Regulatory Story
Go to market news section View chart   Print
RNS
Morses Club PLC  -  MCL   

Preliminary results for 52 weeks ended 24 Feb 2018

Released 07:00 26-Apr-2018

RNS Number : 1539M
Morses Club PLC
26 April 2018
 

 

26 April 2018

Morses Club PLC

Preliminary results for the 52 weeks ended 24 February 2018

Morses Club PLC ("the Company", "Morses Club" or "the Group"), the UK's second largest home collected credit ("HCC") lender, is pleased to announce its preliminary results for the 52 weeks ended 24 February 2018.

Financial Highlights

·     Continued strong performance with revenue up 17.1% to £116.6m (FY17: £99.6m)

·     Adjusted profit before tax increased by 8.5% to £19.2m (FY17: £17.7m); reported profit before tax increased by 44.6% to £16.2m (FY17: £11.2m)

 

·     Total credit issued increased by 21% to £174.4m (FY17: £144.1m), driven primarily by new territory builds

·     Net loan book growth of 19% to £72.8m (FY17: £61.2m)

·     Impairment as a percentage of revenue for the period was 26.1% (FY17: 24.4%), remaining within our target range

·     A 6% increase in customer numbers to 229,000 (FY17: 216,000)

·     Secured additional funding in August 2017 to increase overall revolving facility from £25m to £40m

·     Adjusted EPS increased by 8% to 11.7p (FY17: 10.8p); Basic EPS increased by 53% to 10.1p (FY17: 6.6p)

·     Proposed final dividend of 4.8p (FY17: 4.3p)

Operational Highlights

·     Recruitment of c. 600 agents and managers during the year, which translated into 463 territory builds in FY18

·     21,000 Morses Club Card customers, with £10.6m in loan balances (FY17: £3.9m)

·     Technology continues to enhance Morses Club's offering, improving customer experience, driving efficiencies and productivity gains and supporting diversification into complementary product areas

·     Received full Financial Conduct Authority ("FCA") authorisation

 

Alternative Performance Measures & Key performance indicators

 

52-week period ended 24 February 2018

52-week period ended 25 February 2017

% change

Revenue

£116.6m

£99.6m

17.1%

Net Loan Book

£72.8m

£61.2m

19.0%

Adjusted Profit before tax¹

£19.2m

£17.7m

8.5%

Reported profit before tax

£16.1m

£11.2m

43.8%

Adjusted PBT underlying HCC¹

£24.4m

£18.9m

29.1%

Adjusted earnings per share¹

11.7p

10.8p

8.3%

Basic earnings per share

10.1p

6.6p

53.0%

Proposed Dividend per share

7.0p

6.4p

9.4%

Cost / income ratio

56.3%

56.9%

 

 

 

 

 

Return on assets¹

22.9%

24.1%

 

Return on equity¹

26.5%

27.2%

 

Tangible equity / average receivables ratio

92.6%

93.5%

 

Number of customers ('000)

229

216

6.0%

Number of agents

2,030

1,826

11.2%

Credit Issued

£174.4m

£144.1m

21.0%

Impairment (% of revenue)

26.1%

24.4%

 

 

¹ Definitions are set out in the Glossary of Alternative performance measures 

 

 

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

"We are very pleased to report that FY18 was an even stronger year for Morses Club, reflecting our continued success in serving our core HCC market, delivering good customer outcomes and careful implementation of our prudent credit policy.  We have seen 19% growth in our loan book whilst keeping our impairments within our guidance range, testament to our focus on high quality lending.

"Our advanced digital platform has improved customer experience and streamlined the lending process, reducing our operating cost ratio and enhancing regulatory compliance.  Technology has also enabled us to expand our product offering to provide customers with the flexibility they desire, as well as access a new customer base in the wider non-standard credit market.

"During the year, we have remained committed to our strategy of growing sustainably and focused on integrating new agents into the business. We are excited for the coming year as we look to further strengthen our core business, whilst also developing our complementary product offering."

 

                 Alternative Performance Measures

In reporting financial information, the Group presents alternative performance measures, 'APMs' which are not defined or specified under the requirements of IFRS.

The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. The APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board. Some of these measures are also used for the purpose of setting remuneration targets.

 

Each of the APMs used is set out in the glossary at the back of this statement.

 

The Group makes certain adjustments to the statutory measures in order to derive APMs where relevant. The Group's policy is to exclude items that are considered to be significant in both nature and/or quantum and where treatment as an adjusted item provides stakeholders with additional useful information to assess the year-on-year trading performance of the Group.

 

 

Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve known and unknown risks and uncertainties since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements.

Any forward-looking statements in this announcement reflect Morses Club's view with respect to future events as at the date of this announcement. Save as required by law or by the AIM Rules for Companies, Morses Club undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

 

For further information please contact:

Morses Club PLC
Paul Smith, Chief Executive Officer
Andy Thomson, Chief Financial Officer

Tel: +44 (0) 330 045 0719

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Richard Gray / Fabien Holler / Atholl Tweedie (Corporate Finance)

Charles Leigh-Pemberton (Corporate Broking)

 

Tel: +44 (0) 20 7886 2500

finnCap (Joint Broker)

Jonny Franklin-Adams / Emily Watts / Anthony Adams (Corporate Finance)

Tim Redfern / Richard Chambers (Corporate Broking)

 

Tel: +44 (0) 20 7220 0500

Camarco
Ed Gascoigne-Pees
Jennifer Renwick

Kimberley Taylor

Tel: +44 (0) 20 3757 4984

 

Analyst presentation

There will be an analyst presentation to discuss the results at 9.30 a.m. today at Panmure Gordon, 1 New Change, London, EC4M 9AF.

Those analysts wishing to attend are asked to contact Mercedes Goldman at Camarco on +44 (0) 20 3757 4996 or mercedes.goldman@camarco.co.uk.

 

Notes to Editors

About Morses Club

Morses Club is the second largest UK Home Collected Credit (HCC) lender with 229,000 customers and 2,030 agents across 98 locations throughout the UK.

The Company offers a range of loan products to its customers through its extensive self-employed agent network. The majority of the Company's borrowers are repeat customers and the Company enjoys consistently high customer satisfaction with scores of 95% or above.

The Company is using technology to broaden its offering and provide new products to ensure customers can access credit with the flexibility they require. In April 2016, its cashless lending product, the Morses Club Card, was introduced, enabling its customers to buy online as well as on the high street. Dot Dot Loans, the Company's first online instalment product, was launched in March 2017.

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.

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.

Since February 2014, unsecured personal lending has grown from £161 billion to £209 billion in February 2018².

² Source : Table J Bank of England Money & Credit Report February 2018

About UK Home Collected Credit

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 million3 people using the services of UK HCC lenders.

