Investor and analyst presentation Mortgage Advice Bureau (Holdings) - PowerPoint PPT Presentation

Investor and analyst presentation Mortgage Advice Bureau (Holdings) plc Interim results – six months ended 30 June 2016 September/October 2016

Disclaimer  The information contained in this document (“Presentation”) has been prepared by Mortgage Advice Bureau (Holdings) plc (the “ Com pany”). This Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000.  For the purposes of investors in the United Kingdom, this Presentation is being made to and directed only at persons: (i) who fall within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FPO”); (ii) who fall within Article 49(2)(a) t o (d) of the FPO; or (iii) to whom this Presentation may otherwise be lawfully made to or directed at, all such persons together being referred to as Relevant Persons. The investments and investment activity to which this Presentation relates are available to, and will only be engaged in with, Relevant Persons. No other person should act or rely on it.  This Presentation does not purport to contain all information that a prospective investor may require and is subject to updating, revision and amendment. No representation or warranty, express or implied, is given by the Company or any of its subsidiaries, advisers, directors, members, officers, trustees, employees or agent, as to the accuracy, fairness or completeness of the information or opinions contained in this Presentation and, save in respect of fraud or wilful default, no liability is accepted for any such information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this document or its contents or information expressed in the presentation.  It should be noted that past performance cannot be relied on as a guide to future performance. This presentation may contain forward-looking statements with respect to the Company’s plans and objectives regarding its financial condition, results of operations and businesses. A ll statements other than statements of historical facts including, without limitation, those regarding the Company’s financial position, business stra tegy, plans and objectives of management for future operations are forward looking statements. All forward-looking statements address matters that involve risks and uncertainties and, accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from t hose indicated in these statements. The Company undertakes no obligation to update any forward looking statements contained in this Presentation or any other forward looking statements it may make, save in respect of any requirement under applicable law or regulation. Any forward-looking statements in this Presentation reflect the Company’s current views with respect to future events and are subject to these and other risks, uncertainties and assumpt ions relating to the Company’s operations, results of operations and growth strategy. No statement in this presentation is intended to be a profi t forecast or be relied upon as a guide to future performance. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser.  For more detailed information, the entire text of the interim results announcement for the six months ended 30 June 2016, can be found on the Investor Relations section of the Company’s website (www.investor.mortgageadvicebureau.com). Page 1

Agenda Table of contents  Presentation team  Key highlights  Industry and MAB trends  Financial highlights and update  Strategy  Outlook  Appendices Page 2

Presentation team Peter Brodnicki Chief Executive Officer  Co-founded the business in 2000  >30 years’ mortgage & financial services experience  British Mortgage Awards: Business Leader of the Year (3 consecutive years) Lucy Tilley Finance Director  Joined MAB Board in May 2015  Former corporate financier with extensive experience of listed companies (particularly in Financial Services, inc. IPO of MAB)  Chartered Accountant, qualified at KPMG in 1996 Page 3

Key highlights H1 2016 Highlights  Achieved +30% profits (1) growth  Increased market share (2) to 4.0% (+20%) with mortgage completions up 49% over H1 2015  Adviser numbers up 13% to 891 at period end (31 Dec 2015: 790)  Interim dividend of 7.8p representing c. 90% of H1 post tax profits  Investment in specialist telephone protection firm, Vita Post period end  Adviser numbers up 30 to 921 at 23 September 2016  Sale of 49% stake in Capital Private Finance Limited completed for £2.7m, post tax profit distributed to shareholders by special dividend of 4.25p  Investment in scalable telephony model, Freedom 365 Outlook  Intermediary market share just over 70%; technology developments further enhancing proposition  Flat transactional environment in housing and mortgages expected to continue  Technology advances and brand awareness are main drivers for MAB 1. Profit before tax and profit after tax Page 4 2. Market share is as a % of UK new mortgage lending (CML data) Page 4

Industry trends Source: Council of Mortgage Lenders, IMLA 1 Source: HM Revenue and Customs 1 IMLA data has been used to further analyse CML data Page 5

