Mortgage Advice Bureau (Holdings) (LSE:MAB1) — H1 Results

0:01 Good morning, ladies and gentlemen, and welcome to the Mortgage Advice Bureau PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, we'll and publish those responses where it is appropriate to do so. And before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the team from Mortgage Advice Bureau PLC. Mark, good morning, sir. Good morning. Thank you very much. Good morning, everybody. Thank you for joining, and thank you for your interest in MAB.

0:50 I'm Mark Irvin Fortescue, head of investor relations, and I've got Ben Thompson, deputy CEO, and Emily McCarthy, CFO with me. We're in the middle of our interim roadshow at the moment. So format wise, we're gonna have an introduction to to MAB about us to start with before looking at some of the operational and financial highlights from the first half of this year. Then we'll move into strategy and outlook, leaving plenty of time for q and a. So if I can pass it over to Ben for an introduction to MAB. Thank you very much, Mark, and a very good morning to everybody, and thank you for joining. So I'm Ben Thompson, Deputy CEO of MAB.

1:35 And to Mark's point, I'll give you a quick introduction on MAB and then straight into financial operating highlights, a little bit on strategy and growth plans. And Emily will take us through financials. We'll cover the market as well and then summary and close and hopefully plenty of questions and answers from us. So without further ado, if I can just sort of make a bit of an introduction to MAB, Mortgage Advice Bureau, for those not familiar. We're about twenty three years old now, just over, formed just after 2000. In particular, the business was formed at the time to try and help estate agents make more financial services. Traditionally, many of them were not particularly strong at that, and that's how the business kind of grew from about 2020 onwards specializing in helping people do mortgages and financial services for estate agents.

2:26 So I'm gonna come back to how we've grown since then a little bit later. But for now, basically, I just wanna start by very briefly explaining how people get mortgages for those of you who are not totally familiar. So there's two routes to market. Effectively, there's route one, which is going direct to a lender, fairly self explanatory, I guess, and the second is going via an intermediary. So briefly going direct to lender, at the moment, in terms of, say, for every 100 mortgages arranged in The UK, 13% of customers choose to go direct to a lender. So that's 1313%, and they'll go direct to an HSBC or a Halifax or even to a building society. But, basically, now it's a very small segment of the market that opts to go direct to a lender, very different than it was twenty, thirty years ago.

3:13 The other route is via an intermediary, which is the remaining 87% in terms of distribution. And Mortgage Advice Bureau, so MAB is classed as being an intermediary. In terms of an addressable market, if I try and put some figures before I go through the the full introduction, in terms of house purchase, so anything from a first buyer through, buy to let, someone buying a property to invest and put a tenant in, through to a second or third or fourth or last time mover, plus remortgage is included in a market that's roughly about 250,000,000,000 in terms of new gross lending with an average mortgage amount of about between 200 and £230,000. Alright? So that's the house of the remortgage market.

4:01 On top of that, very topical, in particular, for the last few years is what's called a product transfer market. And that's where if you're borrowing the mortgage with Halifax, for example, and you come to the end of a fixed rate, you can either remortgage to another lender or you can choose to stay with Halifax and just carry out what's called a product transfer. And that thereby, under the product transfer, you you effectively stay with your existing lender, so in that case, Halifax. So two different markets. You've got the latter one, which is just product switching with your existing lender. And as an intermediary, we can help you as a customer to do that. And then the first chunk is house purchase and remortgage. In aggregate, that's £450 of gross lending opportunity for MAB as its addressable market. So it's a huge opportunity size for us to go at.

4:49 So without further ado, if I sort of talk around all set of product providers that we work with, as an intermediary, our whole sort of proposition is about choice. And last year, we completed on just about £25,000,000,000 worth of lending, and that lending went through over a 100 lenders. I think it was a 104. But either way, we don't just use your big HSBCs and Halifax to the point from before. We go right through to the real specialists that help people get out into the property market, for example, where they would normally find it difficult. And in between that, you've got all your medium sized lenders, local building societies, and a whole bunch of specialists. So we do generally offer mortgage advice from right across the mortgage market and over a 100 lenders. In terms of insurance, we help to protect those that want protecting, with things like life insurance, critical illness cover, and income protection.

