TIDMMAB1
RNS Number : 5223I
Mortgage Advice Bureau(Holdings)PLC
26 March 2015
MORTGAGE ADVICE BUREAU (HOLDINGS) PLC
26 March 2015
Final Results for the year ended 31st December 2014 and Board
Changes.
Mortgage Advice Bureau (Holdings) PLC is pleased to announce its
final results for the year ended 31 December 2014.
Financial highlights
-- Revenue up 41% to GBP56.6m (2013: GBP40.1m)
-- Profit before exceptional items(1) and tax up 52% to GBP7.97m (2013: GBP5.24m)
-- Strong profit to cash conversion(2) of 122% (2013: 101%)
-- Adjusted EPS(1,3) 12.7p up 55% (2013: 8.2p(3) )
-- Proposed final stub(4) dividend of 2.00p
-- Strong financial position with unrestricted net cash balances of GBP5.28 m (2013: GBP6.70m)
(1) Before IPO-related costs and provision against loan
(2) Cash flow from operating and investing activities as a % of
operating profit.
(3) Adjusted EPS is based on 50.5m shares being in issue
throughout in order to allow comparability
(4) Period from listing on AIM on 14 November 2014 to 31
December 2014.
Operational highlights
-- Adviser numbers up 22% to 634 at 31 December 2014 (2013 : 521)
-- Adjusted profit margin(5) increased to 14.1% (2013: 13.1%)
-- Successful listing on AIM in November 2014
(5) Net profit before tax and before IPO-related costs and
provision against loan as a proportion of revenue
Peter Brodnicki, Chief Executive commented:
"I am pleased to report that despite the obvious time commitment
by senior management that went into our successful listing on AIM
in November, the Group enjoyed a record year in terms of both
revenues and profits.
MAB's strategy is to deliver strong revenue growth and
attractive returns to investors by continuing to expand its network
and leverage its scalable model."
Board changes
Lucy Tilley ACA will join the Board on 5 May 2015 as Finance
Director subject to regulatory approval, on which date Paul
Robinson will resign from the Board. Paul will remain as Company
Secretary.
Peter Brodnicki, said:
"At the time of the IPO we stated that we would be recruiting a
full time Finance Director, and are delighted to announce the
appointment of Lucy Tilley. Lucy was most recently at Canaccord
Genuity Limited where she was a director in the corporate broking
team that worked with us on MAB's recent admission to AIM. Lucy
qualified as a Chartered Accountant in 1996 with KPMG. Her skills
and experience strengthen the Board and we look forward to working
with her."
Outlook
2015 being an election year may inevitably generate some
uncertainty for the economy generally. However, we are encouraged
by the political consensus around the importance of the housing
market to the UK economy.
Adviser numbers have continued to grow since the year end, in
part due to the Group's expansion into Northern Ireland, further
diversifying the Group's geographical revenue spread. The Group had
661 advisers at 20 March 2015.
The Board remains confident of delivering further growth in
2015, and building our position as both a leading UK consumer
intermediary brand and a specialist Appointed Representative
Network .
For further information please contact:
Mortgage Advice Bureau (Holdings) Tel: +44 (0) 1332
Plc 525007
Peter Brodnicki - Chief Executive
David Preece - Chief Operating
Officer
Paul Robinson - Finance Director
Canaccord Genuity Limited
Martin Green Tel: +44 (0) 20
7523 8350
Peter Stewart
Media enquiries:
Instinctif Partners
Nick Woods Tel: +44 (0)
20 7866 7904
Strategic report - Chief Executive's review
Introduction
I am pleased to report that despite the obvious time commitment
by senior management that went into our successful listing on AIM
in November, the Group enjoyed a record year in terms of both
revenues and profits.
Our strategy
Mortgage Advice Bureau's ("MAB") strategy is to deliver strong
revenue growth and attractive returns to investors by continuing to
expand its network and leverage its scalable model. The Group
intends to deliver this strategy through:
-- Increasing the number of advisers in existing Appointed
Representatives ('ARs')
-- Recruiting new ARs
-- Further development of its client servicing via AR regional
telephone centres
Our business model
MAB is directly authorised by the Financial Conduct Authority
("FCA") and operates an AR network which specialises in providing
independent mortgage advice to customers, as well as advice on
protection and general insurance products.
MAB seeks to develop long term strategic relationships with its
AR firms so that there is a close alignment of interests.
Our proposition appeals most to multiple adviser firms with
ambition to grow both their market share and business, with the MAB
brand becoming an increasingly important USP that is adopted by a
majority of our AR partners.
Under the MAB model almost all the advisers are engaged directly
by the ARs themselves. However, MAB carries out all the compliance
supervision on behalf of the AR firms, ensuring greater control and
helping to achieve consistently high standards of consumer
outcomes.
Relationships
The Group's performance and value to our shareholders is
influenced by other stakeholders, principally our employees, our
ARs (and their advisers), our customers and our suppliers. Our
approach to all these parties is founded on the principle of open
and honest dialogue, based on a mutual understanding of needs and
objectives.
Our relationship with our ARs is fundamental to the success of
MAB, and is based on that of a strategic business partner, with
both parties benefiting from any improvement in the ARs
business performance.
Sector focus and specialisations
MAB has developed bespoke support services for intermediary
firms that operate in specialist sectors such as estate agency, new
build, mortgage shops and telephone based mortgage advice. These
specialist sectors are typically rich in generating new customers
and sales, and offer intermediaries the greatest opportunity to
grow their businesses.
The Group has a broad geographic spread across the United
Kingdom, with expansion into Northern Ireland having taken place in
early 2015. Less than 10% of the Group's revenue is derived from
the London market.
Products available through the Group
The Group's network offers advice on over 8,000 residential and
buy-to-let mortgage products, including those that are only
available through mortgage intermediaries.
The Group's network also offers advice on a range of both
protection and general insurance products, which are sourced from a
panel of insurers.
The Group generates revenue from 3 core areas which can be
broken down as follows:
Proportion of 2014 2013
Revenue
Insurance commission 41% 39%
Mortgage procuration
fees 42% 44%
Client fees 16% 15%
Other income 1% 2%
Total 100% 100%
Proprietary Software
The Group has developed its own technology system that is the
trading platform for the Group and its advisers. This system,
MIDAS, is a significant USP of the Group, and has seen some major
enhancements released in recent months ensuring the customer and
adviser experience is further improved.
Protection is a key part of the advice process, and the most
recent enhancements to MIDAS will ensure a far more visual and
interactive customer experience which we expect to generate an
increase in Insurance sales such as critical illness, income
protection and life insurance.