Industry trends H1 2016 vs H1 2015 Macro factors affecting industry data comparison Whole market April 2014: Mortgage Market Review  Property transactions by volume were up 11% due to pre election environment H1 2015 and BTL spike in H1 2016 May 2015: General election  UK gross mortgage lending in H1 2016 of £118bn 1 : +22% June 2016: BTL stamp duty / EU Referendum  MAB gross mortgage completions in H1 2016 of £4.8bn 2 : +49%  MAB market share increased by 20% from H1 2015 to 4.0%  Market increase driven mainly by house price inflation (c.9% 3 ) Segmental movements in gross mortgage lending by value (distorted by macro factors)  Home-owner purchase: +18%  Home-owner remortgage: +25%  BTL purchase: +38%  BTL remortgage: +37% 1 CML data 2 MAB gross mortgage completions in H1 2015 were £3.2bn 3 Land Registry House Price Index Page 6

Key financial highlights H1 2016 H1 2015 % Change  Average adviser numbers 2 +27% to 851 (2015: 671)  Gross profit margin of 23.1% (2015: 24.3%) Revenue £43.1m £31.2m +38%  Overheads ratio of 11.7% (2015: 13.0%) Gross profit £9.9m £7.6m +31%  PBT margin of 12.3% (2015: 12.6%)  Effective tax rate of 17.8% (2015: 16.1%) Profit before tax £5.3m £3.9m +34%  Final dividend circa 90% of post tax profits for H1 2016  Net cash inflow from operating activities £7.4m 3 (2015: EPS 8.6p 6.5p +32% £3.3m)  Unrestricted cash balances of £9.6m (31 Dec 2015: £8.2m) Interim dividend 7.8p 4.9p +59%  Significant surplus on regulatory capital Operating profit to cash 159% 102% conversion 1,3 1. Net 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 2. Over last six months 3. Due to the timing of the weekly AR commission payment, the Group held additional cash balances at 30 June 2016. Excluding these balances cash conversion would have been 136% for the period ended 30 June 2016 Page 7 (2015: 102%). Furthermore, excluding increases in restricted cash balances, the cash conversion for the period ended 30 June 2016 would have been 118% (2015: 84%).

All income sources continue to grow strongly Revenue breakdown Revenue increase of 38% generated from: Income source H1 2016 H1 2015 Increase £m £m  +27% average Advisers Mortgage procuration fees 19.0 12.3 54% Protection and General Insurance Commission 16.0 12.6 28%  +9% revenue per Adviser Client Fees 7.4 5.8 28% Other Income 0.6 0.6 17% Total 43.1 31.2 38% H1 2016 H1 2015 Revenue split:  Whilst the split of revenue has moved slightly, all income sources continued to grow strongly  Increase in BTL and remortgages in H1 2016 has affected growth in protection revenue  Protection dependent on mortgage mix Page 8

Cash balance waterfall: unrestricted balances (1) £8.2m £6.9m £5.3m 1. Unrestricted cash balances are for operational purposes; they exclude restricted balances (AR retained commission in case of clawback) Page 9

How we performed – KPIs Overheads % of Revenue Adviser Numbers 11.7% 891 At 30.06.16 At 30.06.15 At 30.06.14  Some costs (e.g. compliance) closely correlated to growth   Average adviser numbers up 27% to 851 (2015: 671) Remainder of costs typically rise at a slower rate than revenue  Strong growth continues; 921 advisers at 23 September 2016 Gross Profit Margin (%) Adjusted Profit Before Tax Margin 12.3% 23.1%  Too early to determine the level of growth in adviser productivity as  Existing ARs receive slightly better terms as their revenue grows we look to 2017 and whether the scalable nature of our cost base  New larger ARs typically join on lower than average margins will fully offset the effect of any erosion of our gross profit margin  Full gross margin impact of large businesses brought on in 2015 seen that derives from the growth we experience in 2016 Page 10