MORTGAGE ADVICE BUREAU (HOLDINGS) PLC

("MAB" or "the Group")

19 March 2024

Final Results for the year ended 31 December 2023

Mortgage Advice Bureau (Holdings) plc (AIM: MAB1.L) is pleased to announce its final results for the year ended 31 December 2023.

Financial summary

Operational highlights

Post period end

* In addition to statutory reporting, MAB reports alternative performance measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group uses these APMs to improve the comparability of information between reporting periods, by adjusting for certain items which impact upon IFRS measures, to aid the user in understanding the activity taking place across the Group's businesses. APMs are used by the Directors and management for performance analysis, planning, reporting and incentive purposes. A summary of APMs used and their closest equivalent statutory measures is given in the Glossary of Alternative Performance Measures.

Peter Brodnicki, Chief Executive, commented: 

"Against a very challenging backdrop in 2023, MAB continued its exceptional track record of outperformance and market share growth in all market conditions.

"Despite the severe market downturn, we continued our investment across the entire business and remained resolutely focused on long-term growth. Our proposition for growth focused mortgage and protection firms is outstanding, underpinned by best-in-class technology, lead generation and infrastructure, and our aim is to continue to further increase MAB's differentiation versus our competitors and grow market share and profitability.

"2024 has started well, with both purchase and re-financing activity having picked up significantly. We believe this signals the early stages of a market recovery that builds towards a catch-up year in 2025, with pent-up demand continuing to be released as consumer confidence and affordability increase.

"Although we expect organic adviser growth to start building some momentum again in H2 as our AR firms gain more confidence in the sustainability of the recovery, recruitment activity in terms of new AR firms is exceptionally strong, reflecting the significant strides we have made in terms of our technology and lead generation developments, as well as how we have engaged with and supported our partner firms with the introduction and integration of Consumer Duty.

"Following an exceptionally strong year for our most mature investment First Mortgage, strong progress has been made in terms of efficiencies and lead sources in all our other AR investments, with adviser productivity in these firms being significantly higher than our average across the Group. We expect a record performance from our investments this year and believe the portfolio will contribute to accelerated Group profit growth over the medium term."

Current Trading and Outlook

Following the modest improvement in trading towards the end of last year, we have seen a very positive start to 2024 across both purchase and re-financing, including a long-awaited recovery in Buy-to-Let activity.

We previously reported our expectation that overall market activity would increase once inflation was under control and the Bank of England base rate had peaked or started to fall back. Although a first reduction in the base rate is not expected until later this year, mortgage rates have reduced notably, the availability of mortgage products has increased, and mortgage underwriting criteria are starting to signal a more positive outlook.

This has all helped consumer sentiment, resulting in increasing house purchase activity, some of which will certainly be driven by the pent-up demand that has built up since the events of September 2022.

Although we expect it will be the second half before we see organic adviser growth recommence, our AR firms are eager to resume their growth plans and are preparing to do so now. New AR recruitment activity started picking up strongly in the latter part of 2023, following an understandable lull in the previous 12 months. That momentum has built strongly, boosted by the significant developments in technology and lead generation we have delivered, as well as further investment in our recruitment resources to ensure we can capitalise on the opportunity our proposition enhancements will bring.

Although the macroeconomic environment remains difficult to predict, we are increasingly optimistic about the Group's prospects for this new financial year, with current trading in line with expectations.

For further information please contact:

Media enquiries: investor.relations@mab.org.uk

Analyst presentation

There will be an analyst presentation to discuss the results at 9:30am today. 

Those analysts wishing to attend are asked to contact investor.relations@mab.org.uk.

Copies of this interim results announcement are available at www.mortgageadvicebureau.com/investor-relations 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). 

⁽¹⁾ Percentage points.

⁽²⁾ Based on first charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance.

⁽³⁾ Includes 117 Fluent advisers as at 31 December 2023 (61 advisers in the first charge mortgages division, 49 in the secured personal loans division, 2 in the later life division, and 5 in the bridging finance division). Includes a total of 240 advisers at 31 December 2023 who are later life advisers or advisers in directly authorised firms that use MAB's subsidiary, Auxilium, a specialist protection service provider, for protection. For both later life and directly authorised advisers the fees received by MAB represent the net income received by MAB as there are no commission payouts made by MAB.

⁽⁴⁾ Excludes directly authorised advisers, MAB's later life advisers and, advisers from associates in the process of being onboarded under MAB's AR arrangements. Includes Fluent's second charge, later life and bridging advisers who have a higher revenue per adviser than first charge advisers.

Chief Executive's Review

2023 started with much depleted mortgage and protection pipelines, following the very turbulent and difficult final quarter of 2022 post the mini-budget. From this very low base, mortgage activity gradually increased through much of H1, as it seemed that inflation was starting to come under control, and mortgage rates were appearing to stabilise at manageable levels for borrowers. However, mid-way through the year, the inflationary backdrop began to disappoint, which took markets by surprise. Consequently, mortgage rates rose quickly and to levels sufficiently high enough to markedly reduce house purchase activity, forcing many borrowers to pause and wait longer before re-financing their existing mortgages, on the hope that mortgage rates would subside later in the year.

As expected, these borrowers started to re-finance in greater numbers much later in the year. We also saw a slight improvement in purchase related mortgage activity right at the end of the year, as mortgage rates became more attractive against a backdrop of lower inflation pointing to a more predictable and better outlook for new business in 2024.

Against this difficult market backdrop where new mortgage lending was down by 29%, MAB grew its market share of new mortgages⁽¹⁾ to 8.3% from 7.5%, once again outperforming the market in difficult trading conditions. Much of this outperformance was a clear reflection of how MAB helped ARs and advisers to successfully pivot and focus their efforts largely towards re-finance and protection opportunities, in the absence of an active purchase market. As a result, adviser productivity remained virtually unchanged despite the significant drop in purchase transactions. The ability to do this on the rare occasion of a major downturn strongly underlines the resilience of MAB's operating model, and of course any drop in property transactions is typically made up once the housing market recovers.

In terms of MAB's strategy, although conditions were very challenging, we continued to invest for growth, as opposed to making short-term cost cuts at the expense of longer-term opportunities. This was to ensure we remain on a path towards establishing even greater differentiation versus our competitors, enabling us to carry on growing market share and profitability.

MAB ARs have more employed advisers than the intermediary sector average, and as a result they understandably reduced adviser numbers quickly in response to a sharp decline in purchase transactions. The 4% fall overall in adviser numbers was expected as firms consolidated and focused on efficiency and productivity rather than growth in such uncertain times. We expect a better outcome in 2024, as existing ARs gradually become more confident in a sustainable recovery.

Despite the 29% drop in UK new mortgage lending, Group revenue for the period was up 4% to £239.5m (2022: £230.8m), with organic revenue (excluding the Fluent, Auxilium and Vita acquisitions) down 4%, and Group first charge mortgage completions down 8% to £25.1bn (2022: £27.3bn). Re-financing transactions accounted for 53% of the Group's first charge mortgage completions by lending value (2022: 42%), driven by a 75% increase in the Group's product transfer completions to £6.5bn (2022: £3.7bn).

MAB's first charge mortgage completions are analysed as follows:

Adjusted EBITDA was down 8% to £26.7m (2022: £29.1m), primarily due to a £9.7m or 28.1% increase in administrative expenses, reflecting the planned further investment in the Group's growth strategy.

Lead generation and lifetime customer value

Our investment and developments in early customer capture and nurture, data analytics and customer profiling are helping us build a better understanding of our existing and future customers and how to best service all their likely requirements to generate a larger lifetime value.

This learning is driving the development of our customer and broker platform, apps and tools whilst shaping our entire customer engagement strategy. These optimisations are already delivering early signs of the size of the opportunity we have, including driving an increasing number of opportunities from our existing lead channels, supporting the conversion of all leads, and identifying high propensity for requirements of additional products and services.

Although we are in the early stages of implementation and the learning this strategy will bring, we enter an exciting period as we layer additional opportunities of potential customers and their value to MAB into our existing environment.

MAB's client bank and related retention opportunities grows year after year, as MAB and its ARs continue to generate new lead flows.

Our acquisition of Fluent has added Price Comparison Websites ("PCWs") and other major national lead sources to MAB's market leading position in the estate agency and new build sectors. These are by far the three largest sources of new customers for intermediaries. However, with estate agency and new build in particular, the leads generated have been largely reliant on human referral, which at best can be inconsistent.

Our development of digital customer engagement and research tools enables MAB to reduce that reliance and generate additional opportunities from these existing lead sources, with those potential customers already having had a positive online experience before engaging with an adviser. We see this becoming a major growth opportunity over the medium term, with the same digital engagement and nurture helping MAB to improve retention year-on-year from an ever-increasing client base.

MAB's success has been built on being the leader in providing an exceptional service to introducer lead sources and their customers. Our digital customer engagement and nurture strategy will strengthen our leading position still further and is already starting to provide opportunities for new introducer relationships.

Although MAB is the market leader in customer acquisition and fulfilment from local and national lead sources, we also support our ARs in optimising direct customer engagement and acquisition through organic website traffic and social media.

Lead generation - whether that be new customers, retaining customers, or increasing the lifetime value of a customer - is the major and increasing differentiator for MAB that drives adviser and AR growth, performance, and retention. Technology and Artificial Intelligence (AI) are likely to have an increasing impact on how we acquire, retain, and build extended value for our customers and for MAB, its ARs and their advisers. Accordingly, continued investment in these areas remains a priority, regardless of market conditions, and will continue to underpin our strategy for strong market share and profit growth.

Leveraging existing invested-in partners

The majority of our subsidiaries and associates had significant growth plans in 2023, which have been delayed because of the difficult market backdrop, albeit First Mortgages did deliver an excellent performance, helped partly by the Scottish property market being less affected than the rest of the UK.

