in the prior year, on growth of $45.6 million, or 17.1% ($38.5 million, or 14.4%, on a constant-currency basis), in related loan balances. The increase was driven by continued growth of Open-End loan despite COVID-19 related impacts. Ancillary revenue, which includes sales of insurance to Open-End loan customers, remained flat year over year due to increased insurance claims from consumers impacted by COVID-19 during the year ended December 31, 2020.
Single-Pay revenue decreased $34.0 million, or 43.3% ($33.6 million, or 42.8%, on a constant-currency basis), to $44.5 million for the year ended December 31, 2020, and Single-Pay receivables decreased $17.7 million, or 49.6% ($18.2 million, or 50.7% on a constant-currency basis), to $18.1 million from $35.8 million, in the prior year. The decreases in Single-Pay revenue and receivables were due to product mix shift from Single-Pay loans to Open-End loans, as well as significant declines in demand attributable to COVID-19 Impacts.
The provision for losses decreased $17.8 million, or 23.3% ($17.0 million, or 22.3%, on a constant-currency basis), to $58.6 million for the year ended December 31, 2020, compared to $76.4 million in the prior year. The decrease in provision for loan losses was primarily a result of lower NCOs and favorable loan performance as a result of COVID-19 Impacts as discussed previously. Year-over-year Canada NCOs decreased $26.2 million, or 32.5%.
Canada cost of providing services for the year ended December 31, 2020 was $72.1 million, a decrease of $4.1 million, or 5.4% ($3.4 million, or 4.5%, on a constant-currency basis), compared to $76.2 million for the year ended December 31, 2019, primarily related to certain cost reductions to manage COVID-19 Impacts, as well as efficient and strategic advertising efforts through the course of 2020 to manage growth in Canada.
Canada operating expenses for the year ended December 31, 2020 were $32.0 million, a decrease of $0.4 million, or 1.1%, as a result of certain cost reductions to manage COVID-19 Impacts, partially offset by costs related to year-over-year growth in Canada.
Results of Discontinued Operations
On February 25, 2019, in accordance with the provisions of the U.K. Insolvency Act 1986 and as approved by the Boards of Directors of the U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as Administrators for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries' entry into administration was to place their management, affairs, business and property of the U.K. Subsidiaries under the direct control of the Administrators. Accordingly, we deconsolidated the U.K. Subsidiaries, which comprised the U.K. reportable operating segment, as of February 25, 2019 and classified them as Discontinued Operations for all periods presented.
The following table presents the results of operations of the U.K. Subsidiaries, which meet the criteria of Discontinued Operations and, therefore, are excluded from our results of continuing operations:
Revenue and expenses related to discontinued operations included activity prior to the deconsolidation of the U.K. subsidiaries effective February 25, 2019. For the year ended December 31, 2019, (Gain) Loss on disposition of $39.4 million included the non-cash effect of eliminating assets and liabilities of the U.K. Subsidiaries as of the date of deconsolidation, as well as the effect of cumulative currency exchange rate differences on the U.S. investment in the U.K.
In connection with the disposition of the U.K. Subsidiaries, the U.S. entity that owned our interests in the U.K. Subsidiaries recognized a loss on investment. This loss resulted in an estimated U.S. Federal and state income tax benefit of $46.6 million, which will be available to offset our future income tax obligations. In the fourth quarter of 2019, we revised the estimate of our tax basis in the U.K. Subsidiaries, resulting in a $0.6 million addition in the income tax benefit recorded in the first quarter of 2019.
During the year ended December 31, 2020, we received our final distribution from the Administrators related to the wind-down of the U.K. Subsidiaries, in the amount of $1.7 million.
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
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February 04, 2021 16:00 ET (21:00 GMT)