REG - Mortgage Adv. Bureau - Interim Results
24/09/2024 07:00
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RNS Number : 3410F Mortgage Advice Bureau (Hldgs) PLC 24 September 2024
MORTGAGE ADVICE BUREAU (HOLDINGS) PLC
("MAB" or "the Group")
24 September 2024
Interim Results for the six months ended 30 June 2024
Mortgage Advice Bureau (Holdings) plc (AIM: MAB1.L) is pleased to announce its
interim results for the six months ended 30 June 2024.
Financial summary
H1 2024 H1 2023 Change
Revenue £123.9m £117.5m +5.4%
Gross profit £37.7m £32.9m +14.5%
Gross profit margin 30.4% 28.0% +2.4pp((1))
Adjusted EBITDA(*) £13.8m £10.5m +31.3%
Adjusted EBITDA margin(*) 11.1% 8.9% +2.2pp((1))
Adjusted profit before tax(*) £12.3m £8.8m +39.9%
Statutory profit before tax £6.2m £7.6m -17.9%
Adjusted profit before tax margin(*) 9.9% 7.5% +2.4pp((1))
Reported profit before tax margin 5.0% 6.4% -1.4pp((1))
Adjusted fully diluted EPS(*) 14.8p 11.8p +25.8%
Basic EPS 6.5p 11.3p -42.3%
Adjusted cash conversion(*) 119% 131% -12pp((1))
Interim dividend 13.4p 13.4p -
Highlights
● Adjusted PBT was up 39.9% to £12.3m (1H 2023: £8.8m)
● Market share of new mortgage lending((2)) up to 8.2% (H1
2023: 8.1%)
● Gross mortgage completions((2)) (including product
transfers) flat at £12.1bn (H1 2023: £12.1bn)
● Gross new mortgage completions((2)) (excluding product
transfers) up 1.3% to £9.1bn (H1 2023: £9.0bn)
● Mainstream adviser((3)) numbers down 0.7% to 1,908 (H1
2023: 1,921), however the number of mainstream advisors post-period end has
grown to 1,945 as at 20 September 2024.
● Revenue per mainstream adviser((3)) up 9.2% to £65.3k on
H1 2023
* In addition to statutory reporting, MAB reports alternative performance
measures ("APMs") which are not defined or specified under the requirements of
International Financial Reporting Standards ("IFRS"). The Group uses these
APMs to improve the comparability of information between reporting periods, by
adjusting for certain items which impact upon IFRS measures, to aid the user
in understanding the activity taking place across the Group's businesses. APMs
are used by the Directors and management for performance analysis, planning,
reporting and incentive purposes. A summary of APMs used and their closest
equivalent statutory measures is given in the Glossary of Alternative
Performance Measures.
Peter Brodnicki, Chief Executive, commented:
"The first few months of 2024 started well as mortgage rates edged down ahead
of expected base rate cuts and a more stable political outlook. When it became
clear those cuts were not imminent, lenders adjusted their mortgage rates back
up and the increased activity we saw started to tail off towards the end of
Q1.
Re-financing and purchase activity remained subdued for the rest of H1 ahead
of the general election. Having now seen the first of a number of expected
base rate cuts, activity levels are starting to gradually build again and we
expect momentum to continue.
Against this backdrop I am very pleased with the progress MAB continues to
make in a year that mortgage volumes are likely to be at very similar levels
to 2023.
MAB's investment in technology and AI remains a strategic priority as we shape
the business for strong and sustainable growth, while further increasing our
operational resilience. Significant progress continues to be made in terms of
lead generation, which is becoming an increasingly major differentiator, and
will support our strategy to help scale firms and increase adviser
productivity.
Our adviser numbers have started to pick up since the period end and we expect
to deliver further growth this year as new ARs are recruited into MAB and our
existing ARs start growing adviser numbers again after a sustained period of
market-induced consolidation.
We expect to see record years in terms of re-financing activity in 2025/2026
and it is very encouraging to have a new government that is so focused on
housebuilding and other initiatives that will bring a tail wind to MAB and our
market."
Current Trading and Outlook
MAB's written new case numbers are 11% up in July and August compared to last
year. The Group continues to trade in line with expectations with this pick-up
in activity expected to continue in the final quarter of this year.
A significant amount of mortgage re-financing has been delayed for several
months and we expect August's Bank of England rate cut - and the prospect of
further cuts - to foster a more active refinancing market, as well as a
gradual recovery in the number and make-up of housing transactions.
As expected, 2024 is shaping up to be a year of stability, following a highly
challenging 2023. Our targeted investments in lead generation and customer
retention put MAB in a strong position to capitalise on the growing market
momentum, both in the latter part of this year and into 2025.
Enquiries:
Mortgage Advice Bureau (Holdings) Plc +44 (0)1332 525 007
Peter Brodnicki - Chief Executive Officer
Ben Thompson - Deputy Chief Executive Officer
Emilie McCarthy - Chief Financial Officer
Nominated Adviser and Joint Broker:
Deutsche Numis +44 (0)20 7260 1000
Daniel Werchola / Giles Rolls
Joint Broker:
Peel Hunt LLP +44 (0)20 7418 8900
Andrew Buchanan / Mike Burke
Media enquiries: investor.relations@mab.org.uk
(mailto:investor.relations@mab.org.uk)
Analyst presentation
There will be an in-person analyst presentation to discuss the results at
9:30am today.
Those analysts wishing to attend are asked to contact
investor.relations@mab.org.uk (mailto:investor.relations@mab.org.uk) .
(mailto:investor.relations@mab.org.uk) If you are unable to attend in person,
but would like to join virtually, please contact IR for details.
Copies of this interim results announcement are available at
www.mortgageadvicebureau.com/investor-relations
(http://www.mortgageadvicebureau.com/investor-relations)
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
(1) Percentage points.
(2) Based on first charge mortgage completions, secured personal loans (second
charge mortgages), later life lending mortgages and bridging finance.
(3) Excludes directly authorised advisers, later life advisers without a
mortgage and protection license, and advisers in the process of being
onboarded who are not yet able to trade.
Chief Executive's Review
The year started well with lower mortgage rates and the expectation of rate
cuts through 2024. The subsequent pushing out of rate cut expectations delayed
a sustained pick up in purchase and refinance activity in H1, with gross new
mortgage completions in the UK up just 1.5% in the period to £111.1bn.
Against this backdrop, MAB delivered a creditable 5% growth in first charge
purchase lending completions by value compared to H1 2023. Purchase
completions represented 47% of lending value (H1 2023: 46%) with refinance at
53% (H1 2023: 54%).
Although refinancing activity was still quite buoyant, numbers were lower than
in the equivalent period last year, as borrowers hoped for further rate
reductions and opted to delay switching. Gross UK remortgage lending was down
8%, and down 2% for product transfers. MAB's remortgage and product transfer
completions by lending value were down 1% and 6% respectively.
MAB's market share of new mortgage lending in the first half increased to 8.2%
(H1 2023: 8.1%). Following the period end, adviser numbers have started to
pick up again, and we expect further momentum in the remainder of this year as
new ARs are recruited into MAB, our AR partners recommence their growth plans
as the market gradually recovers and MAB's maturing lead generation
initiatives support an increasing number of firms to expand.
Continued investment in technology and lead flow means the Group is constantly
improving its resilience, efficiency and ability to diversify. MAB is in an
increasingly strong position to drive growth in all market conditions. Our
focus is also on delivering a future proofed business model that recognises
how customers will want to research, receive advice, and transact. Putting MAB
in an increasingly strong position to drive growth in all market conditions.
MAB can and will play a major part in shaping an evolving landscape for
intermediaries. How we achieve our growth is as important, if not more
important than the pace of growth itself. This clear and deliberate strategy
defines MAB and will uniquely position the business to capitalise on the
significant and increasing opportunities we generate.
In May 2024, MAB bought the remaining 20% stake in First Mortgage Direct, a
business where profitability has grown by over 250% since our initial
investment in 2019. Our most recent acquisition, Fluent, is strategically
important in broadening MAB's route to market through Price Comparison
Websites ("PCW") and other major national lead sources. With a better-balanced
cost base, the underlying business generated a strong adjusted PBT in H1 2024
and is well-positioned for a further recovery in revenue and profits in the
second half of the year and into 2025.