5:42 And to be very clear, that's not PPI, just to make that really, really clear. It never has been. And we also help people insure their property, so home and content insurance as well. So in a nutshell, those are the products we sell. That's the addressable market, and that's how we're set up as a business. If I move on a step to the second point, we are regulated directly by the financial conductor authority, so the SCA. And, basically, our business comprises around about 200 appointed representative firms that sit under MAB's umbrella. So we're directly authorized by the FCA under which we have 200 AR firms, and we effectively help them be compliant and and and and operate and carry out mortgage advice and protection advice in a way they should do under our operation and guidance and all, obviously, the FCA's rules.

6:32 Underneath the 200 AR firms, we've got approximately 2,000 advisers. So you're very quick, obviously, to work out Our average appointed rep carries about 10 advisers in each firm. Okay? And that makes us quite different in the marketplace. Across the general marketplace, most appointed reps have one, possibly two advisers. We have, as I say, 10. Our business is all about growth, which is why we have a larger adviser account per AR firm. Advisers and businesses join us to grow. That's our whole MO. So I'll sort of pitch to those in the market that want to grow from, say, eight, nine, 10 advisers through to 50 or even 70 or a 100. They join MAB to do that, and there's loads and loads of support we provide them and business development function to try and enable them to grow their businesses and ultimately exit maybe a couple of decades down the line.

7:21 So they grow, we grow. That's very simply how our model works. I've mentioned the volume of mortgages we arranged, which is to say is 25,000,000,000. We've got a couple 100 AR firms and 2,000 advisers. And we've also within the group, we've made a few tactical acquisitions. And, typically, they've been to bring us into new markets to access new clients, and I'll come back to that. And also to give us new areas of specialism. So, for example, on the specialism point, we've taken some tactical investments in a number of firms that have enabled to become just about a 20% or 20 to 23% market share player, helping those who buy new build homes to to take a mortgage and get them into Plot 24 wherever it is. So we're very strong in new build in terms of mortgages, and we've made a few investments and acquisitions along the way to get us strongly into that market because that is a permanent sort of growth market as as far as we can possibly see into the future.

8:17 We've also made an acquisition of Fluent in the Northwest, as you can see from the diagram. And Fluent gave us access to clients who have historically started their journeys on price comparison site, for example. And, traditionally, those people who self search and try and self serve online don't walk into an estate agent or a builder. So it's important strategically for the group's future growth. We needed to get very much our our tentacles and technology, if you like, into those researching mortgages online, of which there are still a big number, and it's growing. Beyond that, I'd probably just go on to say, I'm gonna skip over a bit to do with detail on new build in this data agency and price comparison sites because I'm gonna come back to it under the strategy slot later. And this, I'm gonna talk about technology a bit later as well. And then a final point just on this slide, basically, is we have won I think it's over 250 industry awards, which we pride ourselves on, and they range from anything from sort of best intermediary, through to things around sustainability, diversity, and inclusivity, and all sorts of other relevant awards that we're very proud of.

9:21 So without further ado, if I can, having just given you a brief background, just take you through to the operational highlights for the first half of this year. So, obviously, January through end of June with one or two updates for post period end as well. The operational highlights you can see on the screen will show that, probably a simple summary of this slide is we've held our strong recent market share gains in what was a really tough market that's ultimately started to improve actually in the last two, three months. But it was a pretty flat market in the first half of this year versus the first half of twenty twenty three. It's a picture a funny picture to the year, and I'll explain on the slide in a second how the year's gone so far, but it sort of started very well. And And then there's a bit of a dip in q two, and I'll come and show you the real details around that in a second, but the outlook looks strong.

10:11 But in summary, basically, in the year, we grew our adviser numbers by 2%. And the good news is since the end of June, we put on I think it was more actually now than 37 new advisers. So the adviser growth has started to increase again. And just to explain the relevance of that, we've seen a very flat sort of adviser landscape in the last two years because a number of advisers have left the industry, something like 5%, perhaps a bit more. So to hold our advisers steady, we're quite happy with that. But now what we're real time seeing is appointed representatives are deciding I want another adviser because the market is growing. And when you have 200 ARs as MAB does, if each one says I want a new adviser, that's another 200 advisers. And then on top of that, we're recruiting new advisers into the group from different parts of the market that don't currently work with us. And that's looking into next year, how we grow again.

