Notes to the interim condensed consolidated financial statements for the six months ended 30 June 2022

1       Accounting policies

Corporate information

The interim condensed consolidated financial statements of Mortgage Advice Bureau (Holdings) plc and its subsidiaries (collectively, "the Group") for the six months ended 30 June 2022 were authorised for issue in accordance with a resolution of the directors on 26 September 2022.

Mortgage Advice Bureau (Holdings) plc ("the Company") is a limited company incorporated and domiciled in England whose shares are publicly traded on the Alternative Investment Market ("AIM"). The registered office is located at Capital House, Pride Place, Pride Park, Derby, DE24 8QR. The Group's principal activity is the provision of financial services.

Basis of preparation

These condensed consolidated interim financial statements for the six months ended 30 June 2022 have been prepared in accordance with IAS 34 'Interim financial reporting' and also in accordance with the measurement and recognition principles of UK adopted international accounting standards. They do not include all of the information required for full annual financial statements and should be read in conjunction with the 2021 Annual Report and Accounts, which were prepared in accordance with UK - adopted international accounting standards.

The comparative figures for the six months ended 30 June 2021 are not the Group's statutory accounts for that financial period. The accounts for the year ended 31 December 2021 have been reported on by the Group's auditors and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 

Going concern

The Directors have assessed the Enlarged Group's prospects until 31 December 2023, taking into consideration the current operating environment, including the impact of geopolitical and macroeconomic uncertainty and inflationary pressures on property and lending markets. The Directors' financial modelling considers the Enlarged Group's profit, cash flows, regulatory capital requirements, borrowing covenants and other key financial metrics over the period.

These metrics are subject to sensitivity analysis, which involves flexing a number of key assumptions underlying the projections, including the effect of geopolitical and macroeconomic uncertainty and inflationary pressures and their impact on the UK property and lending markets and the Group's revenue mix, which the Directors consider to be severe but plausible stress tests on the Enlarged Group's cash position, banking covenants and regulatory capital adequacy. The Group's financial modelling shows that the Enlarged Group should continue to be cash generative, maintain a surplus on its regulatory capital requirements and be able to operate within its current financing arrangements.

Based on the results of the financial modelling, the Directors expect that the Enlarged Group will be able to continue in operation and meet its liabilities as they fall due over the 12 months from the approval of the financial statements. Accordingly, the Directors continue to adopt the going concern basis for the preparation of the financial statements.

Significant estimates and judgements

Other than as set out below, the judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 December 2021. There have been no material revisions to the nature and amount of estimates of amounts reported in prior periods.

Significant accounting policies

The accounting policies applied are consistent with those described in the Annual Report and Group financial statements for the year ended 31 December 2021. New or amended standards effective in the period have not had a material impact on the condensed consolidated interim financial statements.

The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.

New standards with no impact on the Group

·    Annual improvements 18-20 cycle amending IFRS 1, IFRS 9, IAS 41. In May 2020, the IASB made minor amendments to IFRS 1, IFRS 9 and IAS 41 as part of their annual improvement cycle. The amendment to IFRS 1 permits first time adopting subsidiaries to measure cumulative translation differences using amounts reported by its parent. The amendment to IFRS 9 clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the original financial liability. Amendments to IAS 41 removed a requirement to exclude cashflows for taxation when measuring the fair value of biological assets. These amendments were applicable for annual reporting periods beginning on or after 1 January 2022, with early application permitted.

·    Amendments to IAS 37 Onerous contracts - Cost of fulfilling a contract. In May 2020, the IASB amended IAS 37 Onerous contracts to further specify the costs that are considered to be directly related to a contract when assessing for onerous or loss-making contracts. This amendment is applicable for annual reporting periods beginning on or after 1 January 2022, with early application permitted.

·    Amendments to IAS 16 Property, plant and equipment - Proceeds before intended use. In May 2020, the IASB amended IAS 16 Property, plant and equipment, to prohibit entities from deducting from the cost of an item of property, plant and equipment any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. This amendment is applicable for annual reporting periods beginning on or after 1 January 2022, with early application permitted.