Lead generation and lifetime customer value
MAB's success has been built on being the leader in providing an exceptional
service to introducer lead sources and their customers. Further investment
in early customer capture and nurture, data analytics and customer profiling
are helping us build a better understanding of our existing and future
customers and how to best service their requirements to generate a greater
lifetime value.
This learning is driving the development of our customer and broker platform
and our apps and tools, whilst shaping our entire customer engagement
strategy. These optimisations are already showing early signs of the size of
the opportunity we have, including an increasing number of customer referrals
from our existing lead channels, supporting the conversion of all leads, and
identifying a demand for additional products and services.
MAB's client bank and related retention opportunities grow year after year, as
MAB and its ARs continue to generate new lead flows. Although we are in the
early stages of implementation, we are entering an exciting period as we layer
additional opportunities to attract potential customers to MAB.
Our acquisition of Fluent has added PCWs and other major national lead sources
to MAB's market leading position in the estate agency and new build sectors.
Although MAB is the market leader in customer acquisition and fulfilment from
local and national leads sources, we also support our ARs in optimising direct
customer engagement and acquisition through organic website traffic and social
media.
Lead generation - whether that be new customers, retaining customers, or
increasing the lifetime value of a customer - is the major and increasing
differentiator for MAB that drives adviser and AR growth, performance, and
retention. Technology and Artificial Intelligence (AI) are likely to have an
increasing impact on how we acquire, retain, and build extended value for our
customers and for MAB, its ARs and their advisers. Accordingly, continued
investment in these areas remains a priority, regardless of market conditions,
and will continue to underpin our strategy for strong market share and profit
growth.
Leveraging existing associates and subsidiaries
Our subsidiaries and associates have strengthened their businesses and are in
a good position to capitalise on a recovering market and make a stronger
contribution to the Group's overall performance.
On 29 May 2024, MAB exercised its option to purchase the remaining 20% stake
in First Mortgage Direct ("FMD") for a total consideration of £9.4m payable
as £2.4m of cash consideration and £7.0m of new shares in MAB. Since MAB's
original investment in 2019, FMD
has increased profit before tax by over 250%. FMD is now preparing for an
accelerated UK expansion.
Management completed the project to right-size the cost base of Fluent in H1
2023, leading to gross profit margin increasing to 32.5% (H1 2023: 21.7%) and
Fluent making a positive profit contribution in H1 2024. With a
better-balanced cost base, new lead sources and processes, and a strengthened
management team, the business is well-positioned for continued recovery and
growth into 2025.
We expect strong performance from all our subsidiaries and associates in
2025/26, and we have plans to scale a number of them significantly.
Technology, Automation and AI
Whilst others move away from in-house solutions, technology remains central to
our strategy and our investment in our MIDAS Platform, our proprietary
technology platform, will continue at the levels required to ensure we are
always in the strongest possible position to optimise operational efficiency
and drive revenue growth from new lead flow, lead nurture, customer retention,
adviser productivity and customer lifetime value.
Our strategy is to continue developing our system, to provide a best-in-class
experience for our firms and improve the customer journey. To this end,
management is currently reviewing whether the historic accounting policy to
fully expense these costs appropriately reflects the expected future economic
benefit associated with the ongoing investment.
We are committed to maintaining differentiation through the technological
advantage our MIDAS Platform gives us, and our roadmap now incorporates
enhanced functionality through the adoption of AI. As with our MIDAS Platform
development, automation and AI will significantly contribute to our growth
plans and operational efficiency across all areas of the business, as well as
future proof our business model and cement our leadership position in the
intermediary sector.
FCA Regulation
Consumer Duty
The Financial Conduct Authority's ("FCA") Consumer Duty rules require all
regulated firms to consider the needs, characteristics, and objectives of
their customers, and to ensure they are always acting to consider and deliver
the right outcome for customers.
The requirements also include the need to show consideration, flexibility and
attention to customers with characteristics of vulnerability. The Consumer
Duty sets clear standards of consumer protection across financial services and
requires all firms to put the needs of their customers first, and central to
all they do.
Consumer Duty rules have now been in place for more than a year, all
regulatory deadlines have been met and the requirements are embedded into all
MAB's activities and owned by senior leaders across the business. This helps
us to ensure that good customer outcomes are always considered as a matter of
course.
Pure Protection - Market Study
In August 2024 the FCA announced a market study into the Distribution of Pure
Protection Products to Retail Customers. Good customer outcomes have always
been, and continue to be, central to MAB's strategy and culture, and we see
this as a positive initiative for the market and that clearer governance is
complementary and supportive of our objectives as a Group.
As with Consumer Duty, we agree with the raising of standards across our
sector, and that through raising the bar, in the medium to longer term this
only accelerates the need for, and the pace of, market consolidation.
We will ensure that MAB continues to be optimally positioned firstly to
continue doing the right thing by customers, but also to maximise this market
consolidation opportunity.
Resilient Homes
At MAB we serve a genuine social purpose, helping people to move home, improve
their homes, and be protected as best they can be when things go wrong. 2050
net zero ambitions give MAB more relevance and social purpose in helping our
stakeholders make more sustainable decisions.
This year, MAB became the UK's first intermediary group to launch an
initiative to connect customers with the means to improve the energy
efficiency of their properties through the mortgage journey. 11.5m owner
occupied homes in the UK have an EPC rating of D or worse and retrofitting
(insulation, solar panels, smart meters, double glazing) plays a crucial role
in improving the energy efficiency of the country's existing housing stock.
Partnering with Effective Energy Group, Resilient Homes is an end-to-end
process that enables customers to quickly and easily assess potential cost
savings and connect customers to credible suppliers with built-in financial
advice via MAB. We expect this initiative to benefit customers (access to
cheaper finance, reduced energy bills) and advisers (competitive advantage),
as well as mortgage lenders (de-risking of book).
Resilient Homes is a significant USP in our AR proposition, and as with
everything else MAB does, we are leading from the front with this initiative
that further enhances our customer relationships, and opens the door to many
new ones, not least of which those 11.5m customers that will at some stage
need to invest in improving their homes, many of whom will need mortgage
advice.
Board changes
Non-executive chair
Mike Jones became Chair of the Company with effect from 22 May 2024. Mike
joined the Board in March 2021 and has chaired the Group Risk Committee since
November 2022. Mike also chairs the nomination committee. He succeeds
Katherine Innes Ker, who retired from the Board having served as Chair since
the IPO in 2014.
Chief Financial Officer
Emilie McCarthy became Chief Financial Officer of the Company with effect from
22 May 2024. Emilie succeeds MAB's previous CFO, Lucy Tilley.
Non-Executive Director
Rachel Haworth became an independent Non-Executive Director of the Company
with effect from 1 May 2024. Rachel chairs the Remuneration Committee and also
serves on the Audit, Nomination and Group Risk Committees.
(1) First charge mortgage completions, excluding secured personal loans
(second charge mortgages), later life lending mortgages and bridging finance.
Market review
Gross new mortgage completions((1)) across the wider market nudged up 1% at
£111.1bn (H1 2023: £109.5((2))). This follows 2023 when new mortgage
completions were down 29% in the aftermath of the UK's 'mini-budget'.
The purchase segment was up 8%, indicating some release of pent-up demand, but
the re-mortgaging segment was down 8% as refinancing decisions continued to be
deferred.
UK Gross new mortgage lending by segment, £bn
H1 2024 H1 2023 %
Residential purchase 60.1 55.5 +8%
Buy-to-let purchase 4.4 4.4 -
Purchase segment 64.5 59.9 +8%
Residential re-mortgage 31.0 34.9 -11%
Buy-to-let re-mortgage 11.1 10.8 +3%
Re-mortgage segment 42.1 45.7 -8%
Other 4.5 3.9 +15%
Total 111.1 109.5 +1%
Source: UK Finance
http://www.rns-pdf.londonstockexchange.com/rns/3410F_1-2024-9-24.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3410F_1-2024-9-24.pdf)
Source: UK Finance
UK property transactions were broadly flat in H1 2024 compared to H1 2023.
