# Morses Club performed resiliently and profitably during a challenging year

- Link: https://www.directorstalkinterviews.com/morses-club-performed-resiliently-and-profitably-during-a-challenging-year/412965633
- Published: 2021-03-04T07:29:21+00:00
- Author: Giles

**[Morses Club](https://www.directorstalkinterviews.com/company/morses-club-plc/mcl.l)
PLC **([LON:MCL](https://www.directorstalkinterviews.com/company/morses-club-plc/mcl.l)),
an established provider of non-standard financial services, has today provided the
following trading update for the 52-week period to 27 February 2021.

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 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 £109.7m (FY20: £174.2m) 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 £102.1m (FY20: £142.9m) 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 £19.3m (FY20: £15.9m) 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: £2.8m (Peel Hunt – Dec 20), £2.7m (Shore Capital–
Dec 20) and £4.3m (Goodbody – Dec 20)._

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