·    Amendments to IFRS 3 - Reference to the conceptual framework. In May 2020, the IASB amended IFRS 3 Business combinations to update references to the current IASB conceptual framework, as well as add an exception to the recognition principle for gains or losses on acquired liabilities and contingent liabilities in a business combination. The amendment also clarified the recognition criteria of contingent assets on acquisition under IFRS 3. This amendment is applicable for annual reporting periods beginning on or after 1 January 2022, with early application permitted.

Future new standards and interpretations

A number of new standards and amendments to standards and interpretations will be effective for future annual and interim periods, and therefore have not been applied in preparing these condensed consolidated interim financial statements. At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective:

Other than to expand certain disclosures within the Financial Statements, the Directors do not expect the adoption of these standards and interpretations listed above to have a material impact on the Financial Statements of the Group in future periods.

Basis of consolidation

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Entities that are not subsidiaries but where the Group has significant influence (i.e. the power to participate in the financial and operating policy decisions) are accounted for as associates. The results and assets and liabilities of the associates are included in the consolidated accounts using the equity method of accounting.

Segment reporting

An operating segment is a distinguishable segment of an entity that engages in business activities from which it may earn revenues and incur expenses and whose operating results are reviewed regularly by the entity's chief operating decision maker ("CODM"). The Board reviews the Group's operations and financial position as a whole and therefore considers that it has only one operating segment, being the provision of financial services operating solely within the UK. The information presented to the CODM directly reflects that presented in the financial statements and they review the performance of the Group by reference to the results of the operating segment against budget.

Operating profit is the profit measure, as disclosed on the face of the consolidated statement of comprehensive income, that is reviewed by the CODM.

During the six month period to 30 June 2022, there have been no changes from the prior periods in the measurement methods used to determine operating segments and reported segment profit or loss.

2           Revenue

The Group operates in one segment being that of the provision of financial services in the UK.

Revenue is derived as follows:

3       Cost of sales

There is no significant seasonality to income which arises fairly evenly throughout the year and therefore profits also arise fairly evenly throughout the financial year.

4       Acquisition costs

Costs relating to current year acquisitions

The Fluent Money Group Limited

On 28 March 2022 Mortgage Advice Bureau (Holdings) plc announced that it had agreed to acquire 75.4% of Project Finland Topco Limited, which indirectly owns 100% of The Fluent Money Group Limited ("Fluent" or the "Business"), from its shareholders including Beech Tree Private Equity and founders for a total cash consideration of £72.7 million (the "Acquisition"). The Acquisition completed on 12 July 2022 and the cash consideration was funded from the Company's existing cash resources, a drawdown on new debt facilities of £25 million and the proceeds of a proposed placing of new ordinary shares in the Company, conducted on 28 March 2022, which raised £40 million gross, and £38.4 million net of expenses directly associated with the placing.

Other costs incurred in the period in relation to the Acquisition amounted to £1,452,721.

Costs relating to prior year acquisitions

First Mortgage Direct Limited

On 2 July 2019 Mortgage Advice Bureau (Holdings) Plc acquired 80 per cent of the entire issued share capital of First Mortgage Direct Limited ("First Mortgage" or the "Business").

Costs relating to the amortisation of acquired intangibles amounted to £183,000 in the six months ended 30 June 2022 and 2021. The option (comprising the put and the call option) over the remaining 20% of the issued share capital of First Mortgage has been accounted for under IAS 19 Employee Benefits and IFRS 2 Share Based Payments due to its link to the service of First Mortgage's Managing Director. In accordance with IAS 19, £217,936 (2021: £212,303) has been included within costs relating to the First Mortgage Option, and in accordance with IFRS 2, £204,726 (2021 - £338,118) of share-based payments costs has also been included within costs relating to the First Mortgage Option (see note 19).

5       Finance income and expense

Included within interest expense is interest accrued on the Group's Revolving Credit Facility (which has been replaced by the Group's new facilities (see note 15)) of £48,000 (2021: £nil). During the period, interest accrued on loans to associates in previous years of £nil was received (2021: £23,602).

