Investor and Analyst Presentation Delivering On Our Strategy Mortgage Advice Bureau (Holdings) plc Final Results – Year ended 31 December 2016 March/April 2017
Disclaimer The information contained in this document members, officers, trustees, employees or any forward-looking statements contained in (“Presentation”) has been prepared by agent, as to the accuracy, fairness or this Presentation or any other forward looking Mortgage Advice Bureau (Holdings) plc (the completeness of the information or opinions statements it may make, save in respect of any “Company”). This Presentation has not been contained in this Presentation and, save in requirement under applicable law or approved by an authorised person within the respect of fraud or wilful default, no liability regulation. Any forward-looking statements in meaning of the Financial Services and is accepted for any such information or this Presentation reflect the Company’s Markets Act 2000. opinions or for any loss howsoever arising, current views with respect to future events directly or indirectly, from any use of this and are subject to these and other risks, document or its contents or information uncertainties and assumptions relating to the For the purposes of investors in the United expressed in the presentation. Company’s operations, results of operations Kingdom, this Presentation is being made to and growth strategy. No statement in this and directed only at persons: (i) who fall presentation is intended to be a profit forecast within Article 19 of the Financial Services and It should be noted that past performance or be relied upon as a guide to future Markets Act 2000 (Financial Promotion) Order cannot be relied on as a guide to future performance. Past performance cannot be 2005 (the “FPO”); (ii) who fall within Article performance. This presentation may contain relied upon as a guide to future performance 49(2)(a) to (d) of the FPO; or (iii) to whom this forward-looking statements with respect to and persons needing advice should consult an Presentation may otherwise be lawfully made the Company’s plans and objectives regarding independent financial adviser. to or directed at, all such persons together its financial condition, results of operations being referred to as Relevant Persons. and businesses. All statements other than The investments and investment activity statements of historical facts including, For more detailed information, the entire text to which this Presentation relates are without limitation, those regarding the of the final results announcement for the year available to, and will only be engaged in Company’s financial position, business ended 31 December 2016, can be found on with, Relevant Persons. No other person strategy, plans and objectives of management the Investor Relations section of the should act or rely on it. for future operations are forward looking Company’s website statements. All forward-looking statements www.investor.mortgageadvicebureau.com address matters that involve risks and This Presentation does not purport to contain uncertainties and, accordingly, there are or will all information that a prospective investor may be important factors that could cause the require and is subject to updating, revision and Company’s actual results to differ materially amendment. No representation or warranty, from those indicated in these statements. The express or implied, is given by the Company or Company undertakes no obligation to update any of its subsidiaries, advisers, directors, 1
Agenda Table of Contents ▪ Presentation Team ▪ Key Highlights ▪ Industry Trends ▪ Key Strategic Initiatives ▪ MAB Customer Acquisition ▪ Outlook ▪ Financial Highlights and KPIs ▪ Appendices 2
Presentation Team Peter Brodnicki Chief Executive Officer ▪ Co-founded the business in 2000 ▪ >30 years’ Mortgage and Financial Services experience ▪ British Mortgage Awards: Business Leader of the Year (3 consecutive years) Lucy Tilley Finance Director ▪ Joined MAB Board in May 2015 as Finance Director ▪ Former corporate financier; extensive experience working with listed companies (particularly in Financial Services, inc IPO of MAB in 2014) ▪ Chartered Accountant, qualified at KPMG in 1996 3