Market trends favour Intermediaries
Market recovery
In 2014 the UK mortgage market exceeded GBP200 billion of gross
lending for the first time since 2008. Between 2009 and 2012 gross
lending varied between GBP135bn and GBP145bn per annum. 2013 saw a
rise of 23% over 2012 to GBP179bn, whilst 2014 showed a further
rise of 14% to GBP204bn. In December 2014 the Council for Mortgage
Lenders were forecasting further increases to GBP222bn in 2015 and
GBP240bn for 2016.
Whilst bank base rates are not expected to rise in the near
future, rate rises will be inevitable at some point in the economic
cycle.
Although the bank base rate has stayed at 0.5% for 6 years,
mortgage pay rates have been falling, with fixed rates now at
record low levels, with some lenders indicating that further cuts
are unlikely. This makes it an opportune time for borrowers to
consider remortgaging, with the mortgage intermediary in an ideal
position to review the options available to their customers.
Customer reviews are a key focus for MAB, and with fixed rate
mortgages at such incredibly low levels, we see the remortgage
market as a major opportunity.
The government remains committed to growth in housing stock and,
to further support this policy, as recently as February 2015 it was
announced that a discount of up to 20% was being offered to certain
first time buyers, and in the March 2015 budget a 'help to buy' ISA
was announced. Housing is a core policy for all major political
parties who all appear extremely committed to increasing housing
stock and recognising the shortage of affordable homes.
Industry trends
Around 62% of UK mortgage transactions (excluding buy to let
mortgages) were via an intermediary in 2014, up from around 55% in
2013. The share in the fourth quarter of 2014 was around 64%, and
the Board expects this to grow further in 2015 with some industry
commentators expecting it to grow to a 75% market share in the next
few years.
Individual market sectors such as buy-to-let, first time buyers
and remortgaging are performing strongly; intermediaries enjoy a
larger than average share of these sectors.
Impact of Mortgage Market Review ("MMR")
Prior to MMR, customers could obtain mortgages directly from
some lenders without receiving full advice. This typically took
less time than a fully-advised service such as that provided
through MAB. Following MMR, all mortgage sales (with the current
exception of buy-to-let), including direct sales by lenders, must
be made on a fully advised basis in order to comply with the FCA's
requirements.
A customer who now wishes to secure a mortgage directly from a
lender (and not an intermediary) may be required to repeat this
more time consuming fully-advised process with each potential
lender they visit. This enhances the attractiveness of the
intermediary sector.
As MAB already provided a fully-advised service prior to the
introduction of MMR, the Group's procedures were largely unaffected
by the MMR changes.
How we performed
We measure the development, performance and position of our
business against a number of key indicators.
http://www.rns-pdf.londonstockexchange.com/rns/5223I_-2015-3-26.pdf
Financial performance and future developments
Revenues
Revenues were up 41% to GBP56.6m (2013: GBP40.1m). A key driver
of revenue is the average number of ARs in each financial year. Our
business model attracts forward thinking ARs seeking to expand and
grow their market share. Average adviser numbers increased by 19%
to 581 (2013: 489) from a combination of the recruitment of new
ARs, and the expansion of existing ARs.
Profit before exceptional items and tax
To facilitate a like-for-like comparison with prior years, the
costs associated with the Company's admission to AIM in November
2014 and a one-off provision made during 2014 against a loan
advanced in 2011 have been treated as exceptional costs when
calculating adjusted profit before tax.
Profit before exceptional items and tax rose by 52% to GBP7.97m
(2013: GBP5.24m) with the inherent scalability of MAB's model
delivering a 52% increase in pre-exceptional, pre-tax profit
compared with a 41% increase in revenue.
Margins
The gross profit margin fell slightly to 24.1% (2013: 25.9%).
MAB has attracted, and continues to attract, ambitious ARs with
actual or potential scale. Some existing ARs have achieved
significant scale themselves by working alongside MAB. As the scale
of an AR's business grows, the AR might be able to move to a higher
commission tier which can lead to some margin erosion for the
Group, and as a result we expect to see some further contraction in
the gross profit margin. However, the increased revenue these
growing ARs generate does leverage MAB's scalable business model
and is expected to more than offset any margin erosion.
I am pleased to report that overheads as a percentage of revenue
fell to 11.1% (2013: 14.3%). The Group's cost base is largely fixed
in nature, and is expected to grow at a slower rate than revenue.
Certain costs, primarily those relating to compliance, are closely
correlated to the growth in the number of advisers, due to the
requirement to maintain regulatory spans of control.
Overall, these factors resulted in an improvement in profit
before exceptional items and tax as a percentage of revenue to
14.1% (2013: 13.1%).
Net finance revenue
The Group's model is highly cash generative as our income is
received before we pay our ARs. This results in a negative working
capital requirement. Net finance revenues of GBP0.12m (2013:
GBP0.25m) reflect continued low interest rates but are a useful
additional revenue stream.
Profit before Tax
Unadjusted reported profit before tax increased to GBP6.88m
(2013; GBP5.24m), an increase of 31%.
Taxation
The effective rate of taxation on profit before tax rose to
21.6% (2013: 20.8%) principally due to the costs of the AIM listing
being disallowed for tax purposes, partly offset by reductions in
the UK corporation tax rate.
Earnings per share and dividend
Adjusted EPS amounted to 12.69 pence. Comparison to 2013 is
difficult as the share structure was significantly changed in
preparation for the IPO. Had there been a similar number of
ordinary shares in issue in 2013, adjusted EPS would have been 8.21
pence per share.
Basic EPS amounted to 9.63 pence. I am pleased to confirm a
proposed final dividend for the year of 2.0p per share in respect
of the period from Admission to AIM, amounting to a total of
GBP1.01 million.
Cash flow
The Group's operations produce positive cash flow. This is
reflected in the net cash inflow from operating activities of
GBP7.96m (2013: GBP4.95m).
Net cash flow from operating and investing activities as a % of
operating profit
2014 122%
2013 101%
2012 65%
The Group's operations are capital light with our main
investment being in computer equipment. The Group has a regulatory
capital requirement amounting to 2.5% of regulated revenue. At the
end of 2014 this regulatory capital requirement was GBP1.31
million. Only GBP0.14m of capital expenditure was required during
the year (2013: GBP0.07m). Group policy is not to provide company
cars, and no significant capital expenditure is foreseen in the
coming year. All development work on MIDAS is treated as revenue
expenditure.
The Group had no bank borrowings at 31 December 2014 (2013:
GBPnil) with unrestricted bank balances of GBP5.3m (2013:
GBP6.7m).