3 High Cost Credit Review ANNEX 1 - July 2017

 

 

Chief Executive's Statement

Performance 

Performance during the period was strong and in line with market expectations. Revenue grew by 17.1% to reach £116.6m (FY17: £99.6m) and total credit issued increased by 21% to £174.4m, with new territory builds and core business growth the principal drivers.

Customer numbers reached 229,000, an increase of 6% relative to the previous year (FY17: 216,000). The proportion of our gross receivables represented by our highest performing customers increased by 18.0%, further demonstrating our focus on building a high quality customer base.

At 26.1% of revenue (FY17: 24.4%), our impairments for the period were in line with our original forecasts in spite of the growth we achieved over the period.

The year also saw a reduction in our operating cost ratio relative to last year, driven by technology.

As announced in August 2017, our revolving credit facility increased from £25m to £40m with the addition of a high street lender to sit alongside our existing funder, Shawbrook Bank, and the facility has been extended to August 2020.

Strategic Growth Initiatives

We remain very much focused on our core home collected credit (HCC) business, and serving our customers in the traditional manner via our network of self-employed agents, as we believe this is the most appropriate way to serve customers in this part of the market. We have a 14.6%4 share of the known traditional market. Our primary objective remains to strengthen our home collected credit business, to make it more efficient and profitable, seeking growth via acquisition as well as by organic means.

In addition, we are looking to grow in attractive areas that are complementary to our core business. Our growth initiatives are built on our thorough understanding of the market, the depth of our experience in home collected credit and our close relationships with customers.

Our strategy is based on a balance between our experience and prudent approach to lending, allied with diversification and technology. Whilst we recognise and respect the heritage of the business, we are striving to balance tradition with the modern-day needs of our customers. Our customer and people-centric approach means that we seek to remain relevant to our customers thus retaining their loyalty.

4 Market share based on 1.6 million people who regularly borrow using HCC

Territory Builds

We recruited c. 600 agents and managers during the year, capitalising on the unique opportunity presented in the market. After filling vacancies, this translated into 463 territory builds in FY18. Despite this attractive opportunity, we did not lose sight of the need to grow in a controlled manner. We applied stringent criteria in our selection of agents, and were careful not to cause operational disruption to the core business.

Bringing on new agents with contacts in the communities they serve is the most efficient way to access high quality loan books and loyal customers. This is reflected in the proportion of loans attributable to the best paying customers, which increased by 18% (FY17: 10%).

Initial subsidies to maintain agents' income during their first year means that it can take up to 12 months for territory builds to become profitable as agents build up their loan books. Agents recruited in the financial year primarily joined us in July and August 2017 and are largely performing ahead of expectations.

Product Development

Customer satisfaction is at the heart of our model, critical as it is both to customer retention and word-of-mouth recommendations, an important source of organic growth. We are proud that the customer satisfaction rating independently measured every month was 95% or above. As well as tracking satisfaction and identifying areas to improve, these monthly surveys also yield crucial insights into what customers would like to see as part of our proposition.

Grounded firmly in our core business, we have continued investment to enhance our offer in line with evolving customer needs and to keep Morses Club at the forefront of the HCC and wider non-standard credit sectors.

Launched in 2016 and the only current cashless card in the mainstream sector, the Morses Club Card enables customers to make purchases online as well as on the high street. Interest in the card continues to grow, with over 21,000 customers and over £10.6m in loan balances, an increase of 172% from FY17.

Through our close contact with customers in our regular surveys as well as millions of face-to-face meetings with people at their homes, we have seen an increasing interest in digital communications and digitally based products. The significant investment we have made in our technology platform now enables us to develop our digital offering to give customers the products and communication channels they tell us they want. Initiatives such as digital customer acquisition routes and the recent launch of our customer portal in a test phase are not designed to supplant customer relationships with the agent, but rather are moves to enhance the customer experience in an increasingly digitised world.

In March 2017, we launched our online instalment product, Dot Dot Loans, with a view to testing the market and optimising the proposition for online customers. Dot Dot Loans provides a significant opportunity to access a different segment of the non-standard credit market; the 1.6m people accessing the HCC market, and there are a further 8-9m non-standard credit consumers using other products and services. Following the opportunity to add a large number of territory builds to our business during the year, management decided to prioritise resource to our core business. Attention will turn back to Dot Dot Loans in 2018/19, both for organic growth of the platform and also prospective non-standard credit acquisitions. We are taking a conservative approach to growth, however, and will use this extended test phase to make sure that our solutions work for customers and are in line with our risk appetite.

We see the investment in our customer service platforms and our wider technology as relevant to our strategic journey to serve other parts of the non-standard credit market. We are focused on broadening our offering in areas where our customers have identified a need for more flexible and attractive products.  We are continuing to invest in development to take us into these adjacent markets, as well as evaluating suitable acquisition targets to accelerate our journey. Our long-term strategy is based on enhancing the offering to our customers to increase loyalty.

Efficiency Initiatives

Technology has also enabled us to automate processes and eliminate paperwork. This frees up agents to concentrate on customer service and to serve more customers, whilst also enhancing our compliance performance and streamlining our operational cost base. Management data is now integrated onto a single platform, and a full affordability platform was embedded during the year, capturing evidence of income and linked to Credit Reference Agencies, to ensure that any loan offered to a customer is affordable.

We see further scope for technology to provide efficiency gains.
 

Market Developments

In May 2017, Morses Club received full Financial Conduct Authority (FCA) authorisation, following a period of operating under interim permission. We consider ourselves to be well developed regarding regulatory compliance developments, supported by technology. We believe that smaller home collected credit firms may seek to exit the market as they begin to struggle to keep pace with the FCA demands on technology and auditability, which will create opportunities for us to continue loan book acquisition.

From a regulatory perspective, the FCA has been conducting surveys into home collected credit, as well as the rent-to-own and catalogue sectors, and is evaluating affordability and repeat lending for the review of HCSTC (high cost short-term credit), which is due to be published in May 2018. The technology developments launched in the past year, which will be further enhanced in the coming year, are designed to evidence good customer outcomes. We continue to have open and positive dialogue with the regulator.

In these times of uncertainty surrounding the outcome of ongoing Brexit negotiations, it is worth pointing out that we are based solely in the UK, and our market has been demonstrably recession-proof, as evidenced by the growth we have seen throughout our 130-year history.

People

There have not been any changes at Board or strategic executive level during the period. The team continues to deliver our long-term strategic vision, and comprises a cross-functional skillset from different sectors.

