Home credit provider sees revenues drop more than 25%
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Revenue has fallen by 25.1% to £100.2m (FY20: £133.7m) at Morses Club due to the impact of COVID-19 and the firm’s inability to lend to new Home Collect Credit (HCC) customers during the first months of half one.
The listed Birstall-based lender has published its preliminary results for the 52 weeks ended 27 February 2021, which also features falls in adjusted pre-tax profit to £6.1m (FY20: £13.8m) and statutory pre-tax profits to £0.5m (FY20: £11.5m).
Total Group customer numbers declined to 180,000 (FY20: 255,000) and total credit issued to all customers decreased to £129m (FY20: £190.3m).
Morses Club says it has transformed its estate footprint over the same period, having withdrawn from 90 properties.
And it notes it has invested in technological infrastructure to take advantage of the wider shift to operating digitally.
Paul Smith, chief executive officer, said: “In HCC, we re-commenced lending to existing customers just three weeks after lockdown was announced in March 2020.
“67% of lending in our HCC division is now cashless and 80% of cash is collected remotely.
“Despite the impact of the pandemic, we saw a significant increase in the quality of our lending, with impairment levels well below the guidance range.
“The Digital division transitioned to two new operating platforms during the year.
“And, despite tightening our lending criteria, the division issued more loans and introduced longer-term lending during the period, which is an encouraging indicator for the future growth of the Digital business and for the achievement of break-even on a run rate basis by the end of FY22.
“We are seeing robust demand for non-standard finance products as the market reopens, with positive sales trends since the year-end in both divisions and further uptake expected as Government restrictions relax further.
“A number of our competitors have stepped back from the HCC and digital sectors and, as a result, we expect to benefit from reduced competition within the market.
“The accelerated shift to digital is permanent and the investment the Group has made in technological infrastructure over a number of years stands us in good stead.”