Delivering, Growing, Innovating
Investor and Analyst Presentation
Mortgage Advice Bureau (Holdings) plc
Final results for the year ended 31 December 2020
Summary and outlook
Appendices
20 22
Highlights
Financial Highlights
Revenue
Gross Profit
Adj. PBT1
(-1% excl. First Mortgage)
(-3% excl. First Mortgage)
(-17% excl. First Mortgage)
Adj. EPS1
Final Dividend
Cash Conversion2
(-16% excl. First Mortgage)
• Total dividend for the year of 25.6p, including 6.4p catch up dividend (2019: 17.5p)
1. Adjusted in 2020 for £0.4m (2019: £0.2m) amortisation of acquired intangibles and £0.9m (2019: £0.4m) of additional non-cash operating expenses relating to the put and call option agreement to acquire the remaining 20% of First Mortgage. In 2019, £0.4m of one-off costs associated with the acquisition of First Mortgage were also adjusted. PBT and EPS are also adjusted for impairment of loans to related parties of £1.7m in 2020 (2019: £nil), £1.4m net of tax.
2. Adjusted cash conversion is cash generated from operating activities adjusted for movements in non-trading items, including loans to Appointed Representative firms ("ARs") and associates totalling £(1.5)m and increases in restricted cash balances of £0.6m in 2020, as a percentage of adjusted operating profit.
Operational Highlights
Mortgage Completions1
Market Share2
(+3% excl. First Mortgage)
Adviser Numbers3
(+10% excl. First Mortgage)
Revenue Per Active Adviser4
(+8% excl. First Mortgage)
1. MAB's gross mortgage completions, including product transfers.
(-7% excl. First Mortgage)
2. Market share of gross new mortgage lending (excluding product transfers).
Strategic progress
Digital business acceleration
• Platform roll out
• Remote advice/security
• Lead Generation
• Compliance transformation
M&A / Joint Ventures
New BuildInternationalAddressable Market
3. Includes the Advisers of a firm previously authorised under an Appointed Representative agreement with MAB until 7 December 2020. MAB continues to provide services to this firm, now directly authorised by the FCA.
4. Based on average number of active advisers for the period. An active adviser is an adviser who had not been furloughed, and was therefore able to write business
Market Backdrop
£m
Mortgage Lending Market
Gross new mortgage lending values1
30,000
25,000
20,000
15,000
10,000
5,000
-
First time buyersHome-owner remortgagesBTL remortgagesHome-owner moversBTL purchases
Other (inc. lifetime and further advances)
1. Source: UK Finance. Chart excludes product transfers.
2. Includes further advances and lifetime mortgages, excludes product transfers.
3. Source: UK Finance.
Commentary
• Gross new mortgage lending of £243.1bn2, down 9% as a result of the closure of the housing market in Q2
Purchase market:
• Purchase mortgage activity most adversely impacted in Q2 (down 46%)
• Q3 activity continued to be impacted due to pipeline conversion timeframes (down 11%)
• Sharp return to growth in Q4 (up 28%)
Re-financing market:
• External re-mortgage activity less impacted in Q2 (down 18%)
• Activity remained low in Q3 (down 22%) and Q4 (down 30%) due the volume of borrowers only being able to internally transfer their mortgages
• Product transfers: up 1% for the year to £168bn3
140,000
Property Market
UK property transactions by volume1
Year-on-year changes:
120,000
100,000
80,000
60,000
40,000
20,000
0
EnglandScotland
1. Sources: UK Finance. Q4 2020 figures are provisional.
Q1: -1%Q2: -47%Q3: -16%
WalesNorthern Ireland
2. Source: Land Registry. House price inflation is the increase in house prices from December 2019 to December 2020. The increase in average house price is the year-on-year increase in average house prices for the year.
Q4: +17%
Commentary
• Q1 broadly flat year-on-year (-1%)
• Q2 property transaction volumes down 44% in England, as housing market shut for nearly 2 months.