This is consistent with new mortgage lending. Average house prices were 1%
higher in H1 2024 than H1 2023.
http://www.rns-pdf.londonstockexchange.com/rns/3410F_2-2024-9-24.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3410F_2-2024-9-24.pdf)
Source: UK Finance
The share of UK residential mortgage transactions via intermediaries
(excluding Buy to Let, where intermediaries have a higher market share, and
Product Transfers where intermediaries have a lower market share) remains at
87% (H1 2023: 87%), with customers increasingly needing choice, advice and
support in a complex and uncertain macro environment. We expect this increased
intermediary market share to remain stable. UK Finance's and the Intermediary
Mortgage Lenders Association's latest estimates of gross new mortgage lending
for 2024, published in December 2023, are £215bn and £205bn, down 4% and 8%
respectively compared to 2023, which itself was down 28% on 2022. The latest
market data indicates that actual numbers may end up slightly higher than
these forecasts.
(1) First charge mortgage completions, excluding secured personal loans
(second charge mortgages), later life lending mortgages and bridging finance.
(2) UK Finance regularly updates its estimate of gross new mortgage lending,
and previously reported £110.5bn at the time of our 2023 interim results.
Financial review
We measure the development, performance, and position of our business against
several key indicators.
http://www.rns-pdf.londonstockexchange.com/rns/3410F_3-2024-9-24.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3410F_3-2024-9-24.pdf)
Revenue
Group revenue increased by 5.4% to £123.9m (H1 2023: £117.5m) despite the
average number of mainstream((1)) advisers in the first half dipping 3.5% to
1,898 (H1 2023: 1,966). Revenue per mainstream adviser increased by 9.2% to
£65.3k, reflecting a lower proportion of new advisers in the period and a
slightly higher rate of protection attachment.
The Group continued to generate revenue from three core areas, as set out
below.
Income source (£m) H1 2024 H1 2023 Change
Mortgage procuration fees 48.8 48.4 +0.8%
Protection and General Insurance Commission 48.8 44.9 +8.6%
Client Fees 24.0 21.9 +9.5%
Other Income 2.4 2.3 +4.6%
Total 123.9 117.5 +5.4%
Mortgage procuration fees increased by 0.8% reflecting a stable outturn for
net mortgage completions by value. We have seen improved protection volumes as
our advisors focus on improving customer outcomes by aiding them to better
protect the biggest investment of their life, their home. The resulting impact
has led to higher protection volumes and attachment rate to mortgages
resulting in 8.6% growth in protection and GI revenue in H1 2024 compared to
H1 2023.
Client fees increased by 9.5% in the first half due to growth in the overall
number of more complex specialist mortgages leading to a higher attachment
rate of client fees.
The proportion of revenue derived from each of the Group's core revenue
streams has remained consistent, with the movements reflecting the change in
the banked mortgage mix during the period.
Income source H1 2024 H1 2023
Mortgage Procuration Fees 39% 41%
Protection and General Insurance Commission 39% 38%
Client Fees 19% 19%
Other Income 3% 2%
Total 100% 100%
The Group's business mix is little changed compared to H1 2023, purchase
market activity is at 53% (H1 2023: 52%) of lending by value with product
transfers remaining consistent at 17% (H1 2023: 17%). Remortgage business
nudged down to 30% (H1 2023: 31%) due to clients delaying remortgage
activities in anticipation of more favourable rates.
Business mix by lending value (%) H1 2024 H1 2023 Change
Purchase 53% 52% +0.8pp
Remortgage 30% 31% -1.2pp
Product transfer 17% 17% +0.4pp
Total 100% 100%
Gross profit and Gross Profit margin
Gross profit for the period increased 14.5% to £37.7m (H1 2023: £32.9m),
with the margin increasing to 30.4% (H1 2023: 28.0%). The gross margin has
improved from a combination of an increased protection attachment rate and
improved performance at Fluent.
Fluent undertook a right-sizing of the cost base in H1 2023, reducing the
number of advisers due to market conditions following the 2022 'mini-budget'.
This initiative has led to a double-digit Gross Margin improvement in Fluent
to 32.5% in H1 2024 (H1 2023: 21.7%).
Administrative expenses
Group administrative expenses increased by £1.7m (+7.4%) to £25.5m, with a
marginal increase in the administrative expense ratio to 20.5% (H1 2023:
20.2%). MAB continues to invest in the business to drive growth, and
specifically in its technology platform and marketing team through a mix of
employee and third-party costs, which we expect to drive enhanced lead
generation opportunities and future revenue growth. All development work on
our proprietary MIDAS platform continues to be fully expensed, although
management is reviewing whether this policy duly reflects the expected future
economic benefits associated with this ongoing investment.
The Group expects to continue to benefit from the relatively fixed cost nature
of much of its cost base, where those costs typically rise at a slower rate
than revenue, with some anticipated benefits from operational leverage as the
Group grows.
Adjusted EBITDA and margin
Adjusted EBITDA(*) was up 31.3% to £13.8m (H1 2023: £10.5m), with the margin
thereon of 11.1% (H1 2023: 8.9%) reflecting a higher gross profit margin
together with growth in Fluent.
Adjusted profit before tax and margin
Adjusted PBT(*) was up 39.9% to £12.3m (H1 2023: £8.8m), with the margin
thereon being 9.9% (H1 2023: 7.5%). Finance income of £0.3m (H1 2023: £0.1m)
reflects the higher interest rates that prevailed during the period, and the
interest income accrued or received on loans to associates and other appointed
representatives. Finance expense of £1.0m (H1 2023: £1.1m) includes a £0.3m
(H1 2023: £0.4m) charge relating to the unwinding of the redemption liability
of the Fluent and Auxilium Option.
Earnings per share
Adjusted fully diluted earnings per share(*) was 14.8p (H1 2023: 11.8p). Basic
earnings per share fell to 6.5p (H1 2023: 11.3p) primarily due to the
recognition of £1.1m loss on remeasurement of the redemption liability (H1
2023: £3.5m gain). The effective tax rate on adjusted profit before tax(*)
increased to 24.7% (H1 2023: 20.6%), primarily due to the increase in the
prevailing UK corporation tax rate from 1 April 2023.
Dividend
The Board is pleased to confirm an interim dividend of 13.4p per share (H1
2023: 13.4p) reflecting the Group's policy to pay dividends reflecting a
minimum pay-out ratio of 75% of the Group's annual adjusted post-tax and
minority interest profits. This represents a cash outlay of £7.8m (H1 2023:
£7.7m). Following payment of the dividend, the Group will continue to
maintain significant surplus regulatory reserves.
The interim dividend will be paid on 1 November 2024, shares will trade
ex-dividend from 3 October 2024 and the record date will be 4 October 2024.
Adjusted cash conversion
Adjusted cash conversion* was 119% in H1 2024 (H1 2023: 131%), consistent with
the range of recent years (H1 2022: 124% and H1 2021: 120%.)
The following table demonstrates how cash generated from operations was
applied:
£m
Unrestricted bank balances at the beginning of the year 3.0
Cash generated from operating activities excluding movements in restricted 14.1
balances and dividends received from associates
Dividends received from associates 0.2
Dividends paid (8.4)
Dividends paid to minority interest (0.2)
Tax paid (3.3)
Proceeds from borrowings 3.4
Net interest paid and principal element of lease payments (0.9)
Acquisition of minority interest in subsidiaries (2.3)
Capital expenditure (0.7)
Unrestricted bank balances at the end of the year 4.9
Unrestricted cash balances / (net debt)
As at 30 June 2024, the Group had drawn down £6.9m on the revolving credit
facility (£15m available), in addition to a remaining balance of £14.4m on
the term loan undertaken to fund the Fluent acquisition (£20m at
acquisition), and had £0.4m of accrued interest net of prepaid loan
arrangement fees. Net debt (adjusting only for unrestricted cash balances of
£4.9m) was £16.7m.
Since the period end the Group has been highly cash generative, as at 20
September 2024 our net debt position improved to £6.7m owed with £1.0m
currently drawn on the RCF.
Capital adequacy
The Group's regulatory capital requirement represents 2.5% of regulated
revenue and totalled £5.8m at 30 June 2024 (H1 2023: £5.6m), with the Group
reporting a surplus of £24.3m (H1 2023: £23.4m).
