Mortgage Advice Bureau reports successful first half despite Brexit shock

(ShareCast News) - Mortgage Advice Bureau (MAB), a UK-based mortgage broker, has reported a rise in both profits and market share in the first half despite uncertainty surrounding Britain deciding to leave the EU.Chief executive Peter Brodnicki said adviser productivity slowed in the lead up to the EU referendum after a strong start to the year, which was then followed by the usual quiet summer period."Since the referendum, overall written business volumes have held up well, with industry data indicating that the housing market remains relatively stable. House prices continue to grow and a slight softening in the number of house purchases has been partly offset by increased activity in both residential and buy-to-let remortgaging" said Brodnicki.The group's market share rose 20% to 4% and revenue rose 38% to £43.1m during the six month period. The firm's gross margins however suffered, falling to 23.1% from 24.3%, as the profits before tax margin fell to 12.3% from 12.6%.Looking forward, Brodnicki said: "it is too early to determine how quickly adviser productivity will pick back up. The Board expects the growth in revenue per Adviser to be slightly lower than originally anticipated for the year, whilst Adviser numbers are expected to be ahead of expectations for the year end."The company's advisers, who arrange approximately £10bn worth of mortgages per annum across the UK, grew in number by 13% to 891 by the end of the period and continued to grow post period to reach 921 as of 23 September 2016.The firm completed two investments during the period, taking a 20% stake in specialist telephone protection advice firm Vita for £150,000 and a 25% interest in Clear Mortgage Solutions Limited for £50,000 plus contingent consideration of up to £50,000 payable after three years depending on results. After the period, the firm invested in Freedom 365 to gain access to its scalable telephony model."While these investments may be small, we feel they are indicative of MAB's ability to innovate and adopt new technology early," Cannacord Genuity said in a research note sent to clients.The firm sold its 49% stake in Capital private finance limited for £2.7m and distributed the post-tax profit to shareholders through a special dividend of 4.25p. The interim dividend rose 59% to 7.8p and earnings per share rose 32% to 8.6p.The group's cash balance rose to £16.3m from £14m at 31 December 2015.Canaccord Genuity maintain a 420p target price and a buy recommendation based on the company's "high degree of strategic and operational momentum and its potential to garner further market share."The share price rose 3.49% to 305.30p at 1230 BST on Wednesday.