13 August 2021

Morses Club PLC

Trading Update

Morses Club PLC ("Morses Club", the "Company" or, together with its subsidiary undertakings, the "Group"), an established provider of non-standard financial services, provides the following update on trading for the five-month period ending 31 July 2021.

Trading

The Group continues to perform in line with expectations and demand has steadily increased across all lending products in both the HCC and Digital divisions. Morses Club continues to make progress towards offering its customers a more complete suite of financial services and products to suit market demand. Customer satisfaction for the HCC division remains high at 98%.

Digital

Customer numbers in the digital division for short-term and long-term lending products have increased by 80% since the beginning of the financial year and the customer base now stands at over 42,000. The average product mix continues to move towards longer term loans, with loan book growth at 158% from the year end. This increase in lending volumes has not resulted in a deterioration in credit quality, with collections performance in-line with management's budgeted plan. New credit issued is 34% higher than budget. The significant increase in both demand and volume for longer and shorter-term digital lending products has led to the lengthening of the maturity profile of the loan book. The impairment range for the digital division in H1 will increase due to the IFRS9 requirement to take forward-looking provisions at the outset of the loan period.

Home Collected Credit

Morses Club continues to adapt to a digitalised and structurally changing HCC sector, where 65% of all lending in the division is now cashless and over 70% of the Group's customers are registered for the online customer portal.  Customer numbers are in line with expectations during the first five months of the year at 144,000. Total credit issued for the period is 18% above management's budgeted plan. Cash collections against target have remained consistent being 5.4% ahead of budget and 12% ahead of the same period last year.

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

"Our expanded offering in the Digital division along with the continued strong performance in our HCC division is encouraging. Our recently announced proposed corporate restructure is all part of our long-term plans to grow and differentiate our products and services to meet customer demand.

"The Group's significant experience in the sector and its commitment to providing best in class HCC and digital products will enable us to take advantage of changes in the market and further strengthen our position as a leading provider of non-standard financial services products in the UK."

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Notes to Editors

About Morses Club

Morses Club is an established provider of non-standard financial services in the UK. The Group consists of Morses Club, the UK's second largest home collected credit ("HCC") provider, and Shelby Finance Limited, Morses Club's Digital division, which operates under two online brands, Dot Dot Loans, an online lending provider, and U Account, which offers online e-money current accounts. The Group's growing Digital capabilities and scalable, highly invested IT platform has enabled Morses Club to deliver an increasingly broad range of financial products and services to the non-standard credit market.

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.

Morses Club's HCC division is the second largest UK Home Collected Credit (HCC) lender with 151,000 customers throughout the UK. The majority of the Company's customers are repeat borrowers and the HCC division enjoys consistently high customer satisfaction scores of 98%². In 2016, the Morses Club Card, a cashless lending product, was introduced and in 2019 the Company introduced an online customer portal for its HCC customers, which now has over 107,000 registered customers.

The Group's growing Digital division, Shelby Finance, operates under two online brands. Dot Dot Loans provides online instalment loans of up to 48 months to c. 23,000 active customers. U Account is a leading digital current account provider offering an alternative to traditional banking by providing a fully functional agency banking service. U Account currently has c. 6,000 customers.

Morses Club 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 consumers³ and total loan receivables of £10.7bn⁴.

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 markets⁴.

Since February 2014, unsecured personal lending has grown from £161 billion to £225 billion in February 2020. It has since contracted to £197 billion in March 2021⁵.

^{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 March 2021}