The inherently collaborative approach among senior management extends throughout the culture of the organisation and is a key factor in our increasingly high levels of employee engagement (In our 2017 survey 75% of employees reported being satisfied with Morses Club, up from 55% in 2015). In addition, we conduct an annual agent satisfaction survey, with overall satisfaction results being 77% (up from 70% in 2016) and our agency vacancy rates are currently trending at less than 3%.

All of our staff members, subject to the qualifying criteria, are eligible to participate in the Company's share bonus scheme, helping to align employee and  Company performance.

The strong performance of the business and high levels of customer, agent and employee satisfaction would not be possible without the dedication of all of the people who work for and with Morses Club, who share our vision, values and commitment to treating customers fairly.

Dividend

The Board is delighted to declare a final dividend of 4.8p per share (FY17: 4.3p), subject to shareholder approval. The full year dividend is therefore 7.0p (FY17: 6.4p).

The dividend of 4.8p per share will be paid on 27 July 2018 to ordinary shareholders on the register at the close of business on 29 June 2018.

Outlook

We have had a positive start to our next financial year and as such, we are confident in our outlook, as we seek to further strengthen our position in our core HCC market, whilst also diversifying our offering into complementary areas. Our investment in technology will continue to improve operational efficiencies and allow us to serve our customers in more flexible ways.

We remain well positioned for growth and believe that as the market continues to develop, in light of potential regulatory change and customer demand, this provides opportunities for further acquisitions both in our core HCC market and wider markets.

 

Paul Smith
Chief Executive Officer


Date: 26 April 2018

 

 

 

Chief Financial Officer's Operational and Financial Review

£'m (unless otherwise stated)

52-week period ended 24 February 2018

52-week period ended 25 February 2017

Customer Numbers ('000's)

229

216

Period end receivables

72.8

61.2

Average receivables

66.4

58.2

 

 

 

Revenue

116.6

99.6

Impairment

(30.4)

(24.3)

Agent Commission

(28.0)

(22.4)

Gross Profit

58.2

52.9

Administration expenses, including depreciation (pre exceptional, restructuring and non-recurring costs and amortisation of acquisition intangibles )

(37.6)

(34.3)

 

 

 

Operating Profit (pre exceptional, restructuring and non recurring costs and amortisation of acquisition intangibles

20.6

18.6

Exceptional Income / (Costs)

0.1

(2.2)

Restructuring and non recurring costs

(1.0)

(0.6)

Amortisation of acquisition intangibles

(2.1)

(3.7)

Operating Profit

17.6

12.1

Funding costs

(1.5)

(0.9)

Reported Profit Before Tax

16.1

11.2

Tax

(3.0)

(2.6)

Profit after Tax

13.1

8.6

Basic EPS

10.1p

6.6p

 

 

 

Reconciliation of Reported PBT to Adjusted PBT

Reported PBT

16.1

11.2

Exceptional Costs / (Income)

(0.1)

2.2

Restructuring and other non recurring costs

1.0

0.6

Amortisation of acquisition intangibles

2.1

3.7

Adjusted Profit Before Tax

19.2

17.7

Tax

(4.0)

(3.7)

Adjusted Profit After Tax

15.2

14.0

Adjusted EPS

11.7p

10.8p

 

Overview

The results for the Group for the 52 weeks ended 24 February 2018 continue to demonstrate how we are able to grow the business, invest in the up-front costs of building new territories and still deliver improved earnings. As a result we delivered year on year sales growth of 21.0%, revenue growth of 17.1% and an increase in adjusted profit before tax of 8.5%. Statutory profit before tax grew by 44.6%.

The impairment charge as a percentage of revenue for the year was 26.1%. This is higher than the 24.4% reported for last year but still within our guidance range of 22% to 27%, and lower than the 26.6% reported at the half year. Our guidance range was set in 2016 for lower levels of sales growth, and the fact that the impairment figure remains within the range despite 21% growth in credit issued demonstrates the priority we continue to place on quality of lending.

Net tangible assets (net assets less intangible assets arising from acquisitions) increased by 12.8% to £61.5m with net receivables increasing by 19.0% to £72.8m.

Group Results 

Sales to customers for the year increased by 21.0% to £174.4m (FY17: £144.1m), with this growth attributable to the increased level of new territory builds, as no acquisitions were made during the period. In light of the territory build opportunity, we reduced spend on other lead sources for the recruitment of home collected credit customers to maximise the investment opportunity. We estimate that this change in focus reduced credit issued on a like for like basis by £2.8m and resulted in up to 3,500 fewer customers at the year end. However, we believe that the resulting cost savings and lower impairments more than offset any reduction in income.

Revenue increased by 17.1% to £116.6m (FY17: £99.6m), with gross profit increasing by 10.0% to £58.2m (FY17: £52.9m). Agent commission as a percentage of revenue reduced from 21.3% in FY17 to 20.2% in FY18, reflecting the changes in the operating model.

Whilst impairment increased from 24.4% of revenue in FY17 to 26.1% in FY18, this remains within our guidance range of 22% to 27%. The guidance range was set with a lower level of growth in credit issued in mind, which is relevant because the faster a loan book and lending increases, the more adverse the impact is likely to be on impairment as a percentage of revenue. Encouragingly, impairment in the second half year was down to 25.6% from the 26.6% reported in the first half of the year as debt repayment performance exceeded our projections. Impairment as a percentage of credit issued was 17.4% in FY18, a slight uplift on the 16.9% reported for FY17.

Gross profit before territory build subsidies increased by 15.9% from £54.1m in FY17 to £62.7m in FY18. Territory builds increased to 463 in FY18 compared to 186 in FY17, with the cost of the agent subsidies increasing to £4.5m in FY18 from £1.2m in FY17. In addition, 25 of the FY17 territory builds occurred in the last two weeks of that year and so the majority of their costs were incurred in FY18.

After the territory build subsidies are taken into account, gross profit increased by 10.0% to £58.2m (FY17: £52.9m).

 

 

 

52-week period ended 24 February 2018

52-week period ended 25 February 2017

£'m

% of revenue

£'m

% of revenue

Revenue

116.6

 

99.6

 

Agent commission excluding territory build subsidy

(23.5)

20.2%

(21.2)

21.3%

Impairment

(30.4)

26.1%

(24.3)

24.4%

Gross profit before territory build subsidy

62.7

53.8%

54.1

54.3%

Territory build subsidy

(4.5)

3.9%

(1.2)

1.2%

Reported gross profit

58.2

49.9%

52.9

53.1%

 

Administration expenses increased from £34.3m in FY17 to £37.6m in FY18, reflecting not only the increased field infrastructure to support the business growth but also the costs associated with the development of the Dot Dot Loans on-line product, increased investment in our IT infrastructure and additional compliance costs. However, the administration expenses as a percentage of revenue fell from 34.4% in FY17 to 32.3% in FY18, an efficiency gain of 6.1%, driven by the productivity gains achieved from the implementation of technology improvements.

