Trading Update

 30 August 2018

Morses Club PLC

Trading update

Morses Club PLC ("the Company"), the UK's second largest home collected credit lender, provides the following trading update for the 26-week period to 25 August 2018.

The business has performed strongly in the period, with trading in line with the Board's expectations. Total credit issued increased by 4.3% to £85.7m compared to the same period last year (H1 2018: 25% to £82.2m). Cash collections were up 11.9% (H1 2018: 12.7%) and impairments are still expected to be reported within the Company's IAS 39 guidance range.

Total customer numbers of 229,000 at 25 August 2018 have remained largely stable (H2 2018: 229,000 and H1 2018: c.233,000), and the gross loan book has increased by 6.1% (H1 2018: 12%). The proportion of loans attributable to the highest tier of customers remains steady, which reflects the continued focus on the quality of the loan book due to the Company's prudent credit policy and the success of the investment in territory builds in the prior financial year.

As previously reported, Morses Club took on a significantly higher number of territory builds in FY 2018 as a result of a unique market opportunity which arose at that time. These new agents and managers have been successfully integrated into the business. Territory builds are now operating at a more normalised level in the period.

Demand for the Morses Club Card, the cashless lending product, has continued to be strong, with in excess of 27,000 customers holding over £13.1m of loan balances on cards (H1 2018: 11,000 customers and £4.6m of loan balances). Dot Dot Loans continues to develop and is providing us with useful customer insights and learnings.

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

"We are pleased with our first half performance as we have delivered high quality growth in our core HCC loan book, whilst remaining focused on good customer outcomes. We have been working hard on implementing best-in-class operational controls and streamlining our lending process, whilst ensuring we always put our customers first.

"We are encouraged by the continued demand for the Morses Club Card, which is fundamental to our cashless strategy and offers our customers the flexibility they have asked for. We are confident in our outlook for the rest of the current year and remain positive on opportunities in both the HCC and wider non-standard finance markets."

Notice of Interim Results

Morses Club will be announcing its interim results for the 26-week period ended 25 August 2018 on Thursday 4 October 2018.

For further information

Notes to Editors

About Morses Club

Morses Club is the second largest UK Home Collected Credit (HCC) lender with 229,000 customers and 2,030 agents across 98 locations throughout the UK.

The Company offers a range of loan products to its customers through its extensive self-employed agent network. The majority of the Company's borrowers are repeat customers and the Company enjoys consistently high customer satisfaction with scores of 95% 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 and the market is characterised by high frequency borrowing.

Since February 2014, unsecured personal lending has grown from £161 billion to £209 billion in February 20181.

1 Source: Table J Bank of England Money & Credit Report February 2018

About 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 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 million2 people using the services of UK HCC lenders.

2 High Cost Credit Review ANNEX 1 - July 2017