Morses Club 'materially loss-making' in H1

Doorstop lender Morses Club said on Friday that it was "materially loss-making" in the six months ended 27 August and that it was "increasingly imperative" that it make "substantive progress" regarding a potential scheme of arrangement.

Morses Club stated that following its decision to pursue the potential use of a scheme of arrangement to deal with customer redress claims for unaffordable lending and the pausing of all new redress claims for unaffordable lending from 11 August in its home collected credit division, its trading performance was still being impacted by the level of claims in its HCC division made prior to 11 August.

The London-listed group said this meant that it continues to be materially loss-making, with the additional impact of constraining available cash to generate future revenue. This was also said to have led to a reduction in lending volumes and customer numbers in both its HCC and digital divisions in order to ensure that it can continue to operate as a going concern whilst it pursues a potential scheme of arrangement with its stakeholders.

Chief executive Gary Marshall said: "The level of previous claims in our HCC division continues to impact the overall trading performance of the business, which means we are materially loss-making as a result and has the additional impact of constraining the cash available to generate future revenue.

"Although the business continues to be a going concern, the material uncertainty of the trading position of the group means that it is increasingly imperative that we make substantive progress regarding a potential scheme of arrangement."

Marshall added that the group was continuing to work with key stakeholders to make formal progress on a potential scheme of arrangement in order to avoid Morses having to seek protection from insolvency, which would lead to "a materially worse outcome" for customers.

As of 0915 BST, Morses shares had sunk 27.13% to 3.60p.

Reporting by Iain Gilbert at Sharecast.com