All our subsidiaries and associates strengthened their businesses last year, are in a good position to capitalise on a recovering market and are expected to resume some level of adviser growth in 2024. Adviser productivity in this portfolio is significantly higher than the average across MAB and continues to build. We expect a record performance from our investments this year, and for them to increasingly contribute to our plans for accelerated profit growth.

Technology, Automation and AI

Technology remains central to our strategy and our investment in our MIDAS Platform will continue at the levels required to ensure we are always in the strongest possible position to optimise operational efficiency and drive revenue growth from new lead flow, lead nurture, customer retention, adviser productivity, and customer lifetime value.

We are committed to maintaining our differentiation through technological advantage, and our roadmap now incorporates enhanced functionality through the adoption of AI. As with our MIDAS Platform development, automation and AI will significantly contribute to our growth plans and operational efficiency across all areas of the business, as well as future proof our business model and cement our leadership position in the intermediary sector.

Fluent

Fluent had a growing employed salesforce at the time of acquisition. We have worked very closely with the Fluent management team to re-balance the business to better suit the much-reduced levels of new business experienced last year. This process saw significant cost reductions and some key personnel changes. Although adviser numbers were quickly reduced, other cost savings and efficiencies continued throughout the year, ensuring the business is in the best possible shape to capitalise on improving market conditions.

During this period, Fluent also secured a new long-term contract with its largest provider of mortgage leads, whilst adding new lead sources that will support new business growth in 2024/25.

With a better-balanced cost base, new lead sources and processes, and a strong management team, Fluent is well-positioned for a good recovery in revenue and profits in 2024.

Consumer Duty

In 2023, the deadline for the implementation of the Consumer Duty requirements came into effect. The Financial Conduct Authority's ("FCA") new rules require all regulated firms to consider the needs, characteristics, and objectives of their customers, and to ensure they are always acting to consider and deliver the right outcome for customers.

The new requirements also include the need to show consideration, flexibility and attention to customers with characteristics of vulnerability. The Consumer Duty sets clear standards of consumer protection across financial services and requires all firms to put the needs of their customers first, and central to all they do.

The Group's Board closely monitored the preparations for the introduction of the Consumer Duty and could confirm it was satisfied that the firm was prepared for the new requirements by the 31 July 2023 deadline.

Since implementation, work has continued to ensure the Consumer Duty requirements are embedded into all MAB's activities and owned by senior leaders across the business. This helps us to ensure that good customer outcomes are considered as a matter of course, and at all times. 

Good customer outcomes have always been, and continue to be, central to MAB's strategy and culture, and so we see the implementation of Consumer Duty as hugely complementary and supportive of our objectives as a Group.

Board changes

Non-executive chair

Katherine Innes Ker, non-executive chair, will retire from the Board at the conclusion of the Annual General Meeting on 22 May 2024. Katherine joined us as Chair at our IPO nearly 10 years ago and has been an integral part of our success since then. Mike Jones, non-executive director, will succeed Katherine as chair with effect from his re-election at the AGM. Mike joined the Board in March 2021 and has chaired the Group Risk Committee since November 2022. His vision and strategic thinking have made an immediate impact and we look forward to his continued contribution as Group chair.

Chief Financial Officer

Lucy Tilley, Chief Financial Officer, submitted her resignation to the Board in January 2024 and is currently serving her six months' notice. The search for her replacement is well advanced and an update will be provided in due course.

Non-executive director

A search for an additional independent non-executive director who will complement the Board in terms of profile, skills and experience is also well advanced, and we look forward to updating our shareholders in due course.

Summary

It is very rare to see such a severe downturn in UK purchase related mortgages as the one we have experienced, and it significantly affected what would otherwise have been an incredibly strong year for MAB. This was clearly a setback for the business but only one of timing.

The investment in our AR and customer proposition continued as planned, as we strengthened across all business areas, whilst ensuring we were fully prepared for implementation of the Consumer Duty.

We also made good progress on our ESG strategy, as we explore how we can become a real influencer in terms of helping the UK housing stock to become more carbon efficient, and how we can be at the forefront to set the standard within the intermediary sector.

The acquisition of Fluent was strategically important, however the timing of the downturn could not have come at a worse time for the expected growth of the business. Despite an understandably challenging first 18 months, the work we have done together will ensure a better performance this year as Fluent starts to build back towards our original expectations.

We expect a strong contribution from our all our investments this year, and that they will play an increasingly important part in our plans to deliver accelerated profit growth.

Although we do not see normal growth in organic adviser numbers resuming until 2025, AR recruitment activity is building very strongly and reflects the significant technology and lead generation developments seen at MAB over the last 12 months. We believe our approach and implementation of the Consumer Duty across the business is also a major consideration for firms looking at MAB's overall proposition.

Although much of the last quarter of 2023 was challenging in terms of written activity levels, which will have some impact on this year, purchase and re-financing activity since then has picked up notably driven by reducing mortgage rates and inflation. We believe this signals the early stages of a recovery in 2024 that will build towards a catch-up year in 2025 with pent up demand continuing to be released as consumer confidence and affordability increase.

⁽¹⁾ First charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance.

Market review

The fall in new mortgage approval volumes in the aftermath of the September 2022 mini-budget continued throughout 2023, as the rising costs of living and higher interest rates created further affordability constraints and reduced consumer confidence. After a much-depressed Q1 2023, with mortgage approvals 40% down year-on-year, Q2 saw a slight improvement (down 26% year-on-year). However conditions toughened further in Q3 2023 (down 41% year-on-year) and this continued into Q4 (down 13% year-on-year despite Q4 2022 being heavily affected by the mini-budget). Overall, new mortgage approvals were down 32% for 2023, as summarised in the graph below.

http://www.rns-pdf.londonstockexchange.com/rns/3457H_1-2024-3-19.pdf

Source: UK Finance

This led to gross new mortgage completions⁽¹⁾ being down 29% to £223.5bn (2022: £313.2bn⁽²⁾). The purchase segment was down 30% and the re-mortgaging segment down 29%, as illustrated in the table and graph below.

Source: UK Finance

http://www.rns-pdf.londonstockexchange.com/rns/3457H_2-2024-3-19.pdf

Source: UK Finance

Whilst affordability pressures restricted the external re-mortgaging sector during the period, Product Transfers saw a 21% increase by value.

Property transactions were down 19% in 2023 compared to 2022, as illustrated in the graph below. The smaller contraction relative to mortgage lending volumes indicates an increasing proportion of cash buyers, with higher interest rates putting cash buyers in an increasingly favourable position to those taking out a mortgage.

http://www.rns-pdf.londonstockexchange.com/rns/3457H_3-2024-3-19.pdf

Source: UK Finance

The value of mortgage lending was also impacted by average house prices starting to fall from the peak reached in H2 2022. Average house prices in 2023 were down 2% compared to H2 2022, and flat compared to average prices in 2022 as a whole.

The share of UK residential mortgage transactions via intermediaries (excluding Buy to Let, where intermediaries have a higher market share, and Product Transfers where intermediaries have a lower market share) continued to grow to 87% (2022: 84%), with customers increasingly needing choice, advice and support in a more complex and uncertain macro environment. We expect this increased intermediary market share to remain stable.

UK Finance's and the Intermediary Mortgage Lenders Association's latest estimates of gross new mortgage lending for 2024, published in December 2023, are £215bn and £205bn, down 4% and 8% respectively compared to 2023.

However, the Group's current trading and the latest market data would indicate that actual numbers may end up higher than these forecasts. Despite the continuing headwinds, the underlying level of demand for home ownership and mortgages remains strong, and we expect activity levels to be notably stronger this year. We also expect external re-mortgaging to make up a greater share of re-financing in 2024, even though Product Transfers will remain strong.

⁽¹⁾ First charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance.

⁽²⁾ UK Finance regularly updates its estimate of gross new mortgage lending, and previously reported £313.9bn at the time of our 2022 results.

Financial review

We measure the development, performance, and position of our business against several key indicators.

http://www.rns-pdf.londonstockexchange.com/rns/3457H_4-2024-3-19.pdf

Revenue

Group revenue increased by 3.8% to £239.5m (2022: £230.8m) despite the average number of mainstream⁽¹⁾ advisers during the year down 2.4% to 1,940 (2022: 1,988).  Organic⁽²⁾ revenue reduced by 4.3% to £199.6m (2022: £208.6m) driven by a 5% reduction in the average number of organic⁽²⁾ mainstream⁽¹⁾ advisers to 1,801 (2022: 1,901) and a 1% increase in revenue per organic mainstream adviser, partly due to a lower proportion of new advisers in the year. Our existing AR firms paused recruitment and focused on efficiency following the September 2022 mini-budget and inflationary pressures causing further increases in interest rates. In addition, we entered 2023 with a lower-than-expected pipeline of written mortgages and new AR firms. 

Fluent, which was acquired on 12 July 2022, had 117 (2022: 182) mainstream advisers as at 31 December 2023, and contributed £37.5m (2022: £21.9m) of revenue during the year. Auxilium, which was acquired on 3 November 2022, had 226 (2022: 161) directly authorised advisers to as at 31 December 2023, and contributed £1.1m (2022: £0.2m) of revenue. MAB increased its stake in Vita from 49% to 75% on 12 July 2022, with its adviser numbers and revenues already incorporated into the Group's figures due to it having been an AR of the Group since 2016.

The Group continued to generate revenue from three core areas, as set out below.

