TIDMMCL
RNS Number : 0950R
Morses Club PLC
04 March 2021
4 March 2021
Morses Club PLC
Trading Update
Morses Club PLC ("Morses Club", the "Company" or, together with
its subsidiary undertakings, the "Group"), an established provider
of non-standard financial services, provides the following trading
update for the 52-week period to 27 February 2021 ("FY21").
The Group performed resiliently and profitably during a
challenging year, where our primary focus was on supporting our
customers and protecting the wellbeing of our teams and agents.
Morses Club responded to the profound impact that the pandemic and
ensuing market conditions have had on the Group by accelerating our
existing digital strategy and taking advantage of the opportunity
to expedite the tech-enabled transformation of the business.
We quickly moved to a remote Home Collect Credit ("HCC") lending
model, which was made possible by the Group's previous investment
in its digital capability, and our well-advanced digital platform
enabled us to re-commence lending to existing customers just three
weeks after lockdown was announced in March 2020. 64% of lending in
our HCC division is now cashless and transacted through our portal,
with customers signed up to the portal rising by c.70% during the
period. Customer satisfaction remains very high, unchanged at 97%,
reflecting, in part, our customers' positive experience of our new
remote lending model. We expect this to be a permanent shift in
customer behaviour and our research clearly indicates that both
customers and agents see digital lending as the future of the HCC
market.
The Group has focused on the quality of lending since the start
of the pandemic, with strong collection rates and levels of
impairment reflecting this. The collection to terms performance
within HCC has continued to improve, with Q3 FY21 at 95% of
historical expectations and Q4 FY21 rising to 100% of historical
expectations. Total credit issued within HCC reduced by 37.0% to
GBP109.7m (FY20: GBP174.2m) reflecting reduced demand due to
various national and regional lockdowns during the year, along with
the Group's stricter lending criteria to protect the quality of the
loan book. The HCC gross loan book reduced by 28.6% to GBP102.1m
(FY20: GBP142.9m) and total customer numbers within HCC were
152,000 (FY20: 221,000). The confidence and support of our funding
partners provides further validation of our strategy, as we secured
an extension of our revolving credit facility in April 2020.
The Digital division implemented two new platforms over the
period, creating a robust banking proposition and strengthening the
existing loans management system. As with HCC, total credit issued
and customer numbers within the Digital division were impacted by
reduced demand due to lockdown measures along with the Group's
tightening of lending criteria to maintain high quality lending.
Total credit issued increased by 21.4% to GBP19.3m (FY20: GBP15.9m)
and customer numbers were 29,000 (FY20: 33,000). The division is
now primed for growth with new robust platforms and a significant
target market. The division's strong collection figures demonstrate
the platform's capabilities and we are now focused on scaling the
business and achieving run-rate breakeven by the end of FY22.
We also took the opportunity to implement a number of other
structural changes to the business, supporting employees and agents
working from home, and restructuring the Group's property
portfolio, which is now largely complete with all 89 branches
operationally closed on a permanent basis. Morses Club has not
furloughed any staff nor sought any government assistance
throughout the period.
Subject to audit review, we anticipate that Group profit before
tax for FY21 will be ahead of current market expectations([1]) .
Morses Club intends to pay a dividend for FY21, demonstrating its
confidence in the Group's prospects.
Paul Smith, Chief Executive Officer of Morses Club, said:
"First and foremost, I would like to extend my heartfelt thanks
to all of our teams and agents, who have worked tirelessly to
ensure that our customers have continued to receive excellent
customer service. Without their teamwork and support, we would not
have ended the year in as strong a position as we have.
"Last year was a challenging yet transformational year for
Morses Club, during which we demonstrated the robustness of our
business model. The pandemic has resulted in the acceleration of
our digital strategy, vindicating our previous investment, and as a
result, we have made a number of permanent changes to our offering
to meet changing customer behaviour.
"Our strong new operating platforms, increasing suite of
services and first-class customer service ensure the Group is
well-placed to capitalise on opportunities going forward. We are
encouraged by evidence of pent-up demand for our growing number of
products as lockdown eases and we look forward to making further
progress in facilitating financial inclusion across the UK as the
economy gradually rebounds during 2021."
Notice of Full Year Results
Morses Club will be announcing its full year results for the
period ended 27 February 2021 on 13 May 2021. There will be an
analyst presentation to discuss the results at 9.30am. Those
analysts wishing to attend are asked to contact Jake Thomas at
Camarco on +44 (0)20 3781 8337 or jake.thomas@camarco.co.uk .
[1] Market expectations are based on the following Adjusted
Profit Before Tax (Adjusted PBT) forecasts for FY21: GBP2.8m (Peel
Hunt - Dec 20), GBP2.7m (Shore Capital - Dec 20) and GBP4.3m
(Goodbody - Dec 20).
Ends
For further information please contact:
Morses Club PLC Tel: +44 (0) 330
Paul Smith, Chief Executive Officer 045 0719
Graeme Campbell, Chief Financial Officer
Peel Hunt (Nomad) Tel: +44 (0) 20 7418
Andrew Buchanan / James Britton / Rishi 8900
Shah / Duncan Littlejohns (Investment Banking
Division)
Camarco Tel: +44 (0) 20 3757
Jennifer Renwick / Oliver Head / Jake Thomas 4994
Notes to Editors
About Morses Club
Morses Club is an established provider of non-standard financial
services in the UK. The Group consists of Morses Club, the UK's
second largest home collected credit ("HCC") provider, and Shelby
Finance Limited, Morses Club's Digital division, which operates
under two online brands, Dot Dot Loans, an online lending provider,
and U Account, which offers online e-money current accounts. The
Group's growing Digital capabilities and scalable, highly invested
IT platform has enabled Morses Club to deliver an inc reasingly
broad range of financial products and services to the non-standard
credit market.
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 dir e ctly 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.
Morses Club's HCC division is the second largest UK Home
Collected Credit (HCC) lender with 152,000 customers 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 2016, the Morses Club Card, a cashless
lending product, was introduced and in 2019 the Company introduced
an online customer portal for its HCC customers, which now has over
124,000 registered customers.
The Group's growing Digital division, Shelby Finance, operates
under two online brands. Dot Dot Loans provides online instalment
loans of up to 48 months to c. 23,000 active customers. U Account
is a leading digital current account provider offering an altern
ative to traditional banking by providing a fully functional agency
banking service. U Account currently has c. 6,000 customers.
Morses Club 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 borrowin g.
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 GBP225 billion in February 2020. It has since
contracted to GBP206 billion in October 2020(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 October 2020)
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END
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