Morses Club report strong trading during the period

Morses Club

Morses Club PLC (LON:MCL), an established provider of non-standard financial services, has provided the following trading update for the 52-week period to 26th February 2022 (“FY22”).


The Group traded strongly during the period and adapted its customer offering in response to positive market demand for lending, along with changing consumer needs, due to the easing of the pandemic. The strategic focus on delivering excellent customer experience supported by technology is embedded throughout the business.


In the Digital lending division, customer numbers stood at over 36,500 at the end of the period, an increase of 59% since the end of FY21. Total credit issued for the period was £41.2m (FY21: £19.3m), a 113% increase. The gross loan book was £23.9m, an increase of 98% (FY21: £12.1m). The quality of the lending in the digital division remains high, with collections performance in line with management’s budgeted plan.

Customer demand has been strong, with a focus on short-term lending during the period. Customer satisfaction for the division is at 91%. Due to the IFRS9 requirement to take forward-looking provisions at the outset of the loan period, impairment was outside the guidance range in H1. However, impairment significantly improved in H2. We therefore expect the overall impact of this to result in impairment above the guidance range of 45% – 55%.

The division is now primed for continued growth with a stable platform and a significant target market. Month-to-month profitability was achieved in the last two months of FY22. Our growth plans in early FY23 are expected to increase impairment in the short term but we expect to return to run rate profitability during FY23.

Home Collected Credit

The Home Collected Credit (“HCC”) division traded well, despite the recently reported impact of an increase in complaints submitted by claims management companies. We constantly monitor our credit policy to keep it aligned to market conditions and some tightening of criteria has ensured the quality of our lending is maintained. Customer numbers of 143,000 (FY21: 151,000) at the end of the period are a strong indicator of consistent demand. Total credit issued during FY22 was £108.0m, 9% above management’s budgeted plan and just marginally lower than the previous year (FY21: £109.7m). The gross loan book was £96.7m (FY21: £102.1m). Cash collection performance for the HCC division has remained strong and is ahead of management’s budgeted plan.

The Group continues to adapt to a structurally changing HCC sector influenced by changing customer and regulatory needs; 66% of all lending is now cashless, while 87% of payments are cashless. This is consistent with FY21, despite the easing of Covid-19 restrictions. 81% of customers are signed up for the customer portal, which has increased by 8% compared to FY21.  Impairment for the financial year is expected to be lower than the Company’s guidance range.

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Customer satisfaction remains high at 97% for the HCC division, reflecting continued customer support for the evolving digital HCC model.   

The Group’s funding structure remains unchanged, with a revolving credit facility of £35m in place until 31 March 2023.

On 21 February 2022, the Group announced that it expected adjusted profit before tax for FY22 to be between 20% and 30% below the prevailing analyst consensus of £7.5m due to the impact of the recent increase in claims, subject to year-end audit review. Complaints continue at the same levels as we reported, and our guidance remains unchanged.  

Morses Club will review its dividend at the time of finalising its full year audited accounts.

U Account

Following a strategic review of the e-money current account product, U Account, the business has decided to withdraw this product from the market due to significant changes in market conditions.

Director Change

Following the completion of her second three-year term of office as a Non-Executive Director on the Board, Joanne Lake will be stepping down from the Board on 31 March 2022. The Group thanks Joanne for her dedication and hard-work for Morses Club over her six-year tenure on the Board.

Notice of Interim Results

Morses Club will announce its results for the 52-week period ending 26 February 2022 during May 2022.  An update on the expected date of results will be provided in due course.

Gary Marshall, Morses Club Chief Executive Officer, commented: “I am very pleased to have been appointed CEO of Morses Club at such an important and transformational time in the business’ history. I am very encouraged by the performance of the Group over the period. We have traded profitably, with a renewed focus on delivery and enhancing our customer experience. Our digital expertise gives us the ability to adapt to the continued change in customer and regulatory demands in both the Digital and HCC divisions.  

“The HCC business has traded strongly, with proven levels of adaptability which we will continue to mould to our customers’ needs over the coming years. I look forward to providing the group with a renewed focus on transforming the business to deliver sustained growth for both divisions.”

Sir Nigel Knowles, Chairman, added: “Having served on the Board of Morses Club for a number of years, I am delighted to take up the role of Chairman. The underlying trading performance of the business is positive and the reshaped leadership team will give added impetus to the growth plans of the business that will ensure continued focus on delivering for our customers, shareholders, employees and agents.”

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