The adjusted profit before tax increased to £19.2m from £17.7m last year, an improvement of 8.5%. The statutory profit before tax improved to £16.1m from £11.2m last year, an increase of 43.8%. This increase was boosted by the reduced amortisation of acquisition intangibles, and non-recurrence of the £2.2m IPO costs recognised in FY17.

A table of adjustments between reported profit before tax and adjusted profit before tax is shown below.

For illustrative purposes, the table below also shows the improvement in the core home collected credit business excluding the development costs in Dot Dot Loans and the investment costs in the new territory builds. On this basis the underlying performance of the core home collected credit business improved by 29.1%.

 

£'m

52-week period ended 24 February 2018
 

52-week period ended 25 February 2017
 

Increase

Statutory PBT

16.1

11.2

43.8%

Amortisation of acquisition intangibles

2.1

3.7

 

Cost of flotation on AIM

(0.1)

2.2

 

Restructuring and other non-recurring costs

1.0

0.6

 

Adjusted PBT

19.2

17.7

8.5%

Territory build subsidies

4.4

1.2

 

Dot Dot Loans development costs

0.8

-

 

Adjusted PBT (Underlying HCC)

24.4

18.9

29.1%

 

The amortisation of intangible assets reflects the unwinding of intangibles in connection with acquisitions. This reduction is a result of both the lack of acquisitions in the current year and reduced levels of amortisation in connection with prior year acquisitions. Intangible assets are amortised over the asset's useful economic life, which is based on the expected life of the acquired customer relationships. Due to the behavioural profile of our customers, this will naturally result in a greater amortisation charge in the early years with a corresponding reduction in later years.

Other non-operating costs relate primarily to non-recurring restructuring costs of the business and were higher in FY18 as a result of restructuring costs in operations.

Earnings Per Share 

The adjusted earnings per share for FY18 is 11.7p, an increase of 8% relative to the 10.8p for FY17.

The basic reported earnings per share for FY18 is 10.1p compared to 6.6p for FY17, an increase of 53%.

Dividend 

Subject to shareholder approval at the Annual General Meeting on 26 June 2018, the Board proposes to pay a final dividend of 4.8p per ordinary share (FY17: 4.3p) payable on 27 July 2018 to shareholders on the register at the close of business on 29 June 2018.

This payment is in addition to the interim dividend already paid of 2.2p per ordinary share, making a total dividend for the year of 7.0p (FY17: 6.4p). The continued high level of dividend payments reflects the Board's confidence in the business prospects, particularly the opportunity to create further growth from historic territory builds, and our commitment to provide a strong income yield to our shareholders.

Net Margin 

The adjusted net margin, which excludes amortisation of intangibles on acquisitions, the one-off costs of the IPO and other non-operating costs, decreased to 16.5% from 17.8% last year, due to the impact of the cost of the territory builds. The cost of the territory builds impacted margins by 3.9% in FY18 against only 1.2% in FY17. Without this 2.7% adverse impact, the adjusted net margin would have shown a favourable improvement of 1.4% rather than the decline of 1.3%.

The net margin for the period increased to 13.9% from 11.2% last year, driven by several factors: the non-recurrence of the one-off IPO costs of £2.2m, the reduction in the amortisation of intangibles on acquisitions charge (which reduced to £1.9m from £3.7m last year as a result of there being no new acquisitions in FY18) and the lower write downs on prior year acquisitions. These favourable movements more than offset the adverse movement in the adjusted net margin.

Acquisitions and Goodwill 

There were no new acquisitions in the current accounting period, reflecting our focus on embedding the agents that joined us during the year. However the Group will continue to evaluate acquisitions in both the home collected credit market and other related non-prime sectors.

Funding 

We were pleased to announce in August 2017 that we had increased our debt facility from £25m to £40m, with a major high street bank joining the existing facility we had in place with Shawbrook Bank. The expiry date of the facility was also extended from March 2019 to August 2020.

The current facility is sufficient to meet our immediate strategic objectives, with the peak drawdown this year being £28.0m in December 2017. We remain focussed on seeking to increase our gearing in order to maximise equity returns, but not to a degree that we feel that we are putting the Group at a significantly higher level of financial risk.

Balance Sheet 

The total equity for the Group increased by 7.2% from £61.4m to £66.5m, reflecting the proportion of profits that we retain for future expansion.

The main asset of the Group is our loan book, which on a net basis increased by 19% from £61.2m last year to £72.8m in FY18. This increase was in part funded by our closing debt position, which increased to £16.0m from £10.0m over the same period. This increase of 19% was greater than the increase in gross loan book of 12% due to the improved quality of our customers reducing the relative impairment provision.

IFRS 9 

IFRS 9 'Financial instruments' is effective from 1 January 2018 and replaces IAS 39 'Financial instruments: Recognition and measurement'. The standard has been applied prospectively and prior year comparatives will not be restated. 

 

IFRS 9 requires the recognition of impairment on customer receivables through an expected loss model. Impairment provisions are therefore recognised on inception of a loan based on the probability of default and the typical loss given default. This differs from the current incurred loss model under IAS 39, where the requirement is that impairment provisions are only reflected when there is objective evidence of impairment.

 

However, for home collected credit businesses (HCC) the application of IAS 39 was conceptually difficult as the nature of our product is that customers will, from time to time, miss a payment and, up to a level, we are comfortable with this. Indeed, we apply no additional charges associated with missed payments and are proud of this aspect of forbearance in our products.

 

The Group has performed a preliminary assessment of the potential impact of adopting IFRS 9 based on the financial instruments as at the date of initial application of IFRS 9 (25 February 2018). IFRS 9 prescribes: (i) classification and measurement of financial instruments; (ii) expected loss accounting for impairment, and (ii) hedge accounting.

 

No changes are expected to the classification and measurement of the Company's assets, liabilities or equity nor does the company adopt hedge accounting. The only area which materially affects the Group is expected loss accounting for impairment. Under this approach, greater impairment provisions are recognised on inception of a loan based on the probability of default and the typical loss given default.

 

Provisions are calculated based on an unbiased outcome which take into account historic performance and considers the outlook for macro-economic conditions.

 

The impairment approach under IFRS 9 differs from the current incurred loss model under IAS 39 where impairment provisions are only reflected when there is objective evidence of impairment, typically a missed payment. The resulting effect is that impairment provisions under IFRS 9 are recognised earlier. This will result in a one-off adjustment to receivables, deferred tax and reserves on adoption and will result in delayed recognition of profits.