11:05 There's lots of ways we can grow as a group, but, of course, increasing the adviser account is a is a really, really important point to that. So next year, we expect to grow advisers strongly, and the market is very much in recovery mode. So it's a good time. We also measure our revenue per mainstream adviser. And, basically, what we're trying to do is or have been doing is building technology to enable our advisers to do more more business per capita, so write more business per customer than they have done historically. So the idea is you don't necessarily have to always increase your adviser base by a few 100 a year. Ultimately, you you increase the productivity of the existing population, make them far more productive through technology tools and everything else. They become more efficient, earn more money, and, of course, we become more profitable as a group and everybody benefits.

11:55 And the customers, more importantly, get a a a more brief experience and their mortgage is expedited more quickly because technology helps them to do it. So in the period, we've seen revenue per mainstream adviser go up 9%, and that's a really pleasing figure given how tough the market was in particular last year and in the first six months of this year. On the right hand side, really important, we protect people who take out a mortgage. If you're taking a new debt of £300,000, you might be married, and it could be your partner has a critical illness or unfortunately suffers death. Under that circumstance, it's important the debt is paid off. And last year, the insurers who our advisers use around products like that for our mortgage borrowers paid out just about £60,000,000 in claims to to customers who unfortunately went through difficult personal circumstances.

12:45 So we believe it's really important that people are adequately protected. And roughly of the 10 mortgages we arrange, about four out of 10 people take a protection policy to give you a bit of context. But, of course, the outcomes for customers are very strong, and that's really, really important. Our market share of lending is rising. It's at 8.2% in the first half of this year. We believe we will be at 10% pretty soon. And our longer term aim is to get to 20% at least, and we believe strongly we'll get there through differentiating our proposition, I e, having technology, that enables our advisers ultimately to give our customers a better experience. And we're a long way down the path in that. And secondly, to really, really capture all customer opportunities wherever people might be looking for mortgages. In a nutshell, that's how we're going to grow grow further.

13:34 And I've talked about the the mortgage completion figures, which for the half of the year were were 12,100,000,000. So that's just about where you get your 25,000,000,000 in a year from. We always have a stronger second half, so that would take you to a a a big figure at the end of the year. If I could jump on to the the market and how the market has basically gone this year. I mentioned a funny shape to the year earlier in terms of sort of, mortgage behavior with customers this year. So what we basically saw in the first two months of the year was phenomenal. We saw the base rate reduce. Mortgage rates consequently come down just after Christmas into the New Year, into January, in the very first part of February. And as a consequence, we saw an enormous amount of activity. And in fact, we had our best ever month, which you believe, in February, which is really, really unusual month to have your best ever month as a group.

14:24 So an incredibly strong month in February. Now at the time, we did a bit of analysis, and we worked out what people were actually doing was booking their remortgages early because rates had come down so much, and they were very panicked about rates going up again. So they were booking and paying for those deals very early. So what we saw in the first quarter of this year was quite a lot of businesses brought forward from the second quarter. The second quarter consequently was a bit quieter as you'd expect. But, again, as rates have come down and confidence has gone up, we've had the election. We've had base rate change now downwards, which is fantastic. We're seeing much, much lower mortgage rates and activity is most definitely increasing in q three. In fact, in September, our new business levels were well over 30% up on this time last year. We still also believe that some people are waiting for the budget.

15:12 I don't expect any giveaways in the budget even though, obviously, the the labor party is committed to building houses, which we'll talk about later. The reality is I think we're getting a strong return in the market, and we should pick up further following the budget, because I don't think they're gonna put anything new to the positive or the negative, particularly on housing and the budget. I think it's almost irrelevant that people are actively waiting until after October 30, and we'll see what happens after that. Nonetheless, very, very positive in q three, and that's fantastic. If I just jump on very briefly to the next slide just to explain the various things going on within mortgage lending. This graph will just show you a bit of shape in terms of size, so very similar to last year in terms of pattern, but the main message there really is house purchase is is held quite steady this year. In fact, it's gone up.

16:00 So overall, people buying homes is nibbled up versus 2023. Remortgaging has gone down. That's because we've seen an awful lot of product transfers, if you remember my point at the beginning. So lots of people staying with their existing lenders. We've done very well in that. And as I say, buy to let and product transfers as an overall market stayed broadly flat at sort of plus two and minus 2%. So that just shows you some of the movements in the products by segment across the mortgage lending market. Okay. So without further ado, I'll hand you over to our chief financial officer, Emily McCarthy, to pick up on the financials, and I'll come back and talk to you again on strategy and outlook in a second. Thank you so much, Ben. So let's begin with the income statements and all of those numbers as really half year.

