TIDMMAB1
RNS Number : 2975H
Mortgage Advice Bureau(Holdings)PLC
24 March 2020
24 March 2020
MORTGAGE ADVICE BUREAU (HOLDINGS) PLC.
("MAB", or "the Company", or "the Group")
Moratorium on publication of financial statements, trading
update, current trading and Coronavirus
Mortgage Advice Bureau (Holdings) PLC (AIM: MAB1.L) announces
today that it will be complying with the recommendations from the
Financial Reporting Council (FRC), the Financial Conduct Authority
(FCA), and the London Stock Exchange (LSE) to all listed companies
to delay the publication of financial results for at least two
weeks. MAB had intended to release its final results for the year
ended 31 December 2019 today. Further updates will be given as to
the timing of the publication of our 2019 results, as soon as we
are advised by the FCA, the FRC and the LSE.
In light of this, we are today providing an update on our 2019
results, current trading and our responses to the Coronavirus
pandemic.
Summary of unaudited results for the year ended 31 December
2019
Financial highlights:
-- Revenue up 17% to GBP143.7m (2018: GBP123m)
-- Gross profit up 28% to GBP36.4m (2018: GBP28.4m)
-- Gross margin up 10% to 25.3% (2018: 23.1%)
-- Overheads ratio (before acquisition-related costs(1)
) of 12.4% (2018: 10.7%)
-- Profit before tax and acquisition-related costs(1) up
19% to GBP18.7m (2018: GBP15.6m)
-- Statutory profit before tax up 13% to GBP17.7m (2018:
GBP15.7m)
-- Profit before tax margin pre acquisition-related costs(1)
of 13.0% (2018: 12.7%)
-- Reported profit before tax margin of 12.3% (2018: 12.7%)
-- Adjusted(1) EPS up 16% to 30.0p (2018: 25.9p)
-- Basic EPS up 9% to 28.2p (2018: 25.9p)
-- Continued high operating profit to adjusted cash conversion(2)
of 119% (2018: 113%)
Operational highlights:
-- Adviser numbers up 20% to 1,457 at 31 December 2019 (31
December 2018: 1,213), which includes 82 Advisers from
the acquisition of First Mortgage Direct
-- Average number of Advisers during the period up 19% to
1,341 (2018: 1,130), and up 14% to 1,293 excluding First
Mortgage Direct
-- Underlying revenue per Adviser broadly flat for 2019(3)
, with improved banked productivity in H2 2019
-- Gross mortgage completions (including product transfers)
up 20% to GBP16.7bn (2018: GBP14.0bn)
-- Gross mortgage completions with new lenders up 20% to
GBP15.2bn (2018: GBP12.7bn)
-- Market share of new mortgage lending up 20% to 5.7% (2018:
4.7%)
Final dividend
In line with the Group's policy of paying-out a minimum of 75%
of adjusted earnings, as announced on the acquisition of First
Mortgage Direct, the Board had intended to propose an increased
final dividend of 12.8 pence per share, making total dividends for
the year of 23.9 pence per share, up 2.6% on the previous year.
However, in view of the escalating severity of the current
Coronavirus pandemic, we now intend to propose a final dividend of
6.4 pence per share, with the intention to pay a further 6.4 pence
per share when the Board considers it prudent to do so.
Regulatory capital, unrestricted cash and net debt
The Group has a regulatory capital requirement amounting to 2.5%
of regulated revenue. At 31 December 2019 this regulatory capital
requirement was GBP3.1m (31 December 2018: GBP2.8m), and the Group
held a surplus of GBP11.7m (31 December 2018: GBP12.0m). The
Group's unrestricted cash balance was GBP7.0m as at 31 December
2019 and GBP11.4m as at 20 March 2020 (prior to the drawdown on our
Revolving Credit Facility referred to below).
To give the Group additional flexibility to react quickly in
this environment and capitalise on potential new opportunities, we
drew down the full amount on our Revolving Credit Facility of
GBP12m with National Westminster Bank Plc on 20 March 2020.
Trading since 1 January 2020, and response to the Coronavirus
pandemic
A clear change in customer sentiment following the General
Election in early December 2019 led to much improved activity in
the housing market from the start of 2020, giving our AR firms and
their Advisers a strong start to the year in terms of new business
levels and productivity. This marked increase in activity has
remained strong up to 22 March 2020, despite increasing concerns
about the Coronavirus pandemic. Adviser numbers increased to 1,484
at 20 March 2020, despite a noticeable slowdown in recent weeks. It
is too early to predict what the impact of the Coronavirus pandemic
will be on the Group's results, but we do anticipate an inevitable
disruption to trading in the coming months and an associated impact
on our results for the full year.
We are starting to see a decline in new appointment activity in
the purchase market, and expect this trend to continue as the
Government has imposed further restrictions on social activity.
Consequently, despite the strong start to the year, we have
factored into our planning and expectations a considerable
reduction in purchase related activity, which we expect to have a
consequential impact upon adviser numbers and productivity. We
expect volumes to continue as anticipated in the re-mortgage and
product transfer markets.