• In Scotland, where the housing market was shut for 3 months, Q2 volumes decreased by 63%
• Despite the market recovery, Q3 volumes (down 16%) were still impacted due to pipeline conversion timeframes
• Q4 data shows a 17% increase in transaction volumes
• House price inflation c.9%, with 3% increase in average house price for the year2
Financial Review
Financial KPIs
Number of advisers: 1,580
14.5% overheads1 as % of revenue
26.9% gross profit margin
12.0% adj. PBT margin2
1. Adjusted in 2020 for £0.4m (2019 £0.2m) amortisation of acquired intangibles and £0.9m (2019 £0.4m) of additional non-cash operating expenses relating to the put and call option agreement to acquire the remaining 20% of First Mortgage. In 2019, £0.4m of one-off costs associated with the acquisition of First Mortgage were also adjusted.
2. Adjusted for items in note (1) above and impairment of loans to related parties of £1.7m in 2020.
Revenue: income source
Income sourceChange
2020
Change
2019
(£m)
(%)
Mortgage Procuration Fees
Commentary
£67.2m
£64.3m
£2.9m
+4%
• Group revenue up 3% to £148.3m with completions up 5%, higher proportion of Product Transfers
Protection and General Insurance Commission
£58.8m
£56.2m
£2.6m
+5%
• Revenue excluding First Mortgage down 1% with completions up 3%
Client FeesOther Income
£19.0m
£20.2m
£(1.2)m
-6%
£3.3m
£3.0m
£0.3m
+10%
Total
£148.3m
£143.7m
£4.6m
+3%
45%
45%
• Continued growth across all income sources other than client fees as a result of H1 contribution from First Mortgage, despite pandemic impact
• Procuration fees up 4% with Group completions up 5%; increase driven by H1 First Mortgage contribution and associated revenue synergies, 1% increase in MAB (excl. First Mortgage) procuration fees, offset by increased product transfers
• Protection and general insurance commission up 5% driven by H1 First Mortgage contribution and associated revenue synergies, offset by slightly lower banked protection in MAB (excl. First Mortgage)
• Client fees (MAB excl. First Mortgage only) reduced by 6% due to fall in attachment rate of client fees as customers mainly transacted remotely and change in mortgage mix towards Product Transfers
Revenue: quarterly
Quarterly revenue Q1 | Q2 | Q3 | Q4 | Year |
Revenue (y-o-y change) £35.0m (+£7.0m) | £28.5m (-£4.5m) | £37.1m (-£2.8m) | £47.7m (+£4.9m) | £148.3m (+£4.6m) |
Average active Advisers 1,457 | 1,348 | 1,455 | 1,552 | 1,455 |
Average revenue per active Adviser £24.0k | £21.2k | £25.5k | £30.8k | £101.9k |
Commentary
• Q1 strong post December 2019 General Election
• Q2 heavily impacted both in terms of active Advisers and banked and written productivity
• Q3 banked productivity continued to be impacted despite considerable increase in written business activity from increase in house purchase volumes
• Strong Q4 banked and written productivity
Strong cash conversion supports growing dividend
1.
Adjusted cash conversion is cash generated from operating activities adjusted for movements in non-trading items, including loans to Appointed Representative firms and loans to associates, totalling £(1.5)m in 2020 (2019: £0.9m) and increases in restricted cash balances of £0.5m in 2020 (2019: £2.2m) as a percentage of adjusted operating profit.
112% Cash Conversion1
Commitment to dividends
InterimFinalSeries3
£11.7m Excess Capital
Unrestricted Cash Balance
Income Statement
Commentary
• Revenue up 3% to £148.3m, including £14.7m from First Mortgage
• Gross profit margin increase, growth in administrative expenses and overheads ratio mainly reflect the full year impact of the First Mortgage acquisition
• Overheads ratio also impacted by lower revenue growth despite overhead savings of c.£3m
• Adjusted Profit Before Tax1 down 5% to £17.8m in a year heavily affected by Covid-19
• Adjusted Profit Before Tax1 Margin of 12.0% (2019: 13.0%)
• Adjusted EPS1 down 5% to 28.6p (2019: 30.1p)
1. Adjusted in 2020 for £0.4m (2019 £0.2m) amortisation of acquired intangibles and £0.9m (2019 £0.4m) of additional non-cash operating expenses relating to the put and call option agreement to acquire the remaining 20% of First Mortgage. In 2019, £0.4m of one-off costs associated with the acquisition of First Mortgage were also adjusted. Also adjusted for impairment of loans to related parties of £1.7m in 2020 (2019: £nil).
