MCL.L Regulatory News (MCL)

 2 March 2017

Morses Club PLC

Trading update and notice of preliminary results

Morses Club PLC ("the Company"), the UK's second largest home collected credit lender, provides the following trading update for the 52-week period to 25 February 2017.

Trading performance for the period has continued to show strong growth and is in line with the Board's expectations. Total credit issued increased by 18% to £144m compared with the prior year, with customer numbers increasing by 9% to 216,000 as at 25 February 2017. This increase reflects the success of new territory builds and acquisitions in our core home collect credit ("HCC") market.

The Company's gross loan book is up over 4% compared with 27 February 2016. The proportion of loans attributable to highest tier customers has increased by 10% against last year, demonstrating the Company's focus on higher quality lending.

We expect to report impairments comfortably in line with our guidance range1.

The Company acquired Shelby Finance Ltd. a provider of online instalment loans, in January 2017, and is finalising plans for the launch of its new online instalment lending product. This marks the next step in the Company's strategy of developing digital products to expand its core offering and target a wider range of customers across the UK non-standard credit market.

Paul Smith, Chief Executive Officer of Morses Club, said:

"We are pleased with our continued growth and performance for the year, with progress achieved against all of our key metrics.

"We have continued to invest in technology to support our strategic plan to offer customers a broader range of products and the ability to access credit more flexibly. On top of the successful introduction of the Morses Club Card in April 2016, we are finalising the launch of our new online instalment loan product. We have invested to streamline processes, and reduce cost, further demonstrating our commitment to develop technology to keep us at the forefront of our core HCC market and broaden our offer to the wider non-standard consumer finance sector.

"We have a number of developments planned for the coming year as part of our expansion into consumer rewards, interactive and mobility-based customer communications channels, social media and banking and card-related services.

"We remain confident in our outlook, with a strong pipeline of territory builds for our growth plan, and continue to see attractive acquisition opportunities in the HCC and the wider non-standard finance markets."

Notes:1 The Company's guidance range for impairments is 22 - 27%.

Notice of Preliminary Results

Morses Club will be announcing its preliminary results for the 12-month period ended 25 February 2017 on Thursday, 27 April 2017.

There will be an analyst presentation to discuss the results at 09:30am on 27 April 2017 at Numis Securities, 10 Paternoster Square, London, EC4M 7LT. Those analysts wishing to attend are asked to contact Kimberley Taylor at Camarco on +44 (0)20 3757 4999 or at kimberley.taylor@camarco.co.uk.

For further information

Notes to Editors

About Morses Club

Morses Club is the second largest UK Home Collected Credit lender with 216,000 customers and approximately 1,800 agents across 100 locations throughout the UK.

The Company offers a range of loan products to its customers through its extensive agent network. A significant majority of the Company's borrowers are repeat customers and the Company enjoys consistently high customer satisfaction scores of 95 per cent or above.

The Company is using technology to broaden its offering and provide new products to ensure customers can access credit with the flexibility they require. In April 2016 its cashless lending product, the Morses Club Card, was introduced, enabling its customers to buy online as well as on the high street.

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 12 million consumers.

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. 

Since 2009, unsecured personal lending has grown from £161 billion to £244 billion in 2015.

UK Home Collected Credit

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 via self-employed agents 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 3 million people using the services of UK HCC lenders, of which 1.3 million people borrow regularly.