16:46 And so the group revenue grew by 5% in the first half, reaching £124,000,000 despite a relatively flat mortgage market as Ben just mentioned earlier. Gross profit saw a notable increase of 14% to 37,700,000, and that's mainly driven by efficiency gains than one of our subsidiary, Freud, did following the rightsizing of their business. This resulted in a significant group gross profit expansion of 240 bps, pushing it pushing it above the 30% mark in the first half. Our profit before tax reached £12,300,000, which is a significant 40% increase compared to last year, and this really reflect the strong performance of our subsidiaries, particularly Fluence, as I already mentioned.

17:35 Now let's move on to the financial KPIs for the balance sheet. So one of the standout features of MAB business model is its strong cash generating capability. The procuration fees and interest commissions are paid to MAB by the lenders and providers before the pay away days are distributed distributed to our advisers and AR. This creating really an attractive working capital dynamics as evidenced in our cash conversion rates, which is consistently well above the 100%. The platform nature of the business also means that we are capital light, giving us flexibility on how we deploy free cash flow. As of June 30, our net debt was £16,700,000, which included a term loan issued to finance one of our acquisition.

18:26 By September 20, our net debt position had improved to £6,700,000 with only £1,000,000 drawing on our £15,000,000 RCF facility. At the end of June, our surplus cap regulatory capital was £24,300,000, which was well above the requirement of 5,800,000. So when you come when you look at this solid profitability, which I mentioned in the previous slide, our strong cash generation and robust balance sheet, we were very pleased to announce that we're committing to our dividend of 13.4 p for the first half of this year. Then now I'm gonna hand over to you for the strategy. Thank you, Emily. Just in terms of lead generation, I wanna go back to what I said just briefly at the beginning to show you on this particular graph how we've grown over the years as a group and also how resilient the group is against housing market downturn.

19:24 And if I just pause on that point for a moment, one of the things we've seen I think we've had three black swan events, they're called, aren't they, in the last sort of five years or so, which is sort of two lots of COVID and a disastrous budget. And actually, prior that, we had a bit of waiting in sort of a a muted market because of Brexit. So it's been a really difficult last five years. But notwithstanding that, what I'll show you separately in a minute is how well we've done as a group through that period and why we've done well. One of the answers for that lies on this graph, which is the bottom chunk, which is basically repeat business from existing customers, which I'll come on to talk about in a minute. But if you just remember the word resilience in a downturn, that's quite relevant in terms of us as a stock. So if I look at, this particular lead generation diagram, what you see going back over the years is we we basically started, as I say, in the state agency market.

20:15 We grew through acquisition in about 2011, I think it was possibly 02/12, say 2011, by buying a business that specialized in new build, because it's very difficult actually at the time to get into that market and really scale. And after that acquisition, MAB as a group scaled enormously into helping people buy their homes more quickly, get into homes more quickly, and and we became very, very strong in new build as well as estate agency. Much more recently, the darker sort of chunk or parts of the graph at the top is a deliberate move from us a few years ago to get into what I call digital online traffic. So notwithstanding what I said earlier about the fact that 87% of business goes through an intermediary, 13% goes direct, What we are seeing is an increasing number of people over the last few years have been looking to research online.

21:04 What they typically do is get to a point where they know they need help. They run out of confidence. They run out of choice. They need hand holding assistance, reassurance, advice, and guidance, and they definitely need choice. They then always go into an intermediary journey, which offers choice. And, of course, although that is our model and people start off trying to research on their own, we do know that they need help in that process. So we deliberately sort of integrated with various third parties, formed relationships with price comparison sites and other sort of consumer brands to try and capture that sort of opportunity in the digital traffic online and provide mortgage advice to help people get into their homes and to refinance. As part of accelerating that process, similar to what we did in New Build, we acquired a business called Fluent Money in the Northwest.

21:53 And Fluent already had sort of strong relationships with these big brands I referred to. So that kind of accelerated our strategy, and it's a very good way of deploying our resources to try and bring that business into group. And similar to another acquisition we made in the new build space in 2019, a business called First Mortgage, we plan for both of them to grow significantly from here. First Mortgage having already grown by 250,260% in the first five years post acquisition. So when we buy, we tend to buy hard and and hopefully try and scale and grow the businesses we buy so everybody benefits. And that's very much the point I wanna make around the top three lines. The bottom block on this graph refers to repeat income.