MAB's organic⁽¹⁾ revenue across the three core areas was as follows:

As a result of the market downturn in 2023, MAB's organic banked mortgage⁽³⁾ mix had a considerably lower proportion of house purchase transactions compared to the prior year at 45% (2022: 51%), driven by a 19% reduction in UK property purchase transactions overall, and an even larger reduction of 30% in mortgage-backed UK property purchase transactions as a result of the fall in consumer confidence.  The proportion of re-financing transactions in MAB's organic banked mortgage mix increased to 55% (2022: 49%) of completions by volume, as we saw a further increase in the proportion of product transfer completions by volume to 28% of MAB's mortgages⁽³⁾ (2022: 21%, 2021: 13%).  Product transfers have a lower average procuration fee and typically have lower protection, general insurance and client fee attachment rates than other mortgage types.

The Group's organic net mortgage⁽³⁾ completions by value reduced by 9%, with mortgage procuration fees reducing by 14% as a result of the increased proportion of product transfers. Client fees reduced by 10%.  The Group's organic protection and general insurance commissions however increased by 10%, reflecting the strong focus of MAB's advisers on protection when volumes in the mortgage market fall, particularly in our invested businesses, and the strength of MAB's proposition and support in these areas.

MAB's average first charge mortgage size decreased by 7.1% compared to the prior year, with average house prices remaining flat year-on-year, reflecting the increased proportion of re-financing completions where the average mortgage size is lower than for purchase transactions.

Fluent's revenue contribution across the Group's three core revenue streams during the year was as follows, with an additional £1.1m (2022: £0.1m) of revenue synergies realised:

Fluent generates revenue from a wider range of mortgage types than MAB, including first charge mortgages, secured personal loans (second charge mortgages), later life lending mortgages and bridging finance. Fluent earns revenue on first charge mortgages in the same way as MAB. In its other divisions, Fluent predominantly earns procuration and client fees, with a smaller proportion of protection and general insurance commission earned on loans arranged for its customers.

Auxilium, a specialist protection service provider, contributed revenue of £1.1m (2022: £0.2m). Auxilium's revenues are classified under protection and general insurance commission and represent the total income received, with there being no commission payouts to the directly authorised entities serviced by the business. 

MAB's overall revenue from re-financing (including both re-mortgages and product transfers) represented circa 35% (35% on an organic basis) of total revenue (2022: 32%, 2021: 25%) due to the Group's organic banked mortgage mix having a higher proportion of re-financing and Fluent having a higher proportion of re-financing in its first charge mortgage mix, with 2021 reflecting a particularly high level of purchase transactions.

The proportion of organic revenue derived from each of the Group's core revenue streams has remained reasonably stable as summarised below, with the movements reflecting the change in banked mortgage mix during the period, as well as the focus on protection.

The proportion of total revenue derived from each of the Group's core revenue streams has also changed, due to the dynamics set out above for organic revenue and a full year effect of the Fluent acquisition. Client fees as a proportion of Fluent's revenue are higher than for the organic Group, with protection and general insurance commission being a lower proportion of Fluent's revenue due to lower attachment rates on second charge mortgages, with the Group's revenue mix summarised as follows:

In first charge mortgages we expect client fees to become increasingly dependent upon the type and complexity of the mortgage transaction, as well as the delivery channel, leading to a broader spread of client fees on mortgage transactions, which represent the Group's lowest margin revenue stream.

Gross profit margin

Gross profit margin for the year increased to 29.3% (2022: 27.3%) and MAB's organic gross profit margin also increased to 28.5% (2022: 26.5%). This increase in gross margin is primarily due to the increased proportion of protection revenue in the organic Group in 2023.

The network organic business of the Group receives slightly reduced revenue share as existing ARs grow by increasing their adviser numbers. In addition, larger new ARs typically join the Group on lower-than-average margins due to their existing scale, hence a degree of erosion is expected in MAB's underlying gross profit margin due to the continued growth of our existing ARs and the addition of new larger ARs.

Looking ahead, we expect any further erosion in underlying organic gross margin to be offset by operational leverage reducing the Group's administrative expenses ratio^*.

Administrative expenses

Group administrative expenses increased by £10.7m (+29.7%) to £46.7m, mainly reflecting the full year impact of the acquisitions of Fluent and Vita. Organic adjusted administrative expenses increased by £4.5m (+14.9%) to £34.6m, reflecting MAB's continued investment in growth through the market downturn in 2023, and specifically in its technology platform and marketing team through a mix of employee and third-party costs, which we expect to drive enhanced lead generation opportunities and future revenue growth.  Head office costs, including those of First Mortgage, and compliance costs also increased to support the Group's growth strategy. MAB's Head office refurbishment at the end of 2022 led to a £0.5m increase in the depreciation charge.  All development work on MAB's MIDAS platform continues to be fully expensed. The Group's administrative expenses ratio was 19.5% (2022: 15.6%), and the organic administrative expenses ratio^* increased to 17.3% (2022: 14.4%) reflecting the adverse impact of the market downturn on revenue growth in a period where the Board originally expected to deliver operational leverage.

The Group expects to continue to benefit from the relatively fixed cost nature of much of its cost base, where those costs typically rise at a slower rate than revenue, with the operational leverage offsetting the expected slight erosion of MAB's underlying organic gross margin as the business continues to grow. 

Associates and Investments

MAB's share of profits from Associates was £0.8m (2022: £0.7m) with all of the Group's Associates being adversely impacted by the market downturn. 

Management believes that the value of a number of its associate investments exceeds their carrying value recognised using the equity accounting method under IAS 28.

Adjusted EBITDA, profit before tax and margin thereon

Adjusted EBITDA^* was down 8.1% to £26.7m (2022: £29.1m), with the margin thereon of 11.2% (2022: 12.6%) reflecting the impact of the market downturn and MAB's continued investment through this period. 

Organic adjusted EBITDA^* was £24.6m (2022: £26.9m), with the margin thereon of 12.3% (2022: 12.9%).

Adjusted profit before tax^* was down 14.8% to £23.2m (2022: £27.2m), with the margin thereon being 9.7% (2022: 11.8%), also reflecting a full year of interest charges on MABs debt facilities. Organic adjusted profit before tax^* was £22.2m (2022: £25.5m), with the margin thereon of 11.1% (2022: 12.2%). Statutory profit before tax was £16.2m (2022: £17.4m) reflecting a full year impact of Fluent, Vita and Auxilium ongoing acquisition-related costs, including amortisation of acquired intangibles and non-cash operating expenses associated with the put and call option agreements relating to the minority interests on the Fluent and Auxilium acquisitions. As a result, the margin on statutory profit before tax was 6.8% (2022: 7.5%). 

Vita and Auxilium contributed adjusted profit before tax of £0.5m (2022: £0.05m) and £0.7m (2022: £0.1m) respectively. Fluent made an adjusted loss before tax of £1.1m, which was due to Fluent's performance in H1 2023, with an improved performance in H2 2023, and having made an adjusted profit before tax of £1.5m in the period from acquisition to 31 December 2022.  These figures exclude the impact of any non-cash charges associated with the put and call options for Fluent and Auxilium.

Adjusted profit before tax^* as a percentage of net revenue^* was 24.6% (2022: 34.0%) primarily due to the effect of the market downturn and MAB's continued investment in growth.  

Finance revenue 

Finance income of £0.3m (2022: £0.1m) reflects the uptick in interest rates that prevailed for most of the financial year and the interest income accrued or received on loans to associates and other appointed representatives. 

On 28 March 2022 MAB entered into new four-year debt facilities with NatWest, comprising a £20m Term Loan (the "Term Loan") and a £15m revolving credit facility (the "RCF") to be used in connection with the acquisition of Fluent. The RCF is also available for general corporate purposes. There is an option to extend the RCF and the Term Loan for a further year.

Finance expenses of £2.6m (2022: £1.2m) include £1.4m (2022: £0.6m) of interest and non-utilisation fees payable on MAB's debt facilities, the interest expense on lease liabilities and a £1.1m charge (2022: £0.6m) relating to the unwinding of the redemption liability associated with the Fluent Option and a £0.1m charge (2022: nil) relating to the unwinding of the redemption liability associated with the Auxilium Option.

A remeasurement of the redemption liability associated with the Fluent and Auxilium options has been undertaken at the year end. This has resulted in a £4.5m gain (2022: £nil) recognised in the year, split as a £4.7m gain for the Fluent Option, predominantly due to further acquisition of share capital undertaken in the year, and a cost of £0.2m for Auxilium options.

Taxation

The effective tax rate on adjusted profit before tax^* increased to 21.8% (2022: 16.8%), primarily due to the increase in the prevailing UK corporation tax rate from 1 April 2023.  The effective rate of tax on reported profit before tax reduced to 23.0% (2022: 26.4%), primarily due to lower acquisition related costs, a gain on redemption liabilities in the current year and write off of the Boomin investment in the prior year, which are all disallowable for tax purposes. This is offset by a higher prevailing tax rate and higher disallowable share option costs linked to acquisitions. We expect the effective tax rate on adjusted PBT in future years to be in line with the prevailing UK corporation tax rate.

Earnings per share and dividend

Adjusted fully diluted earnings per share^* was 29.6p (2022: 37.4p). Basic earnings per share increased to 23.6p (2022: 21.8p) due to £2.6m lower acquisition-related costs, £4.5m fair value gain on redemption liabilities in 2023 and the £2.8m write off of the Boomin investment in 2022, offset by £2.6m higher amortisation of acquired intangibles due to a full year of amortisation on 2022 acquisitions.

The Board is pleased to propose a final dividend of 14.7p per share (2022: 14.7p). This brings the total proposed dividend for the year to 28.1p per share (2022: 28.1p), reflecting the Group's policy to pay dividends reflecting a minimum pay-out ratio of 75% of the Group's annual adjusted post-tax and minority interest profits. This represents a cash outlay of £8.4m (2022: £8.4m). Following payment of the dividend, the Group will continue to maintain significant surplus regulatory reserves.

