Mortgage Advice Bureau (Holdings) PLC Ninth consecutive year of strong revenue and profit growth

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Mortgage Advice Bureau (Holdings) PLC (LON:MAB1) has today announced its final results for the year ended 31 December 2017.

Financial highlights

● Ninth consecutive year of strong revenue and profit growth

● Revenue up 17% to £108.8m (2016: £92.8m)

● Gross profit up 17% to £25.9m (2016: £22.1m)

● Gross margin maintained at 23.8% (2016: 23.9%)

● Overheads ratio of 10.9% (2016: 11.1%)

● Reported profit before tax of £14.5m (2016: £15.2m1)

● Profit before exceptional gain and tax up 16% to £14.5m (2016: £12.5m2)

● Profit margin before exceptional gain and tax maintained at 13.4% (2016: 13.5%2)

● Basic EPS of 23.8p (2016: 25.6p1)

● Adjusted EPS up 17% to 23.8p (2016: 20.3p2)

● Continued high operating profit to headline cash conversion3 of 120% (2016: 128%)

● Continued high operating profit to adjusted cash conversion4 of 109% (2016: 111%)

● Proposed final dividend of 11.9p making proposed total ordinary dividends for the year of 21.4p (2016: 18.3p), up 17% (payout ratio of 90%)

● Strong financial position with significant surplus on regulatory capital requirement

● Total cash balances of £22.6m (31 Dec 2016: £18.7m)

● Unrestricted cash balances of £13.2m (31 Dec 2016: £10.8m)

Operational highlights

● Average number of Advisers in 2017 up 14% to 1,008 (2016: 888)

● Adviser numbers up 13% to 1,078 at 31 December 2017 (2016: 950)

● Revenue per Adviser up 3%5

● Market share up 13% to 4.6% (2016: 4.1%)

● Gross mortgage completions up 18.5% to £11.9bn (2016: £10.0bn)

Post period end

●	Adviser numbers have increased to 1,096 at 16 March 2018
●	Stephen Smith joins MAB Board as a Non-Executive Director
●	MAB receives ‘Best Mortgage Broker’ award at Mortgage Strategy 2018 Awards

	2017	2016	Change

Revenue	£108.8m	£92.8m	+17%
Gross profit	£25.9m	£22.1m	+17%
Gross profit margin	23.8%	23.9%
Profit before tax	£14.5m	£15.2m¹
Profit before exceptional gain and tax	£14.5m	£12.5m²	+16%
PBT margin	13.4%	13.5%²
Adjusted EPS	23.8p	20.3p²	+17%
Basic EPS	23.8p	25.6p¹
Proposed final dividend per share	11.9p	10.5p	+13%
Proposed total ordinary dividends per share	21.4p	18.3p	+17%
Operating profit to headline cash conversion²	120%	128%
Operating profit to adjusted cash conversion³	109%	111%

¹ Includes exceptional gain of £2.7m profit on disposal of 49% stake in Capital Private Finance Limited in 2016.

²Excludes exceptional gain of £2.7m profit on disposal of 49% stake in Capital Private Finance Limited in 2016.

³Headline cash conversion is cash generated from operating activities adjusted for movements in non-trading items including loans to Appointed Representative firms (“ARs”) and loans to associates totalling £0.7m in 2017 (2016: £0.4m) as a percentage of operating profit.

⁴Adjusted cash conversion is headline cash conversion adjusted for increases in restricted cash balances of £1.5m in 2017 (2016: £2.1m) and additional cash balances (2017: £nil; 2016: £nil) held due to the timing of the weekly AR commission payment in relation to the period end, as a percentage of operating profit.

⁵Based on Average number of Advisers

Peter Brodnicki, Mortgage Advice Bureau (Holdings) PLC Chief Executive commented: “I am delighted to report another set of excellent results. Strong growth in revenue, up 17% to £108.8m has translated into strong growth in adjusted EPS up 17% to 23.8p. Accordingly, the Board is pleased to propose the payment of an increased final dividend of 11.9p per share, making total proposed ordinary dividends for the year of 21.4p, up 17% on the prior year.

“MAB continues to deliver on its strategy in all market conditions whilst maintaining a strong financial position. Our mortgage completions increased by 18.5% and our market share increased by 13%. Achievements across the business continue to be recognised by a number of industry awards, including being named Best Mortgage Broker at the 2018 Mortgage Strategy Awards.

“We are focused on delivering sustainable long-term growth and providing the best possible solutions and outcomes for our customers. We plan to continue growing our market share and mortgage completions, whilst leading the evolution of intermediary distribution that we expect to see over the next five years.”

Outlook

UK Finance’s estimate for gross mortgage lending in 2017 of £258bn, implies market growth of 5% since 2016. UK Finance recently increased its estimate for gross mortgage lending in 2018 to £260bn, as well as publishing a first estimate for 2019 of £271bn. Gross mortgage lending is therefore expected to be relatively flat for 2018 and show a 4% increase for 2019.

Adviser numbers have increased since the year end to 1,096 at 16 March 2018. We remain confident about our planned growth in adviser numbers in 2018 and beyond, both organically and from new ARs.

We are confident that our strategy, driven by our customers and their changing expectations, will continue to drive growth in MAB’s market share year on year and deliver attractive returns to investors. The Board’s expectations for the year remain unchanged.