 

Based on current estimates, the adoption of IFRS 9 results in a reduction in the net loan book as at 24 February 2018 of between 4% and 6%.

 

Despite the adjustments required to receivables and net assets, it is important to note that IFRS 9 only changes the timing of profits made on a loan. The Group's underwriting and scorecards will be unaffected by the change in accounting, the ultimate profitability of loan is the same under both IAS 39 and IFRS 9 and more fundamentally the cash flows and capital generation over the life of a loan remain unchanged. The Group's bank covenants are unaffected by IFRS 9, as they are based on accounting standards in place at the time they were set.

Cash Flow 

The simplified cash flow statement below demonstrates the healthy levels of cash generated by the business prior to re-investment in the loan book asset of £22.9m (FY17: £15.7m).

It also shows how loan book growth in FY18 was primarily through the organic territory builds £11.6m (FY17: £4.9m) whereas last year's growth was a mix of organic growth and acquisitions.

Summary cash flow

£'m

52-week period ended 24 February 2018

52-week period ended 25 February 2017

Cash from operations excluding investment in loan book

22.9

15.7

Cash from funding

6.0

1.0

Total cash sources

28.9

16.7

Increase in net loan book

(11.6)

(1.9)

Acquisitions

-

(5.7)

Capital expenditure

(2.0)

(1.2)

Corporation tax

(4.6)

(4.1)

Interest paid

(1.4)

(0.9)

Dividends paid

(8.4)

(2.7)

Total cash uses

(28.0)

(16.5)

Cash movement

0.9

0.2

 

 

Principal Risks and Uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Company's performance.  A full explanation of the Group's principal risks and mitigants are included in the Annual report. The Company's principal risks are:

·     Conduct Risk - The risk of poor outcomes for customers.

·     Regulatory Risk - The risk of legal or regulatory action resulting in fines, penalties, censure or other sanction or legal action arising from failure to identify or meet regulatory and legislative requirements in the jurisdictions in which the Group operates. This also includes the risk that new regulation(s) or changes to the interpretation or implementation of existing regulation(s) may affect the Group's operations and cost base.

·    Credit Risk - The risk of default on a debt may arise from a borrower failing to make the necessary payments. The initial risk lies with the lender and includes lost principal and interest, disruption to cash flow, and increased collection costs.

·    Strategic and Business Risk - The risk arising from poor business decisions, substandard execution of decisions, inadequate resource allocation, and/or from failure to adapt sufficiently to changes in the business environment.

·     Reputational Risk - The risk of loss due to damage to, or a decline in, the Group's reputation.

·     Operational Risk - The risk of loss arising from inadequate or failed procedures, systems or policies,  employee errors, system failures, fraud, other criminal activity - indeed any event which disrupts  business processes.

·   Liquidity Risk - The risk of the Company being unable to meet its current and future financial obligations on time.

·     IT Risk - The risk of business disruption from cyber crime or system failures.

 

Andy Thomson
Chief Financial Officer

Date: 26 April 2018

 

 

MORSES CLUB PLC

 

CONSOLIDATED INCOME STATEMENT

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

 

 

 

 

 

 

 

52 weeks

 

52 weeks

 

 

 

 

Ended

 

Ended

 

 

 

 

24.2.18

 

25.2.17

 

Note

 

 

£'000

 

£'000

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

Existing operations

 

 

 

116,576

 

96,242

Acquisitions during the period                      

 

 

 

-

 

3,336

 

 

 

 

116,576

 

99,578

Cost of sales

 

 

 

(58,350)

 

(46,695)

GROSS PROFIT

 

 

 

58,226

 

52,883

 

 

 

 

 

 

 

Administration expenses

 

 

 

(40,637)

 

(40,737)

OPERATING PROFIT BEFORE AMORTISATION OF INTANGIBLES AND EXCEPTIONAL ITEMS

 

 

 

19,569

 

17,988

Amortisation of acquisition intangibles

 

 

 

(2,051)

 

(3,663)

Exceptional income/(costs)

 

 

 

71

 

(2,179)

OPERATING PROFIT

 

 

 

 

 

 

Existing operations

 

 

 

17,589

 

10,917

Acquisitions during the period                      

 

 

 

-

 

1,229

 

 

 

 

17,589

 

12,146

 

 

 

 

 

 

 

Finance costs

 

 

 

(1,456)

 

(927)

 

 

 

 

 

 

 

PROFIT BEFORE TAXATION

1, 2

 

 

16,133

 

11,219

Taxation

3

 

 

(3,041)

 

(2,620)

PROFIT AFTER TAXATION

 

 

 

13,092

 

8,599

 

 

 

 

 

 

 

 

 

 

 

24.2.18

 

25.2.17

EARNINGS PER SHARE

 

 

 

Pence

 

Pence

Basic

5

 

 

10.11

 

6.64

Diluted

5

 

 

10.02

 

6.61

 

 

All results derive from continuing operations. A Statement of Comprehensive Income is not included as there are no other gains or losses, other than those presented in the Income Statement.

 

 

                 MORSES CLUB PLC Registered Number: 06793980

 

CONSOLIDATED BALANCE SHEET

AS AT 24 February 2018

 

 

 

 

 

 

 

 

 

ASSETS

Note

 

24.2.18

 

25.2.17

 

Non-current assets

 

 

£'000

 

£'000

 

Goodwill

6

 

2,834

 

2,834

 

Other intangible assets

7

 

5,520

 

7,058

 

Investment in subsidiary

 

 

-

 

-

 

Property, plant & equipment

 

 

822

 

763

 

Deferred tax

9

 

-

 

-

 

Trade and other receivables

8

 

265

 

395

 

 

 

 

9,441

 

11,050

 

Current Assets

 

 

 

 

 

 

Trade and other receivables

8

 

74,602

 

62,641

 

Cash and cash equivalents

 

 

4,868

 

3,985

 

 

 

 

79,470

 

66,626

 

Total assets

 

 

88,911

 

77,676

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Taxation payable

 

 

(1,110)

 

(2,153)

 

Trade and other payables

 

 

(5,585)

 

(3,739)

 

 

 

 

(6,695)

 

(5,892)

 

Non-current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

(15,552)

 

(9,789)

 

Deferred tax

9

 

(144)

 

(617)

 

 

 

 

(15,696)

 

(10,617)

 

Total liabilities

 

 

(22,391)

 

(16,509)

 

 

 

 

 

 

 

 

NET ASSETS

 

 

66,520

 

61,378

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Called up share capital

 

 

1,295

 

1,295

 

Group reconstruction reserve

 

 

-

 

-

 

Retained earnings

 

 

65,225

 

60,083

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

66,520

 

61,378

 

 

 

 

 

 

 

 

 

 

 

 