The following demonstrates how cash generated from operations
was applied
Unrestricted bank balances at the GBP6.7m
beginning of the year
Cash generated from operating activities GBP8.9m
before
IPO costs and loans advanced for
commercial return
Interest received GBP0.1m
Share issue GBP0.1m
Repayment of loans advanced for GBP1.4m
commercial return
New loans advanced for commercial (GBP1.0m)
return
Taxes paid (GBP1.5m)
Capital expenditure (GBP0.1m)
Costs incurred in relation to IPO (GBP0.7m)
Redemption of shares (GBP4.6m)
Dividends paid (GBP4.0m)
Unrestricted bank balances at the GBP5.3m
end of the year
The Group's emphasis is to reduce risk by spreading deposits
over a number of institutions rather than to seek marginal
improvements in returns.
Further information on Board Changes
Lucy Claire Tilley (nee Haythorn), age 43, was most recently a
director in the corporate broking team at Canaccord Genuity Limited
and was part of the team that worked on MAB's recent admission to
AIM. She is a chartered accountant having qualified with KPMG in
1996.
Save as disclosed above and detailed below, there are no other
details to be disclosed regarding Lucy Tilley's appointment as
required under paragraph (g) of Schedule 2 of the AIM Rules.
Directorships held during the past five years
None
The following information is an extract from the audited
financial statements. See Note 19 for further information.
2014 Financial Statements
Consolidated statement of comprehensive income for the year
ended 31 December 2014
Note
2014 2013
GBP GBP
------------------------------------- ----- ------------- -------------
Revenue 3 56,577,613 40,066,719
Cost of sales 4 (42,932,390) (29,684,918)
------------------------------------- ----- ------------- -------------
Gross profit 13,645,223 10,381,801
Administrative expenses (6,257,174) (5,745,335)
Share of profit of associates 458,074 344,573
------------------------------------- ----- ------------- -------------
Operating profit before exceptional
costs 7,846,123 4,981,039
Exceptional costs 5 (1,093,944) -
Operating profit 6,752,179 4,981,039
Finance income 124,066 254,094
Profit before tax 6,876,245 5,235,133
Tax expense 6 (1,485,042) (1,090,644)
------------------------------------- ----- ------------- -------------
Profit for the year attributable
to equity holders of parent
company 5,391,203 4,144,489
------------------------------------- ----- ------------- -------------
Total comprehensive income
attributable to equity holders
of parent company 5,391,203 4,144,489
------------------------------------- ----- ------------- -------------
Earnings per share attributable
to the owners of the parent
Basic 7 9.626p 5.924p
------------------------------------- ----- ------------- -------------
Diluted 7 9.588p 5.924p
------------------------------------- ----- ------------- -------------
Consolidated statement of financial position as at 31 December
2014
2014 2013
Note GBP GBP
------------------------------- ------ ----------- -----------
Assets
Non-current assets
Property, plant and
equipment 204,228 176,832
Goodwill 9 4,114,107 4,114,107
Other intangible assets 9 45,118 63,165
Investments 252,766 198,743
Total non-current assets 4,616,219 4,552,847
------------------------------- ------ ----------- -----------
Current assets
Trade and other receivables 3,265,224 3,698,180
Cash and cash equivalents 10 9,270,006 9,388,153
------------------------------- ------ ----------- -----------
Total current assets 12,535,230 13,086,333
------------------------------- ------ ----------- -----------
Total assets 17,151,449 17,639,180
------------------------------- ------ ----------- -----------
Equity and liabilities
Equity attributable
to owners of the parent
Share capital 13 50,510 69,960
Share premium 3,042,255 2,988,891
Capital redemption
reserve 19,532 46
Share option reserve 10,553 -
Retained earnings 4,497,264 7,621,981
------------------------------- ------ ----------- -----------
Total equity 7,620,114 10,680,878
------------------------------- ------ ----------- -----------
Liabilities
Non-current liabilities
Provisions 11 750,679 588,783
Deferred tax liability 12 25,121 18,146
------------------------------- ------ ----------- -----------
Total non-current liabilities 775,800 606,929
------------------------------- ------ ----------- -----------
Current liabilities
Trade and other payables 8,252,905 5,805,437
Corporation tax liability 502,630 545,936
------------------------------- ------ ----------- -----------
Total current liabilities 8,755,535 6,351,373
------------------------------- ------ ----------- -----------
Total liabilities 9,531,335 6,958,302
------------------------------- ------ ----------- -----------
Total equity and liabilities 17,151,449 17,639,180
------------------------------- ------ ----------- -----------
Consolidated statement of changes in equity for the year ended
31 December 2014
Capital Share
Share Share redemption option Retained Total
capital premium reserve reserve earnings Equity
GBP GBP GBP GBP GBP GBP
----------------------- --------- ----------- ------------ --------- ------------ -------------
Balance at 1
January 2013 69,960 2,988,891 46 - 4,118,272 7,177,169
Profit for the
year - - - - 4,144,489 4,144,489
----------------------- --------- ----------- ------------ --------- ------------ -------------
Total comprehensive
income - - - - 4,144,489 4,144,489
----------------------- --------- ----------- ------------ --------- ------------ -------------
Transactions
with owners
Dividends paid - - - - (640,780) (640,780)
----------------------- --------- ----------- ------------ --------- ------------ -------------
Transactions
with owners - - - - (640,780) (640,780)
----------------------- --------- ----------- ------------ --------- ------------ -------------
Balance at 31
December 2013
and 1 January
2014 69,960 2,988,891 46 - 7,621,981 10,680,878
Profit for the
year - - - - 5,391,203 5,391,203
----------------------- --------- ----------- ------------ --------- ------------ -------------
Total comprehensive
income - - - - 5,391,203 5,391,203
----------------------- --------- ----------- ------------ --------- ------------ -------------
Transactions
with owners
Share based
payment transactions - - - 10,553 - 10,553
Issue of new
shares 36 53,364 - - - 53,400
Redemption of
shares (19,486) - 19,486 - (4,558,168) (4,558,168)
Dividends paid - - - - (3,957,752) (3,957,752)
Transactions
with owners (19,450) 53,364 19,486 10,553 (8,515,920) (8,451,967)
----------------------- --------- ----------- ------------ --------- ------------ -------------
At 31 December
2014 50,510 3,042,255 19,532 10,553 4,497,264 7,620,114
----------------------- --------- ----------- ------------ --------- ------------ -------------
Consolidated statement of cash flows for the year ended 31
December 2014
Cash flows from operating activities
Profit for the year before tax 6,876,245 5,235,133
Adjustments for
Depreciation of property, plant
and equipment 112,083 74,515
Profit on disposal of property,
plant and equipment - (315)
Amortisation of intangibles 18,047 20,048
Share based payments 10,553 -
Share of profit of associates (458,074) (344,573)
Finance income (124,066) (254,094)
--------------------------------------- ------------ ----------
6,434,788 4,730,714
Changes in working capital
Decrease/(increase) in trade
and other receivables 432,956 (740,747)
Increase in trade and other payables 2,447,419 1,687,956
Increase/(decrease) in provisions 161,896 (20,961)
Cash generated from operating
activities 9,477,059 5,656,962
Income taxes paid (1,521,373) (709,190)
--------------------------------------- ------------ ----------
Net cash inflow from operating
activities 7,955,686 4,947,772
--------------------------------------- ------------ ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (139,479) (112,537)
Proceeds from sale of property,
plant and equipment - 526
Acquisitions of associates and
investments (150) (50,300)
Proceeds from disposal of associates - 766
Dividends received from associates 404,250 245,367
--------------------------------------- ------------ ----------
Net cash inflow from investing
activities 264,621 83,822
--------------------------------------- ------------ ----------
Cash flows from financing activities
Interest received 124,066
Redemption of shares (4,558,168)
Issue of shares 53,400
Dividends paid (3,957,752)
--------------------------------------- ------------
Net cash outflow from financing
activities (8,338,454)
--------------------------------------- ------------
Net (decrease)/increase in cash
and cash equivalents (118,147)
Cash and cash equivalents at
the beginning of year 9,388,153
--------------------------------------- ------------
Cash and cash equivalents at
the end of the year 9,270,006
--------------------------------------- ------------
Notes to the financial statements
for the year ended 31 December 2014
1. Accounting policies
New Standards, interpretations and amendments not yet
effective
The following new standards, interpretations and amendments
which will or may have an effect on the Group, are effective for
annual periods beginning on or after 1 January 2015 and have not
yet been applied in preparing these financial statements. None of
these new standards or interpretations are expected to have a
material impact on the financial statements of the Group.