Our management team has responded quickly to the Coronavirus
pandemic, as follows:
Business Continuity Plan (BCP)
Maintaining the health and well-being of our staff and AR
network remains a priority . We have successfully implemented all
aspects of our Business Continuity Plan, requiring staff at all
levels and in all functions to work remotely. Our IT platform
ensured a smooth transition and is well adapted to maintain
operations on this basis for as long as is required.
Seamless transition to telephone advice
All elements of the mortgage and protection advice process can
be transacted by telephone. Unsurprisingly, in recent weeks this
has become by far the preferred option for customers. Telephone
advice is already a fast-growing area of our business, both through
strong growth in specialist telephone advisers, as well as an
increasing number of telephone appointments being conducted by
traditionally face-to-face advisers. MAB has been providing new
guidance and tools to support a seamless transition to telephone
advice across our distribution network, ensuring business
continuity for advisers and customers across all purchase and
re-mortgage transactions.
Realignment of resources
As well as realigning our resources to enable more telephone
advice and to support advisers working from home, all our systems
and processes have been robustly tested to allow MAB's head office
and field based teams to work as effectively from home as in the
office, ensuring continued and tailored support for our
distribution channels.
Despite the anticipated reduction in the purchase market, we
expect volumes to continue as expected in the re-mortgage and
product transfer markets. Together they currently represent around
65% of the value of all UK mortgage transactions. This area of
sustained activity is clearly one of the key priorities for MAB in
this climate with resources now being largely focused on optimising
the growth opportunities for MAB in this sector.
Although we expect protection sales to fall in line with
purchase activity, the escalation of the Coronavirus pandemic has
resulted in a heightened awareness of the importance of such
products amongst customers. We have increased our focus and that of
our ARs and Advisers on protection especially in the re-mortgage
and product transfer markets, so that appropriate solutions can be
presented to customers in the current circumstances.
New campaigns and initiatives
The changes in the circumstances and priorities for consumers
has led us to design new campaigns and initiatives as part of our
communication strategy. These include a free mortgage information
support service to help the financial wellbeing of homeowners
worried about paying their mortgage. In addition, all our online,
social media, and existing client communications, which now feature
this free service, have also been tailored to reflect a heightened
awareness of protection and refinancing.
In response to the challenging environment, MAB, our AR firms
and their Advisers have an increased focus on business efficiency
and ensuring no opportunities are missed. We have commenced the
implementation of new technology-led processes and efficiencies to
optimise working practices, customer engagement and income
generation, which we expect to deliver long lasting benefits.
Government stimuli
In addition to these initiatives, the Government has also
announced a strong package of measures to ensure lenders can
continue to lend to mortgage borrowers as usual, including access
to new, significant and cost-effective funding and reduced
regulatory capital buffer requirements in this period of
exceptional challenge.
The Bank of England has also reduced its base rate to a record
low of 0.1%, allowing the cost of mortgages to be reduced even
further. This will benefit all those buying a new house or moving
home and create more re-mortgage and product transfer
opportunities. Wider measures, including increased investment in
all types of housing, should ensure the medium to long term outlook
for our market remains very positive.
Peter Brodnicki, Chief Executive, commented:
"Over 20 years we have built a high-quality distribution
network, a leading consumer brand, and an exceptional management
team that continues to adapt quickly to our new ways of working.
The Group has a strong balance sheet, is cash generative and enjoys
a healthy surplus over its regulatory capital requirement. To give
ourselves additional flexibility to capitalise on potential
opportunities quickly, we drew down the full GBP12m limit on our
Revolving Credit Facility on 20 March 2020. We are in a stronger
position than many to deal with the challenges that lie ahead and
are confident in our ability to continue growing our market share,
with a specific additional short-term focus on re-mortgages and
product transfers.
MAB has a clear strategy and we continue to strengthen our
proposition. During this pandemic our priority is to redeploy our
resources where possible to focus on lead generation, telephone
advice and remote working. We remain very optimistic about MAB's
growth prospects in the medium to long term and intend to be in a
strong position to react quickly and take full advantage of the
opportunities that will present themselves in the future."
Footnotes
(1) Costs associated with the acquisition of First Mortgage,
including GBP0.4m of one-off acquisition costs, GBP0.2m
amortisation of acquired intangibles and GBP0.4m of additional
non-cash operating expenses relating to the put and call option
agreement to acquire the remaining 20% of First Mortgage.
(2) Adjusted cash conversion is headline cash conversion
adjusted for increases in restricted cash balances of GBP2.2m in
2019 (2018: GBP1.0m) as a percentage of adjusted operating
profit.
(3) Based on average number of Advisers. Underlying basis
excludes a one-off adjustment in H1 2018 of GBP1.7m for procuration
fees awaiting processing.
For further information please contact:
Mortgage Advice Bureau (Holdings) Plc Tel: +44 (0) 1332 525007
Peter Brodnicki - Chief Executive Officer
Ben Thompson - Deputy Chief Executive Officer
Lucy Tilley - Chief Financial Officer
Numis Securities Limited Tel: +44 (0)20 7260 1000
Stephen Westgate / Hugo Rubinstein / Laura White (Corporate
Finance)
Media Enquiries: investorrelations@mab.org.uk
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END
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