Morses Club Plc (LON:MCL) saw its shares jump higher this morning after the UK's second largest home collected credit lender reported strong maiden full-year results and said it has made a good start to the current year.
For the year ended 25 February 2017, the AIM-listed group reported a rise in adjusted pre-tax profit to £17.7mln, up from £16.8mln a year earlier, with reported pre-tax profit rising to £11.2mln from £10.4mln.
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The firm’s continued strong performance came as its revenue increased by 10% to £99.6mln, up from £90.6mln in the previous year, with net loan book growth of 8% to £61.2mln.
Morses Club – which floated on AIM on May 5 last year - saw a 9% increase in customer numbers to around 216,000, up from 198,000 at the end of the previous financial year.
The group’s performance was also helped by efficiency improvements, with its costs as a percentage of income declining to 56.9% from 58.9%.
Maiden pay-outs total 6.4p
The firm is recommending a first final dividend of 4.3p, after a 2.1p pay-out for the first-half.
Paul Smith, chief executive officer of Morses Club, said: "We remain confident in our outlook. We have made a strong start to the current year in terms of both credit issued and customer numbers.
“ A significant pipeline of territory builds is bringing with it high quality growth, and we continue to see attractive acquisition opportunities in the wider non-standard finance market."
He added: “We are currently reviewing several growth and diversification opportunities and will continue to identify and evaluate opportunities as they emerge.”
In mid morning trading, shares in Morses Club were over 4%, or 5.25p higher at 133.25p, well above the 108p placing price of just under a year ago.
Numis ups profit estimates, target price for Morses Club
In a note to clients, analysts at Numis Securities upped their profit forecasts and raised their target price for Morses Club shares to 149p from 130p, reiterating an ‘add’ rating on the stock.
They said: “With a stronger growth outlook we are upgrading our Pre-tax profit forecasts by 1% this year to £19.3m from £19.1m and by 5% next year to £22.3m from £21.1m.”
The analysts added: “Morses Club is growing well and we believe there is an opportunity to significantly increase customer numbers through agent acquisition.
“This will drive increased agent cost, which will offset increased revenues this year before driving higher profitability next.”
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