22:39 Every year, something like 35, 36, 37% of our revenue will come from repeat business, and that's quite simply the growing block of existing customers needing to refinance and lock in to better deals for the next, you know, three, five, or ten year period, whatever they choose. But the important thing to say is on the January 1 every year, we almost near as damn it know that we will get that 35, 37% of revenue come through from refinance. So even if the housing market is quiet, and if I jump on to the next slide, I'll show you why that's so important. What we can see is how resilient we can be in a tough housing market. So to further sort of underline the point on the resilience bit, if you if you have a look at this graph, if I just go top to bottom on the top, the 139 through to the 130 figure, that's billions of lending for house purchase.

23:31 So first time buyers, home movers, everything. What you can see there is for a number of years through to about 2019, it was a pretty flat figure. So boring boringly flat, actually, very remarkably similar. What we saw was a bit of a dip in 2020, because although the market shut for between two and four months because of COVID, it recovered very, very strongly. Of course, 2021 was a really strong year. And since then, it's kind of gone back to being quite subdued post the the Liz Trust mini budget and is yet to recover, although I think now it's starting its recovery in the last few months. But what you can see on there is irrespective of the whether it's COVID, whether it's mini budget, whether it's Brexit, whether it's election, it although we've had markets drop as much as 50% like it did after the mini budget, we still grow our market share every year, and we still grow our EBITDA every year bar two, one being the COVID year when the market was shut in 2020.

24:28 And, of course, the period post the mini budget, our EBITDA dropped off a little bit. But you can see despite taking significant markdowns to share price, and expectations, we can still deliver very strongly. And that's really because our advisers need to earn money. They need to do well. They've got customers to help, and they'll go and find more business. And they've proved their resilience incredibly through those four or five significant downturns that I referred to. So we think that's a really strong graph. And there's also to show you how healthy the p and l is, the bottom lighter blocks refer to what I call strategic spend. So in a sense, some of this is discretionary spend. I'd argue it's not because you've got to be future fit, but this is spending on digital marketing and on tech build and tech tools.

25:16 So if I just pick on one year, 2023, for example, that was a really difficult year last year because the housing market is down 30%. But we chose to spend our highest amount in that year on what I call strategic spend. We could have easily pulled back the spending and delivered a higher profit number, but we firmly believe the more we invest in the model, the more successful we will be as a business going forward. So we will continue to spend because that will give us a level of differentiation versus our peers, which means we'll continue to grow strongly. So if I can jump forward to conclude with a summary and outlook, if I may. Probably what I would say, just to pick up on where we are, the top the top sentence shows you that the RICS survey on housing market in August was very strong.

26:05 It showed a 15% increase in new buyer demand for the month. I expect that to continue, and we've certainly seen, as I say, a very strong August and September, and we believe the recovery is now real time underway. The market as a whole is still about 20% beneath where it should be for its its sort of recent long term average, let alone the longer long term average. So in a sense, the housing market is derisked as far as I can ever say it ever is. And it's already it's got a natural recovery to go up 20% to get to that average figure. So it should well be we've got a tailwind behind us now and and good conditions with real wage growth and confidence to to support that. I'd say just jumping on to the adviser numbers element, just to echo the point I was making before, we expect more adviser growth next year, and it feels like it's picking up at the moment, and we've seen evidence of that.

26:57 We've invested cleverly in a number of businesses over the last sort of five, six, seven years, our subsidiary businesses and associates, and they're growing as well, all of them. So it helps to grow the group more strongly than perhaps the conventional adviser count, which is our more traditional way of measuring growth for the group. And then the overall sort of closing point for us is we're trading well. We believe we'll hit our numbers this year, in what has still been a very difficult year, although it's getting better now. And we're very, very optimistic about the group's future and our march towards 20% market share. So at that point, I will take a pause, but I'll hand back to Mark to facilitate questions and answers. Thanks, Ben. Few questions coming through. First one is one of your favorite subjects about loaded premiums.

27:46 Perhaps if you can frame that, just just telling people what loaded premiums are, what the risks are around them, and what information customers receive. Yep. Okay. So I can see the question now as you have just seen it. Okay. So by the way, Alastair, wherever you are, thank you very much for the question because you're going right to you've taken us right to the center of why our share price dropped about three, four weeks ago. So for those who are probably privy to see the graph, you'll be wondering why we've got a recovering housing market and not a recovering share price. So that's actually really, really helpful to take us straight to the point. So thank you. So what is loaded commission? If I can just step back from that bit and just sort of explain. When our clients take out mortgages, they buy some of them buy protection, which is your critical illness cover, income protection, and life insurance.