* In addition to statutory reporting, MAB reports alternative performance
measures ("APMs") which are not defined or specified under the requirements of
International Financial Reporting Standards ("IFRS"). The Group uses these
APMs to improve the comparability of information between reporting periods, by
adjusting for certain items which impact upon IFRS measures, to aid the user
in understanding the activity taking place across the Group's businesses. APMs
are used by the Directors and management for performance analysis, planning,
reporting and incentive purposes. A summary of APMs used and their closest
equivalent statutory measures is given in the Glossary of Alternative
Performance Measures.
(1) Excludes directly authorised advisers, MAB's later life advisers and
advisers from associates in the process of being onboarded under MAB's AR
arrangements. Includes Fluent's second charge, later life and bridging
advisers who have a higher revenue per adviser than first charge advisers.
Cautionary Statement
Certain statements included or incorporated by reference within this
announcement may constitute "forward-looking statements" in respect of the
Group's operations, performance, prospects and/or financial condition.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words and words of similar meaning as
"aims", "anticipates", "believes", "continues", "could", "due", "estimates",
"expects", "goal", "intends", "may", "objectives", "outlook", "plans",
"potential", "probably", "project", "seeks", "should", "targets", or "will"
or, in each case, their negative or other variations or comparable
terminology.
By their nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may differ
materially from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the
future. Except as required by applicable law or regulation, no responsibility
or obligation is accepted to update or revise any forward-looking statement
resulting from new information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast.
This announcement does not constitute or form part of any offer or invitation
to sell, or any solicitation of any offer to purchase any shares or other
securities in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with, any
contract or commitment or investment decisions relating thereto, nor does it
constitute a recommendation regarding the shares or other securities of the
Company. Past performance cannot be relied upon as a guide to future
performance and persons needing advice should consult an independent financial
adviser authorised under the Financial Services and Markets Act 2000 (as
amended). Statements in this announcement reflect the knowledge and
information available at the time of its preparation. Liability arising from
anything in this announcement shall be governed by English law. Nothing in
this announcement shall exclude any liability under applicable laws that
cannot be
excluded in accordance with such laws.
INDEPENDENT REVIEW REPORT TO MORTGAGE ADVICE BUREAU (HOLDINGS) PLC ("the
Company")
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the London Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the interim condensed consolidated statement of
financial position, interim condensed consolidated statement of comprehensive
income, interim condensed consolidated statement of changes in equity, interim
condensed consolidated statement of cash flows and related explanatory notes
that have been reviewed.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410 (Revised), however future events or conditions may cause the
group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with
the London Stock Exchange AIM Rules for Companies which require that the
half-yearly report be presented and prepared in a form consistent with that
which will be adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange AIM Rules for Companies for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly disclaim any
and all such liability.
BDO LLP
Chartered Accountants
London, UK
23 September 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Interim condensed consolidated statement of comprehensive income for the six months ended 30 June 2024
Six months ended 30 June
2024 2023
Unaudited Unaudited
Note £'000 £'000
Revenue 2 123,933 117,545
Cost of sales 3 (86,219) (84,601)
Gross profit 37,714 32,944
Administrative expenses (25,458) (23,713)
Share of profit of associates 9 379 75
Costs relating to First Mortgage, Fluent and Auxilium options 4 (1,991) (1,081)
Amortisation of acquired intangibles 4 (2,580) (2,580)
Acquisition costs 4 (89) (148)
Restructuring costs - (238)
Gain/(Loss) on fair value measurement of derivative financial instruments 31 (214)
Operating profit 8,006 5,045
Finance income 5 295 130
Finance expense 5 (972) (1,081)
(Loss)/Gain on remeasurement of redemption liability 4 (1,104) 3,485
Profit before tax 6,225 7,579
Tax expense 6 (2,378) (1,149)
Profit for the period 3,847 6,430
Total comprehensive income 3,847 6,430
Profit is attributable to:
Equity owners of Parent Company 3,695 6,423
Non-controlling interests 152 7
3,847 6,430
Earnings per share attributable to the owners of the Parent Company
Basic 7 6.5p 11.3p
Diluted 7 6.4p 11.2p
Adjusted measures
Adjusted EBITDA 13,764 10,483
Adjusted profit before tax 12,255 8,758
Adjusted fully diluted earnings per share 14.8p 11.8p
Further details of adjusted measures are provided within the Glossary of
Alternative Performance Measures.
Interim condensed consolidated statement of financial position
as at 30 June 2024 and 31 December 2023
30 June 2024 31 Dec 2023
Unaudited Audited
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 5,455 5,799
Right of use assets 1,930 2,283
Goodwill 53,885 53,885
Other intangible assets 49,147 51,474
Investments in associates and joint venture 9 12,462 12,301
Derivative financial instruments 338 302
Trade and other receivables 10 515 353
Deferred tax asset 1,117 719
Total non-current assets 124,849 127,116
Current assets
Trade and other receivables 10 12,530 9,321
Cash and cash equivalents 11 24,525 21,940
Corporation tax asset 232 -
Total current assets 37,287 31,261
Total assets 162,136 158,377
Equity and liabilities
Share capital 15 58 57
Share premium 55,163 48,155
Capital redemption reserve 20 20
Share option reserve 5,018 6,045
Retained earnings 9,679 15,921
Equity attributable to owners of Parent Company 69,938 70,198
Non-controlling interests 1,399 4,211
Total equity 71,337 74,409
Liabilities
Non-current liabilities
Trade and other payables 12 2,739 2,642
Redemption liability 4 4,194 2,793
Lease liabilities 1,348 1,805
Derivative financial instruments 188 183
Loans and borrowings 13 10,580 12,426
Deferred tax liability 11,128 11,417
Total non-current liabilities 30,177 31,266
Current liabilities
Trade and other payables 12 37,031 35,225
Clawback liability 11,581 10,331
Lease liabilities 932 931
Loans and borrowings 13 11,078 5,824
Corporation tax liability - 391
Total current liabilities 60,622 52,702
Total liabilities 90,799 83,968
Total equity and liabilities 162,136 158,377
Interim condensed consolidated statement of changes in equity for the six months ended 30 June 2024
Attributable to holders of the Parent Company
Capital redemption Non- controlling interest
Share premium reserve Share option Retained earnings
Share capital reserve Total Total equity
Note £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Balance as at 1 January 2023 57 48,155 20 4,511 15,154 67,897 7,548 75,445
Profit for the period - - - - 6,423 6,423 7 6,430
Total comprehensive income - - - - 6,423 6,423 7 6,430
Transactions with owners
Share based payment transactions - - - 1,289 - 1,289 - 1,289
Current and deferred tax recognised in equity 6 - - - 296 - 296 - 296
Acquisition of minority interests - - - - 45 45 (140) (95)
Reserve transfer - - - (378) 378 - - -
Dividends paid 8 - - - - (8,384) (8,384) (357) (8,741)
Total transactions with owners - - - 1,207 (7,961) (6,754) (497) (7,251)
Balance at 30 June 2023 (unaudited) 57 48,155 20 5,718 13,616 67,566 7,058 74,624
Balance as at 1 January 2024 57 48,155 20 6,045 15,921 70,198 4,211 74,409
Profit for the period - - - - 3,695 3,695 152 3,847
Total comprehensive income - - - - 3,695 3,695 152 3,847
Transactions with owners
Acquisition of minority interests 4 1 7,008 - (2,544) (1,730) 2,735 (2,735) -
Share-based payment transactions - - - 1,330 - 1,330 - 1,330
Current and deferred tax recognised in equity 6 - - - 366 15 381 - 381
Reserve transfer - - - (179) 179 - - -
Dividends paid 8 - - - - (8,401) (8,401) (229) (8,630)
Total transactions with owners 1 7,008 - (1,027) (9,937) (3,955) (2,964) (6,919)
Balance at 30 June 2024 (unaudited) 58 55,163 20 5,018 9,679 69,938 1,399 71,337
Interim condensed consolidated statement of cash flows for the six months
ended 30 June 2024
Six months ended 30 June
2024 2023
Unaudited Unaudited
Note £'000 £'000
Cash flows from operating activities
Profit for the period before tax 6,225 7,579
Adjustments for:
Depreciation of property, plant and equipment 569 621
Depreciation of right of use assets 352 443
Amortisation of intangibles 2,787 2,693
Profit on disposal of fixed assets (4) -
Share-based payments 17 1,842 1,473
Share of profit from associates 9 (379) (75)
Loss/(Gain) on remeasurement of redemption liability 4 1,104 (3,485)
Unwinding of loan arrangement fees 37 -
(Gain)/Loss on fair value movements taken to profit and loss (31) 214
Dividends received from associates 9 218 -
Finance income 5 (295) (130)
Finance expense 5 972 1,081
13,397 10,414
Changes in working capital
Increase in trade and other receivables 10 (3,371) (3,529)
Increase in trade and other payables 12 3,727 4,721
Increase in clawback liability 1,250 516
Cash generated from operating activities 15,003 12,122
Income taxes paid (3,305) (3,309)
Interest received 295 -
Acquisition of minority interests 4 (2,336) (189)
Net cash generated from operating activities 9,657 8,624
Cash flows from investing activities
Purchase of property, plant and equipment (223) (720)
Purchase of intangibles (458) (498)
Acquisition of associates - (469)
Net cash used in investing activities (681) (1,687)
Cash flows from financing activities
Proceeds from borrowings 5,299 2,800
Repayment of borrowings (1,875) (1,875)
Interest received - 122
Interest paid (729) (608)
Principal element of lease payments (456) (455)
Dividends paid to Company's shareholders 8 (8,401) (8,384)
Dividends paid to minority interest (229) (357)
Net cash used in financing activities (6,391) (8,757)
Net increase/(decrease) in cash and cash equivalents 2,585 (1,820)
Cash and cash equivalents at the beginning of the period 21,940 25,462
Cash and cash equivalents at the end of the period 24,525 23,642
Notes to the interim condensed consolidated financial statements for the six months ended 30 June 2024
1 Accounting policies
Corporate information
The interim condensed consolidated financial statements of Mortgage Advice
Bureau (Holdings) plc and its subsidiaries
(collectively, "the Group") for the six months ended 30 June 2024 were
authorised for issue in accordance with a resolution of the directors on 23
September 2024.