                               

                 MORSES CLUB PLC

 

STATEMENTS OF CHANGES IN EQUITY

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

 

 

 

Called up

 

 

 

 

 

 

 

share

Retained

Total

 

 

 

 

 

  capital

earnings

equity

 

Group

 

 

Notes

£'000

£'000

£'000

 

As at 27 February 2016

 

1,295

54,074

55,369

 

Profit for period

 

 

-

8,599

8,599

 

Total comprehensive income for the period

 

-

8,599

8,599

 

Deferred tax adjustment

 

-

4

4

 

Share based payments charge

 

-

126

126

 

Dividends paid

 

 

4

-

(2,720)

(2,720)

 

As at 25 February 2017

 

1,295

60,083

61,378

 

Profit for period

 

-

13,092

13,092

 

Total comprehensive income for the period

 

-

13,092

13,092

 

Deferred tax adjustment

 

-

11

11

 

Research and development credit adjustment

 

-

26

26

 

Share based payments charge

 

-

431

431

 

Dividends paid

 

 

4

-

(8,418)

(8,418)

 

As at 24 February 2018

 

1,295

65,225

66,521

 

 

 

 

 

 

                   

 

 


MORSES CLUB PLC

 

CASH FLOW STATEMENTS

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

 

 

Group

 

 

24.2.18

 

25.2.17

 

 

£'000

 

£'000

 

 

 

 

 

Net cash inflow from operating activities

 

7,239

 

9,726

 

 

 

 

 

Cash flows used in financing activities

 

 

 

 

Dividends paid

 

(8,418)

 

   (2,720)

Proceeds from additional long term debt

 

6,000

 

1,000

Arrangement costs associated with additional funding

 

(448)

 

-

Interest paid

 

(1,456)

 

(927)

Net cash outflow from financing activities

 

(4,322)

 

(2,647)

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

Purchase of intangibles

 

(1,412)

 

(1,029)

Purchase of property, plant and equipment

 

(622)

 

(125)

Additional investment in subsidiary

 

-

 

-

Acquisitions

 

-

 

(5,695)

Net cash (outflow) from investing activities

 

(2,034)

 

(6,849)

 

 

 

 

 

Increase in cash and cash equivalents

 

883

 

230

 

 

 

 

 

 

 

 

 

 

Reconciliation of increase in cash and cash equivalents

 

 

 

 

 

 

 

 

 

Movement in cash and cash equivalents in the period

 

883

 

230

Cash and cash equivalents, beginning of period

 

3,985

 

3,755

 

 

 

 

 

Cash and cash equivalents, end of period

 

4,868

 

3,985

 

 

 

 

 

 

 

MORSES CLUB PLC

 

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

 

 

 

1

RECONCILIATION OF PROFIT BEFORE TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

 

 

 

£'000

 

£'000

 

 

 

 

 

Profit before exceptional costs

 

16,062

 

13,398

 

 

 

 

 

Exceptional costs

 

71

 

(2,179)

 

 

 

 

 

Profit before taxation

 

16,133

 

11,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid included in financing activities

 

1,456

 

927

 

 

 

 

 

Loss on disposal of intangibles

 

-

 

134

 

 

 

 

 

Depreciation charges

 

563

 

544

 

 

 

 

 

Share based payments expense

 

431

 

126

 

 

 

 

 

Amortisation of intangibles

 

2,950 

 

4,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) in receivables

 

(11,604) 

 

  (1,918)

 

 

 

 

 

Increase/(Decrease) in payables

 

1,846 

 

(1,640)

 

 

 

 

 

 

 

(4,358)

 

2,585

 

 

 

 

 

Taxation paid

 

(4,536)

 

(4,078)

 

 

 

 

 

Net cash inflow from operating activities

7,239

 

9,726

 

 

 

 

 

 

 

 

 

 

 

 

 

                           

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

1.        BASIS OF PREPARATION

 

          General information

The preliminary announcement has been prepared in accordance with the Listing Rules of the FCA and is based on the consolidated financial statements for the period ended 24 February 2018 which have been prepared under IFRS as adopted by the European and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The accounting policies applied in preparing the preliminary announcement are consistent with those used in preparing the statutory financial statements for the year ended 25 February 2017.

Shopacheck Financial Services Limited and Shelby Finance Limited both qualify for an exemption to audit under the requirements of Section 479A of the Companies Act 2006. As such, no audit has been conducted for these companies in the period ending 24 February 2018.

The preliminary announcement has been prepared on a going concern basis consistent with the basis of preparation of the statutory financial statements for the period ended 24 February 2018.

The preliminary announcement does not constitute the statutory financial statements of the Group within the meaning of Section 434 of the Companies Act 2006.

The preliminary announcement has been agreed with the Company's auditor for release.

 

 

 

`              MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

2.       PROFIT BEFORE TAXATION

Profit before tax is stated after charging:

 

 

 

 

 

 

52 weeks

 

52 weeks

 

 

 

 

 

Ended

 

Ended

 

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

 

£'000

 

£'000

Depreciation - owned assets

 

 

 

563

 

544

Amortisation of intangibles

 

 

 

2,950

 

4,412

Operating lease rentals - Motor vehicles  

 

 

1,581

 

1,967

Operating lease rentals - Property  

 

 

1,093

 

1,110

Restructuring costs (note 3)

 

 

 

1,019

 

283

 

 

Directors' remuneration (including key management personnel)

1,014

 

858

Directors' pension contributions to money purchase schemes

 

18

 

    8

 

 

 

 

 

 

 

 

The number of directors to whom retirement benefits were accruing was as follows:

 

 

Money purchase schemes

 

 

 

2

 

6

 

 

 

 

 

 

 

 

Information regarding the highest paid director is as follows:

 

52 weeks

 

52 weeks

 

 

 

 

 

Ended

 

ended

 

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

 

£'000

 

£'000

Emoluments

 

 

 

 

412

 

330 

Pension contributions to money purchase schemes

 

5

 

4

 

 

3.       TAXATION

 

Analysis of the tax charge

 

 

 

 

 

 

The tax charge/(credit) on profit before tax for the period was as follows:

 

 

 

 

 

 

 

 

52 weeks

 

52 weeks

 

 

 

 

Ended

 

ended

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

£'000

 

£'000

Current tax:

 

 

 

 

 

 

UK corporation tax

 

 

 

3,526

 

3,499

Adjustment in respect of prior periods

 

 

 

(23)

 

-

Deferred tax:

 

 

 

 

 

 

Origination and reversal of timing differences

 

 

 

(440)

 

(1,562)

Adjustment in respect of prior periods

 

 

 

(22)

 

654

Effect of change of tax rates

 

 

 

-

 

