Morses Club’s digital division experiences a 172.5% increase in credit issued

Morses Club PLC (LON:MCL), an established provider of non-standard financial services, has announced its interim results for the 26 weeks ended 28 August 2021. 

Operational Highlights:

·    100% growth in lending customer numbers in Digital division since the year end

·    Quality of lending in Digital division remains high alongside growth in customer numbers

·    Continued adaptation to a structurally changing HCC sector driven by customer demand

·    Digital HCC offering remains popular – 65% of all lending and 86% of payments now cashless

·    Over 75% of HCC customers are registered for the customer portal

·    Customer satisfaction in HCC maintained at 98%

·    Total Group customer numbers: 196,000 (H1 FY21: 205,000)

·    Continued progress in the plan to restructure the Group

Financial Highlights:

·    Revenue increased by 4.4% to £52.4m (H1 FY21: £50.2m)

·    Total credit issued to all customers increased by 29.2% to £77.8m (H1 FY21: £60.2m)

·    Total credit issued to HCC customers 3.9% higher at £53.1m (H1 FY21: £51.1m)

·    Total credit issued to Digital customers 172.5% higher at £24.8m (H1 FY21: £9.1m)

·    Net loan book of £60.3m, increase of 8.5% (H1 FY21: £55.6m)

·    Statutory profit before tax of £1.8m (H1 FY21: £0.8m)

·    Adjusted profit before tax¹ of £2.6m (H1 FY21: £2.3m)

·    Statutory HCC profit before tax of £6.5m, an increase of 16.1% (H1 FY21: £5.6m)

·    Adjusted HCC profit before tax¹ of £7.3m, an increase of 7.4% (H1 FY21: £6.8m)

·    Statutory loss before tax in Digital division (£4.7m) (H1 FY21: (£4.8m))

·    Adjusted loss before tax¹ in Digital division of (£4.7m)  (H1 FY21: (£4.5m)) with profits held back by additional IFRS9 provisioning as a result of 188% increase in loan book

·    Impairment as a percentage of revenue¹ for the period 31.5% (H1 FY21: 23.5%) as a result of IFRS9 costs on a growing loan book in H1 FY22 in comparison to a declining loan book in H1 FY21

·    Statutory return on assets of 2.0% (H1 FY21: 7.0%)

·    Adjusted return on assets¹ of 9.3% (H1 FY21: 9.9%)

·    Statutory EPS of 1.1p (H1 FY21: 0.5p)

·    Adjusted EPS¹ of 1.6p (H1 FY21: 1.3p)

·    Proposed interim dividend of 1.0p per share (H1 FY21: 1.0p)

1. Definitions are set out in the Glossary of Alternative Performance Measures on page 37

Alternative Performance Measures & Key Performance Indicators

Key performance indicators	26-week period ended 28 August 2021	26-week period ended 29 August 2020	% +/-
Revenue	£52.4m	£50.2m	4.4%
Net Loan Book	£60.3m	£55.6m	8.5%
Adjusted Profit Before Tax1	£2.6m	£2.3m	13.0%
Statutory Profit Before Tax	£1.8m	£0.8m	125.0%
Adjusted Earnings per share1	1.6p	1.3p	23.1%
Statutory Earnings per Share	1.1p	0.5p	120%
Cost / Income ratio	61.6%	67.5%	8.7%
Return on Assets	2.0%	7.0%	(71.4%)
Adjusted Return on Assets1	9.3%	9.9%	(6.1%)
Return on Equity	2.2%	9.5%	(76.8%)
Adjusted Return on Equity1	10.6%	13.4%	(20.9%)
Tangible Equity / average receivables1	87.8%	74.2%	18.3%
No of customers (000’s)	196	205	(4.4%)
Number of agents	1,163	1,584	(26.6%)
Credit Issued	£77.8m	£60.2m	29.2%
Impairment as % of Revenue1	31.5%	23.5%	(34.0%)

1. Definitions are set out in the Glossary of Alternative Performance Measures on page 37

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

“Our resilience as a business underpins continued growth in our digital division which has experienced a 172.5% increase in credit issued and a significant increase in customer numbers in the period.  The HCC division has performed well, despite the challenges brought about by the pandemic, and this has given us a strong foundation to address market demand, particularly in our lending products. We continue to maintain our position as one of the market leaders for customers who face financial challenges in accessing lending products. Our levels of customer satisfaction, allied with the engagement levels from our teams, are testament to our strategy of putting customers at the very heart of our day-to-day operations.”  

Sell-side Analyst Presentation

Morses Club will be holding a virtual sell-side analyst presentation at 9:30am on Thursday 7^th October. Please contact morses@camarco.co.uk if you would like to attend.