Mortgage Advice Bureau (Holdings) plc ("the Company") is a public limited
company incorporated and domiciled in England whose shares are publicly traded
on the Alternative Investment Market ("AIM"). The registered office is located
at Capital House, Pride Place, Pride Park, Derby, DE24 8QR. The Group's
principal activity is the provision of financial services.
Basis of preparation
These condensed consolidated interim financial statements for the six months
ended 30 June 2024 have been prepared in accordance with IAS 34 'Interim
financial reporting' and also in accordance with the measurement and
recognition principles of UK adopted international accounting standards. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the 2023 Annual Report and
Accounts, which were prepared in accordance
with UK - adopted international accounting standards.
The comparative figures for the six months ended 30 June 2023 are not the
Group's statutory accounts for that financial period. The accounts for the
year ended 31 December 2023 have been reported on by the Group's auditors and
delivered to the registrar of companies. There are no changes in the basis of
preparation adopted, which remains in line with the 2023 audited accounts.
The accounting policies applied are consistent with those described in the
Annual Report and Group financial statements for the year ended 31 December
2023. New or amended standards effective in the period have not had a material
impact on the condensed consolidated interim financial statements.
Going concern
The Directors have assessed the Group's prospects until 31 December 2025,
taking into consideration the current operating environment, including the
impact of geopolitical and macroeconomic uncertainty and inflationary
pressures on property and lending markets. The Directors' financial modelling
considers the Group's profit, cash flows, regulatory capital requirements,
borrowing covenants and other key financial metrics over the period.
These metrics are subject to sensitivity analysis, which involves flexing a
number of key assumptions underlying the projections, including the effect of
geopolitical and macroeconomic uncertainty and inflationary pressures and
their impact on the UK property and lending markets and the Group's business
volumes and revenue mix, which the Directors consider to be severe but
plausible stress tests on the Group's cash position, banking covenants and
regulatory capital adequacy. The Group's financial modelling shows that the
Group should continue to be cash generative, maintain a surplus on its
regulatory capital requirements and be able to operate within its current
financing arrangements.
Based on the results of the financial modelling, the Directors expect that the
Group will be able to continue in operation and meet its liabilities as they
fall due over this period. Accordingly, the Directors continue to adopt the
going concern basis for the preparation of the financial statements.
Significant estimates and judgements
The judgements, estimates and assumptions applied in the interim financial
statements, including the key sources of estimation
uncertainty, were the same as those applied in the Group's last annual
financial statements for the year ended 31 December 2023. There have been no
material revisions to the nature and amount of estimates reported in prior
period.
The impairment reviews conducted at the end of 2023 concluded that there had
been no further impairment of goodwill. We have performed an impairment
assessment to the period ending 30 June 2024 and there are no matters which
have arisen that indicate that an impairment is required.
Future new standards and interpretations
A number of new standards and amendments to standards and interpretations will
be effective for future annual and interim periods, and therefore have not
been applied in preparing these condensed consolidated interim financial
statements. At the date of authorisation of these financial statements, the
following standards and interpretations, which have not been applied in these
financial statements, were in issue but not yet effective:
Standard or Interpretation
Periods commencing on or after
IFRS S1 - General Requirements for Disclosure of Sustainability-related 1 January 2024
Financial Information
IFRS S2 - Climate-related Disclosures 1 January 2024
IFRS S1 and IFRS S2 are not expected to have a material impact on the results
of the Group other than to expand on climate related disclosures within the
financial statements. It is anticipated that transition reliefs for
comparative information prior to the first year of adoption will be utilised.
At the time of preparing the most recent consolidated financial statements, a
decision on the UK adoption of the IFRS Sustainability Standards was expected
by June 2024, however this has now been delayed to January 2025. We have not
decided to voluntarily apply these standards within these interim financial
statements, nor will we in the full year financial statements ending 31
December 2024 and as such there is no impact upon these statements.
Segment reporting
An operating segment is a distinguishable segment of an entity that engages in
business activities from which it may earn revenues and incur expenses and
whose operating results are reviewed regularly by the entity's chief operating
decision maker ("CODM"). The Board reviews the Group's operations and
financial position as a whole and therefore considers that it has only one
operating segment, being the provision of financial services operating solely
within the UK. The information presented to the CODM directly reflects that
presented in the financial statements and they review the performance of the
Group by reference to
the results of the operating segment against budget.
Operating profit is the profit measure, as disclosed on the face of the
consolidated statement of comprehensive income, that is reviewed by the CODM.
During the six month period to 30 June 2024, there have been no changes from
the prior year in the measurement methods used to determine operating segments
and reported segment profit or loss.
2 Revenue
The Group operates in one segment being that of the provision of financial
services in the UK. Revenue is derived as follows:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Mortgage procuration fees 48,813 48,456
Protection and general insurance commission 48,768 44,913
Client fees 23,972 21,899
Other income 2,380 2,277
123,933 117,545
3 Cost of sales
Costs of sales are as follows:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Commissions paid 67,530 65,556
Fluent affinity partner payments 7,169 6,660
Movement in provision for impairment of trade receivables (141) -
Other cost of sales 771 644
Wages and salary costs 10,890 11,741
86,219 84,601
4 Acquisition related costs, acquisition of minority interests and redemption
liability
First Mortgage Direct Limited
Exercise of put and call option
On 29 May 2024 Mortgage Advice Bureau Limited exercised its option to purchase
the remaining 20% stake in First Mortgage for
£9.4m. This was funded through £2.4m of cash consideration and a £7.0m
equity share issue by the parent entity, Mortgage Advice Bureau (Holdings)
plc. The £7.0m equity share issue resulted in clearing £2.7m of accumulated
non-controlling interest, a reduction in parent equity of £1.7m and a
transfer of £2.5m from the share option reserve.
The costs relating to this acquisition for the period are made up as follows:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Amortisation of acquired intangibles 183 183
Option costs (IAS 19) 412 224
Option costs (IFRS 2) 512 205
Acquisition related costs 47 -
Total costs 1,154 612
The Fluent Money Group Limited
Put and call options
There is a put and call option over the remaining 15.7% of the issued share
capital of Fluent which has been accounted for under IAS 32 Financial
Instruments and IFRS 2 Share-based Payments, as respectively a proportion is
treated as consideration under IAS 32, with the balance treated as
remuneration under IFRS 2, because the amount payable on exercise of the
option consists of a non-contingent element, and an element that is contingent
upon continued employment of the option holders within the Group. There is
also a put and call option over certain growth shares that have been issued to
Fluent's wider management team that has
been accounted for under IFRS 2 Share-based Payments as exercise is solely
contingent upon continued employment.
