Morses Club PLC (LON:MCL), an established provider of non-standard financial services, has provided the following update to its investors.
Morses Club is proposing a reorganisation of its business and corporate structure which will involve the introduction of a new, AIM-quoted, holding company for the Group, U Money PLC. Following the reorganisation, there will be two distinct business divisions, home collected credit and digital, which will operate through separate operating subsidiaries of U Money; HCC through Morses Club and Digital through Shelby Finance Ltd under the brands Dot Dot Loans for online lending and U Account for online e-money current accounts.
The recent acceleration of the Group’s digital transformation, as a result of changes to market conditions and customer needs due to the COVID-19 pandemic, necessitates the realignment of the Group’s structure to allow it to better facilitate the ongoing development of the Group’s digital strategy.
The Board believes the reorganisation provides all stakeholders with material benefits, including, but not limited to:
· aligning the structure of the Group to provide both new and existing customers with a balanced offering of Digital and HCC products and services to support their financial needs;
· creating two clear, distinct business lines, Digital and HCC, to ensure there is no confusion with regards to the branding of the lines;
· aligning the presentation of the Group with the markets in which the Group operates, creating clarity as to branding and ensuring a broader span of appeal to a wider market of funders, investors, customers and key stakeholders; and
· continuing to evolve the business, by easing its entry into new markets and managing the Group’s resources as a Group operation.
The reorganisation will have no direct impact on the Group’s customers who will continue to be served by their existing business division.
The reorganisation will be implemented by means of a members’ scheme of arrangement under Part 26 of the Companies Act 2006 (the “Members Scheme”), and will be subject to shareholder approval, sanction by the High Court and FCA regulatory approval for U Money to become a controller of the Group. The application, submitted 6 July 2021, is with the FCA for consideration.
A video of Morses Club CEO, Paul Smith, outlining the reorganisation and why it benefits all stakeholders can be found on the Company’s investor relations website at https://www.morsesclubplc.com/.
Effect of Reorganisation
As part of the Members Scheme, Morses Club shareholders will receive the same number of U Money ordinary shares as their current number of Morses Club ordinary shares and continue to enjoy the same rights and economic exposure to the Morses Club Group.
To ensure continuity in trading in the Group’s shares, U Money’s ordinary shares will be admitted to trading on AIM and concurrently Morses Club’s ordinary shares will be delisted from trading on AIM.
U Money ordinary shares are expected to commence trading on AIM under the ticker UMY on 12 October 2021 at 8.00am.
A new company, U Money Services Limited has been incorporated as a subsidiary of U Money and will operate as a service company supporting the two operating subsidiaries, Morses Club and Shelby Finance.
Publication of Circular and Notice of Court Meeting and General Meeting
The Group will today be publishing a circular that will be sent to all shareholders who are entitled to vote on the Members Scheme. The Circular is also available on the Company’s investor relations website, www.morsesclubplc.com.
The Members Scheme is conditional on the approval of the Group’s shareholders (amongst other approvals). Accordingly, the Circular contains a notice of both a court convened meeting of the Company (the “Court Meeting”) and a general meeting of the Company (the “General Meeting”) which is to be held at Suite 2.01, One City West, Gelderd Road, Leeds, LS12 6NJ at 10.30am for the Court Meeting and 10.50am for the General Meeting on 8 September, in which shareholders can, if thought fit, pass the Resolutions set out in the Circular.
If shareholders intend to attend the Court Meeting and the General Meeting in person, the Company would ask that, due to the continued presence of COVID-19 concerns, shareholders confirm to the Company by email to [email protected] whether they will be attending the Court Meeting and the General Meeting in person, to ensure the Company has in place proper COVID-19 protections. Shareholders will be able to join the meetings virtually by emailing [email protected] for a link to join the meetings.
Expected timetable of events for the Members’ Scheme of arrangement
| Item | Date and time |
| Posting of Circular | 16 August 2021 |
| Court Meeting | 10:30 a.m. on 8 September 2021 |
| General Meeting | 10:50 a.m. on 8 September 2021 |
| Court Hearing to sanction the Members Scheme | 5 October 2021 |
| Last day of dealings in, and for registration of transfers of, Morses Club PLC Ordinary Shares | Close of business on 11 October 2021 |
| Members’ Scheme Effective Date | By 8.00 a.m. on 12 October 2021 |
| Admission of trading, and dealings commence in, the shares of U Money PLC on AIM | 8.00 a.m. on 12 October 2021 |
| Cancellation of trading on AIM of the Morses Club PLC Ordinary Shares | 8.00 a.m. on 12 October 2021 |
| U Money PLC’s Ordinary Shares are listed, crediting of U Money PLC’s Ordinary Shares to CREST accounts and trading in these shares on AIM | 8.00 a.m. on 12 October 2021 |
The company went on to provide the following trading update:
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.”