2. An active adviser is an adviser who had not been furloughed, and was therefore able towrite business.
Investing to deliver margin enhancement
• Investment to generate revenue growth:
➢ Adviser productivity
➢ Scaling of existing ARs
➢ New AR firms
• Operational benefits: ➢ Growth in revenue will increasingly outstrip growth in costs over the medium term ➢ Productivity and efficiency gains within our invested businesses will deliver increased profits from associates
… delivering margin enhancement
15
Strategy
Investing in future ready capabilities
Provide customers with the optimum balance of efficient digital solutions, combined with the reassurance of human interaction and adviceTransform risk management process and strengthen our technology infrastructure
Further develop our business model to help our ARs to have deeper and longer-lasting relationship with their customers
Digital
Business Acceleration
Platform developments will enhance scalability and agility resulting in improving overheads ratio in the medium term
Deliver a platform solution and data analytics that enable our AR partners to flex in scale and scope quickly and cost effectively
17
Set-up for Acceleration
Q1 2021 Progress on our initiatives
*
*
*
|
|
|
|
Adviser Growth
*see Appendix for further information
Adviser ProductivityLead Generation
New Products & ServicesAddressable
MarketCustomer Experience
Summary and Outlook
Summary & outlook
• Strong performance and market share growth demonstrates the resilience of our operating model.
• Significant progress made through securing major new lead sources that are fundamental to MAB's growth strategy.
• Healthy pipeline of both Adviser recruitment and written business, despite the various lockdown restrictions.
• Strong fundamentals of house purchase demand will be supported by recent Budget announcement.
• Current trading is in line with Board expectations.
• Maturing and new growth drivers will support future profits and market share growth.
Appendices
Award Winning
Company Overview
• Mortgage Advice Bureau ("MAB") is a leading UK mortgage intermediary network
• Directly authorised by FCA, MAB operates an Appointed Representative (AR) network which specialises in providing mortgage advice to customers as well as advice on protection and general insurance
• Over 1,600 Advisers, almost all employed or engaged by ARs
• All compliance supervision undertaken by MAB employees
• Broad geographical spread across the UK
• Developed leading in-house proprietary trading platform called MIDAS Pro
• Won over 150 awards
Management
Executive Team
Non-Executive Team
* David Preece retired as Chief Operating Officer on 30 June 2019 and became a Non-executive Director.
Growth Focus - our investments
Online Leads 49%
Shareholding1 | ||
Distribution | Strategic | Specialism |
Conveyancing 43%
Specialist New Build 25%
+
MAB Australia
+
Surveys 49%
International 48%New Build / Shared Ownership
40%49%
1. InitialMaximum
2. In March 2021, Meridian agreed to acquire Metro Finance Brokers Ltd. The acquisition is subject to FCA approval
Cash Balance Waterfall Unrestricted net cash balances1
40.0
£m
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
Unrestricted balances Cash generated from
at 1 January 2020
operations excl. associates and movement in restricted balances2
Issue of sharesDividends received from associatesDividends paid
Tax paid
Capital expenditureInvestments in associates
Net interest paid and Unrestricted balancesprincipal element of lease payments 3
1. Unrestricted net cash balances are for operational purposes; they exclude restricted balances (AR retained commission in case of clawback) and £12m Natwest Revolving Credit Facility loan.
2. Cash generated from operating activities of £22.1m, less £0.2m dividends received from associates and movements in restricted balances of £0.5m.
3. Principal elements of lease payments of £0.35m. Interest received of £0.1m, less interest paid of £0.2m.
at 31 December 2020
Balance Sheet - Strong financial position
Growth Focus - early customer capture / nurture
-24 months
-12 months
Completion
+12 months
+36 months
+60 months
-6 months | +48 months | |
Property Search | Estate Agents | Remo / Product Transfer |
Mortgage Platforms | Builders | Protection Reviews |
Tenants / LISA Savers | Mortgage Shops | Financial Planning |
-18 months
Workplace/employees
Online
Capture / Nurture
+24 months
Home Services
Nurture / Financial Reviews
Our latest Partnerships
30
Our latest Partnerships
31
32
Attachments
- Original document
- Permalink
Disclaimer
Mortgage Advice Bureau (Holdings) plc published this content on 23 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 March 2021 08:28:04 UTC.