TIDMMCL
RNS Number : 6906F
Morses Club PLC
11 March 2020
11 March 2020
Morses Club PLC
Trading update
Morses Club PLC ("Morses Club" or the "Group"), an established
provider of non-standard financial services, provides the following
trading update for the 53-week period ended 29 February 2020.
The performance of the Home Collect Credit (HCC) division during
the period has been very strong in a sector that continues to face
headwinds and is expected to maintain like-for-like profitability.
Total credit issued of GBP174.2m was slightly lower at -2.4%
year-on-year (FY 2019: GBP178.5m). We continue to make operational
efficiencies as a result of our investment in technology and agent
recruitment over the last four years. As anticipated, the change in
the FCA regulations on the non-solicitation of loans has had a
minimal impact on our business, demonstrating the prudent and tight
credit controls employed by Morses Club.
Total HCC customer numbers are marginally lower at 224,000 (FY
2019: 235,000). The gross loan book has reduced slightly by -2.4%
(FY 2019: 7% growth). Impairments are anticipated to be at the
lower end of our normal range. Our diversification strategy in
digitising aspects of the customer offering in HCC continues to
gather momentum, with over 78k of our customers using our online
customer portal launched in February 2019 and GBP22.9m of loan
balances on our Morses Club Card (FY 2019: GBP15.5m).
2019 was a year of significant change for the Group's Digital
division, following substantial acquisition activity, incorporating
Dot Dot Loans and U Account. The businesses have undergone
significant re-engineering and are now better positioned to take
advantage of the opportunity in the wider non-standard credit
market. Although losses in the Digital division have been higher
than initially expected, we have focused on ensuring that we
ultimately create a customer journey with high quality lending and
operational routines, resulting in a digital product set that is
best suited to our addressable market. The Digital division is
still on track to deliver a substantial improvement in losses
during FY21, and to reach run-rate break-even during H2 FY21,
reflecting the significant investment Morses Club has made in line
with its strategy of diversifying its product offering.
Although we anticipate a robust overall profit performance, the
adjusted profit before tax for the Group will be reduced by 18% -
23% against consensus. The Company intends to maintain its existing
dividend policy.
Paul Smith, Chief Executive Officer of Morses Club, said:
"This year for the Group has been transformational in terms of
diversification and product offering. The strong financial
performance of the HCC division ensures that we have a strong
financial bedrock to enhance our strategic plan. The business is
undergoing a significant development phase which is necessary to
deliver a broader offering to our customers. The strong customer
response to the introduction of key initiatives in HCC, such as the
customer portal, is testament to our long-term strategic
approach.
"In our Digital division, we have looked holistically at our
recently acquired digital businesses so that we create an
end-to-end customer platform that is wholly relevant to Morses
Club's existing and future customers. Whilst the re-engineering of
these businesses has taken longer than we initially anticipated, we
continue to meet the strategic milestones we have set ourselves and
the diversification of our business puts us in a strong position to
benefit from demand from the wider non-standard credit market.
"The growth potential for our Digital division is significant.
Whilst we intend to continue our investment phase to ensure that we
provide our customers with an expanded and complementary offering
to our core HCC offering, we are confident in the long-term
strength of the business and continue to look for opportunities to
grow both our HCC business and digital offering."
Notice of Full Year Results
Morses Club will be announcing its full year results for the
period ended 29 February 2020 on Thursday 30 April 2020. There will
be an analyst presentation to discuss the results at 9.30am at
finnCap, 60 New Broad St, London, EC2m 1JJ. Those analysts wishing
to attend are asked to contact Jake Thomas at Camarco on +44 (0)20
3781 8337 or at jake.thomas@camarco.co.uk .
This announcement constitutes inside information for the
purposes of article 7 of the Market Abuse Regulation (EU) No
596/2014.
For further information please contact:
Morses Club PLC Tel: +44 (0) 330
Paul Smith, Chief Executive Officer 045 0719
Andrew Hayward, Chief Financial Officer
finnCap Ltd (Nomad and Joint Broker) Tel: +44 (0) 20
Jonny Franklin-Adams / Anthony Adams (Corporate 7220 0500
Finance)
Tim Redfern / Richard Chambers (ECM)
Peel Hunt (Joint Broker) Tel: +44 (0) 20
Andrew Buchanan / Rishi Shah / Duncan 7418 8900
Littlejohns (Corporate)
Jock Maxwell Macdonald (ECM)
Camarco Tel: +44 (0) 20
Jennifer Renwick / Kimberley Taylor 3757 4994
Notes to Editors
About Morses Club
Morses Club is an established non-standard financial services
provider, consisting of Morses Club, the UK's second largest home
collected credit ("HCC") provider, and Shelby Finance Limited which
operates online lending through its Dot Dot brand and online
e-money current accounts through its U Account brand.
UK HCC is considered to be a specialised segment of the broader
UK non-standard credit market. UK HCC loans are typically small,
unsecured cash loans delivered directly to customers' homes.
Repayments are collected in person during weekly follow-up visits
to customers' homes. UK HCC is considered to be stable and
well-established, with approximately 1.6 million (1) people using
the services of UK HCC lenders.
The HCC division is the second largest UK Home Collected Credit
(HCC) lender with 224,000 customers and 1,695 agents across 90
locations throughout the UK. The majority of the Company's
customers are repeat borrowers and the HCC division enjoys
consistently high customer satisfaction scores of 97% (2) . In
April 2016 its cashless lending product Morses Club Card was
introduced, enabling its customers to buy online as well as on the
high street. In February 2019, the Company introduced an online
customer portal for its HCC customers, which now has over 78,000
registered customers.
Shelby Finance, via the Dot Dot brand has 37,000 active
customers and via the U Account brand, has c.18,000 customers using
the online e-money product. Dot Dot is a provider of 3 - 9 month
short-term online loans and 18 - 48 month online loans in the
non-standard credit market.
Morses Club successfully listed on AIM in May 2016.
About the UK non-standard credit market
The UK non-standard credit market, of which UK HCC is a subset,
consists of both secured and unsecured lending and is estimated to
comprise around 10 million consumers (3) and total loan receivables
of GBP10.7bn (4) .
Non-standard credit is the provision of secured and unsecured
credit to consumers other than through mainstream lenders. Lenders
providing non-standard credit principally lend on an unsecured
basis and the market is characterised by high frequency borrowing.
Approximately 2 million people move annually between standard and
non-standard markets (4) .
Since February 2014, unsecured personal lending has grown from
GBP161 billion to GBP216 billion in February 2019 (5) .
(1 High Cost Credit Review ANNEX 1 - July 2017 2 Independent
Customer Satisfaction Survey conducted by Mustard 3 FCA High Cost
Credit Review Technical Annex 1: CRA data analysis of UK personal
debt - July 2017 4 Apex Insight - Non-Prime Consumer Credit: UK
Market Insight Report - September 2019 5 Table A5.2, Bank of
England Money and Credit Bank stats February 2019)
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END
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