28:39 And and they all need it apart from single people for sake of argument who you can make an argument still need it. But the reality, a single person might argue I can pay my mortgage off when I die. So and there's no one to worry about it, so I don't need life cover. And and that's a pretty strong argument. But if you've got a surviving spouse or child in a house, then, obviously, if something happens to you, it's a very good idea to take some form of protection, whether it's income protection, credit card, or life insurance. These are the products I'm talking about. So if I then look at Alastair's question on what is loaded commission, best way of describing this is if if I'm a big insurer like an AVIVA or a legal in general, I have a vast array of customers in the marketplace. So distributions are like estate agents, IFAs, price comparison sites, MABs, tight agents, all sorts of things. And as with any other walking life, you've got different price points per distribution channel.

29:36 And the best way of describing the loaded commission points to try and drill a point home is there's sort of a there's perhaps 20 price tariffs in the market, let's say. And somewhere two thirds towards the bottom, you've got what I would describe as level or par pricing. Neutral pricing is perhaps a better way of putting it. Now beneath neutral, you'll have a price comparison site, for example, that chooses to sacrifice commission and put that sort of back into its product pricing. So, effectively, they set their stall out through cheaper products, but they don't offer advice. You do have to self execute. And, for example, if you want a policy written in trust, it's it's not gonna be written in trust. It's a different service where people just buy life cover quite cheap. And fully understandable that business model works. Not many people go via that route, but, of course, it's a perfectly viable proposition. At neutral, you've got IFAs.

30:23 So it could be Ben Thompson and co working with another partner, Mark, in his IFA firm. That's neutral pricing very typically. Also, the the terminology for that in our market is IFA rates. But if I could just call them neutral, that's more helpful. And relative to the neutral point, we're about 6%, 7% above the neutral roughly in terms of monthly premiums. And at the top end, you've got some biggest data agency groups that are about 30% above. Alright? So to contextualize that, our 6 or £7 percent rather in terms of over the neutral pricing is about $5.06, £7 a month to a policy premium. So it's not much. In exchange for that, what I have to do is, as a person who's ultimately on the spike for this advice, I need to be absolutely clear that customers who are being advised by our advisers get a brilliant customer outcome.

31:10 And under every single metric and measure, which we monitor under the FCA's big consumer duty regulation, I can demonstrably show that customers get better outcomes. So whether it's the percentage that have their policies written in trust, whether it's level of complaints, whether it's cancellations or policies falling off the books, under every single measure, the customer outcomes are really, really good. Notwithstanding that, it's something we're not complacent about. There are things we're doing I can't talk about on this call necessarily except to say it under consumer duty. We take our responsibilities very, very strongly, and there's a clear direction to travel for us in terms of pricing. That's the best I can set at the moment. But thank you for raising it. The market misunderstood the issue, and you can see the recovery in the share price recently accordingly. Next question is about adviser adviser numbers productivity.

32:01 How do we think about supporting AR firms growing adviser numbers, and what sort of metrics do we look at to to focus on success in in that part of the market? Yeah. So if I deal with the so the adviser growth point first, we help all our AR firms with their recruitment to the point where we're proactively helping to recruit more advisers. We encourage them to do so when the market is supportive. Sometimes we give them leads so they can recruit into the new lead lead opportunity. And our interest is in helping a lot of to grow and become successful because, obviously, if they do, we do. There's a complete alignment point there. So it's kind of a virtuous circle. So there's loads we do to try and help our advisers adviser growth by helping our AR firms to to grow.

32:48 Secondly, we recruit new ARs into MAB, and, of course, we do the same with them. We help them to grow. So you can see probably quite clearly from there where the growth comes from and some of the things we do to help them. Secondly, the other metrics we track, firstly, obviously, the straight adviser count, which is a relatively crude measure. It used to be, if I look back historically, if we grow our advisers 10% a year, our revenue and profits grow at 10% a year. Near as, was pretty close. We're much broader as a group now, so it's a bit harder to follow it that closely. But secondly, we look at productivity per adviser as well, as I mentioned earlier, and that was really if if when I joined, I think, roughly speaking, our productivity per capita is about a 102 and a half thousand, I think, something like that. You've seen now if you double the first half figure, it's probably about a 130.