29

Total deferred tax

 

 

 

(462)

 

(879)

Tax on profit on ordinary activities

 

 

 

3,041

 

2,620

 

 

 

 

 

 

 

 

 

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

Factors affecting the tax charge

 

The tax assessed for the period is lower (2017 - higher) than the standard rate of corporation tax in the UK. The difference is explained below:

 

 

 

 

 

 

52 weeks

 

52 weeks

 

 

 

 

Ended

 

Ended

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

£'000

 

£'000

Profit on ordinary activities before tax

 

 

 

16,133

 

11,219

 

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 20%)

 

3,065

 

2,244

 

 

 

 

 

 

 

Effects of:

 

 

 

 

 

 

Ordinary expenses not deductible for tax purposes 

 

 

 

(12)

 

70

IPO Exceptional expenses not deductible for tax purposes

 

 

 

-

 

436

Effect of changes in tax rate

 

 

 

25

 

30

Movement in amounts not provided in deferred tax 

 

 

 

8

 

8

Adjustment in respect of prior periods

 

 

 

(45)

 

(167)

Tax on profit on ordinary activities

 

 

 

3,041

 

2,620

 

 

 

 

 

 

 

 

 

The standard rate of corporation tax applicable for the period ended 24 February 2018 is 19% (2017 - 20%).

 

Finance Bill 2016 provides that the tax rate will reduce to 17% with effect from 1 April 2020. The effect of this proposed tax rate reduction will be reflected in future periods.

 

 

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

4.       DIVIDEND PER SHARE

 

                    Dividend per share

 

 

 

 

 

 

 

 

 

 

52 weeks

 

52 weeks

 

 

 

 

ended

 

ended

 

 

 

 

24.2.18

 

25.2.17

                Dividends paid (£'000)

 

 

 

8,418

 

2,720

               Weighted average number of shares (000's)

 

 

 

129,500

 

129,500

                Dividend per share (pence)

 

 

 

6.50

 

2.10

 

Subject to shareholder approval at the Annual General Meeting on 26 June 2018, the Board proposes to pay a

final dividend of 4.8p per ordinary share payable on 27 July 2017 to all shareholders on the register at the

close of business on 29 June 2018.

 

5.       EARNINGS PER SHARE

 

 

 

 

 

52 weeks

 

52 weeks

 

 

 

 

ended

 

ended

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

 

 

 

Earnings (£'000)

 

 

 

13,092

 

8,598

 

 

 

 

 

 

 

Number of shares

 

 

 

 

 

 

Weighted average number of shares for the purposes of basic earnings per share ('000s)

 

 

 

129,500

 

129,500

 

 

 

 

 

 

 

Effect of dilutive potential ordinary shares through share options ('000s)

 

 

 

1,133

 

598

 

 

 

 

 

 

 

Weighted average number of shares for the purposes of diluted earnings per share ('000s)

 

 

 

130,633

 

130,098

 

 

 

 

 

 

 

Basic per share amount (pence)

 

 

 

10.11

 

6.64

 

 

 

 

 

 

 

Diluted per share amount (pence)

 

 

 

10.02

 

6.61

 

 

 

 

 

 

 

 

Diluted earnings per share calculates the effect on earnings per share assuming conversion of all dilutive potential ordinary shares. Dilutive potential ordinary shares are calculated for awards outstanding under performance related share incentive schemes such as the Deferred Share Plans. The number of dilutive potential ordinary shares is calculated based on the number of shares which would be issuable if the performance targets have been met.

 

 

 

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

6.       GOODWILL

 

 

 

 

 

 

Group

 

Company

 

 

 

 

 

Goodwill

 

Goodwill

 

 

 

 

 

£'000

 

£'000

Cost

 

 

 

 

 

 

 

At 27 February 2016

 

 

1,659

 

1,659

Additions

 

 

1,508

 

1,316

At 25 February 2017 and 24 February 2018

 

 

3,167

 

2,975

 

 

 

 

 

 

 

 

Impairment

 

 

 

 

 

 

 

At 27 February 2016

 

 

 

(333)

 

(333)

Impairment charge for the period

 

 

 

-

 

-

At 25 February 2017

 

 

 

(333)

 

(333)

Impairment charge for the period

 

 

 

-

 

-

At 24 February 2018

 

 

 

(333)

 

(333)

 

 

 

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

 

 

 

 

 

 

 

 

 

At 24 February 2018

 

 

 

2,834

 

2,642

At 25 February 2017

 

 

 

2,834

 

2,642

At 27 February 2016

 

 

 

   1,326

 

   1,326

 

 

 

 

 

 

 

 

                 

 

 

  Allocation of goodwill to cash generating units

 

Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Upon acquisition the activities of the acquired entities are closely aligned to those of the Company and are deemed to have been integrated rather than remain as separate CGUs.

 

Key assumptions used in goodwill impairment review

Determining whether goodwill is impaired requires an estimation of the discounted future cash flows of the Company using a discount rate of 11% and a terminal value based on a minimum future growth rate of 2%. The Group has conducted a sensitivity analysis on the goodwill impairment assessment and believes that there are no reasonably possible changes to the key assumptions in the next year which would result in the carrying value of goodwill exceeding the recoverable amount. The recoverable amount has been calculated using the value in use method. Goodwill is tested for impairment annually or more frequently if there are indications that goodwill might be impaired. The key assumptions used in the value in use calculation are the growth rates and the discount rates adopted. The growth rates are based on the most recent financial budgets approved by the Group Board for the next three years. The discount rates which reflect the time value of money and the risks specific to the financial services sector are sourced from and independent 3rd party.  

 

 

 

 

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

7.       OTHER INTANGIBLE ASSETS

Group

 

Software, Servers,

& Licences

 

Customer Lists

 

Agent Networks

 

Totals

COST

 

£'000

 

£'000

 

£'000

 

£'000

At 27 February 2016

 

4,156

 

19,309

 

784

 

24,249

Additions

 

1,029

 

1,457

 

66

 

2,552

Disposals

 

(144)

 

-

 

-

 

(144)

At 25 February 2017

 

5,041

 

20,766

 

850

 

26,657

Additions

 

1,412

 

-

 

-

 

1,412

At 24 February 2018

 

6,453

 

20,766

 

850

 

28,069

ACCUMULATED AMORTISATION

 

 

 

 

 

 

 

 

At 27 February 2016

 

1,404

 

13,250

 

543

 

15,197

Charge for period

 

749

 

3,517

 

146

 

4,412

Disposals

 

(10)

 

-

 

-

 

(10)

At 25 February 2017

 

2,143

 

16,767

 

689

 

19,599

Charge for period

 

898

 

1,973

 

79

 

2,950

At 24 February 2018

 