The record date for the final dividend will be 26 April 2024 and the payment date 29 May 2024. The ex-dividend date will be 25 April 2024.

Balance sheet

In connection with the acquisitions of Fluent, Vita and Auxilium in 2022, the Group recognised separately identifiable intangible assets with a fair value on acquisition of £55.4m and goodwill totalling £38.7m. The carrying value of the intangible assets after amortisation at 31 December 2023 was £50.1m (2022: £55.2m). In addition, redemption liabilities of £2.4m (2022: £7.0m) and £0.4m (2022: £0.2m) in respect of the put and call options relating to the Fluent and Auxilium acquisitions respectively, are included in other payables as at 31 December 2023.

A clawback liability is recognised on the balance sheet.  Life insurance commissions are paid upfront on an indemnity basis, mainly over a four-year period. If a policy is cancelled during the indemnity period, part of the commission received may have to be repaid to the policy provider. The clawback liability estimates the value and timing of repaying commission received on an indemnity basis for policies that may lapse in a period of up to four years following inception.

In 2022, the Group entered into an agreement on 28 March 2022 with NatWest, in respect of a new term loan for £20m and a revolving credit facility for £15m (the "Facilities Agreement"), in order to part fund the cash consideration payable in relation to the Fluent acquisition.  As at 31 December 2023, the Group had drawn down £1.6m (2022: £3.2m) on the revolving credit facility, in addition to a remaining balance of £16.3m (2022: £20.0m) on the term loan, and had £0.4m (2022: £0.2m) of accrued interest net of prepaid loan arrangement fees.  Net debt (adjusting only for unrestricted cash balances of £3.0m (2022: £7.2m)) was £15.2m (2022: £16.2m).

Cash flow and cash conversion

The Group's operations produce positive cash flow, which is reflected in the net cash generated from operating activities of £24.3m (2022: £24.3m). 

Other than the £2.8m refurbishment of the Group's head office in Derby in 2022, the Group's operations are typically capital-light, with the most significant ongoing capital investment being in computer equipment. A further £0.4m was spent on the final elements of the head office refurbishment project in early 2023, and only £0.5m of general capital expenditure on office and computer equipment was required during the year (2022: £0.4m).  Group policy is not to provide company cars and no other significant capital expenditure is foreseen.

The Group's regulatory capital requirement represents 2.5% of regulated revenue and totalled £5.5m at 31 December 2023 (2022: £5.5m), with the Group reporting a surplus of £28.0m (2022: £26.8m).

The following table demonstrates how cash generated from operations was applied:

* In addition to statutory reporting, MAB reports alternative performance measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group uses these APMs to improve the comparability of information between reporting periods, by adjusting for certain items which impact upon IFRS measures, to aid the user in understanding the activity taking place across the Group's businesses. APMs are used by the Directors and management for performance analysis, planning, reporting and incentive purposes. A summary of APMs used and their closest equivalent statutory measures is given in the Glossary of Alternative Performance Measures.

⁽¹⁾ Excludes directly authorised advisers, MAB's later life advisers and advisers from associates in the process of being onboarded under MAB's AR arrangements. Includes Fluent's second charge, later life and bridging advisers who have a higher revenue per adviser than first charge advisers.

⁽²⁾ Organic means the Group before the impact of the acquisitions made in 2022 (Fluent, July 2022; Vita, July 2022; and Auxilium, November 2022).

⁽³⁾ First charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance.

Principal Risks and uncertainties

The Board is ultimately responsible for risk management. It regularly considers the most significant and emerging threats to the Group's strategy, as well as establishing and maintaining the Group's systems of internal control and risk management and reviewing the effectiveness of those systems. The Board and senior management are actively involved in a regular risk assessment process as part of the risk management framework, supported by TriLine Governance and Risk and Compliance software (TGRC), to enable consistency and ownership by risk owners across MAB. The Group's risk assessment process considers the impact and likelihood of risk events that could materialise and affect the delivery of the Group's strategic goals. If and when necessary, risk owners regularly review and update the controls in place to mitigate the impact of the risks, with the output of these reviews being reported to the Risk & Compliance Committee (RCC) and Group Risk Committee (GRC). This is to ensure that appropriate oversight is provided and that actions are in place to mitigate any areas of concern. Throughout the Group, all employees have a responsibility for managing risk and adhering to the control framework.

There are a number of potential risks that could hinder the implementation of the Group's strategy and have a material impact on its long-term performance. These arise from internal or external events, acts or omissions that could pose a threat to the Group. The principal risks identified as having a potential material impact on the Group are detailed below, together with the primary means of mitigation. These risks have been assigned a rating based on: (a) likelihood of the risk materialising to a point where it will impact MAB's strategic objectives; and (b) perceived impact to MAB that the crystalised risk may cause. In addition, we show whether the risk has remained the same, reduced, or increased versus the prior year. The risk factors mentioned do not purport to be exhaustive as there may be additional risks that materialise over time that the Group has not yet identified or deemed to have a potentially material adverse effect on the business.

ESG (Environmental, Social, Governance)

MAB remains committed to the implementation of its integrated ESG strategy and ensuring that we are a responsible business that grows sustainably and makes a positive contribution to all stakeholders - our customers, shareholders, employees, suppliers, and the local communities in which we operate, whilst minimising our direct environmental impact.

The Group's Mission and Vision Statements reflect how we are integrating social and environmental considerations in our decision making:

Our Mission: We help people fulfil their aspirations, by making key financial moments in life a simple, happy and reassuring experience - from home ownership and beyond.

Our Vision: We want to become the leading financial partner through life's key moments.
By being an amazing place to work, providing an outstanding experience for our customers, transforming the industry with the best mortgage journey, having a positive social and environmental impact.

The ESG section of this report outlines the activities we have progressed throughout the year to embed and further our integration of core sustainability themes into our operations, and includes:

·    details of how the Group continues to build upon the progress made in previous years in implementing and advancing its ESG strategy;

·    our stakeholder engagement arrangements, including the section 172 statement of the Companies Act 2006;

·    our environmental performance and strategy report;

·    how the Group assesses and manages climate-related risks and opportunities, in line with the requirements of Climate-related Financial Disclosure Regulations 2022; and

·    our ESG strategy and progress.

Section 172(1) statement

The Directors of MAB consider that in conducting the business of the Company over the course of the year they have complied with Section 172(1) of the Companies Act 2006 (the "Act"), by fulfilling their duty to promote the success of the Company and act in the way they consider, in good faith, would be the most likely to promote the success of the Company for the benefit of its members as a whole, having regard to the matters set out in s172(1)(a-f) of the Act.

The continued success of our business is dependent on the support of all of our stakeholders. Building positive relationships with stakeholders that share our values is essential to us and working together towards shared goals assists us in delivering long-term sustainable success.

To fulfil their duties, the senior management team and the Directors take care to have regard to the likely consequences on all stakeholders of the decisions and actions they take, with a long-term view in mind and with the highest standards of conduct. Where possible, decisions are carefully discussed with the groups concerned and are therefore fully understood and supported when taken.

Reports are regularly made to the Board by the senior management team about the strategy, performance and key decisions taken, which provides assurance that proper consideration is given to stakeholder interests in decision-making, and the Board uses this information to assess the impact of decisions on each stakeholder group as part of its own decision-making process.

The Group's governance structure allows the Board and the senior management team to have due regard to the impact of decisions on the following matters specified in Section 172(1) of the Act, as set out in the table below.

Methods used by the Board

The main methods used by the Directors to perform their duties include:

• Board meetings or strategy days to review all aspects of the Group's business model, performance and strategy and assess the long-term sustainable success of the Group, as well as its impact on key stakeholders. Regular senior management team strategy sessions also took place during the year;

• The Board meets regularly throughout the year as well as on an ad hoc basis, as required by time critical business needs, such as acquisitions or other investments;

• The Board is responsible for the Company's ESG activities set out in the Strategic Report. Ben Thompson is the Group's designated executive with responsibility for ESG;

• Specialist advice from external consultancy firms is sought where appropriate, for instance with regards to ESG or executive remuneration;

• The Board's risk management procedures set out in the Corporate governance report identify the potential consequences of decisions in the short, medium and long term so that mitigation plans can be put in place to prevent, reduce or eliminate risks to the Company and wider stakeholders;

• The Board sets the Company's purpose, values and strategy, as detailed in the Strategic Report, and the senior management team ensures they align with its culture;

• The Board carries out direct shareholder engagement via the AGM and the Executive Directors attend shareholder meetings on a regular and an ad hoc basis;

• External assurance is received through internal and external audits and reports from brokers and advisers; and

• Specific training for existing Directors and induction for new Directors as set out in the Corporate governance report.

Stakeholders

Engaging with our stakeholders is very much a part of our ethos as it strengthens our relationships and helps us to make better business decisions to enable us to deliver on our commitments. The Board is regularly updated on wider stakeholder engagement feedback to stay abreast of customers, suppliers and shareholders' insights into the issues that matter most to them and our business. The below table outlines how we consider these stakeholders and how we engage with them:

Climate-related financial disclosure

The Group is now within scope of the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 ("CRFD"). Such disclosures on how climate change will affect businesses are intended to assist investors and wider stakeholders in understanding how climate-related financial risks are managed.

The Board supports the initiatives of the TCFD, and has prepared the Group's CRFD disclosures to a level of detail that are reflective of the nature of its business.

The Group's disclosures address the following four pillars:

Governance

The Group views climate related risks and opportunities as growing in importance. The Board is ultimately responsible for the oversight and compliance with all applicable laws, together with assessment of the impact of climate change on risk to the organisation in line with its reporting obligations.

During 2023 MAB's Sustainability Committee was established to promote all related activities of the Group and ensure appropriate governance. The Sustainability Committee has taken a lead role in assessing the climate related risks the Group faces, as well as implementing strategic initiatives to mitigate such risks and meet the evolving expectations of our customers and partners.