-- IFRS 9 will eventually replace IAS 39 in its entirety.
However, the process has been divided into three main components
(classification and measurement, impairment and hedge accounting).
This standard becomes effective for accounting periods beginning on
or after 1 January 2018. Its adoption may result in changes to the
classification and measurement of the Group's financial
instruments, including any impairment thereof.
-- IFRS 15 'Revenue from Contracts with Customers' was issued by
the IASB on 28 May 2014 and applies to an entity's first annual
IFRS financial statements for a period beginning on or after 1
January 2017.It sets out the requirements for recognising revenue
that apply to contracts with customers, except for those covered by
standards on leases, insurance contracts and financial
instruments.
-- Amendments to IFRS11 "Accounting for Acquisitions of
Interests in Joint Operations" provides guidance on how to account
for the acquisition of joint operations that constitute a business
as defined in IFRS 3 Business Combinations. It is effective for
accounting periods beginning on or after 1 January 2016.
-- Amendments to IAS 16 and IAS 38 "Clarification of Acceptable
Methods of Depreciation and Amortisation". The amendment to IAS 16
prohibits entities from using a revenue-based depreciation method
for items of property, plant and equipment. The amendment to IAS 38
introduces a rebuttable presumption that revenue is not an
appropriate basis for amortisation of intangible assets. It is
effective for accounting periods beginning on or after 1 January
2016.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the
practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining
whether de-facto control exists the company considers all relevant
facts and circumstances, including:
- The size of the company's voting rights relative to both the
size and dispersion of other parties who hold voting rights
- Substantive potential voting rights held by the company and by other parties
- Other contractual arrangements
- Historic patterns in voting attendance.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
Entities that are not subsidiaries but where the group has
significant influence (i.e. the power to participate in the
financial and operating policy decisions) are accounted for as
associates.
The results and assets and liabilities of the associates are
included in the consolidated accounts using the equity method of
accounting.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs.
Depreciation is provided on all items of property, plant and
equipment at rates calculated to write off the cost of each asset
on a straight line basis over its expected useful lives, as
follows:
Fixtures and fittings 20%
Computer equipment 33%
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised in the income
statement. The directors reassess the useful economic life of the
assets annually.
Goodwill
Goodwill represents the excess of the cost of a business
combination over, in the case of business combinations completed
prior to 1 January 2011, the Group's interest in the fair value of
identifiable assets, liabilities and contingent liabilities
acquired. For business combinations completed after 1 January 2011,
the goodwill represents the excess of a cost of a business
combination over the Group's interest in the fair value of
identifiable assets under IFRS 3 Business Combinations.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in
full to the consolidated statement of comprehensive income on the
acquisition date.
Other intangible assets
Intangible assets other than goodwill acquired by the Group
comprise licences and are stated at cost less accumulated
amortisation and impairment losses. Amortisation is charged to
statement of comprehensive income within administrative expenses on
a straight line basis over the period of the licence agreements.
Assets are tested annually for impairment or more frequently if
events or circumstances indicate potential impairment.
Amortisation is provided on licences at 16.7% per annum,
calculated to write off the cost of the asset on a straight line
basis over its expected useful life.
Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of the asset exceeds its recoverable amount
(i.e. the higher of value in use and fair value less costs to
sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
smallest Group of assets to which it belongs for which there are
separately identifiable cash flows, its cash generating units
('CGUs'). Goodwill is allocated on initial recognition to each of
the Group's CGUs that are expected to benefit from the synergies of
the combination giving rise to the goodwill.
Unquoted investments
Unquoted investments are shown at cost less provision for
impairment.
Financial assets
The Group classifies its financial assets as loans or
receivables. The classification depends on the purpose for which
the financial assets were acquired. Loans and receivables are
non-derivative financial assets with fixed or determinable payments
which arise principally through the provision of services (e.g.
trade receivables). These are recognised at original fair value
cost, less appropriate provision for impairment.
The Group's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts, the amount
of such a provision being the difference between the net carrying
amount and the present value of the future expected cash flows
associated with the impaired receivable. For trade receivables,
which are reported net; such provisions are recorded in a separate
allowance account with the loss being recognised within
administrative expenses 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.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with banks with an original maturity of three months or
less.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently carried at amortised cost.
Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are
charged to the consolidated statement of comprehensive income in
the year to which they relate.
Provisions
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Company's ordinary shares are classified
as equity instruments. Incremental costs directly attributable to
the issue of new shares are shown in share premium as a deduction
from the proceeds.
Revenue
Revenue comprises commissions and fees receivable. Commissions
are included at the gross amounts receivable by the Group in
respect of all services provided. Commissions payable to trading
partners in respect of their share of the commissions earned are
included in cost of sales.
