Non-standard financial services provider, Morses Club, says it expects its adjusted pre-tax profits to fall by 18% to 23%.

The company says the performance of the Home Collect Credit (HCC) division during the period has been very strong in a sector that continues to face headwinds and is expected to maintain like-for-like profitability.  Total credit issued of £174.2m was slightly lower at -2.4% year-on-year (FY 2019: £178.5m).

Total HCC customer numbers are marginally lower at 224,000 (FY 2019: 235,000). The gross loan book has reduced slightly by -2.4% (FY 2019: 7% growth). Impairments are anticipated to be at the lower end of its normal range. The diversification strategy in digitising aspects of the customer offering in HCC continues to gather momentum, with over 78k of Morses customers using its online customer portal launched in February 2019 and £22.9m of loan balances on the Morses Club Card (FY 2019: £15.5m).

2019 was a year of significant change for the Group’s Digital division, following substantial acquisition activity, incorporating Dot Dot Loans and U Account. The businesses have undergone significant re-engineering and are now better positioned to take advantage of the opportunity in the wider non-standard credit market. Although losses in the Digital division have been higher than initially expected.

The company anticipates a robust overall profit performance, the adjusted profit before tax for the Group will be reduced by 18% – 23% against consensus.  The Company intends to maintain its existing dividend policy.

Paul Smith, Chief Executive Officer of Morses Club, said “This year for the Group has been transformational in terms of diversification and product offering. The strong financial performance of the HCC division ensures that we have a strong financial bedrock to enhance our strategic plan.  The business is undergoing a significant development phase which is necessary to deliver a broader offering to our customers.  The strong customer response to the introduction of key initiatives in HCC, such as the customer portal, is testament to our long-term strategic approach.”

“In our Digital division,  we have looked holistically at our recently acquired digital businesses so that we create an end-to-end customer platform that is wholly relevant to Morses Club’s existing and future customers. Whilst the re-engineering of these businesses has taken longer than we initially anticipated, we continue to meet the strategic milestones we have set ourselves and the diversification of our business puts us in a strong position to benefit from demand from the wider non-standard credit market.”

“The growth potential for our Digital division is significant. Whilst we intend to continue our investment phase to ensure that we provide our customers with an expanded and complementary offering to our core HCC offering, we are confident in the long-term strength of the business and continue to look for opportunities to grow both our HCC business and digital offering.”