The Sustainability Committee members includes the following members:

·    Head of ESG (Chair)

·    Deputy Chief Executive Officer

·    Chief Financial Officer

·    Chief Risk Officer

·    Head of Legal (Deputy Chair)

·    Company Secretary

·    Chief People Officer

·    Financial Accountant

The Sustainability Committee's scope and responsibilities include:

-      Identifying and disseminating MAB's Sustainability Goals across the Group

-      Developing and implementing the Project Plan(s) for achieving these Goals and related activities ('ESG improvement plan'), including capturing the actions for reporting on the same

-      Documenting the corresponding decision making and governance steps in pursuit of the Goals

-      Ensuring that risks (including climate-related) and vulnerabilities in achieving the Goals are identified, managed and mitigated across the Group

-      Ensuring the efficient removal of any obstructions throughout the implementation of goals and actions

-      Giving regard to the consequences of any decision in the long term

-      Considering in full the need to maintain a reputation for high standards of business conduct at all times

In terms of CRFD, the Committee reports into: (i) the Group's Audit Committee, and (ii) the Board, whilst also ensuring that significant risks are appropriately disseminated as part of the Group's Risk Management Framework including the Risk and Compliance Committee (RCC) and the Group Risk Committee (GRC). ESG more generally has now been integrated into board discussions as a standing agenda item for its meetings.

Sustainability-related risk management and strategy

The Sustainability Committee is kept abreast of all legal and regulatory developments in connection with ESG and climate-related issues, including actions and reporting obligations via our dedicated In-House legal function, and with support of our external advisers and know-how tools. Other key colleagues also garner intelligence in relation to industry specific political and economic considerations through active collaboration in relevant external forums, such as MCAG ('Mortgage Climate Action Group'), an initiative by the Association of Mortgage Intermediaries which aims to help and shape how intermediaries can support the transition to a net zero economy.

We have ensured that climate-related risks have been identified, assessed and quantified in consultation with colleagues from the Operational Risk function, members of the Sustainability Committee and the Finance team through continuous interaction as well as dedicated scenario analysis workshops with all business functions. The tracking of climate-related risks is fully integrated into the Group's risk management function and processes, supported by the TriLine Governance, Risk and Compliance software which is used across the Group. This allow us to monitor the impact and likelihood of risk events that could materialise and affect the delivery of the Group's strategic goals, to ensure that mitigation strategies for any risks deemed material are implemented quickly and consistently.

 The output of our climate-related risk assessment incorporates the common risk methodology of correlating both the likelihood and impact of a risk materialising that applies to all aspects of the Group's risk protocols.

For MAB, the key climate-related risks and opportunities are predominantly driven by sector-related considerations, such as climate-related impact on properties in the UK, government guidelines and legislation regarding the energy efficiency of housing and considerations relating to the value of such assets. Furthermore, we recognise that our supply chain plays an important role in ensuring the seamless operation of our business, including, but not limited to, our technology partners.

To the extent that certain climate related physical risks could materialise at the Group's operational locations, appropriate mitigation measures are in place.  All sites are regularly monitored to ensure they are optimally utilised and increasingly efficient (to the extent possible) from an energy consumption and waste perspective.

In terms of transitional risks, the Group has dedicated teams focused on interacting with key lenders and other stakeholders with a common interest in evolving financial services to support consumers as they, and their homes, face the challenges that climate events may cause.

The Board has not identified any climate-related scenarios that are expected to materially impact the financial position, or resilience, of the Group. Via the Sustainability Committee, the Group will continue to monitor all relevant risks and scenarios.

Metrics and targets

Given the nature of the business, we consider that there are very limited metrics or targets that reflect the climate-related risks that the Group may face, other than physical risks in connection with its footprint from an operating locations perspective. Those risks are appropriately tracked, and the extent of the Group's emissions are set out in this report.

It is, however, anticipated that the Group may start to monitor the emissions and energy performance of the properties of customers it has advised with a view to understanding the extent of this collective impact more fully, and informing the Group's strategy in supporting such customers in the future.

Climate risk assessment - scenario analysis

During 2023 we carefully scrutinised our practices across the Group, as well as reflected on our interactions with customers, lenders, providers and other parties we engage with, to assess the potential impacts of certain climate-related scenarios occurring.

This Group-wide initiative was undertaken in conjunction with our Risk team, the Sustainability Committee, and key colleagues from our Finance, Operations, Sales, and Technology teams.

Our analysis (as summarised in the matrix below) has factored in those tangible 'physical' aspects as well as strategic 'transition' elements - all of which may present certain risks or opportunities.

Primarily, we have considered the scenario of global temperatures rising by up to 2 degrees, as well as the potential resulting events, and the Government strategies and policies towards carbon neutrality that may derive from this, e.g.:

-      Changes to frequency and severity of extreme weather events, including (but not limited to) droughts and storms;

-      Certain geographic locations being compromised, e.g., via sea-levels rising, coastal erosion, fluvial floods;

-      Government, market, and technology shifts; and 

-      Other changes to expectations of us as a business.

MAB Climate Risk Matrix

http://www.rns-pdf.londonstockexchange.com/rns/3457H_5-2024-3-19.pdf

Physical Risks

Physical climate risk describes the potential for physical damage and financial losses because of increased exposure to climate hazards.

Given the geographic locations of the Group's operations, acute risks of climate change (flooding, storms etc.) have to date had no impact on financial performance. No chronic (longer term) risks are considered to be relevant.

Given the locations of the offices of our subsidiaries, there is limited risk that these will be exposed to climate-related incidents, such as flooding or subsidence issues. We did assess the impact of possible damage to our physical operations (both owned and leased premises) due to the climate, and whilst it could be costly to repair any damage to our offices, appropriate insurance policies are in place.

A business continuity plan is in place, including a switch to remote working for office-based staff, should our physical infrastructure be compromised. Having completed the cloud migration of our most critical IT infrastructure throughout 2023, we have effectively reduced the risk of an adverse impact resulting from climate-related events to our day-to-day operations further.

In terms of the harm that customers and their properties may face, we do not believe that this will have a direct material impact on the Group's financial position in the short or medium term. However, we are, of course, extremely sensitive to the difficulties such events could cause, and are working on strategies to help mitigate the impact of the UK housing stock on the environment.

Transition Risks

Transition risks result from the relative uncertainty created by the global shift towards a more sustainable, net-zero economy. Transition risks are very broad in nature and can be difficult to quantify or model. Regulatory, geopolitical, and even social pressures may create material impacts on the operations of a business, its reputation, and the value of its assets, amongst other things.

UK homes are responsible for a notable proportion (up to 26%) of emissions. We therefore believe it is imperative for organisations in our industry to actively promote the decarbonisation of the UK housing stock to contribute to achieving the government's 2050 net zero ambitions.

It is critical that our advisers are fully aware and equipped to provide our customers with financial advice that enables them to implement appropriate solutions. We continue to develop our Learning & Development resources with this in mind and work closely with a variety of industry partners in raising awareness of the essential role the housing sector can have in achieving net zero targets.

It is too early to have a view on the impact on the Group of any possible material lenders' responses to climate-related risks to their assets and operations, but it is anticipated that this could have a marginal impact on the Group's finances, for instance where there may be a failure to evolve an adequate product and service offering for those assets that may be most at risk.

We are fully aware of the need to consider the goals that lenders and other providers are setting for themselves and keep closely in touch with them in order to allow us to respond to changing expectations. In 2023 we commissioned further work with our ESG consultants to gain a more detailed understanding of our carbon footprint to guide us in setting credible carbon reduction targets.

With regards to transition risk, we currently do not perceive there to be expectations to change our current business model. Furthermore, we recognise that with rising temperatures causing potential damage to insured customer assets, we may be presented with additional commercial opportunities for our insurance related businesses.

Summary

To date, no climate-related risks have been identified as potentially having a material financial impact on the Group in the short to medium-term (i.e., up to 5 years).

In our role as an intermediary, we believe that it is premature to try and assess further impacts to the Group in the longer term, as they will primarily be a consequence of the decisions by lenders and other providers in the context of evolving government policy, technological advancements, and the wider socio-economic changes.

In the longer term, given our close working relationships with lenders and providers, we believe that the Group is well placed to align with such partners in developing products and solutions that can support customers in tackling any effect that climate change may have on their homes.

Furthermore, we are committed to the decarbonisation of UK housing stock and this may be another critical factor that will help us retain a competitive advantage.

No significant climate-related transactions have occurred during 2023. We confirm that neither MAB nor any member of the Group, has been subject to any corruption or ESG-related controversies, or enforcement action/sanctioning (or equivalent scrutiny), in connection with its operating practices.

Environmental performance and strategy

The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 implement the government's policy on Streamlined Energy and Carbon Reporting, requiring disclosure of the environmental performance of the Group's assets through calculating the Group's greenhouse gas ("GHG") emissions and subsequently, setting strategies to minimise these emissions. The following information summarises the Group's environmental performance over the year.

Methodology

GHG emissions are quantified and reported according to the Greenhouse Gas Protocol. Consumption data has been collated and converted into CO₂ equivalent. To collect consumption data, the Group has reviewed utility invoicing and its staff expense software to track business mileage in employee vehicles. We have used the UK Government's 2023 GHG Conversion Factors for Company Reporting in order to calculate emissions from corresponding activity data.

Our analysis includes the data collected for MAB and other Group subsidiaries: First Mortgage, Fluent and Vita. Auxilium only has two employees and is considered to have minimal impact. As at 31 December 2023, MAB owned 80% of First Mortgage, 84% of Fluent, and 75% of Vita, but we have factored in 100% of the Scope 1, Scope 2, and Scope 3 emissions for these subsidiaries.