Commissions earned are accounted for when received, as until
received it is not possible to be certain that the transaction will
be completed. In the case of life commissions there is a
possibility for a period after the inception of the policy that
part of the commission earned may have to be repaid if the policy
is cancelled during this period. A provision is made for the
expected level of commissions repayable.
Other income comprises income from ancillary services such as
survey and conveyancing fees and is credited to the statement of
comprehensive income on an accruals basis.
Leased assets
Rentals under operating leases are charged on a straight line
basis over the lease term, even if the payments are not made on
such a basis. Benefits received and receivable as an incentive to
sign an operating lease are similarly spread on a straight line
basis over the lease term, except where the period to the review
date on which the rent is first expected to be adjusted to the
prevailing market is shorter than the full lease term, in which
case the shorter period is used.
Finance income
Finance income comprises interest receivable on cash at bank.
Interest income is recognised in statement of comprehensive
incomeas it accrues.
Exceptional items
As permitted by IAS 1 'Presentation and disclosure' certain
items are presented separately in the statement of comprehensive
income as exceptional where, in the judgement of the directors,
they need to be disclosed by virtue of their nature, size or
incidence in order to obtain a clear and consistent presentation of
the Group's underlying business performance. Examples of material
and non-recurring costs which may give rise to disclosure as
exceptional items include asset impairments and costs associated
with acquiring new businesses.
Taxation
Income tax comprises current and deferred tax. Income tax is
recognised in profit or loss except to the extent that it relates
to items recognised in other comprehensive income in which case it
is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income
for the year using tax rates enacted or substantively enacted by
the statement of financial position date and any adjustment to tax
payable in respect of previous years.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- Investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probably that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantially enacted by the
statement of financial position date and are expected to apply when
the deferred tax liabilities or assets are settled or recovered.
Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company, or
-- different company entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
and liabilities are expected to be settled or recovered.
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 combined income statement that is reviewed by the CODM.
Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
they are paid. In the case of final dividends, this is when they
are approved by the shareholders.
Share based payments
Where equity settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to the
statement of comprehensive income over the vesting period.
Non-market vesting conditions are taken into account by adjusting
the number of equity instruments expected to vest at each reporting
date so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually
vest. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. As long as all
other vesting conditions are satisfied, a charge is made
irrespective of whether the market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to
achieve a market vesting condition or where a non-vesting condition
is not satisfied.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the statement of comprehensive income over the remaining vesting
period.
Where options are granted to persons other than employees, the
statement of comprehensive income is charged with the fair value of
the options at the date of the grant over the vesting period.
2 Critical Accounting Estimates and Judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The directors consider that the
following estimates and judgements that have the most significant
effect on the carrying amounts of assets and liabilities within the
financial statements are discussed below.
(a) Impairment of goodwill
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the choice
of a discount rate in order to calculate the present value of the
cash flows. Actual outcomes may vary. More information including
carrying values is included in note 9.
(b) Impairment of trade and other receivables
Judgement is required when determining if there is any
impairment to the trade and other receivable balances. Trade
receivables are reviewed for impairment if they are past due and
are not repaid within the terms of the contracts. Other
receivables, which include loans, are reviewed for impairment when
there are any indications that they may not be recoverable or that
security held against the balance may be inadequate to fully cover
the amount outstanding. A provision for impairment will be made if
following review of the balances, the Group considers it unlikely
that any balance will be recovered.
(c) Clawback Provision
The provision relates to the estimated cost of repaying
commission received on life assurance policies that may lapse in a
period of up to four years following inception. The provision is
calculated using a model that has been developed over several
years. The model uses a number of factors including the total
unearned commission at the point of calculation, the age profile of
the commission received, the Group's proportion of any clawback,
likely future lapse rates, and the success of the Group's team that
focuses on preventing lapses and/or generating new income at the
point of a lapse. More information is included in note 11.
3 Revenue
The Group operates in one segment being that of the provision of
financial services in the UK.
Revenue is derived as follows:
2014 2013
GBP GBP
Mortgage related products 32,148,696 21,594,777
Insurance and other protection
products 23,702,415 17,667,253
Conveyancing and survey fees
and other income 726,502 804,689
--------------------------------- ----------- ------------
56,577,613 40,066,719
-------------------------------- ----------- -----------
4 Cost of sales
Costs of sales are as follows:
2014 2013
GBP GBP
Commissions paid 41,886,947 28,159,716
Wages and salary costs 1,045,443 1,525,202
------------------------- ----------- -----------
42,932,390 29,684,918
------------------------ ----------- -----------
5 Exceptional costs
The following items have been included in arriving at profit
before tax:
2014 2013
GBP GBP
--------------------------- ------------ -----
Costs incurred in relation 746,053 -
to the IPO
Provision against loan 347,891 -
--------------------------- ------------ -----
Total 1,093,944 -
--------------------------- ------------ -----
In November 2014, the Group was listed on the Alternative
Investment Market ("AIM"). The costs charged to the consolidated
statement of comprehensive income relate to costs incurred as a
result of the listing. These costs include such items as marketing
expenditure and legal and professional fees relating to work
performed for the listing.
At 31 December 2014 there was a loan outstanding to Client Data
Systems Group Limited of GBP347,891 (2013: GBP347,891), a company
in which Mortgage Advice Bureau Limited had a 7% shareholding. The
loan was fully provided for in the year.
6. Income Tax
2014 2013
GBP GBP
-------------------------------- ---------- ----------
Current tax expense
UK corporation tax charge on
profit for the year 1,555,390 1,138,516
Adjustments for over provision
in prior years (77,323) (62,109)
-------------------------------- ---------- ----------
Total current tax 1,478,067 1,076,407
-------------------------------- ---------- ----------
Deferred tax expense
Origination and reversal of
timing differences 9,355 12,522
Effect of change in tax rate
on opening liability (2,380) 1,715
-------------------------------- ---------- ----------
Total Deferred Tax (see note
12) 6,975 14,237
-------------------------------- ---------- ----------
Total tax expense 1,485,042 1,090,644
-------------------------------- ---------- ----------
The reasons for the difference between the
actual charge for the year and the standard
rate of corporation tax in the United Kingdom
of 21.5% (2013: 23.25%) applied to profit for
the year is as follows:
2014 2013
GBP GBP
-------------------------------- ---------- ----------
Profit for the year before
tax 6,876,245 5,235,133
-------------------------------- ---------- ----------
Expected tax charge based on
corporation tax rate 1,478,393 1,217,168
Expenses not deductible for
tax purposes
amortisation and impairment 184,838 14,742
Utilisation of tax losses - (5,377)
Adjustments to tax charge in
respect of prior periods (77,323) (62,109)
Profits from associate (98,486) (75,495)
Rate change on deferred tax
liability (2,380) 1,715
-------------------------------- ---------- ----------
Total tax expense 1,485,042 1,090,644
-------------------------------- ---------- ----------
Changes in the taxation rate
The standard rate of corporation tax in the United Kingdom
changed from 24% to 23% with effect from 1 April 2013 and from 23%
to 21% from 1 April 2014. Further changes have also been enacted
which reduced the main rate of corporation tax to 21% from 1 April
2015 and so the deferred tax balance has been calculated at that
enacted rate.