6       Income tax

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the interim condensed statements of comprehensive income are:

For the period ended 30 June 2022, the deferred tax recognised in equity was £24,513 (2021: £717,160).  A change to the corporation tax rate was substantively enacted on 24 May 2021 to increase it to 25% from 1 April 2023 rather than the previously enacted 19%.

The deferred tax asset is recognised after being assessed as recoverable on the basis of available evidence including projected profits, capital and liquidity position.  The deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.  The deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

7       Earnings per share

Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the Parent Company, Mortgage Advice Bureau (Holdings) plc, as the numerator.

The weighted average number of shares for the purposes of the calculation of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

The Group uses adjusted results as key performance indicators, as the Directors believe that these provide a more consistent measure of operating performance. Adjusted profit is therefore stated before one-off acquisition costs relating to the acquisition of The Fluent Money Group, ongoing non-cash items relating to the option in connection with the acquisition of First Mortgage Direct Limited and amortisation of acquired intangibles. Adjusted profit is also stated before net fair value gains on deferred consideration paid and estimated to be paid to Associate businesses, net fair value losses on financial instruments relating to options to increase shareholdings in Associate businesses, and impairment of loans to related parties, net of tax.

The reconciliation between the basic and adjusted figures is as follows:

Net fair value gains on deferred consideration of £656,794 represents amounts attributable to the equity owner of the parent company and excludes £6,581 attributable to non-controlling interests included in the amounts shown in the consolidated statement of comprehensive income.

8       Dividends

On 28 March 2022 the Group issued 3,809,524 new ordinary shares in an equity placing in connection with the acquisition of The Fluent Money Group which completed on 12 July 2022.

9       Goodwill

The goodwill relates to the acquisition of Talk Limited in 2012, and in particular its main operating subsidiary Mortgage Talk Limited, and the acquisition of First Mortgage Direct Limited ("FMD") in 2019.  The goodwill is deemed to have an indefinite useful life. It is currently carried at cost and is reviewed annually for impairment.

Under IAS 36, "Impairment of assets", the Group is required to review and test its goodwill annually each year or in the event of a significant change in circumstances. The impairment reviews conducted at the end of 2021 concluded that there had been no impairment of goodwill.

The key basis for determining that there was no impairment to the carrying value of goodwill was disclosed in the annual consolidated financial statements for the year ended 31 December 2021. There are no matters which have arisen in the period to 30 June 2022 which indicated that an impairment was required at that date.

10     Investments in associates and joint ventures

The investment in associates and a joint venture at the reporting date is as follows:

Acquisitions and disposals

2022

Following the finalisation of Vita Financial Limited's ("Vita") 2021 audited accounts, a deferred consideration of £179,252 was paid in relation to the 29% interest that was acquired on 28 May 2021. The actual deferred consideration paid in respect of Vita was £7,572 lower than the original amount estimated.

During the period, the fair value of deferred consideration payable upon finalisation of Vita's 31 December 2022 audited accounts was revalued to £nil which was £201,007 lower than the original amount estimated.

Following the finalisation of Heron Financial Limited's ("Heron") 2021 audited accounts, a deferred consideration of £277,600 was paid in relation to the 49% interest that was acquired on 30 November 2021. The actual deferred consideration paid in respect of Heron was £130,512 lower than originally estimated.

During the period, the fair value of deferred consideration payable upon finalisation of Heron's 31 December 2022 audited accounts was revalued to £234,428 which was £293,878 lower than the original amount estimated.

Following the finalisation of M & R FM Ltd's ("M&R FM") 2021 audited accounts, a deferred consideration of £244,858 was paid on 15 July 2022 in relation to the 25% interest that was acquired by First Mortgage Direct Limited on 12 January 2021. The actual deferred consideration paid in respect of M&R FM was £32,906 higher than originally estimated.

Following the finalisation of Evolve FS Ltd's ("Evolve") 2021 audited accounts, a deferred consideration of £625,567 was paid on 21 July 2022 in relation to the 49% interest that was acquired on 20 July 2021. The actual deferred consideration paid in respect of Evolve was £50,150 lower than originally estimated.