The costs relating to this acquisition for the period are made up as follow:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Amortisation of acquired intangibles 2,199 2,199
Option costs (IFRS 2) 972 630
Acquisition related costs 42 128
Total costs 3,213 2,957
Vita Financial Limited
The costs relating to this acquisition for the period are made up as follow:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Amortisation of acquired 33
intangibles
33
Acquisition related 10
costs
-
Total 43
costs
33
Aux Group Limited
Put and call options
There is a put and call option over the remaining 25% of the issued share
capital of Aux Group Limited which has been accounted for under IAS 32
Financial Instruments and IFRS 2 Share-based Payments, as respectively a
proportion is treated as consideration under IAS 32, with the balance treated
as remuneration under IFRS 2 because the amount payable on exercise of the
option consists of a non-contingent element, and an element that is contingent
upon continued employment of the option holder within
the Group.
The costs relating to this acquisition for the period are made up as follow:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Amortisation of acquired intangibles 165 165
Option costs (IFRS 2) 95 22
Acquisition related costs - 10
Total costs 260 197
Redemption liability
At 30 June 2024, the expected cash flows relating to the redemption liability
were remeasured resulting in a loss of £1.1m
included within the consolidated statement of comprehensive income. £0.3m has
been included within finance expenses relating to the unwinding of the
redemption liability from the end of the prior year.
31 December
Carrying value of redemption liability 30 June 2024 2023
Unaudited Audited
£'000 £'000
Balance as at 1 Jan 2,793 7,186
Purchase of additional minority interest in Fluent - (1,090)
Loss/(Gain) on remeasurement 1,104 (4,486)
Unwinding of redemption liability 297 1,183
Balance as at period end 4,194 2,793
5 Finance income and expense
Six months ended 30 June
2024 2023
Unaudited Unaudited
Finance Income £'000 £'000
Interest income 295 122
Interest income accrued on loans to associates - 8
295 130
Finance expenses
Interest expense 638 620
Interest expense on lease liabilities 37 58
Unwinding of redemption liability 297 403
972 1,081
6 Income tax
The Group calculates the period income tax expense using the tax rate that
would be applicable to the expected total annual earnings. The major
components of income tax expense in the interim condensed statements of
comprehensive income are:
Six months ended 30 June
2024 2023
Unaudited Unaudited
Current tax £'000
expense
£'000
UK corporation tax charge on profit for the 2,085
period
2,696
Total current 2,085
tax
2,696
Deferred tax expense
Origination and reversal of timing differences (318) (936)
Total deferred tax (318) (936)
Total tax expense 2,378 1,149
For the period ended 30 June 2024 the deferred tax credit relating to
unexercised share options recognised in equity was £0.4m (2023: £0.3m).
The deferred tax asset is recognised after being assessed as recoverable on
the basis of available evidence including projected profits, capital and
liquidity position. The deferred tax asset is only recognised to the extent
that it is probable that future taxable profits will be available against
which the asset can be utilised. The deferred tax asset is reviewed at each
reporting date and reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
The headline UK rate of corporation tax for the period 25% (2023: 23.52%), and
the rate at which deferred tax has been provided is 25% (2023: 25%)
7 Earnings per share
Basic earnings per share are calculated by dividing net profit for the year
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the period.
Six months ended 30 June
2024 2023
Basic earnings per share Unaudited Unaudited
Profit for the period attributable to the owners of the parent (£'000) 3,695 6,423
Weighted average number of shares in issue 57,260,870 57,054,481
Basic earnings per share (in pence per share) 6.5 11.3
For diluted earnings per share, the weighted average number of ordinary shares
in existence is adjusted to include potential ordinary shares arising from
share options.
Six months ended 30 June
2024 2023
Diluted earnings per share Unaudited Unaudited
Profit for the period attributable to the owners of the parent (£'000) 3,695 6,423
Weighted average number of shares in issue 57,547,255 57,288,052
Diluted earnings per share (in pence per share) 6.4 11.2
The share data used in the basic and diluted earnings per share computations
are as follows:
Six months ended 30 June
2024 2023
Weighted average number of ordinary shares Unaudited Unaudited
Issued ordinary shares at the start of the year 57,127,034 57,054,481
Effect of shares issued during the period 133,836 -
Basic weighted average number of shares 57,260,870 57,054,481
Potential ordinary shares arising from options 286,385 233,571
Diluted weighted average number of shares 57,547,255 57,288,052
The reconciliation between the basic and adjusted figures is as follows:
Six months ended 30 June
2024 2023 2024 2023
Basic Basic Diluted Diluted
2024 2023 earnings earnings earnings earnings
Unaudited Unaudited per share per share per share per share
£'000 £'000 pence pence pence pence
Profit for the 6,423 6.5 11.3 6.4 11.2
period 3,695
Adjustments:
Amortisation of acquired intangibles 1,887 2,580 3.3 4.5 3.3 4.5
Costs relating to the First Mortgage, 1,814 920 3.2 1.6 3.2 1.6
Fluent and Auxilium options
Costs relating to Fluent and Auxilium 89 148 0.2 0.3 0.2 0.3
acquisitions
Loss on derivative financial instruments (31) 214 (0.1) 0.4 (0.1) 0.4
Restructuring costs - 182 - 0.3 - 0.3
Remeasurement and unwinding of 1,401 (3,082) 2.4 (5.4) 2.4 (5.4)
redemption liability
Tax effect of adjustments (339) (644) (0.6) (1.2) (0.6) (1.1)
Adjusted earnings 8,516 6,741 14.9 11.8 14.8 11.8
The Group uses adjusted results as key performance indicators, as the
Directors believe that these provide a more consistent measure of operating
performance. Adjusted earnings is therefore stated before one-off acquisition
costs, one-off restructuring costs, ongoing non-cash items relating to the
acquisitions of First Mortgage, Fluent and Auxilium, fair value gains on
financial instruments relating to options to increase shareholding in
associate businesses and impairment of loans to related parties, net of tax.
8 Dividends
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Dividends paid and declared on ordinary shares during the period:
On ordinary shares at 14.7p per share (2023:14.7p) 8,401 8,384
Equity dividends on ordinary shares:
Declared:
Interim dividend for 2024 13.4p per share (2023:13.4p) 7,766 7,766
7,766 7,766
9 Investment in associates and joint ventures
The investment in associates and a joint venture at the reporting date is as
follows:
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
At start of the period 11,387
12,301
Additions 469
-
Credit to statement of comprehensive income
Share of profit 848
379
848
379
Dividends received (403)
(218)
At period end 12,301
12,462
The Group is entitled to the results of its associates in equal proportion to
its equity stakes.
10 Trade and other receivables
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
Trade receivables 2,796 2,028
Less provision for impairment of trade receivables (313) (454)
Trade receivables - net 2,483 1,574
Other receivables 699 924
Loans to related parties 404 201
Less provision for impairment of loans to related parties - (18)
Total financial assets other than cash and cash equivalents 3,586 2,681
Prepayments and accrued income 9,459 6,993
Total trade and other receivables 13,045 9,674
Less: non-current - Loans to related parties (207) (77)
Less: non-current - Trade receivables (308) (276)
Current trade and other receivables 12,530 9,321
30 June 2024 30 June 2023
Unaudited Unaudited
Reconciliation of movement in trade and other receivables to cash flow £'000 £'000
Movement per trade receivables 3,371 3,537
Accrued interest movement - (8)
Total movement per cash flow 3,371 3,529
The carrying value of trade and other receivables classified at amortised cost
approximates fair value.
Included within trade receivables are operational business loans to Appointed
Representatives. The non-current trade receivables balances is comprised of
loans to Appointed Representatives.
Also included in trade receivables are amounts due from Appointed
Representatives relating to commissions that are refundable to the Group when
policy lapses or other reclaims exceed new business. As these balances have no
credit terms, the Board of Directors consider these to be past due if they are
not received within seven days. In the management of these balances, the
Directors can recover them from subsequent new business entered into with the
Appointed Representative or utilise payables that are owed to the same
counterparties and included within payables as the Group has the legally
enforceable right of set off in such circumstances. These payables are
considered sufficient by the Directors to recover receivable balances should
they default, and, accordingly, credit risk in this respect is minimal.
