Mortgage Advice Bureau (Holdings) PLC Profit before tax up 34%, Dividend up 59%

Mortgage Advice Bureau (Holdings) PLC (AIM: MAB1.L) has given DirectorsTalk its interim results for the six months ended 30 June 2016.

This announcement contains inside information.

Financial highlights

·    Revenue up 38% to £43.1m (H1 2015: £31.2m)

·    Gross margin of 23.1% (H1 2015: 24.3%)

·    Overheads ratio of 11.7% (H1 2015: 13.0%)

·    Profit before tax up 34% to £5.3m (H1 2015: £3.9m)

·    Profit before tax margin of 12.3% (H1 2015: 12.6%)

·    EPS up 32% to 8.6p (H1 2015: 6.5p)

·    High operating profit to cash conversion¹ of 159% (H1 2015: 102%)

·    Interim dividend up 59% to 7.8p; payout ratio: c. 90% (H1 2015: 4.9p; payout ratio: c. 75%)

·    Strong financial position with significant surplus on regulatory capital requirement

·    Total cash balances of £16.3m (31 Dec 2015: £14.0m)

·    Unrestricted cash balances of £9.6m (31 Dec 2015: £8.2m)

Operational highlights

·    Adviser numbers up 13% to 891 at 30 June 2016 (31 Dec 2015: 790)

·    Average number of Advisers in six months ended 30 June 2016  up 27% to 851 (H1 2015: 671)

·    Market share up 20% to 4.0% (H1 2015: 3.3%)

·    Two investments completed, one a specialist telephone protection advice firm, Vita

Post period end highlights

·    Adviser numbers up 30 from period end to 921 at 23 September 2016

·    Sale of 49% stake in Capital Private Finance Limited completed for £2.7m, post tax profit distributed to shareholders by special dividend of 4.25p

·    Investment in scalable telephony model, Freedom 365

¹ Cash flow from operating activities adjusted for non-trading items including loans to Appointed Representative firms (“ARs”), loans to associates and other non-trade receivables as a % of operating profit.  Due to the timing of the weekly AR commission payment, the Group held additional cash balances at 30 June 2016.  Excluding these balances cash conversion would have been 136% for the period ended 30 June 2016 (2015: 102%).  Furthermore, excluding increases in restricted cash balances, the cash conversion for the period ended 30 June 2016 would have been 118% (2015: 84%).

Peter Brodnicki, Chief Executive commented: “I am pleased to report another strong set of results, with profit before tax up 34% and MAB’s market share increasing by 20% compared to the same period last year. After a strong start to the year, adviser productivity eased slightly in the run up to the EU referendum.  From that point, we saw the usual quieter period in the housing market over the peak summer holiday months.  Since the referendum, overall written business volumes have held up well, with industry data indicating that the housing market remains relatively stable.   

“House prices continue to grow and a slight softening in the number of house purchases has been partly offset by increased activity in both residential and buy-to-let remortgaging.

“Our focus remains to continue to grow our market share in all market conditions. ” 

Current Trading and Outlook

Since the EU referendum, overall MAB written business volumes have held up well and have been encouraging in September, after the usual quieter summer period. However, it is too early to determine how quickly adviser productivity will pick back up.  Adviser numbers have increased to 921 as at 23 September 2016. The Board expects the growth in revenue per Adviser to be slightly lower than originally anticipated for the year, whilst Adviser numbers are expected to be ahead of expectations for the year end. Current trading is in line with the Board’s expectations.