A total net gain of £650,213 has been recognised in the consolidated statement of comprehensive income in respect of the actual deferred consideration paid or expected to be paid on the above associate businesses.

2021

On 12 January 2021, First Mortgage Direct Limited, an 80% owned subsidiary of the Group acquired a 25% stake in M & R FM Ltd ("M&R FM"), for an initial cash consideration of £663,400. Estimated deferred consideration of £0.2m is payable following finalisation of M&R FM's audit for the year ended 31 December 2021.

On 13 January 2021, the Group ceased to have an investment in Freedom 365 Mortgage Solutions Limited, having entered into a deed of termination.

The Group acquired a further 29% interest in Vita Financial Limited ("Vita") on 28 May 2021 at an initial cash consideration of £159,081. Estimated deferred consideration of £0.2m and £0.2m is payable following the finalisation of Vita's audits for the year ended 31 December 2021 and 31 December 2022 respectively.

The Group acquired a 49% stake in Evolve FS Ltd ("Evolve") plus an option over a further 31% of the ordinary share capital of Evolve on 20 July 2021 at an initial cash consideration of £2,316,290. Estimated consideration of £0.7m is payable following finalisation of Evolve's audit for the year ended 31 December 2021.

The Group acquired a 49% stake in Heron Financial Limited ("Heron") plus an option over the remaining ordinary share capital of Heron on 30 November 2021 for an initial cash consideration of £1,600,000. Estimated deferred consideration of £0.4m is payable following finalisation of Heron's audit for the year ended 31 December 2021 with further estimated deferred consideration of £0.5m payable following finalisation of Heron's audit for the year ending 31 December 2022.

In accordance with IAS28 the Group impaired further the value of the investment in The Mortgage Broker Group Limited by £400,000 due to its performance. The investment in The Mortgage Broker Group Limited is classified as Level 3 for the purposes of disclosure in the fair value hierarchy. The recoverable amount of the asset is its fair value less costs of disposal and the market approach has been determined as the most appropriate method of estimating the fair value of this investment.

On 30 September 2021, the Group paid a further £271,183 in deferred consideration in respect of its acquisition of a further 24% interest in Clear Mortgage Solutions Limited in December 2020.

On 16 July 2021, as part of a shareholding restructure in Sort Group Limited, in which Sort Group Limited increased its stake in Sort Limited to 100% (previously 75.68%), the Group disposed of its 10.52% shareholding in Sort Limited for £nil cash consideration. The Group now holds 43.25% of Sort Group Limited which is equal to the previous effective interest prior to the shareholding restructure held through separate investments in Sort Group Limited, Sort Limited and Sort Technology Limited. With no change in effective interest, the carrying value of the investment in Sort Limited has been transferred to Sort Group Ltd.

Derivative financial instruments

The fair value of the call option at 30 June 2022 for Evolve is £67,746 (31 December 2021: £124,055). The fair value of the call option and put option at 30 June 2022 for Heron is £102,620 (31 December 2021: £95,455) and £1,358 (31 December 2021: £34,235) respectively. The fair value of the call option and put option at 30 June 2022 for Meridian are £134,035 (31 December 2021: £142,895) and £nil (31 December 2021 2021: £7) respectively.

Derivative financial instruments (continued)

A total net loss of £25,120 has been recognised in the consolidated statement of comprehensive income in respect of fair value movements on derivative financial instruments since 31 December 2021.

The fair values of the option contracts have been calculated using either stochastic or Black Scholes models as appropriate in the option valuations. The key assumptions used to value the options in the model are the value of shares in the associate, the anticipated growth of the business, the option exercise price, the expected life of the option, the expected share price volatility of similar businesses, forecast dividends and the risk-free interest rate. The gain relating to the derivative financial instruments is included within 'operating profit'. These financial instruments are categorised as Level 3 within the fair value hierarchy.