7. Earnings Per Share
a) Earnings per share
2014 2013
Basic earnings per share GBP GBP
----------------------------------- ----------- -----------
Profit for the year attributable
to the owners of the parent 5,391,203 4,144,489
----------------------------------- ----------- -----------
Weighted average number of shares
in issue (see note below) 56,009,100 69,960,000
----------------------------------- ----------- -----------
Basic earnings per share (in
pence per share) 9.626p 5.924p
----------------------------------- ----------- -----------
For diluted earnings per share, the weighted
average number of ordinary shares in existence
is adjusted to include all dilutive potential
ordinary shares arising from share options.
2014 2013
Diluted earnings per share GBP GBP
----------------------------------- ----------- -----------
Profit for the year attributable
to the owners of the parent 5,391,203 4,144,489
----------------------------------- ----------- -----------
Weighted average number of shares
in issue (see note below) 56,229,933 69,960,000
----------------------------------- ----------- -----------
Basic earnings per share (in
pence per share) 9.588p 5.924p
----------------------------------- ----------- -----------
b) Adjusted earnings per share
2014 2013
GBP GBP
----------------------------------- ----------- -----------
Profit for the year attributable
to the owners of the parent 5,391,203 4,144,489
Adjusted for the following items
net of tax:
Exceptional costs 1,019,147 -
----------------------------------- ----------- -----------
Adjusted earnings net of tax 6,410,350 4,144,489
----------------------------------- ----------- -----------
Weighted average number of shares
in issue 56,009,100 69,960,000
----------------------------------- ----------- -----------
Adjusted basic earnings per share
(in pence per share) 11.445p 5.924p
Adjusted diluted earnings per
share (in pence per share) 11.400p 5.924p
----------------------------------- ----------- -----------
Until 11 November 2014 the Company's share capital comprised
ordinary shares of GBP1 each, at which point these were subdivided
into 0.1 pence shares each. To allow comparability, the weighted
average has therefore been restated based on shares being 0.1 pence
shares throughout both 2014 and 2013
8. Dividends
2014 2013
Dividends paid during the year GBP GBP
On A ordinary shares at GBPnil
per share (2013: GBP60) - 240,000
On B ordinary shares at GBP52.078
per share (2013: GBP8) 2,083,154 320,000
On C ordinary shares at GBP10 24,600 -
per share (2013: GBPnil)
On D ordinary shares at 0.0p
per share (2013: 0.0578p) - 780
On E ordinary shares at GBPnil
per share (2013: GBP8) - 80,000
On ordinary shares at GBP36.625 1,849,998 -
per share (2013: GBPnil)
------------------------------------ ---------- ---------
3,957,752 640,780
9. Intangible Assets
Goodwill 2014 2013
GBP GBP
------------------------ ---------- ----------
Cost
At 1 January 4,267,453 4,267,453
At 31 December 4,267,453 4,267,453
-------------------------- ---------- ----------
Accumulated impairment
At 1 January 153,346 153,346
At 31 December 153,346 153,346
-------------------------- ---------- ----------
Net book value
At 31 December 4,114,107 4,114,107
-------------------------- ---------- ----------
The goodwill relates to the acquisition of Talk Limited in 2012,
and in particular its main operating subsidiary Mortgage Talk
Limited. The goodwill is deemed to have an indefinite useful life.
It is currently carried at cost and is reviewed annually for
impairment.
Under IAS 36, "Impairment of assets", the Group is required to
review and test its goodwill annually each year or in the event of
a significant change in circumstances. The impairment review
conducted at the end of 2014 concluded that there had been no
impairment of goodwill.
The Board considers that it now has only one operating segment,
so accordingly it is necessary to assess the impact of the
acquisition of Mortgage Talk Limited to the Group. The value in use
of Mortgage Talk Limited has therefore been estimated based on the
improvements in net profits which that unit continues to bring to
the Group. The forecast on-going profits generated by the
acquisition of Mortgage Talk Limited significantly exceed the value
of goodwill and therefore no impairment of the goodwill is
required. On this basis it has not been possible to apply a
discount rate to these calculations. Management has considered
forecast profits over a three year period in determining the value
in use. Management believes that any reasonably possible change to
any of the key assumptions applied in determining the value in use
would not cause the carrying amount of goodwill to exceed the
forecast ongoing profits.
Licences 2014 2013
GBP GBP
-------------------------- -------- --------
Cost
At 1 January 108,461 108,461
At 31 December 108,461 108,461
---------------------------- -------- --------
Accumulated Amortisation
At 1 January 45,296 25,248
Charge for the year 18,047 20,048
At 31 December 63,343 45,296
---------------------------- -------- --------
Net book value
At 31 December 45,118 63,165
---------------------------- -------- --------
10. Cash and cash equivalents
2014 2013
GBP GBP
-------------------------------- ---------- ----------
Unrestricted cash and bank
balances 5,281,117 6,702,642
Bank balances held in relation
to retained commissions 3,988,889 2,685,511
-------------------------------- ---------- ----------
Cash and cash equivalents 9,270,006 9,388,153
-------------------------------- ---------- ----------
Bank balances held in relation to retained commissions are held
to cover potential future lapses in AR commissions. Operationally,
the Group does not treat these balances as available funds. An
equal and opposite liability is shown within Trade Payables.
11. Provisions
Clawback provision 2014 2013
GBP GBP
------------------------------------- -------- ---------
At 1 January 588,783 609,744
Charged/(released) to the statement
of comprehensive income 161,896 (20,961)
------------------------------------- -------- ---------
At 31 December 750,679 588,783
------------------------------------- -------- ---------
The provision relates to the estimated cost of repaying
commission income received on life assurance policies that may
lapse in the four years following issue. Provisions are held in the
financial statements of three of the group's subsidiaries: Mortgage
Advice Bureau Limited, Mortgage Advice Bureau (Derby) Limited and
Mortgage Talk Limited. The exact timing of any clawbacks is
uncertain and the provision was based on the directors' best
estimate, using industry data where available, of the probability
of clawbacks to be made.
12. Deferred Tax Liability
Deferred tax liability is calculated in full on temporary
differences under the liability method using the tax rates enacted.