We have calculated energy intensity in tCO2_e per employee per year using the average number of employees during the year. We consider this to be a good indicator of the scale of the business and our energy intensity.

As part of the data collection, a materiality assessment was applied to determine which indicators were relevant to the Group. We have assessed each indicator in terms of its impact on the Group and its perceived importance to stakeholders.

This year, we have reported our scope 2 electricity emissions both using a location-based approach, i.e. based on grid average emissions factors, and a market-based approach. Market-based emissions allow for a reduced emission figure where, for example, a renewable energy tariff is used. At MAB we took action to switch electricity suppliers to be powered by 100% renewable electricity at our head office as well as all the First Mortgage offices. We intend for Fluent to follow suit as soon as its existing energy contract ends. As part of the overall refurbishment of our Head Office in 2022, we also moved from dual fuel to a new single fuel high-efficiency Variable Refrigerant system. This significant investment ensures we can best leverage our switch to 100% renewable electricity as well as provide a more consistent and controlled temperature throughout the building. As such, we believe that a market-based approach is a more relevant indicator of the Group's carbon intensity.

Reporting boundaries and limitations

The GHG sources that constitute our operational boundary for the reporting period are:

·      Scope 1: Natural gas combustion within boilers. MAB does not provide any company cars;

·      Scope 2: Purchased electricity consumption for our own use; and

·      Scope 3: Fuel consumption from employee-owned cars for business use.

Fuel connected with employee train and plane travel for business use has been excluded as amounts are likely to be immaterial and we consider it impractical to make estimations. Water usage has also been excluded as amounts are also likely to be immaterial. Fugitive gases from office air conditioning are also considered immaterial. We have estimated Scope 3 emissions based on the split of Diesel vs. Petrol cars in the UK.

Performance

The table below shows our Scope 1, 2 and 3 emissions for 2023 and 2022 on both a market basis and location basis.

http://www.rns-pdf.londonstockexchange.com/rns/3457H_6-2024-3-19.pdf

Overall, our Scope 1 and Scope 2 emissions in kWh reduced by 5%, which is due to efficiency measures implemented at Head Office as part of the major refurbishment that took place in Q4 2022, including upgrading to a new highly efficient single high efficiency heating and ventilation system. In equivalent tonnes of CO₂, our location-based emissions were flat year-on-year due to a 7% adverse movement in the UK Government's 2023 GHG Conversion Factor for UK electricity. Taking into account the supply of 100% renewable electricity at Head Office and First Mortgage, our market-based Scope 1 and Scope 2 emissions in tCO₂e decreased by 9%, and by 11% on a per employee basis. This follows a 17% reduction year-on-year in 2022.

In terms of fuel consumption for business use, our emissions increased by 18% compared to 2022, or 16% on a  per employee basis. This is due to our employees increasingly returning to more face-to-face meetings and pre-coronavirus pandemic ways of working.

Sustainability is embedded into our core values and we have taken a number of steps to reduce our impact on the environment. These are detailed later in the Environmental, Social and Governance section.

We continue to investigate new strategies to make our business more sustainable and through collaboration with all our stakeholders we expect to make further positive steps in this regard in 2024.

ESG strategy and progress

The Board recognises the need to ensure that we are a responsible business that grows sustainably and makes a positive contribution to all its stakeholders - our customers, shareholders, employees, suppliers, and the local communities in which we operate.

At MAB we firmly believe that strengthening our positive impact on society will also help us become a better company, with a more engaged workforce and sustainable competitive advantage. ESG remains a priority for MAB and in 2023 we continued to increase our investment in this area. We appointed a new Head of ESG to drive the implementation of our improvement plan across all business functions and continued to work with our ESG consultants to ensure ESG is an integral part of what we do and is embedded within our broader Group strategy.

In 2022, we elected to base our roadmap for ESG improvements on the B-Corp framework. B Corp is a widely recognised framework to assess a company's social and environmental performance. Whilst we do not seek to achieve B Corp certification at present, the B-Corp framework delivers best practices with regards to demonstrating accountability for an organisation's impact on the environment, the economy and people, and we aim to leverage it to improve our performance across five impact areas:

-       Employees;

-       Community engagement;

-       Environment;

-       Customers; and,

-       Governance.

Our ESG roadmap set out 71 individual improvement actions, a number of which are described in detail in the following pages under the headings (i) Employee wellbeing, diversity, equity and inclusion ("DEI"); (b) Community engagement and charitable activities; and (iii) Minimising our impact on the environment.

The table below sets out a summary of some of the key areas we have progressed throughout the year under ESG.

We progressed the majority of the identified 71 actions, with a broad spread across all categories.

Employee wellbeing, diversity, equality and inclusivity

Our employees are our most valuable asset. Their immense knowledge, skills and experience are key to our success in delivering our business plan and are vital to ensuring we maintain the high standards of customer service and satisfaction which underpin the provision of quality advice. We focus on creating a working environment in which our diverse team can thrive and where our core values are communicated effectively and upheld. We believe that a positively engaged workforce is one that is more productive, happier and fulfilled, which in turns leads to improved performance, greater customer satisfaction and reduced employee attrition.

Employee wellbeing (Financial, Emotional and Physical)

In January 2023 we were delighted to re-open our newly refurbished headquarters. Employee wellbeing and Diversity, Equity and Inclusion were key considerations during the design phase of this project. We gathered extensive feedback from our employees to understand their diverse requirements. We now have a state-of-the-art office space that caters for hybrid working and offers a wide range of working environments with collaborative spaces, pods and booths, and quiet zones, as well as fixed desking and agile seating so all employees have the option to work in an environment that suits their needs. This has proved an enormous success.

We have now added a designated wellbeing room, which is available for employees to use when they require a moment away from their work or for employees to participate in prayer. The room is also stocked with a range of items to support employees - yoga mats, fans, cold water and a resource library containing information from various health and wellbeing organisations, as well as books on a range of relevant wellbeing topics.

As in previous years, we ran a comprehensive programme of events and awareness campaigns throughout the year to promote a healthy lifestyle, incorporating physical, mental and financial wellbeing. We offered support to our employees on a wide range of topics, via both online and in-person events. We celebrated Employee Appreciation Day with an early finish and letter box brownies in recognition of everyone's hard work.

Once again, we partnered with a number of charities to bring their expertise inhouse, marking occasions such as Mind's 'Time to Talk Day' in the Hub; hosting a cardiopulmonary resuscitation (CPR) training session with British Heart Foundation; raising awareness during Men's Health Week with Prostate Cancer UK, and of course, everyone's favourite the Great MAB Bake Off for MacMillan Cancer Care.

In October, we celebrated Menopause Awareness Month with the publication of a Menopause Support Policy, for those experiencing peri-menopausal or menopausal symptoms. We ran an internal awareness campaign and organised training for ten Menopause Champions, who are now available to support and signpost employees that need help.

The mental health of our workforce continued to be a key focus for us this year. As well as the internal awareness campaigns, our team of Mental Health First Aiders held a number of drop-in sessions in our wellbeing room, and we rolled out our Employee Assistance Programme, which includes a 24/7 telephone and text helpline, to our Appointed Representative network.

In addition to this, we introduced a policy offering support to those with additional learning needs, alongside a Neurodiversity Policy to support our neurodivergent colleagues and offer guidance to their managers. We also updated our Bereavement and Compassionate Leave Policy, to offer employees a minimum of ten days paid leave, to ensure they are taking the time they need to grieve and process events.

2023 was a difficult year financially for many, so we ran sessions to support our employees, including a financial education webinar with AAG Wealth Management; a first-time buyer's clinic; a mortgage advice surgery; and internal benefits webinars.

We also brought forward the December and January pay dates to help employees manage their expenses around the end of year season.

One important project in 2023 was the introduction of our new intranet platform, Chatter. As well as a tool for engaging and communicating with employees, the site contains a discounts platform to help with the cost of living and a dedicated wellbeing area that offers online exercise classes, healthy recipes and general wellbeing advice.

To best leverage the new platform, our People team also recruited an Internal Communicatrions Manager who is responsible for all communications across the business, ensuring a coherent approach to how we communicate and maximum employee engagement. The introduction of Chatter has been a great success and has made a significant difference to how we communicate as a business.

Recognising the importance of maintaining a healthy work life balance, we continued to offer a hybrid working approach in 2023, and updated our Flexible Working Policy to introduce the concept of "core hours", which enables employees to flex their start and finish times to suit their personal preferences and priorities.

Diversity, Equity and Inclusion (DEI)

MAB is committed to the principle of equal opportunity in employment, regardless of a person's race, creed, colour, nationality, gender, age, marital status, sexual orientation, religion or disability. Employment policies are written in gender neutral language and are fair, equitable and consistent with the skills and abilities of employees and the needs of the business. All of our job advertisements have been updated to reflect this approach to DEI, and we encourage applicants from a diverse talent pool to apply.

Following the launch of our "MABology" in April 2021, we have been working hard to embed the Mission, Vision and DNA behaviours into everything we do at MAB. This has helped us create the foundations of a diverse and inclusive working environment, by encouraging employees to take pride in who they are, celebrate the uniqueness of others and to be open and honest. In 2023 we continued to promote the MABology values through our Team Based Embedding initiative, a series of events which provided the opportunity for MAB teams to fully immerse themselves into the MAB DNA and underpinning behaviours - all aimed at breaking down silos and creating high performing teams. Over 180 colleagues attended a Team Based Embedding event in 2023, with further sessions planned for 2024.

Throughout 2023 we continued to seek regular feedback from our workforce and conduct regular Employee Engagement Surveys. For the first time, we included DEI specific questions in our most recent survey. 88% of respondents agreed that they had a good understanding of DEI and 73% believed that MAB was committed to promoting it.