In light of the above, the Directors do not consider that disclosure of an
aging analysis of trade and other receivables would provide useful additional
information. Further information on the credit quality of financial assets is
set out in note 14.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using the lifetime expected credit losses.
During this process the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime expected
credit loss for the trade receivables. For trade receivables, which are
reported net, such provisions are recorded in a separate provision account
with the loss being recognised within cost of sales in the consolidated
statement of comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is written off
against the associated provision. As at 30 June 2024 the lifetime expected
loss provision for trade receivables is £0.3m (2023: £0.5m). The movement in
the impairment allowance for trade receivables has been included in cost of
sales in the consolidated statement of comprehensive income.
Impairment provisions for loans to associates are recognised based on a
forward-looking expected credit loss model. The methodology used to determine
the amount of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. For
those where the credit risk has not increased significantly since initial
recognition of the financial asset, twelve month expected credit losses along
with gross interest income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be credit
impaired, lifetime expected credit losses along with interest income on a net
basis are recognised. In determining the lifetime expected credit losses for
loans to associates, the Directors have considered different scenarios for
repayments of these loans and have applied percentage probabilities to each
scenario for each associate where applicable.
11 Cash and cash equivalents
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
Unrestricted cash and bank balances 3,022
4,944
Bank balances held in relation to retained commissions 18,918
19,581
Cash and cash equivalents 21,940
24,525
Bank balances held in relation to retained commissions earned on an indemnity
basis from protection policies are held to cover potential future lapses in
Appointed Representatives commissions. Operationally the Group does not treat
these balances as available funds. An equal and opposite liability is shown
within Trade and other payables (note 12).
12 Trade and other payables
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
Appointed Representatives retained commission 19,581 18,918
Other trade payables 9,310 7,644
Trade payables 28,891 26,562
Social security and other taxes 2,241 2,116
Other payables 233 169
Accruals 8,405 9,020
Total trade and other payables 39,770 37,867
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
Current 35,225
37,031
Non-current 2,642
2,739
Total trade and other payables 37,867
39,770
Should a protection policy be cancelled within four years of inception, a
proportion of the original commission will be clawed back by the insurance
provider. The majority of any such repayment is payable by the Appointed
Representative, with the Group making its own liability for its share of any
such repayment. It is the Group's policy to retain a proportion of commission
payable to the Appointed Representative to cover such potential future lapses;
these sums remain a liability of the Group. This commission is held in a
separate ring-fenced bank account as described in note 11.
The non-current portion of trade and other payables relates to Appointed
Representative retained commission and accruals.
As at 30 June 2024 and 31 December 2023, the carrying value of trade and other
payables classified as financial liabilities measured at amortised cost
approximates fair value.
30 June 2024 30 June 2023
Unaudited Unaudited
Reconciliation of movement in trade and other payables to cash flow £'000 £'000
Movement per trade and other payables 1,903 1,729
Redemption liability - 3,176
Share-based payment accruals (512) (184)
Acquisition of associates and contingent consideration for associates 2,336 -
Total movement per cash flow 3,727 4,721
13 Loans and borrowings
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
Bankloans 21,658 18,250
Total loans and borrowings 21,658 18,250
Less: non-current - Bank loans (12,426)
(10,580)
Current loans and borrowings 11,078 5,824
A summary of the maturity of loans and borrowings is as follows:
31 December
30 June 2024 2023
Unaudited Audited
Bank loans £'000 £'000
Payable in 1 year 11,078 5,824
Payable in 1-2 years 3,750 3,750
Payable in 2-5 years 6,830 8,676
Total bank loans 21,658 18,250
Loan covenants
Under the terms of the Facilities Agreement, the Group is required to comply
with the following financial covenants:
• Interest cover shall not be less than 5:1
• Adjusted leverage shall not exceed 2:1
The Group has complied with these covenants since the Facilities Agreement was
entered into.
14 Financial instruments - risk management
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Liquidity risk
• Market risk
In common with all other businesses, the Group is exposed to risks that arise
from its use of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these
risks is presented throughout these financial statements.
Principal financial instruments
• Trade and other receivables
• Derivative financial instruments
• Cash and cash equivalents
• Trade and other payables
• Loans and other borrowings
A summary of financial instruments by category is provided below:
31 December
30 June 2024 2023
Unaudited Audited
Financial assets £'000 £'000
Cash and cash equivalents 24,525 21,940
Trade and other receivables (amortised cost) 3,586 2,681
Derivative financial instruments (FVTPL) 338 302
Total financial assets 28,449 24,923
31 December
30 June 2024 2023
Unaudited Audited
Financial liabilities £'000 £'000
Trade and other payables (amortised cost) 9,542 7,812
Loans and borrowings (amortised cost) 21,658 18,250
Accruals (amortised cost) 8,405 9,020
Redemption liability (FVTPL) 4,194 2,793
Clawback liability (FVTPL) 11,581 10,331
Lease liabilities (amortised cost) 2,280 2,736
Derivative financial instruments (FVTPL) 188 183
Appointed representative retained commission (amortised cost) 19,581 18,918
Total financial liabilities 77,429 70,043
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies, and designs and operates processes that
ensure the effective implementation of the objectives and policies to the
Group's finance function. The Board sets guidelines to the finance team and
monitors adherence to its guidelines on a monthly basis.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below.
Credit risk
Credit risk is the risk of financial loss to the Group if a trading partner or
counterparty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from loans to its
trading partners. It is Group policy to assess the credit risk of trading
partners before advancing loans or other credit facilities. Assessment of
credit risk utilises external credit rating agencies. Personal guarantees are
generally obtained from the Directors of its trading partners.
The carrying amounts stated above represent the Group's maximum exposure to
credit risk for trade and other receivables. An element of this risk is
mitigated by collateral held by the Group for amounts due to them.
Trade receivables consist of a large number of unrelated trading partners and
therefore credit risk is not concentrated. Due to the large volume of trading
partners the Group does not consider that there is any significant credit risk
as a result of the impact of external market factors on their trading
partners. Additionally, within trade payables are Appointed Representative
retained commission amounts due to the same trading partners that are included
in trade receivables; this collateral of £0.2m (2023:
£0.2m) reduces the credit risk.
The Group's credit risk on cash and cash equivalents is limited because the
Group places funds on deposit with National Westminster Bank plc (rated A),
The Royal Bank of Scotland plc (rated A+), Barclays plc (rated A), HSBC Bank
plc (rated AA-) and Bank of Scotland plc (rated A+).
Market risk
Interest rate risks
The Group's main interest rate risk arises from borrowings, both short term
facilities and long-term debt, with floating interest rates that are linked to
SONIA. The Group manages the risk by continually reviewing expected future
volatility in UK interest rates and will consider entering into hedges as
deemed appropriate to fix the floating interest rate. A maturity analysis of
loans and
borrowings is set out in Note 13.
Foreign exchange risk
As the Group does not operate outside of the United Kingdom and has only one
investment outside the United Kingdom, it is not
exposed to any material foreign exchange risk.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. The Group's trade and
other payables are repayable within one year from the reporting date and the
contractual undiscounted cash flow analysis for the Group's trade and other
payables is the same as their carrying value.
Capital management
The Group monitors its capital which consists of all components of equity
(i.e. share capital, share premium, capital redemption reserve, share option
reserve and retained earnings).
The Group's objectives when maintaining capital are:
• To safeguard the entity's ability to continue as a going concern, so that
it can continue to provide returns for shareholders and benefits for other
stakeholders,
• To ensure that capital is maintained at all times to ensure that financial
resource requirements set by its regulator, the Financial Conduct Authority,
are exceeded at all times, and
• To ensure the Group has the cash available to develop the services
provided by the Group to provide an adequate return to shareholders.