The reduction in the main rate of corporation tax as set out in
note 6 has been applied to deferred tax balances which are expected
to reverse in the future.
The movement in deferred tax is shown below:
2014 2013
GBP GBP
----------------------------- ------- -------
Deferred tax liability
- opening balance 18,146 3,909
Recognised in the statement
of comprehensive income 6,975 14,237
----------------------------- ------- -------
Deferred tax liability
- closing balance 25,121 18,146
----------------------------- ------- -------
The deferred tax liability is made up as follows:
2014 2013
GBP GBP
-------------------------------- ------- -------
Accelerated capital allowances 25,121 18,146
-------------------------------- ------- -------
Deferred tax liabilities have arisen due to capital allowances
which have been received ahead of the depreciation charged in the
accounts.
13. Share Capital
Issued and fully paid
2014 2013
GBP GBP
--------------------------- ------- -------
A Ordinary shares of GBP1
each - 4,000
B Ordinary shares of GBP1
each - 40,000
C Ordinary shares of GBP1
each - 2,460
D Ordinary shares of GBP1
each - 13,500
E Ordinary shares of GBP1
each - 10,000
Ordinary shares of 0.001p 50,510 -
each
--------------------------- ------- -------
Total share capital 50,510 69,960
--------------------------- ------- -------
The holders of the A Ordinary shares were entitled to a dividend
in preference to any dividend voted to any other class of share and
were redeemable at the option of the company. The A Ordinary shares
were entitled to priority of proceeds upon a winding up or return
of capital and carried voting rights totalling 5%.
The B Ordinary shares were not entitled to dividends other than
at the discretion of the board but not if there were any arrears on
the A dividends or if there remained any A shares to be bought back
after the 1 January 2019. In the event of a winding up or return of
capital the proceeds were payable to the holders of the B shares
after any amounts paid to the A and C shareholders. The B shares
with the E shares carried voting rights totalling 65%.
The C Ordinary shares were not entitled to dividends other than
at the discretion of the board. The C shares were repayable at par
upon a winding up or return of capital and did not carry voting
rights.
The D Ordinary shares were not entitled to dividends other than
at the discretion of the board but not if there were any arrears on
the A dividends or if there remain any A shares to be bought back
after the 1 January 2019. The D shares were repayable at par upon a
winding up or return of capital. The D shares carried voting rights
totalling 30%.
The E Ordinary shares were not entitled to any dividends other
than at the discretion of the board but not if there were any
arrears on the A dividends or if there remained any A shares to be
bought back after the 1 January 2019. In the event of a winding up
or return of capital the proceeds were payable to the holders of
the E shares after any amounts paid to the A shareholders. The E
shares with the B shares carried voting rights totalling 65%.
On 3 January 2014 all 4,000 A Ordinary shares of GBP1 in issue
were purchased by the company and cancelled for a total
consideration of GBP4,521,816. On the same date 4,500 D Ordinary
shares of GBP1 were purchased by the company and cancelled for a
total consideration of GBP4,500.
On 25 June 2014, 1,188 of the E Ordinary shares of GBP1 were
redesignated as B Ordinary shares of GBP1 and the 2,460 C Ordinary
shares of GBP1 were converted to B Ordinary shares of GBP1 at the
rate of 1 B Ordinary share for every 3.56 C Ordinary shares held.
On the same date the remaining 9,000 D Ordinary shares of GBP1 were
purchased by the company and cancelled for a total consideration of
GBP9,000.
On 8 September 2014 217 Ordinary shares of GBP1 each were
purchased by the company and cancelled for a consideration of
GBP217.
Stamp duty of GBP22,635 was incurred on the cancellation of the
shares referred to above.
On 31 October 2014 all remaining shares were redesignated as
Ordinary shares and the 50,474 Ordinary shares of GBP1 each were
redesignated as 50,474,000 Ordinary shares of 0.001p each. All
shares rank pari passu in all respects.
On 4 November 2014, 35,600 Ordinary shares of 0.1 pence were
issued for a total consideration of GBP53,400.
14. Reserves
The following describes the nature and purpose of each reserve
within equity
Reserve Description and purpose
Share premium Amount subscribed for share
capital in excess of nominal
value.
Capital redemption The capital redemption reserve
reserve represents the cancellation
of part of the original share
capital premium of the company
at par value of any shares
Share option repurchased.
reserve
The fair value of equity instruments
granted by the Company in
respect of share based payment
transactions.
Retained earnings All other net gains and losses
and transactions with owners
(e.g. dividends) not recognised
elsewhere.
There is no restriction on the distribution of retained
earnings.
15. Related Party Transactions
On 3 January 2014 all 4,000 A Ordinary shares of GBP1 in issue
were purchased by the company and cancelled for a total
consideration of GBP4,521,816. On the same date 4,500 D Ordinary
shares of GBP1 were purchased by the company and cancelled for a
total consideration of GBP4,500. The recipients of all of this
consideration were directors of the company at this date.
On 25 June 2014 9,000 D Ordinary shares of GBP1 were purchased
by the company and cancelled for a total consideration of GBP9,000.
The recipients of GBP4,500 of this consideration were directors of
the company at this date.
On 8 September 2014 217 Ordinary shares of GBP1 each were
purchased by the company and cancelled for a consideration of
GBP217. The recipient of this consideration was a director of the
company at this date.
At 31 December 2014 included in other receivables there was an
amount of GBP1,000,000 (2013: GBPnil) due to the Group from HBB
Bridging Loans Limited, a company in which S Blunt and D Preece are
directors and shareholders. This loan is secured, by a fixed and
floating charge over the assets of the company and personal
guarantees from certain directors of HBB Bridging Loans Limited. It
accrues interest at a rate of 9.5% per annum above RBS bank base
rate and has no fixed repayment date, although three months' notice
to terminate can be given by either party.
At 31 December 2013 included in other receivables there was an
amount of GBP906,563 due to the Group from House Buyer Bureau
Limited, a company in which S Blunt is a director and shareholder.
This loan was unsecured, accrued interest at a rate of 8.75% per
annum and had no fixed repayment date. The loan was repaid in full
in January 2014.
The Group made purchases of GBP45,283 (2013: GBP46,046) and
sales of GBP2,606 (2013: GBP4,781) to BriefYourMarket Limited. At
31 December 2014 there was an amount of GBP521 due to the Group by
BriefYourMarket Limited (2013: GBP488,926), and GBP4,627 (2013:
GBP1,448) was due to BriefYourMarket Limited, a company in which R
Palmer, P Robinson and P Brodnicki are or were directors and are
shareholders. The amount due at 31 December 2013 of GBP488,926
included in other receivables represented an unsecured loan, which
accrued interest at a rate of 8.75% per annum and had no fixed
repayment date. The loan was repaid in full in January 2014.
