31 August 2017

Morses Club PLC

Trading update and notice of interim results

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 26 August 2017.

Trading performance for the period has continued to be strong.  Total credit issued increased by 25% to £82.2m compared to the same period last year (H1 2017: 16% to £66.0m), reflecting the significant increase in territory builds.  Impairment for the period is expected to remain within the Company's target range. Notwithstanding the up-front costs of the investment in territory builds and infrastructure during the first half of the year, overall, business performance is in line with expectations.

Customer numbers increased substantially by 12% to approximately 233,000 as at 26 August 2017, driven by territory builds and organic growth (H1 2017: 2.4%).   

The gross loan book also increased by 12% (H1 2017: flat) with the average customer balance unchanged.  We continue to improve the quality of the customer base with the proportion of loans attributable to the Company's highest tier customers increasing by 7% compared to 27 August 2016. This reflects the continued success of the Company's credit policy which focuses on higher quality lending.

The territory builds in progress to date are performing ahead of management's expectations set at the beginning of the year, and it is anticipated that this increased level of investment will not have an adverse impact on earnings expectations in FY18. The Company anticipates that the new loan facility announced on 18 August 2017 will lead to over 400 new agent territory builds in the current financial year.

The Company continues to make good progress on the development of its digital platform to provide innovative new services and products for its customers. Morses Club Card, the Company's cashless lending product continues its organic growth with Dot Dot Loans, its first online instalment product launched in March 2017, continuing in its market test phase.

Notice of Interim Results and dividend

Morses Club will be announcing its interim results for the 26-week period ended 26 August 2017 on Thursday, 5 October 2017.  It will also declare its dividend (to be paid in Q1 2018) on that date.

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

"We are delighted with all aspects of the progress of the business, reflecting the fact that we have capitalised on market conditions, whilst developing our strategy of product diversification. As the second largest lender in this market, we believe that our growth is based on a solid foundation of listening to our customers and adapting to their needs.  Our depth of operational experience is central to our customer service model which consistently delivers customer satisfaction levels of 95% or more.

"We continue to focus on a strong technology platform to underpin the core business, which also means that we can utilise this expertise across our strategic growth initiatives.  Our aim is to build new product streams carefully over time, so that they have solid foundations, rather than quick-fire initiatives.

For further information

Notes to Editors

About Morses Club

Morses Club is the second largest UK Home Collected Credit lender with 233,000 customers and 2,124 agents (as at 26 August 2017) 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 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 and the market is characterised by high frequency borrowing.

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 typically 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.