11     Investments in non-listed equity shares

2022

At 30 June 2022, the Group had a shareholding of 2.92% in PD Innovations Limited, trading as Boomin, at a value of £2,783,000. In determining the fair value at 30 June 2022, the market approach was used with reference to recent transactions, and there was no change in value since there had been no material change in circumstances. This investment continues to be classified as Level 3 for the purpose of disclosure in the fair value hierarchy.

2021

The investment at the start of 2021 represented a 2.23% interest in Yourkeys Technology Ltd. This was sold on 23 April 2021 for initial consideration of £329,000 with estimated further consideration of £55,000. Final consideration of £113,541 was received on 1 April 2022 leading to a further profit on disposal of £58,541.

On 9 April 2021, the Group acquired a 3.17% stake in PD Innovations Limited, trading as the property portal Boomin for a cash consideration of £2,500,000. The increase in value of £283,000 since investment was recognised in the consolidated statement of comprehensive income during 2021. This investment is classified as Level 3 for the purpose of disclosure in the fair value hierarchy, with any fair value movements taken to the consolidated statement of comprehensive income. The Group has determined that using the market approach is an appropriate method of estimating the fair value of this financial instrument.

12     Trade and other receivables

The carrying value of trade and other receivables classified at amortised cost approximates fair value.

Included within trade receivables are £1.2m (2021: £1.4m) of operational business development loans to the Group's Appointed Representatives. The non-current trade receivables balance is comprised solely of a proportion of these loans.

Also included in trade receivables are amounts due from Appointed Representatives relating to commissions that are refundable to the Group when policy lapses or other reclaims exceed new business. As these balances have no credit terms, the Board of Directors consider these to be past due if they are not received within seven days. In the management of these balances, the Directors can recover them from subsequent new business entered into with the Appointed Representative or  utilise payables that are owed to the same counterparties and included within payables as the Group has the legally enforceable right of set off in such circumstances. These payables are considered sufficient by the Directors to recover receivable balances should they default, and accordingly, credit risk in this respect is minimal.

In light of the above, the Directors do not consider that disclosure of an aging analysis of trade and other receivables would provide useful additional information. Further information on the credit quality of financial assets is set out in note 16.

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. At 30 June 2022 the lifetime expected loss provision for trade receivables is £0.4m (2021: £0.4m) The movement in the impairment allowance for trade receivables has been included in cost of sales in the consolidated statement of comprehensive income.

Impairment provisions for loans to associates are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. In determining the lifetime expected credit losses for loans to associates, the Directors have considered different scenarios for repayments of these loans and have applied percentage probabilities to each scenario for each associate where applicable.

13     Cash and cash equivalents

For the purpose of the interim condensed statement of cash flows, cash and cash equivalents are comprised of:

Bank balances held in relation to retained commissions earned on an indemnity basis from protection policies are held to cover potential future lapses in Appointed Representatives commission. Operationally, the Group does not treat these balances as available funds. An equal and opposite liability is shown within trade and other payables (note 14).

Unrestricted cash and bank balances increased considerably during the period as the Group undertook an equity placing of new shares on 28 March 2022 that raised £40 million prior to expenses in order to part fund the acquisition of Fluent Money Group that completed on 12 July 2022, this being the date on which the consideration was paid.

14     Trade and other payables

Should a protection policy be cancelled within four years of inception, a proportion of the original commission will be clawed back by the insurance provider.  The majority of any such repayment is payable by the Appointed Representative.  It is the Group's policy to retain a proportion of commission payable to the Appointed Representative to cover such potential future lapses; these sums remain a liability of the Group.  This commission is held in a separate ring fenced bank account as described in note 13.

As at 30 June 2022 and 31 December 2021, the carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.

Appointed Representative retained commission is expected to be payable after more than one year. Other trade payables normally fall due within 30 - 60 days.