15 Share capital
31 December
30 June 2024 2023
Unaudited Audited
Issued and fully £'000
paid
£'000
Ordinary shares of 0.1p each 57
58
Total share capital 57
58
During the period 25,001 ordinary shares of 0.1p each were issued following
partial exercise of options issued in 2020 and 2021 at no premium. 804,754
ordinary shares were also issued following the exercise of the option over the
remaining 20% stake in First Mortgage Direct Limited, see note 4 for further
details. As at 30 June 2024, there were 57,956,789 ordinary shares of 0.1p in
issue (2023: 57,127,034).
16 Related party transactions
The following table shows the total amount of transactions that have been
entered into with related parties during the six months ended 30 June 2024 and
2023, as well as balances with related parties as at 30 June 2024 and 31
December 2023.
Relationship Commission Balance of retained Loans owed to MAB
received/(paid) commissions*
30 June 30 June 30 June 31 December 30 June 31 December
2024 2023 2024 2023 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Buildstore Limited Associate (496) (419) 38 23 13 -
Sort Limited Associate 639 811 - - - -
Clear Mortgage Solutions Associate (2,654) (2,506) 667 595 - -
Limited
Evolve FS Ltd Associate (1,694) (1,876) 223 178 - -
The Mortgage Broker Associate (767) (728) 39 67 - 5
Limited
Meridian Holdings Group Associate (2,302) (2,085) 555 550 - 81
Ltd
M & R FM Ltd Associate (1,911) (1,460) 230 184 - -
Heron Financial Limited Associate (1,823) (724) 80 41 318 -
Pinnacle Surveyors Associate 52 - - - 48 100
(England & Wales) Ltd
MAB Broker Services PTY Joint Venture - - - - 15 15
Limited
* Balances in relation to retained commissions are to cover future lapses
During the period the Group received dividends from associate companies as
follows:
31 December
30 June 2024 2023
Unaudited Audited
£'000 £'000
Clear Mortgage Solutions Limited 32 56
M & R FM Limited 186 222
Heron Financial Limited - 125
Total dividends received 218 403
17 Share-based payments
On 22 April 2024 and 24 May 2024, 274,563 and 50,986 options over ordinary
shares of 0.1 pence each in the Company, respectively, were granted to the
Executive Directors and senior executives of the Group under the equity
settled Mortgage Advice Bureau Executive Share Option Plan (the "Options").
Exercise of the Options is subject to the service conditions and achievement
of performance conditions based on total shareholder return and earnings per
share criteria. Subject to achievement of the performance conditions, the
Options will be exercisable 35 months and 34 months respectively from the date
of grant. The exercise price for the Options is 0.1 pence, being the nominal
cost of the Ordinary Shares.
Options exercised in April 2024 resulted in 25,001 ordinary shares being
issued at an exercise price of £0.01. The price of the ordinary shares at the
time of exercise were £9.22.
Share-based remuneration expense
The share-based remuneration costs for the period are made up as follows:
Six months ended 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Charge for equity settled schemes 296 416
National Insurance on equity settled schemes (248) (13)
Share incentive plan costs 50 80
Free shares awarded to employees 165 133
Charge for equity settled acquisition options 1,034 872
Charge for cash settled acquisition options 545 (15)
Total costs 1,842 1,473
18 Events after the reporting date
There were no material events after the reporting period which have a bearing
on the understanding of these interim financial statements.
Glossary of Alternative Performance Measures ("APMs") for the Group's interim
report and financial statements
Certain numerical information and other amounts and percentages presented have
been subject to rounding adjustments. Accordingly, in certain instances, the
sum of the numbers in a column or a row in tables may not conform exactly to
the total figure given for that column or row or the sum of certain numbers
presented as a percentage may not conform exactly to the total
percentage given.
Closest equivalent
APM statutory measure Definition and purpose
Income statement measures
Administrative expenses ratio None Calculated as administrative expenses (which exclude amortisation of acquired
intangibles, acquisition costs incurred in the year and non-cash operating
expenses relating to put and call option agreements) divided by
revenue.
Adjusted EBITDA None Calculated as EBITDA before charges associated with acquisition and
investments, and other adjusting items that the Group deems, by their nature,
require adjustment in order to show more accurately the underlying business
performance of the Group from period to period in a consistent manner.
Charges associated with acquisition or investments in businesses include:
• non-cash charges such as amortisation of acquired intangibles and the
effect of fair valuation of acquired assets,
• non-cash operating expenses relating to put and call option agreements
and cash charges including transaction costs,
• fair value movements on deferred and contingent consideration, and
• fair value movements on derivative financial instruments.
£m H1 2024 H1 2023
Gross profit 37.7 32.9
Administrative expenses (25.5) (23.7)
Depreciation 0.9 1.1
Amortisation 0.2 0.1
Share of profit from associates 0.4 0.1
Rounding difference 0.1 -
Adjusted EBITDA 13.8 10.5
Adjusted EBITDA margin None Calculated as Adjusted EBITDA divided by revenue.
Adjusted operating profit Operating profit Calculated as operating profit before charges associated with acquisition and
investments, and other adjusting items that the Group deems, by their nature,
require adjustment in order to show more accurately the underlying business
performance of the Group from period to period in a consistent manner.
Charges associated with acquisition or investments in businesses include:
• non-cash charges such as amortisation of acquired intangibles and the
effect of fair valuation of acquired assets,
• non-cash operating expenses relating to put and call option agreements
and cash charges including transaction costs,
• fair value movements on deferred and contingent consideration, and
• fair value movements on derivative financial instruments.
£m H1 2024 H1 2023
Operating profit 8.0 5.0
Amortisation of acquired intangibles 2.6 2.6
Acquisition costs 0.1 0.1
Non-cash operating expenses relating to 2.0 1.1
put and call option agreements
Non-cash fair value losses on financial - 0.2
instruments
Restructuring costs - 0.2
Round difference (0.1) 0.1
Adjusted operating profit 12.6 9.3
Adjusted profit before tax Profit before tax Calculated as profit before tax before charges associated with acquisition and
investments, and other adjusting items that the Group deems, by their nature,
require adjustment in order to show more accurately the underlying business
performance of the Group from period to period in a consistent manner.
Charges associated with acquisition or investments in businesses include:
• non-cash charges such as amortisation of acquired intangibles and the
effect of fair valuation of acquired assets,
• non-cash operating expenses relating to put and call option agreements
and cash charges including transaction costs,
• fair value movements on deferred and contingent consideration, and
• fair value movements on derivative financial instruments.
£m H1 2024 H1 2023
Profit before tax 6.2 7.6
Amortisation of acquired intangibles 2.6 2.6
Acquisition costs 0.1 0.1
Non-cash operating expenses relating to 1.1
put and call option agreements 2.0
Non-cash fair value losses on financial 0.2
instruments -
Restructuring costs - 0.2
Unwinding of redemption liability 1.4 (3.1)
Round difference - 0.1
Adjusted profit before tax 12.3 8.8
Adjusted profit before tax None Calculated as Adjusted profit before tax divided by revenue
margin
Adjusted earnings per share Basic earnings per share Calculated as basic earnings per share before charges (net of tax) associated
with acquisition and investments, and other adjusting items that the Group
deems, by their nature, require adjustment in order to show more accurately
the underlying business performance of the Group from
period to period in a consistent manner. See note 7 for further details.
Adjusted fully diluted earnings per share Diluted earnings per share Calculated as diluted earnings per share (basic EPS, adjusting for the effects
of potentially dilutive share options) before charges (net of tax) associated
with acquisition and investments, and other adjusting items that the Group
deems, by their nature, require adjustment in order to show more accurately
the underlying business performance of the Group from
period to period in a consistent manner. See note 7 for further details.
Cash flow measures
Adjusted cash generated None Adjusted cash generated is cash generated from operating activities adjusted
for movements in non-trading items, including loans to AR firms and
associates, cash transaction costs, and increases in restricted cash
balances as a percentage of adjusted operating profit.
£m H1 2024 H1 2023
Cash generated from operating activities 15.0 12.1
Acquisition costs 0.1 0.1
Restructuring costs - 0.2
Increase in loans to AR firms and 0.6 0.1
associates
Increase in restricted cash balances (0.7) (0.4)
Rounding differences - 0.1
Adjusted cash generated 15.0 12.2
Adjusted cash None Adjusted cash conversion is adjusted cash generated as a percentage of
conversion adjusted operating profit
Balance sheet measures
Net debt None Loans and borrowings less unrestricted cash balances.
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