33:35 Now what I would say is in models that we've really put time and energy and technology into and lead generation in the last sort of three, four years, we can now see in those models where you've got employed advisers, very good technology, and a a constant supply of leads coming into the business. The productivity is, I think, it's 55 or 60% higher in those businesses than is in the average of our normal AR firms. So what I'm pointing to there is we understand what model and employment structures need to work well to bring the generality of our productivity up to an equivalent figure. So the path we're clearly on is measuring productivity per adviser. And as I say, that has been going up. And, obviously, we are focusing very much on technology to assist advisers to get there because the the killer point for me is if I'm a customer, it takes ten hours to complete a mortgage with an adviser overall, including admin and everything else. That's too long.

34:34 I just wanna get in my house. If I could do it in half the time and our advisers, therefore, can be twice as productive, that's a brilliant outcome for everybody and especially customers. If we move to market share, there's a question saying the rate of growth seems to have slowed a little. How do we see our market share evolving? Yeah. And, again, thank you, Alastair, for that question. The market share growth, you're very right. It does look on the face of it as though it slowed. And and just to go back a bit, we've we've grown an awful lot, recently. So we've held our share, I think, my wording from the beginning, although it's gone up a tiny bit in the last six months. The the reality is, we've doubled in the last five years, a bit more than that.

35:21 And the current figure is having gone up from, I think, it's eight to 8.1 or 8.1 to 8.2. Looks slowed, but actually it isn't. There's two factors driving that. One, if I mentioned right back at the beginning, our addressable market, what we've seen in the last two years in particular is product transfers. So people staying with their existing lenders has been extremely active. So to give you a figure on that, 84% of all refinance activity last year was done on product transfers, and I've never ever seen that. That's because people are petrified about rising rates and just chose to stay with their existing lenders. Now we were incredibly strong in that last year. We grew by over 70%, which is a phenomenal growth in a market where the purchase market was down. But those figures don't count in a market share growth.

36:09 Right? It's a really important point. So had they been remortgages, our market share would have gone up significantly further than it has done. So that's a temporary market dislocation point. The second point is where you'll probably be very familiar that new build, effectively. So, you know, Barrett, Persimmon, Taylor Wimpy, all the big brands, that market has been, frankly, on its knees for well, since the mini budget. It's been over two years now. And obviously, that was a a disastrous moment for the new build market, and it's hit lows that probably we've almost never seen. The relevance for the point I'm making is we are at MAB. We're over indexed actually in new build to the point where we we basically got a share of about 22, 23% of the mortgages written in that space. So, obviously, when that market goes quiet, our market share doesn't go up as much as it ordinarily would do.

37:00 That market will recover next year. It's already started, and, of course, that will see us increase our market share further along with the previous point as well. So so very good observation, but I'm I'm more optimistic about what is actually going on underlying. Question here about the dividend. Emily, do you fancy taking that one? Can you talk about the dividend policy? Yes. Of course. Thank you, Jeff. So our dividend policy, for history has been to distribute at least 75%, of our earning back. So if I look at kind of the past five years, our dividend payout ratio was actually some some years were actually much closer to even 90% as we were just trying to keep, you know, the the dividends payouts, pence, through some much some years that were actually harder.

37:51 The only exception that we've had to that 75% is in 2019, which was the COVID year. And and with all the uncertainty that was coming out, we actually give up give up 58%. However, in 2020, we did a catch up dividend just to just to compensate, and the 2020 payout ratio was 91%. Thanks, Emily. Another question here saying we've referenced a relatively flat mortgage market. How does MAB look to boost customer loyalty or repeat business? Yep. So thank you for that one. There's lots of work we're doing or or have been doing around that. So in the future, it may be we diversify more as a group as well as our, what I call, route one growth, if that makes sense. So two points there. Firstly, if we're at sort of 8% market share, eight to 9%, let's say, we can most definitely get to a much bigger figure than that. That's what I describe as route one growth.

38:57 In the future, we may choose to device diversify more into also sort of the home moving area. So lots of people take out lots of things when they move home. It's perfectly logical. We can extend into that space. But around retention in particular, so customer loyalty is a the two words almost sort of overlap, don't they? Our whole sort of play is to really help people get into their first and second and third homes and then try and help them in between their various moves. So with refinancing, with all sorts of things, with protection as well where it's suitable. And there's all sorts of customer contact strategies in there, but I wanna particularly wanna pull out is we we've got a a tool called mortgage monitoring tool, which is a a digital automatic way of effectively you opting in to be reminded on the state of your mortgage and evaluation of your property.