Over the last 12 months we focused on reviewing our policies, processes and initiatives through a DEI lens. To support working parents, we increased our paid Maternity, Paternity, Adoption and Shared Parental Leave offering by two weeks. We also introduced two paid "guilt free days" for parents returning from Family Leave, to enable them to better manage the transition back to work.

We continue to advertise all our vacancies internally, making use of the additional communication tools now available to us and have simplified the internal application process to encourage more internal applicants. We are pleased with the impact this is having and last year we saw 20% of new Head Office roles filled via internal applicants.

In 2023 we also set up a new initiative, MAB U'nity, which encompasses a diverse group of 20 with the objective of furthering MAB's DEI agenda, and fostering a workplace culture that celebrates diversity, ensures equality and promotes inclusion. This will be achieved by breaking down barriers, championing fair treatment for all and embracing diversity.

Based on feedback from our employees, we continued to offer a mixture of virtual and in person social events, to ensure that everyone feels included. We continued to foster employee connections through a range of social events such as Coffee Roulette, online quizzes and onsite events at our head office. As MAB continues to grow, and particularly in a hybrid/remote set up, it is paramount to maintain an environment where employees are encouraged to meet, interact and share ideas and knowledge with each other.

Learning and Development ("L&D")

The Group is committed to developing its employees to enhance our capacity to deliver sustainable growth and maximise workforce engagement and employee retention.

In 2023, our new L&D initiatives included a new approach to our induction programme for new starters or those employees that are returning from long-term leave. Our new Induction Day kicks off with a tour of our head office, followed by a series of briefings including on the Group's history, its Mission, Vision and DNA, and our wellbeing programme. It also includes an interactive quiz as well as an introduction to our ESG programme. 60 new colleagues attended the Induction Day throughout 2023, with the initiative achieving an overall satisfaction rate of 4.7 / 5.0.

2023 saw the launch of the "Mentoring Gang", a group created to provide the opportunity for colleagues to grow and develop their career goals. We currently have 16 mentors within MAB from a variety of roles and intend to extend this further in 2024 to include professional coaching too.

Developing our internal talent remains a priority, and we pride ourselves for providing a culture that encourages both personal and professional growth. Throughout 2023 there were 43 internal promotions at MAB. Our Learn to Lead programme remains popular. Consisting of a wide range of topics from effective communication to conflict resolution and emotional intelligence to DEI, this internally designed programme is an important means for us to develop talent. Nine aspiring leaders graduated in 2023.

We also have a growing number of colleagues undertaking professional qualifications through taking advantage of the Apprenticeship Levy, and have seven colleagues completing the bespoke Level 3 and Level 5 Women in Leadership Apprenticeship. These are tailored programmes which aim to enable career progression and nurture women into leadership roles and senior positions, and forms part of our strategy to empower women within MAB.

Overall, we won four awards in 2023 for our initiatives in DEI and L&D:

·    Barclays D&I Awards - Best Inclusive Culture;

·    MoneyAge Mortgage Awards - Diversity Initiative of the Year;

·    Women's Leadership Association Awards - Woman in Management; and

·    Money Marketing Awards - Diversity & Inclusivity Champion.

Community engagement and charitable activities

Corporate Social Responsibility is very important to the Group, and we strive to maximise our positive impact on the communities in which we operate.

Throughout 2023, MAB continued to fund and provide staffing resources to the Mortgage Advice Bureau Foundation, our grant-giving charity. Established to coordinate MAB charitable activity, the Foundation aims to create sustainable, positive change within the local communities of our staff and customers.

Issuing grants from £500 to £5,000 to local community projects the Foundation engages with MAB's employees, customers and business partners to put forward projects for consideration.

The grant giving purposes remain unchanged as the Foundation looks to support charitable activities in the three following areas:

1.   Health and Wellbeing - projects that help communities address health and wellbeing issues so that everybody's quality of life can be improved.

2.   Preventing and relieving poverty - projects to support communities through financial hardship and social exclusion.

3.   Environmental and conservation - practical and educational projects to help communities make green choices and reduce their carbon footprint.

Funding applications are only accepted when nominated by a MAB employee, a business partner or one of our customers.

During 2023:

-      the Foundation received 68 nominations for funding, completing on 13 applications which received funding from the Foundation of £47,405, and

-      the Foundation helped these 13 projects raise a total of £139,149 through its partnership with Crowdfunder.

This meant that for every £1 donated by the Foundation a further £2 was raised. This is a great outcome which was achieved in part by encouraging other grant funders to support these projects, including British Airways, M&S, Sport England and Aviva.

Trustees

The Trustees responsible for the management and administering of the trust according to its purpose  are:-

Andy Frankish CEO    Trustee

Lucy Tilley Chair         Trustee             Chief Financial Officer at Mortgage Advice Bureau

Peter Brodnicki                        Trustee             Chief Executive Officer at Mortgage Advice Bureau

Ali Crossley                 Trustee             Managing Director, Distribution at Legal and General

Esther Dijkstra             Trustee             Managing Director, Intermediaries at Lloyds Banking Group

Fabien Holler               Trustee             Company Secretary at Mortgage Advice Bureau

Ben Thompson                        Trustee             Deputy Chief Executive Office at Mortgage Advice Bureau

Tranche Funding

Throughout 2023 the Foundation reviewed its funding model and in December 2023 it moved to a tranche funding model. By making a tranche of money available for charities to apply for by a fixed end date, the Foundation Committee will be able to review a larger number of applications for funding at the same time, thus ensuring that it can apply its robust scoring criteria consistently to select the most appropriate projects, maximise funding for the best projects, and better control the funds available to the Foundation.

Award Winning

We are delighted that in November 2023 the Mortgage Advice Bureau Foundation received an industry award in recognition of its Excellence in Philanthropy and Community Service. The judges commented on how MAB had set standards for other businesses to follow in demonstrating a commitment to Corporate Social Responsibility.

Case Study - Printed by Us

Part of The Archer Project, which has a proven history of transforming the lives of the vulnerable and homeless in Sheffield and the wider region, Printed by Us is a social enterprise that employs people, in a supported environment, who have experienced homelessness or similar adversities and most need help and understanding. Printed by Us uses the craft of screen-printing to give these vulnerable people the opportunity to learn new skills, build confidence and thrive.

The Project was nominated by one of the MAB business owners in Sheffield who has long worked with The Archer Project, volunteering in their soup kitchen.

The project needed new equipment to further develop the programme and set a target of £10,000 which they achieved with the help of a £5,000 grant from the Foundation.

Case Study - Flamingo Chicks

Flamingo Chicks is a multi-award-winning charity and an inclusive community, giving disabled or ill children the opportunity to explore movement through dance. Since the coronavirus pandemic, they have experienced a surge in demand for their support.

Flamingo Chicks delivers ground-breaking, inclusive programmes designed to support disabled children and families through five core pillars:

-      inclusive dance classes;

-      peer-to-peer support;

-      intergenerational volunteering;

-      youth-led advocacy; and

-      global outreach.

Flamingo Chicks was looking to raise £20,000 to increase its programme's outreach to more children and shine a spotlight on the importance of supporting disabled children's mental and physical health.

Nominated by the MAB business owners in Bristol, the project secured a £5,000 grant from the Foundation and through the Crowdfunder platform it vastly exceeded its fundraising target, raising over £34,000. This included joint grant funding from the British Airways Foundation.

Employee volunteering

In addition to grant funding the Foundation also assists in organising volunteering days with the projects it supports. MAB gives its employees two fully paid days per year to work with charities of their choice, and the Foundation helps link up the projects that need support with employees. As well as onsite work, the Foundation also coordinates specialist support that MAB staff can carry out from their desks including help with IT, project management, content writing, marketing and social media. This helps deliver support faster and across a greater number of staff.

In 2023, we greatly increased the number of organised volunteering events, enjoying good team participation rates and great feedback from all volunteers. These events included:

-      a mock interview day at a school with Making the Leap, a London-based charity that seeks to improve social mobility by raising the aspirations of, and increasing opportunities for, young people;

-      helping Derby Kid's Camp turn an empty field into a huge summer camp. Derby Kid's Camp is a children's charity that provides free holidays to Derbyshire-based young people most in need of a break; and

-      supporting a local children's mental health charity, Bridge the Gap, with its social media strategy and content creation.

In November 2023, a group of MAB employees spent a day volunteering at Treetops Hospice, a charity that provides nursing care and emotional support for adults and their families in Derbyshire and Nottinghamshire.

Our group of volunteers spent the day at the Treetops Hospice grounds, clearing leaves from the outdoor spaces and redecorating the internal corridors. Their hard work was rewarded with homemade cake and a tour of the brand new building used for counselling and support activities for young people and children that was recently constructed as part of DIY SOS for Children in Need.

As in previous years, one of the highlights of our volunteering calendar is helping Derby City Mission with their Christmas Gift Appeal, helping to provide Christmas presents to Derby's most vulnerable children.

Overall, 16% of MAB employees volunteered throughout the year. 

Other charitable activities

In 2023, in addition to its commitment to the Mortgage Advice Bureau Foundation in excess of £40,000, MAB helped raise the following amounts for charitable donations:

-      £16,334 as part of the MAB Golf Day;

-      £8,429 as part of the MAB Awards; and

-      £1,792 as part of the Derby Marathon.

Fluent also made charitable donations over the year totaling £40,271 which included £33,205 to the Education for Children Foundation, whose mission is to break the cycle of poverty through education, empowerment and enterprise at the heart of the community. Education for Children Foundation works in partnership with disadvantaged families, children and young adults in Guatemala and Central America.

Finally, MAB now donates its decommissioned mobile phones and laptops to help the local community. Once the devices have been thoroughly wiped and factory reset, they are donated to Derbyshire Refugee Solidarity, where they are redistributed to people who otherwise may not be able to take advantage of modern technology.