15     Loans and borrowings

MAB entered into a new facilities agreement with NatWest on 28 March 2022 (the "Facilities Agreement") in respect of a new term loan for £20m and a new revolving credit facility for £15m, in order to part fund the cash consideration payable in relation to the acquisition of The Fluent Money Group announced on the same day.  MAB drew down on the new facilities post period end as the acquisition competed on 12 July 2022.  It is MAB's intention to repay the drawn down proportion of the revolving element of this debt facility as soon as practicable. MAB's practice over recent years has been to pay out approximately 75% of its adjusted profit after tax and minority interests as dividends and MAB intends to keep that level of pay out.  In respect of the new facilities, the Group has given security to NatWest in the form of fixed and floating charges over the assets of Mortgage Advice Bureau Limited, Mortgage Advice Bureau (Derby) Limited, Mortgage Advice Bureau (Holdings) plc, First Mortgage Direct Limited, First Mortgage Limited, Project Finland Bidco Limited, Fluent Money Limited and Fluent Mortgages Limited.

Loan covenants

Under the terms of the Facilities Agreement, the Group is required to comply with the following financial covenants:

·    Interest cover shall not be less than 5:1

·    Adjusted leverage shall not exceed 2:1

The Group has complied with these covenants throughout the reporting period.

16     Financial instruments - risk management activities

Credit risk

Credit risk is the risk of financial loss to the Group if a trading partner or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from loans to its trading partners. It is Group policy to assess the credit risk of trading partners before advancing loans or other credit facilities. Assessment of credit risk utilises external credit rating agencies. Personal guarantees are generally obtained from the Directors of its trading partners.

Quantitative disclosures of the credit risk exposure in relation to financial assets are set out below. Further disclosures regarding trade and other receivables are given in note 12.

Financial assets - maximum exposure

Financial liabilities

The carrying amounts stated above represent the Group's maximum exposure to credit risk for trade and other receivables. An element of this risk is mitigated by collateral held by the Group for amounts due to them.

Trade receivables consist of a large number of unrelated trading partners and therefore credit risk is limited. Due to the large volume of trading partners the Group does not consider that there is any significant credit risk as a result of the impact of external market factors on their trading partners. Additionally, within trade payables are amounts due to the same trading partners as those included in trade receivables; this collateral significantly reduces the credit risk.

The Group's credit risk on cash and cash equivalents is limited because the Group places funds on deposit with National Westminster Bank plc and Bank of Scotland plc which are A/A+ and A+ rated respectively.

17     Share capital

Issued and fully paid

In connection with the acquisition of Fluent Money Group, the Group issued 3,809,524 new ordinary shares in an equity placing on 28 March 2022 to raise £40 million gross to part fund the consideration for the acquisition.  The new ordinary shares were issued at £10.50 per ordinary share.  The share premium recognised was £38.4 million after deduction of £1.6 million of costs directly associated with the equity placing.

18     Related Party Transactions

The following details provide the total amount of transactions that have been entered into with related parties during the six months ended 30 June 2022 and 2021, as well as balances with related parties as at 30 June 2022 and 31 December 2021.

During the period the Group paid commission of £467,573 (2021: £400,942) to Buildstore Limited, an associated company. There was a balance of £13,136 (2021: £10,443) of retained commission to cover future lapses.

During the period the Group received introducer commission from Sort Limited, a subsidiary of an associated company of £747,598 (2021: £587,958). At 30 June 2022, there was a net loan outstanding from Sort Group Limited of £218,369 (2021: £218,369).

During the period the Group paid commission of £2,228,815 (2021: £2,392,199) to Clear Mortgage Solutions Limited, an associated company. There was a balance of £599,088 (2021: £542,290) of retained commission to cover future lapses.

During the period the Group paid commission of £783,150 (2021: £nil) to Evolve FS Ltd, an associated company. There was a balance of £20,144 (2021: £nil) of retained commission to cover future lapses.

During the period the Group paid commission of £869,886 (2021: £870,209) to Vita Financial Limited, an associated company. There was a balance of £298,725 (2021: £253,948) of retained commission to cover future lapses.

During the period the Group paid commission of £820,042 (2021: £795,434) to The Mortgage Broker Limited, an associated company. There was a balance of £66,791 (2021: £66,785) of retained commission to cover future lapses. At 30 June 2022, there was a loan outstanding from The Mortgage Broker Limited of £22,000 (2021: £nil).