39:50 So you can be nudged at the point where you can save money and come out of your existing mortgage even if it hasn't finished the end of its term. And now I, as an adviser, as your adviser, effectively, I also get alerted. So that kind of brings us both together in a digitally forced way to make sure even if I might have missed the opportunity, I'm contacting you to see if you actually want to refinance and move your deal get you know, save money or raise finance or whatever it happens to be. The reason I think that's important is if, historically, our retention rate was, I don't know, 50% to make up a figure, it's slightly beneath or slightly above that. The delta between 5080%, 80 being the very best of our businesses, so 80% is probably the top end of customer retention that we would so eight out of 10 customers retained.

40:37 The delta between fifty and eighty is very significant. Most importantly, actually, it constitutes an even better service to our customers, from our advisers. So if eight out of 10 are being retained, it means they're happy, and that's the metric I look at the most. But it also drives a a huge success for the p and l as well. So that 30% delta between fifty and eighty would drive significant profitability through MAB through making our customers much more happy people. So that's why we've we've invested time and money in that tool. And, you know, obviously, I'm I'll be watching that interest link with great interest when the housing market continues its recovery. The point I'm making there is historically when the housing market is doing very well, it's quite easy to focus on who else is coming through the front door to ask for help buying a new home rather than focus on existing customers.

41:28 What we need to do is make sure we recruit sufficient advisers in to look after existing customers so we maximize those opportunities and look after those customers as well as not missing a single opportunity in terms of new business. So our mortgage monitoring tool will will very much help us with that. Next question asks, what impact do you expect from the FCA market study of protection sales? Yes. So we really welcome this market study, which is a bit that obviously was probably misconstrued. I think some people took it as action by the regulator on an industry that MAB operated in. Well, it is it is a market study. It's not classed as high priority by the regulator, and we've seen, a mortgages market study, and I think it's 2018 as well.

42:14 And at the time, they're looking at the effect of competition, commission, advice, non advice, execution only, all sorts of things in the mortgage space. And the conclusion from the regulator was that the market is operating very well and competition was good. The sort of the tenor of this market study looks very similar to me, although it's focused obviously on the protection market. And I can't second guess the outcome of where the regulator goes with it. All I can really do from our perspective is is welcome it, proactively engage with the regulator, which we have done. In fact, we're seeing them very shortly, and try and demonstrate clearly the outcomes we get are increasingly good all the time. There are things we're doing under consumer duty, which I probably can't talk about in this call, but they're all very, very positive things.

43:02 And that was the bigger body of regulation implemented over a year ago, which in my view should have been already driving the right behaviors in this sector. So I think they're interested in competition. I can't control that. I welcome more competition in this space. But the overarching picture for me that gives me comfort is The UK as a population is 2,000,000,000,000 underinsured. Alright? People need to be protected when they take on big debt. So there isn't any form of sort of misselling or anything. People absolutely need this product, and the FCA acknowledges that and also that the products serve great outcomes for customers. I think primarily, it's looking at some fringe practices, it's also trying to find out how competition works in this space. So I think there'll be some helpful stuff that comes from the review.

43:51 I expect if it does deal with some of the fringe activities, maybe it helps with market consolidation also, and that ultimately would be a benefit for MAB as a group. We've always argued that the strut stronger the stronger regulation is and the more costly it is to implement and invest in, the more market consolidation should happen, and and I still believe that's the case. We won't know the outcome of this review for probably two to three years. And as I say, we'll consult along the way, but we've got a a house that's very well in order because of consumer duty already. That's great. Thanks, Ben. I think we're pretty much running up to time now. So I just like to thank you all very much, for joining the meeting. Thank you for your interest, in MAB.

44:38 Hopefully, our our confidence in the prospects for the business is evident. If you've got any follow-up questions, you know, feel free to to hit me up. Look on the investor relations website for our email address. But for today, let's let's leave it there. I'm gonna hand you back to to Jake, our moderator. And thank you very much for for joining, and and I wish you well as well. Thank you for your interest. Thank you. Perfect. That's great. Mark, Ben, Emily, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure be greatly valued by the company.

45:26 On behalf of the management team of Mortgage Advice Bureau PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all. Thank you.