3,041

 

18,740

 

768

 

22,549

 

NET BOOK VALUE

 

 

 

 

 

 

 

 

At 24 February 2018

 

3,412

 

2,026

 

82

 

5,520

At 25 February 2017

 

2,898

 

3,999

 

161

 

7,058

At 27 February 2016

 

2,752

 

6,059

 

241

 

9,052

 

 

 

 

 

 

 

 

 

 

 

8.        TRADE AND OTHER RECEIVABLES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net receivable from advances to customers

 

 

72,563

 

60,833

 

Amounts falling due after one year:

 

 

 

 

Net receivable from advances to customers

 

 

265

 

395

 

Net loan book

 

 

72,828

 

61,228

 

 

 

 

 

 

 

 

Other debtors

 

 

429

 

489

 

Prepayments

 

 

1,611

 

1,319

 

 

 

 

74,867

 

63,036

 

 

 

 

 

 

 

 

 

 

 

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

 

8.        TRADE AND OTHER RECEIVABLES - continued

 

Amounts receivable from customers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24.2.18

 

 

25.2.17

  

 

 

 

 

£'000

 

 

£'000

Amounts receivable from customers

 

 

 

 

72,828

 

 

61,228

 

 

 

 

 

 

 

 

 

Analysis by future date due

 

 

 

 

 

 

 

 

 - due within one year

 

 

 

 

72,563

 

 

60,833

 - due in more than one year

 

 

 

 

265

 

 

395

Amounts receivable from customers

 

 

 

 

72,828

 

 

61,228

 

 

 

 

 

 

 

 

 

Analysis by security

 

 

 

 

 

 

 

 

Other loans not secured

 

 

 

 

72,828

 

 

61,228

Amounts receivable from customers

 

 

 

 

72,828

 

 

61,228

 

 

 

 

 

 

 

 

 

Analysis of overdue

 

 

 

 

 

 

 

 

Neither Past due Nor impaired

 

 

 

 

52,544

 

 

42,990

Past Due not Impaired

 

 

 

 

231

 

 

224

Impaired

 

 

 

 

20,053

 

 

18,014

Amounts receivable from customers

 

 

 

 

72,828

 

 

61,228

                           

 

The credit risk inherent in amounts receivable from customers is reviewed under impairment as per note 1 and under this review the credit quality of assets which are neither past due nor impaired was considered to be good. The above analysis of when loans are due is based upon original contractual terms which are not rescheduled. The carrying amount of amounts receivable from customers whose terms have been renegotiated that would otherwise be past due or impaired is therefore £nil (2017- £nil).

 

An analysis of movements on loan loss provisions is provided below:

 

 

 

 

Group

 

 

 

 

£'000

 

At 27 February 2016

 

36,086

 

Charge for period

 

21,058

 

Amounts written off during period

 

(22,526)

 

Unwind of discount

 

(2,601)

 

Provision subsequently recognised for customers acquired during the period

 

2,737

 

At 25 February 2017

 

34,754

 

Charge for period

 

24,452

 

Amounts written off during period

(24,946)

 

Unwind of discount

 

(351)

 

At 24 February 2018

 

33,909

 

 

 

 

 

 

 

 

There has been no material change in the average effective interest rate used for consumer credit during the period to 24 February 2018.

 

MORSES CLUB PLC

 

NOTES TO THE PRELIMINARY RESULTS - continued

FOR THE 52 WEEK PERIOD ENDED 24 FEBRUARY 2018

 

 

9.        DEFERRED TAX

 

 

 

 

 

 

 

 

 

 

 

 

 

24.2.18

 

25.2.17

 

 

 

 

 

£'000

 

£'000

 

Fixed asset temporary differences

 

 

 

 

(161)

 

(123)

 

Other temporary differences

 

 

 

 

 

305  

 

740

 

Deferred tax liability/(asset)

 

 

 

 

 

144  

 

617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

 

 

 

 

£'000

 

 

 

Balance as at 27 February 2016

 

 

1,879

 

 

 

Credit for the period

 

 

(714)

 

 

 

Arising on acquisition

 

 

274

 

 

 

Adjustment in respect of prior periods

 

 

(822)

 

 

 

Balance as at 25 February 2017

 

 

617

 

 

 

Credit for the period

 

 

 

 

       (451)

 

 

Adjustment in respect of prior periods

 

 

(22)

 

 

 

Balance as at 24 February 2018

 

 

144

 

 

 

                                   

 

 

 

10.      ULTIMATE PARENT COMPANY

 

Up until 21 February 2018 the Company was a 51% subsidiary of Hay Wain Group Limited (formerly Perpignon Limited). Hay Wain Group Limited's shareholding reduced on 21 February 2018 to 36.8% and as such it no longer holds a controlling interest in the Company. From 22 February 2018 the directors consider there to be no ultimate parent company.

              

 

 

Alternative performance measures

 

This Annual Report and Financial Statements provides alternative performance measures (APMs) which are not defined or specified under the requirements of International Financial Reporting Standards. We believe these APMs provide readers with important additional information on our business. To support this we have included a reconciliation of the APMs we use where relevant and a glossary indicating the APMs that we use, an explanation of how they are calculated and why we use them.

 

 

 

 

 

 

 

 

£'m

Increase

Statutory PBT

16.1

11.2

43.8%

Amortisation of acquisition intangibles

2.1

3.7

 

Cost of flotation on AIM

-

2.2

 

Restructuring and other non-recurring costs

1.0

0.6

 

Adjusted PBT

19.2

17.7

8.5%

Territory build subsidies

4.4

1.2

 

Dot Dot Loans development costs

0.8

-

 

Adjusted PBT underlying HCC

24.4

18.9

29.6%

Tax

(5.1)

(4.0)

 

Adjusted PAT underlying HCC

19.3

14.9

 

 

 

 

 

Alternative performance measures - continued

 

 

 

 

 

 

 

 

Adjusted Profit before tax (which excludes amortisation of intangibles on acquisitions, the one-off costs of the IPO and other non-operating costs

 

 

 

Reconciliation of Cash from operations to Cash from operations (excluding investment in loan book)

 

 

 

Group

 

 

24.2.18

 

25.2.17

 

 

£'000

 

£'000

 

 

 

 

 

Net cash inflow from operating activities

 

7,239

 

9,726

Add back:

 

 

 

 

Movement in net loan book

 

11,604

 

1,918

Tax paid

 

4,536

 

4,078

Prepaid loan facility arrangement fee

 

(448)

 

-

Cash from Operations (excluding investment in loan book)

 

22,931

 

15,722

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR VELFLVZFZBBF
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Preliminary results for 52 weeks ended 24 Feb 2018 - RNS