Minimising our impact on the environment

Reducing our environmental footprint remains an important priority for MAB, despite our overall footprint being limited due to the nature of our operations as a mortgage intermediary business.

In January 2023 we re-opened our head office after carrying out a major refurbishment project. Minimising our environmental impact was a central consideration for this project, as was sourcing products from local suppliers where practical, and repurposing furniture.

As part of this refurbishment, we installed a new single fuel high efficiency heating and ventilation system, as well as new high efficiency LED lighting operating 'on motion' sensor activation throughout the building. These measures contributed to reducing the Group's Scope 1 and Scope 2 emissions intensity by a further 11%.

We no longer use a gas supply in our head office, and 100% of our electricity at our head office and First Mortgage offices comes from renewable sources. We commissioned two EPC reports, before and after the refurbishment, with our energy performance rating having improved from 84 (D rating) to 39 (B rating). We will continue to work with specialist consultants throughout 2024 to improve further our carbon reporting framework based on science-based targets and drive the Group's sustainability agenda.

In 2023, we created a supplier code of conduct which outlines our expectations in terms of our suppliers' commitments to environmental and ethical standards. All new suppliers are asked to commit to adhering to our code of conduct and we are working with our already established supply chain to do the same retrospectively.

Where possible, we endeavour to work with local (<50 miles) suppliers in order to minimise the impact of transport-related emissions.

We continue to operate a hybrid working model that allows our colleagues to work from home up to two days per week, and the use of electric vehicles is encouraged through our Electric Vehicle chargers at head office.

Waste reduction

MAB continues to monitor the production of waste from its facilities and our waste management supplier only works with "Zero waste to Landfill" partners in its own supply chain. Effectively this means that 95% of our general waste is used for energy production, with the remaining 5% being recycled appropriately. This includes paper, ink and cardboard and we also have recycling stations where our colleagues can discard used batteries.

The adoption of new technology and processes can be an important waste minimisation factor, and improvements to our MIDAS technology platform and to the structure of our compliance function have meant ARs, advisers and their clients are required to print fewer documents. Our focus on reducing the level of printing undertaken by the Group continues.

We no longer use plastic mineral water bottles or single use plastic drinking cups.

Promoting energy efficient homes

With an estimated 20%+ of carbon emissions in the UK being attributed to the housing sector and given the UK Government's Net Zero strategy by 2050, we recognise that we are uniquely positioned to influence change and have a significant positive impact on the UK's overall carbon footprint.

In 2023 we continued our work with our adviser community to ensure that all our advisers are kept abreast of legislation changes and industry concerns, whilst working with our lending partners to collaborate on what the future product landscape might look like in this respect. We are currently in the process of building a new proposition that addresses the financing needs of customers who wish to explore energy efficiency retrofit options, and also helps them to navigate the complexities of sourcing and installing the right equipment by having a nationwide solution under which customers can make the desired environmentally-friendly changes to their homes.

Our Head of ESG joined the Mortgage Climate Action Group's steering committee in July 2023, an initiative by the Association of Mortgage Intermediaries designed to help raise awareness of this area. We also continued to enhance the content of our Green Hub to promote cost effective ways to reduce utility bills and educate consumers on the subject of "Green Mortgages".

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Independent auditor's report to the members of Mortgage Advice Bureau (Holdings) plc

Opinion on the financial statements

In our opinion:

•     the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2023 and of the Group's profit for the year then ended;

•     the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

•     the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Mortgage Advice Bureau (Holdings) PLC (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023 which comprise the Consolidated Statement of Comprehensive Income, Consolidated and Company Statement of Financial Position, Consolidated and Company Statement of Changes in Equity, Consolidated Statement of Cash Flows, and notes to the financial statements, including material and significant accounting policy information.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard in the United Kingdom and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

·    We have assessed the reasonableness of the assumptions within the Directors' forecast for liquidity and profitability for a period of 12 months from the signing of these accounts corroborating the inputs to supporting documentary evidence. This involved considering the base and stress scenarios testing undertaken by the Directors to support the Going concern assessment which included assumptions about the potential impact this could have on revenue (mainly from purchase mortgages) and possible cost saving measures.

·    We examined the existing agreement of the Revolving Credit Facility and reviewed the nature of the facility, repayment terms, covenants and attached conditions. We assessed its continued availability to the Group through the going concern period and checked the completeness of management's covenant assessment;

·    We verified the mathematical accuracy of the going concern model for the period to 31 December 2025;

·    We considered whether there were any indicators of other sources of finance not considered by Directors in their assessment;

·    We assessed whether the capital and cash positions are adequate and whether the Group complies with its covenant requirements in both the base and stress scenarios.

·    We assessed the appropriateness of the duration of the going concern assessment period to 31 December 2025 and considered the existence of any significant events or conditions beyond this period based on our procedures on the Group's cash flow forecasts and from knowledge arising from other areas of the audit;

·    We have reviewed publicly available information on the housing market and house price index to assess any impact on going concern.

·    We assessed how the Directors have factored in ongoing economic pressures such as high inflation, cost of living crisis and increasing interest rates on the business, checking these had been appropriately considered as part of the Directors' going concern assessment.

·    We reviewed the disclosures made relating to going concern included in the financial statements in order to assess the appropriateness of the disclosures and conformity with reporting standards.

The Directors' assessment forecasts that the Group will maintain sufficient liquidity throughout the going concern assessment period in the base case scenario and will not breach banking covenants. Under the Group severe but plausible scenario, which includes a significant reduction in performance throughout the going concern period, liquidity remains and there is no breach of covenants.

We have not identified any climate related risks that would materially impact the Group's forecasts to 31 December 2025.

Controllable mitigating actions available to management over the going concern assessment period include reductions to non-declared dividend payments.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report

Overview

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

The Group is made up of the Parent Company and its subsidiaries. The significant components were determined to be MAB Limited and MAB Derby Limited together '(MAB Core'), First Mortgage Direct Limited ('FMD') and Project Finland Topco Limited and its subsidiaries ('Fluent Group'). These three components were subject to full scope audits performed by the Group audit team. In respect of the non-significant components the Group audit team carried out specific procedures on balances that were identified as material to the Group.

Climate change

Our work on the assessment of potential impacts of climate-related risks on the Group's operations and financial statements included:

·     Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements and adequately disclose climate-related risks within the annual report;

·     Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects this particular sector;

·     Review of the minutes of Board and Audit Committee meeting and any other relevant party and other papers related to climate change and performed a risk assessment as to how the impact of the Group's commitment as set out in the Strategic report may affect the financial statements and our audit.

The Group has explained in the Strategic report how they have reflected the impact of climate change in their financial statements. The Group did not identify any climate risk that would materially impact the carrying values of the group's assets or have any other impact on the financial statements. These disclosures also explain where governmental and societal responses to climate change risks are still developing, and where the degree of certainty of these changes means that they cannot be taken into account when determining asset and liability valuations under the requirements of UK adopted international accounting standards. Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management's assessment of the impact of climate risk, physical and transition, and their climate commitments. As part of this evaluation, we performed our own risk assessment to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit. We also challenged the Directors' considerations of climate change risks in their assessment of going concern and viability and associated disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are described above

Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-related risks.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken based on the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

Component materiality

We set materiality for each significant component of the Group, including the parent company, based on a percentage of between 31% and 95% (2022: 43% and 79%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £237,000 to £738,000 (2022: £436,515 to £792,000). In the audit of each significant component, we further applied performance materiality levels at  75% (2022: 75%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.

Reporting threshold 

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £51,000 (2022: £20,000).  We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report and Financial Statements other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Independent auditor's report to the members of Mortgage Advice Bureau (Holdings) plc

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. 

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken based on these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

•     Our understanding of the Group and the industry in which it operates;

•     Discussion with management and those charged with governance, legal counsel and Audit Committee;

•     Obtaining and understanding of the Group's policies and procedures regarding compliance with laws and regulations.

We considered the significant laws and regulations to be IFRS as adopted by the UK, UK tax legislation, Companies Act 2006 and the AIM Listing Rules.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations.

We identified such laws and regulations to be the health and safety legislation and the Anti-Bribery Act including fraud, corruption and bribery.

Our procedures in respect of the above included:

·    Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;

·    Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations;

·    Review of financial statement disclosures and agreeing to supporting documentation;

·    Involvement of tax specialists in the audit;

·    Review of legal expenditure accounts to understand the nature of expenditure incurred.

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

·    Enquiry with management and those charged with governance also considered Audit Committee regarding any known or suspected instances of fraud;

·    Obtaining an understanding of the Group's policies and procedures relating to:

o  Detecting and responding to the risks of fraud; and

o  Internal controls established to mitigate risks related to fraud.

·    Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;

·    Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;

·    Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

·    Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these;

Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue, management override of controls and clawback liability.

Our procedures in respect of the above included:

·    Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;

·    Assessing significant estimates made by management for bias;

·    Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above;

·    Enquiring of management and the Audit Committee for any instances of non- compliance with laws and regulation and any known or suspected instances of fraud;

·    Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

·    Reading minutes of meetings of those charged with governance and correspondence with the Financial Conduct Authority to check for any instances of non-compliance with applicable laws and regulations; 

·    In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments on a sample basis to supporting documentation;

·    In respect of the risk of fraud in relation to revenue recognition and in accounting estimates such as the clawback liability and goodwill impairment assessment performing the procedures as set out in the Key Audit Matters section of our report; and

·    Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

·    At a component level, our full and specific scope component audit team's procedures included inquiries of component management, journal entry testing and focused testing, including in respect of the key audit matter of revenue recognition.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

David Gonnelli (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, UK

19 March 2024

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated statement of comprehensive income
for the year ended 31 December 2023

All amounts shown relate to continuing activities.

The notes that follow form part of these financial statements.