At 31 December 2014 there was a loan outstanding by Client Data
Systems Group Limited included in other receivables of GBP347,891
(2013: GBP347,891), a company in which Mortgage Advice Bureau
Limited had a 7% shareholding. This loan is secured by personal
guarantees and on the freehold property owned by one of the
guarantors. The loan attracts interest at a rate of 10% per annum
and has no fixed repayment date. The loan was fully provided for in
the year.
Accounting services were provided to the Group by Robconsult
Limited, a company in which P Robinson is a director and
shareholder. Services supplied were on an arm's length basis and
amounted to GBP9,065 plus VAT during the year (2013: GBP19,078 plus
VAT). At the year-end GBPnil (2013: GBP1,813) was owing to
Robconsult Limited included in trade payables in respect of these
transactions.
During the year the Group made purchases from Astute Insurance
Solutions Limited of GBP5,514 (2013: GBP3,535), a company in which
P Robinson is a shareholder and was a director.
During the year the Group received introducer fees of GBP34,038
(2013: GBP26,267) from Capital Private Finance Limited, an
associated company. At 31 December 2014 there was a balance due
from Capital Private Finance Limited of GBP3,566 (2013: GBP3,410)
included in trade receivables.
At 31 December 2014 there was a loan outstanding by Pinnacle
Surveyors (England & Wales) Limited an associated company, of
GBP15,000 (2013: GBP18,600) included in trade receivables.
At 31 December 2014, Buildstore Limited, an associated company
owed GBP114,000 (2013: GBPnil) included in trade receivables.
During the year the Group received dividends from associated
companies as follow:
2014 2013
GBP GBP
--------------------------------- -------- --------
CO2 Commercial Limited 191,100 117,967
Capital Private Finance Limited 213,150 127,400
--------------------------------- -------- --------
Total 404,250 245,367
--------------------------------- -------- --------
16. Share based payments
The Group operates two equity-settled share based remuneration
schemes for executive directors and certain senior management, one
being an approved scheme, the other unapproved, but with similar
terms. Half of the options are subject to a total shareholder
return ("TSR") performance condition and the remaining half is
subject to an earnings per share ("EPS") performance condition. The
options in both schemes vest as follows:
-- 25% based on performance to 31 March 2017, exercisable between that date and 11 November 2022,
-- 25% based on performance to 31 March 2018, exercisable between that date and 11 November 2022,
-- 25% based on performance to 31 March 2018, exercisable
between 31 March 2019 and 11 November 2022,
-- 25% based on performance to 31 March 2018, exercisable
between 31 March 2020 and 11 November 2022.
Weighted
average
exercise
price 2014
2014 GBP
GBP
---------------------------- ---------- --------------------------
Outstanding at 1 January - -
Granted during the year 1.60 1,325,000
---------------------------- ---------- --------------------------
Outstanding at 31 December 1.60 1,325,000
---------------------------- ---------- --------------------------
Of the total number of options outstanding at 31 December 2014,
none had vested. There were no options exercised during the year.
For the share options outstanding as at 31 December 2014, the
weighted average remaining contractual life is 3.75 years (2013:
not applicable).
The following information is relevant in the determination of
the fair value of options granted during the year under the
equity-settled share based remuneration scheme operated by the
Group.
2014 2013
--------------------------- -------------- -----
Equity settled
Option pricing model - EPS Black-Scholes -
Option pricing model - TSR Stochastic -
Exercise price GBP1.60 -
Expected volatility 30% -
Expected dividend yield 5.4% -
Risk free interest rate 0.81 - 1.58% -
--------------------------- -------------- -----
Expected volatility is a measure of an amount by which the share
price is expected to fluctuate during a period. As the Company has
only recently listed historical data is not available. Management
have therefore used a proxy volatility figure based on the median
volatilities, of dividend paying FTSE AIM 100 companies over each
of the expected terms.
Dividends paid on shares reduce the fair value of an award as
participant does not receive the dividend income on these shares.
For the purpose of these valuations we have used a dividend yield
of 5.4%, being the dividend projected by Canaccord Genuity Limited
for investors at IPO.
The Options offer participants the opportunity to benefit from
increasing per share value without risking the current per share
price. The risk-free rate used is the rate of interest obtainable
from UK government securities as at the date of grant over the
expected terms
The option has vesting period of 2.38, 3.38, 4.48 or 5.39 years
from the date of grant and the calculation or the share based
payment is based on these vesting periods.
The share-based remuneration expense comprises the
equity-settled schemes of GBP10,553 and also a payment of GBP53,400
into a Share Incentive Plan - Free Share Award. The Free Share
award consisted of 35,600 new ordinary shares issued on 4 November
2014 into the Share Incentive Plan for all employees. Every
employee employed by the Group at 1 January 2014 and still employed
by the Group on 2 December 2014 was each awarded 400 free
shares.
The Group did not enter into any share-based payment
transactions with parties other than employees during the current
or previous period.
17. Contingent Liabilities
The group had no contingent liabilities at 31 December 2014 or
31 December 2013.
18. Events after the Reporting Date
Financial Services Compensation Scheme levy
On 19 March 2015 the Financial Services Compensation Scheme
("FSCS") confirmed a GBP20m interim levy for life and pensions
intermediaries in respect of the year to 31 March 2015, driven by
an unexpected increase in the cost of claims relating to bad advice
by certain financial advisers to transfer funds from existing
pension schemes into self-invested personal pensions. MAB does not
provide pension scheme advice, but the levy is made on the class of
intermediaries to which MAB belong. This interim levy will cover
the costs of compensation claims until the next annual levy becomes
available in July 2015.
MAB will contribute GBP89,449 to the interim levy. No provision
has been made in these financial statements for this or any
additional FSCS levies that may be raised during the year ending
31
19 . Distribution of the annual report and accounts to
members
The announcement set out above does not constitute a full
financial statement of the Group's affairs for the year ended 31
December 2014. The Group's auditors have reported on the full
accounts of each year and have accompanied them with an unqualified
report. The accounts have yet to be delivered to the Registrar of
Companies.
The annual report and accounts will be posted to shareholders in
due course, and will be available on our website
(www.investor.mortgageadvicebureau.com) and for inspection by the
public at the Group's head office address: Capital House, Pride
Place, Pride Park, Derby DE24 8QR during normal business hours on
any weekday. Further copies will be available on request.
The Company's annual general meeting will take place on 20 May
2015 at the offices of Canaccord Genuity Limited, 88 Wood Street,
London EC2V 7QR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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