Morses Club PLC Reconfirming Market Guidance (5080G)
18 March 2020 - 3:00AM
UK Regulatory
TIDMMCL
RNS Number : 5080G
Morses Club PLC
17 March 2020
17 March 2020
Morses Club PLC
Reconfirming Market Guidance
Morses Club PLC ("Morses Club" or the "Company") notes the
recent share price movement and issues the following statement to
ensure that full accuracy of information in the market is
maintained.
The Company remains confident in the guidance it provided in its
Trading Statement on 11(th) March 2020. As guided, the HCC division
continues to perform well and is expected to maintain like-for-like
profitability for FY20 versus FY19. We are pleased to report that
our impairment levels as a percentage of revenues for HCC will be
at the lower end of our guidance range of 21% - 26%. It is
noteworthy that this result will be one of the best in the HCC
sector.
Morses Club has a robust balance sheet and as previously
announced, we intend to maintain our existing dividend policy. Our
interest cover is almost twice what is needed under our debt
funding covenants. Provisional interest cover (based on six-month
rolling EBITDA) at the end of February 2020 was 9x, compared to a
covenant of 5x.
Negotiations regarding our new funding facility are progressing
well and it is envisaged that a positive announcement will be made
confirming arrangements at the appropriate time.
The Board is delighted to welcome back Andy Thomson in the role
as interim CFO. Andy was previously Morses Club's CFO and has
stepped down from his role as a Non-executive Director on the Board
of Morses Club to take up this role. Andy served as Morses Club's
CFO for three years and was instrumental in building Morses Club
into the UK's second largest HCC lender. His analytical skills and
track record in the financial stewardship of the Company will
provide Morses Club with undoubted expertise as the Company
continues its strategy of diversifying its product offering to take
advantage of opportunities in the wider non-standard credit
market.
Paul Smith, CEO commented:
"We remain confident in the guidance we provided to the market
in our Trading Statement on 11th March."
"I am delighted to be able to welcome Andy Thomson back as
interim CFO. Andy and I work extremely well together as evidenced
at the IPO and years of subsequent results. Morses Club is highly
cash-generative and has a robust balance sheet. Our
customer-centric focus and Andy's significant experience and sharp
focus will be invaluable as we undertake this period of investment
and the re-engineering of our digital businesses as part of our
product diversification strategy."
For further information please contact:
Morses Club PLC Tel: +44 (0) 330
Paul Smith, Chief Executive Officer 045 0719
Andy Thomson, Interim Chief Financial
Officer
finnCap Ltd (Nomad and Joint Broker) Tel: +44 (0) 20
Jonny Franklin-Adams / Anthony Adams (Corporate 7220 0500
Finance)
Tim Redfern / Richard Chambers (ECM)
Peel Hunt (Joint Broker) Tel: +44 (0) 20
Andrew Buchanan / Rishi Shah / Duncan 7418 8900
Littlejohns (Corporate)
Jock Maxwell Macdonald (ECM)
Camarco Tel: +44 (0) 20
Jennifer Renwick / Kimberley Taylor 3757 4994
Notes to Editors
About Morses Club
Morses Club is an established non-standard financial services
provider, consisting of Morses Club, the UK's second largest home
collected credit ("HCC") provider, and Shelby Finance Limited which
operates online lending through its Dot Dot brand and online
e-money current accounts through its U Account brand.
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 million (1) people using
the services of UK HCC lenders.
The HCC division is the second largest UK Home Collected Credit
(HCC) lender with 224,000 customers and 1,695 agents across 90
locations throughout the UK. The majority of the Company's
customers are repeat borrowers and the HCC division enjoys
consistently high customer satisfaction scores of 97% (2) . In
April 2016 its cashless lending product Morses Club Card was
introduced, enabling its customers to buy online as well as on the
high street. In February 2019, the Company introduced an online
customer portal for its HCC customers, which now has over 78,000
registered customers.
Shelby Finance, via the Dot Dot brand has 37,000 active
customers and via the U Account brand, has c.18,000 customers using
the online e-money product. Dot Dot is a provider of 3 - 9 month
short-term online loans and 18 - 48 month online loans in the
non-standard credit market.
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 (3) and total loan receivables
of GBP10.7bn (4) .
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.
Approximately 2 million people move annually between standard and
non-standard markets (4) .
Since February 2014, unsecured personal lending has grown from
GBP161 billion to GBP216 billion in February 2019 (5) .
(1 High Cost Credit Review ANNEX 1 - July 2017 2 Independent
Customer Satisfaction Survey conducted by Mustard 3 FCA High Cost
Credit Review Technical Annex 1: CRA data analysis of UK personal
debt - July 2017 4 Apex Insight - Non-Prime Consumer Credit: UK
Market Insight Report - September 2019 5 Table A5.2, Bank of
England Money and Credit Bank stats February 2019)
This announcement constitutes inside information for the
purposes of article 7 of the Market Abuse Regulation (EU) No
596/2014.
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END
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