Saturday, October 24, 2020

Resilience of Mortgage Advice Bureau praised as new JV partner announced

Mortgage Advice Bureau’s Chief Executive has praised the “resilience” of the Derby-headquartered firm’s operating model in interim results for the six months ended 30 June 2020.

Revenue in the period has risen 4% to £63.5m, up from £60.9m in 2019. Meanwhile statutory profit before tax dipped 15% to £6.1m, from £7.2m in 2019.

The results come with MAB’s announcement that Australian Finance Group Ltd (AFG) is to become the group’s new joint venture partner for MAB Broker Services Pty Ltd (MAB Broker Services) in Australia.

Following completion of the joint venture agreements and AFG’s investment in MAB Broker Services, MAB and AFG will have an equal shareholding in MAB Broker Services, which trades as Mortgage Advice Bureau. Completion is subject to approval from the Australian Foreign Investment Review Board, and this is expected in the next few weeks.

Peter Brodnicki, Chief Executive, said: “These results illustrate the resilience of our operating model and the quality and dedication of our management team and staff throughout the Covid-19 pandemic. By reacting quickly and redeploying our resources to capture all possible opportunities during the pandemic, we ensured that our H1 performance remained strong.

“Against an exceptionally challenging market where housing transactions were 25% lower than in H1 2019, we grew our revenue by 4% to £63.5m (H1 2019: £60.9m), including £6.1m of revenue generated by our subsidiary First Mortgage, acquired in July 2019.  Gross mortgage completions grew by 8%, and our market share by 17%, delivering on our strategy to grow market share in all market conditions whilst maintaining a strong financial position.

“Adjusted earnings per share rose by 7% to 13.2 pence (H1 2019: 12.3 pence), while basic earnings per share decreased by 15% to 10.1 pence (H1 2019: 11.9 pence), with the adverse revenue impact of the reduction in mortgage completions being partially offset by the Board and MAB’s non-furloughed employees taking a 20% paycut in Q2 2020 as the pandemic escalated.

“I am very pleased with the progress we have achieved during the period and as a result of our strong trading since the period end, the Board has approved the reimbursement of these paycuts, which will increase staff costs by a total of £0.8m in the second half.  Subject to this strong performance continuing throughout the remainder of the second half, and in the absence of any new restrictions being imposed that significantly adversely impact the housing market in the remainder of this year, we also intend to repay the £0.5m of Government grant income the Group has received.

“The Group is currently trading strongly and, in the absence of any such new restrictions, we expect adjusted profit before tax for the full year to be significantly ahead of the market’s current expectations. However, due to the uncertainty arising from the pandemic, the Board intends to only pay a final dividend in respect of the year ending 31 December 2020. As previously announced, the Board remains committed to paying a further 6.4 pence per share.

“The planned roll out of our new platform has continued and at pace, with the crisis accelerating our development of new technology projects in many areas of the business, particularly those critical to supporting the new ways of working adopted by our Appointed Representatives (“ARs”) during the lockdown.

“We have also launched ‘MAB Later Life’, a new and unique proposition in the later life market developed in partnership with a leading integrated provider of later life lending products. This is an exciting opportunity to broaden our addressable market in a highly intermediated segment where specialist advice is a key differentiator. Entering the later life market with a best in class proposition will enable MAB to attract the highest quality advisers in this sector which will help us build market share.

“In addition, Australian Finance Group Ltd (“AFG”) becomes our new joint venture partner to roll out our well established and successful UK model in Australia. Listed on the Australian Stock Exchange, AFG is a leading Australian mortgage network with extensive distribution channels and a strong broker proposition. This new joint venture is an exciting development and a real step change for our Australian operations, that will allow us to scale by attracting the best brokers into our differentiated model.

“Despite the economic challenges that lie ahead, the strong factors that underpin housing demand, combined with existing and future Government support, cause us to be optimistic about the outlook.

“We continue to deliver sustainable long-term growth by providing the best solutions and outcomes for our ARs and customers driven by our significant focus on technology developments. We plan to continue growing our market share and mortgage completions, whilst leading the evolution of intermediary distribution.”

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