MCL.L Regulatory News (MCL)

1 March 2018

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 24 February 2018.

Trading performance for the period has been strong and is in line with the Board's expectations. 

Total credit issued was up 21% to £174.3m compared to the prior year (FY 2017: £144.1m) with a strong increase in the Company's gross loan book which is up over 12% compared to 25 February 2017.

Total customer numbers increased by 6% to c.229,000 as at 24 February 2018 (FY 2017: c.216,000) and the proportion of loans attributable to the highest tier customers increased by 18% against last year, reflecting the continued improvement in the quality of the loan book (FY 2017: 10% increase against previous year). This is a result of our investment in territory builds, which have generated leads from higher quality customers.

As highlighted in our half year results, notwithstanding the significant growth in total credit issued, we expect to report impairments at the upper end of our guidance range, demonstrating the quality of our customers.

Growth in the Morses Club Card, the first cashless lending product for Morses Club customers, has continued, with over 21,000 customers and over £10.6m of loan balances now on cards (FY 2017: 10,200 customers and £3.9m of loan balances).

The Company launched its first online instalment loans product, Dot Dot Loans, in March 2017 in an extended customer test phase. This is another step in the Company's strategy of developing digital products to build upon its core offering and provide affordable credit to a wider range of customers across the UK non-standard credit market and we look forward to updating the market further at the time of our results.

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

"We are pleased with the strong growth we have achieved over the year as we continue to build our customer base and develop new products tailored to meet the needs of our customers, whilst maintaining a clear focus on high quality growth in our core HCC loan book. The success of the Morses Club Card and development of our Dot Dot online loans product highlight the market opportunity for new, flexible products to complement our core HCC product.

"Customer relationships and experiences are paramount, and we remain committed to ensuring that our customer needs are balanced with advances in technology to keep our service ethos at the forefront of our market and continue to record consistent customer satisfaction of 95% or more.

"We continue to remain confident in our outlook, with further opportunities for growth both within the HCC and the wider non-standard finance markets."

Notice of Preliminary Results

Morses Club will be announcing its preliminary results for the 12-month period ended 24 February 2018 on 26 April 2018. There will be an analyst presentation to discuss the results at 9:30am at Panmure Gordon, 1 New Change, London EC4M 9AF. Those analysts wishing to attend are asked to contact Mercedes Goldman at Camarco on +44 (0)20 3757 4996 or at mercedes.goldman@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

Notes to Editors

About Morses Club

Morses Club is the second largest UK Home Collected Credit lender with 229,000 customers and 2,050 agents across 98 locations throughout the UK.

The Company offers a range of loan products to its customers through its extensive agent network. The 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. Dot Dot Loans, the Company's first online instalment product, was launched in March 2017.

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.

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 1.5 and 2 million people borrow regularly.