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Morses Club PLC on Wednesday said it swung to a loss in the first half of its financial year, following an increase in complaints in the period.
The Nottingham, England-based home collected credit provider recorded a pretax loss of £20.8 million in the 26 weeks to August 27, down from a profit of £1.8 million the year before. Morses Club said this was due to an increase in complaints in the period that were submitted by claims management companies.
Morses Club said the associated costs of complaint volumes is likely to adversely impact on its trading performance for the first half of financial 2023.
Morses Club’s revenue declined 18% to £43.2 million from £52.4 million, due to the decreased credit issued across both its businesses.
The Home Collected Credit division reported a 10% decline in revenue to £34.6 million from £38.6 million. Revenue in Morses Club’s digital division, Shelby Finance, decreased by 38% to £8.6 million from £13.8 million, which Morses said is because lending was constrained due to cash constraints.
Looking ahead, Morses Club said there is material uncertainty that may cast ‘significant doubt’ about the future going concern and viability of the group.
Morses Club plans to reduce its product range to ensure its products are ‘sustainable and clear to our addressable market’.
Morses Club has not declared an interim dividend for financial 2023.
‘We continue our discussions with the Financial Conduct Authority to progress on a potential Scheme of Arrangement. Any potential Scheme of Arrangement would remove the uncertainty of continued redress claims and remove the risk of ongoing liabilities with regard to volatility in the level of complaints,’ Chief Executive Gary Marshall said.
Morses Club shares were down 15% to 2.37 pence on Thursday morning in London.
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