Key Highlights 2016 Highlights ▪ Achieved +20% profits (1) growth ▪ Increased market share (2) to 4.1% (+14%) with mortgage completions up 28% from 2015 ▪ Adviser numbers up 20% to 950 at year end (31 Dec 2015: 790) ▪ Proposed final dividend of 10.5p representing c. 90% of H2 post tax profits ▪ CPF sale proceeds fully distributed, 5.35p per share ▪ Four Strategic Investments: ▪ Specialist telephone protection firm, Vita ▪ Regional Network Partner in Scotland, Clear ▪ Scalable telephony model, Freedom 365 ▪ New Australian JV, MAB Broker Services 1 Profit before exceptional gain and tax 2 Market Share is MAB gross mortgage completions as a % of UK new mortgage lending (CML data) 4
Industry Trends Market Forecasts 2016 vs 2015 Whole Market UK Gross Mortgage Lending ▪ Property transactions in 2016 by volume were broadly flat CML projections for gross mortgage lending are overall for the third successive year broadly flat: ▪ UK gross mortgage lending in 2016 of £246bn 1 : +12% ▪ 2017 : £248bn, +1% driven mainly by house price inflation (c.7.5% 2 ) ▪ 2018 : £252bn, +2% ▪ MAB gross mortgage completions in 2016 of £10.0bn 3 : +28% ▪ MAB market share of 4.1%: +14% Property Prices: ▪ House prices in the UK expected to see an average Segmental movements in gross mortgage lending by increase of 3% over the course of 2017 as the number of transactions stabilises 4 value ▪ Home-owner purchase: +7% ▪ Home-owner remortgage: +19% ▪ BTL purchase: -4% ▪ BTL remortgage: +15% 4 RICS housing forecast for 2017 (21/12/16) 1 CML data 2 Land Registry House Price Index 3 MAB gross mortgage completions in 2015 were £7.8bn 5
Industry Trends New mortgage lending by purpose of loan, £m 30,000 25,000 20,000 Other, includes lifetime and further advances £m BTL loans for re-mortgage 15,000 BTL loans for house purchase Home-owner loans for remortgage 10,000 Home-owner loans for house purchase 5,000 0 Property transactions in the UK by volume 180 160 140 120 Northern Ireland ‘000s 100 Scotland 80 Wales 60 England 40 20 0 6
Key Strategic Initiatives Protection Growth Robo Advice Specialist partner, Driving productivity Vita BUILDING Regional Australia MARKET Network Partners Testing new Distribution markets SHARE growth Data Brand Profile Management Direct to consumer Driving customer acquisition 7
MAB Customer Acquisition Data Management Data Management Direct to Consumer Direct to Consumer Existing Customer Existing Customer Introducers Introducers Introducers Introducers Strategic Direction Leads Leads 8
Outlook ▪ Flat transactional environment in housing and mortgages expected over 2017 and 2018 ▪ Intermediary market share at 72% 1 ; technology developments further enhancing intermediary proposition ▪ Technology advances and brand awareness are main strategic drivers for MAB ▪ +26 growth in adviser numbers to 976 YTD; market share increasing Retention Procuration Fees now being paid by lenders: c.£90bn 2 product ▪ switching market opening up to intermediaries REMORTGAGE AND PRODUCT SWITCHING MARKETS 2 Residential Remortgages £66bn Product c. £90bn Switching Market £25bn Buy-To-Let Remortgages 1 Based on CML figures which exclude Buy-To-Let, where intermediaries have a higher market share, and product switches with the same lender 9 2 Based on CML figures for Residential and Buy-To-Let remortgages and MAB estimate for product switching market
Key Financial Highlights 2016 Profit Before Tax 1 Revenue Gross Profit £92.8m £22.1m £12.5m +23% +21% +20% Cash Conversion 3 EPS 1 Total Dividends 2 20.3p 18.3p 128% +18% +27% 1. Before exceptional gain on disposal of 49% stake in CPF of £2.7m. 2. Excluding special dividends of £2.7m following 100% distribution of profit on sale of 49% stake in CPF of £2.7m. 3. Cash flow from operating activities adjusted for movements in non-trading items including loans to ARs, loans to associates and other non-trade receivables as a % of operating profit. This is now calculated using cash flow before income taxes paid as a fairer representation of cash conversion as % of operating profit. Excluding increases in restricted cash balances, cash conversion for the year ended 31 December 2016 would have been 111% (2015: 95%). 10
All Income Sources Continue To Grow Strongly Income source 2016 2015 Increase £m £m Revenue increase of 23% generated from: Mortgage procuration fees 39.4 31.0 27% ▪ +23% average Advisers Protection and General Insurance Commission 36.4 30.4 20% Client Fees 15.6 12.8 22% ▪ Flat revenue per Adviser Other Income 1.4 1.3 11% Total 92.8 75.5 23% 2016 2015 Revenue Split: Whilst the split of revenue has moved slightly, all income sources continued to grow strongly. Increase in BTL and Remortgages affected growth in protection revenue in H1 2016; rebalanced for year as a whole. Protection dependent on mortgage mix. 11
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