Listed home credit firm delivers strong first half as profits hit £10m

An AIM-listed West Yorkshire credit provider says it ‘capitalised on a unique market opportunity’ to deliver a successful first half of 2018, during which its pre-tax profits hit £10m.  

Batley-headquartered Morses Club, the UK’s second largest home collected credit  lender, this morning announced its interim results for the six month period ended 25 August 2018.

Pre-tax profits rose from £6.7m in the same period last year to £10m in the latest period of trading, while statutory revenues jumped up 6% from £54.2m to £57.5m.  

Morses Club said: “FY 2018 was a period of exceptional growth in customer numbers for Morses Club as we capitalised on a unique market opportunity to integrate a significantly higher number of territory builds than in a ‘typical’ year.

“We applied stringent criteria to our selection of agents and the subsequent territory builds have resulted in high quality loan books and loyal customers. The territory builds have been successfully integrated into the business and their success is reflected in the proportion of loans attributable to the best paying customers.

“A year on, these territory builds are now profitable and the cost of onboarding and integrating these territory builds has been fully incurred. We expect growth in the number of new territory builds to return to more normalised levels, and the decrease in associated costs to have a positive impact on earnings growth.”

Morses Club has 230,000 customers and 1,942 agents across 98 locations throughout the UK.

Its net loan book growth over 12 months stood at 4.3% to £68m (H1 FY18: £65.2m). There were 116 territory builds in the period (H1 FY18: 434), which it said reflected a return to more normalised levels.

During the period, there were 27,000 live Morses Club Cards issued, with loan balances of over £13.1m (H1 FY18: 11,100 live Morses Club Cards with loan balances of £4.6m).

Paul Smith, Chief Executive Officer of Morses Club, said: “The success of last year’s territory builds has been demonstrated in the first half of this financial year.  Our focus on successful integration, the sustainable growth of the loan book and high-quality lending has resulted in a robust performance across all of our key financial metrics and delivered significant earnings growth for investors.

“We expect to benefit from further consolidation as regulatory changes force smaller players out of the market, along with the opportunity to broaden our customer base as we offer customers a greater choice of products to suit their needs going forward.

 “Whilst the traditional HCC product remains at our core, we continue to recognise that the needs of our customers are evolving, and we are making good progress in developing our digital offering, using our deep customer insights and advanced technology platform to create products that will add significant value for our customers.

“Our proven ability to successfully integrate territory builds and the progress we are making in developing new products for our customers gives us confidence in the outlook for the full year.”