During the period the Group paid commission of £1,982,972 (2021: £1,981,588) to Meridian Holdings Group Ltd, an associated company. There was a balance of £545,656 (2021: £545,605) of retained commission to cover future lapses. At 30 June 2022, there was a loan outstanding from Meridian Holdings Group Ltd of £435,461 (2021: £550,069).

During the period the Group paid commission of £1,166,714 (2021: £156,524) to M & R FM Ltd, an associated company. There was a balance of £64,416 (2021: £34,598) of retained commission to cover future lapses.

During the period the Group received dividends from associate companies as follow:

Six months ended 30 June

19     Share based payments

On 6 June 2022, 154,850 options over ordinary shares of 0.1 pence each in the Company were granted to the Executive Directors and senior executives of MAB under the equity-settled Mortgage Advice Bureau Executive Share Option Plan (the "Options"). Exercise of the Options is subject to the service conditions and achievement of performance conditions based on total shareholder return and earnings per share criteria. Subject to achievement of the performance conditions, the Options will be exercisable 34 months from the date of grant.  The exercise price for the Options is 0.1 pence, being the nominal cost of the Ordinary Shares.

Included in administrative expenses are share-based remuneration expenses of £601,865 (2021: £695,795) which comprises the charge for the equity-settled schemes of £327,057 (2021: £355,255) and related employer's National Insurance Contributions of £168,986 (2021: £185,221). Also included are the matching element of the Group's Share Incentive Plan for all employees of £58,889 (2021: £63,624) and costs for free shares awarded to employees of £46,933 (2021: £91,695).   Further share-based payments costs of £204,726 (2021: £338,118) in respect of the option relating to First Mortgage Direct Limited are shown separately (note 4).

20     Events after the reporting date

The Fluent Money Group Limited

On 28 March 2022 Mortgage Advice Bureau (Holdings) plc announced that it had agreed to acquire 75.4% of Project Finland Topco Limited, which indirectly owns 100% of The Fluent Money Group Limited ("Fluent" or the "Business") from its shareholders including Beech Tree Private Equity and founders for a total cash consideration of £72.7 million (the "Acquisition"). The Acquisition completed on 12 July 2022 and the cash consideration was funded from the Company's existing cash resources, a drawdown on new debt facilities of £25 million and the proceeds of the placing of new ordinary shares in the Company, conducted on 28 March 2022 which raised £40 million gross, and £38.4 million net of expenses directly associated with the placing.

MAB also entered into a shareholders' agreement with Fluent's founders and senior management who have retained 24.6% of the issued share capital of Fluent. This sets out the terms of the put and call option for MAB to acquire this remaining stake after six years at a valuation subject to performance criteria relating to future growth and profitability to align with MAB's growth objectives. The total consideration for the above put and call option and a put and call option over certain growth shares that have been issued to Fluent's wider management team is capped at £118 million and will be determined on the basis of future financial performance. MAB will, at its discretion, be able to satisfy up to 50% of the exercise consideration for the above put and call options in ordinary shares and such shares will be subject to a 12 month orderly market undertaking upon issue.

Fluent is a fast-growing telephone advice mortgage and specialist lending intermediary that has formed relationships with a range of third party brands, including aggregators and other national lead sources operating across first charge, second charge, lifetime mortgages and bridging loan product areas. MAB has also targeted this fast-growing sector. Combined, MAB and Fluent can grow this new market share opportunity quickly and effectively, complementing the local/regional strategy delivered by the rest of the Group's growing distribution.

At the date of authorisation of these interim financial statements it has not yet been possible to complete a detailed assessment of the fair value of the identifiable net assets.

Fair value of consideration paid                                                                                       £'000               

Cash                                                                                                                                         72,691

Vita Financial Limited

On 12 July 2022 the Group increased its stake from 49% to 75% in Vita Financial Limited, a leading protection and general insurance advice firm.  This is a strategically important step for the Group as we look to achieve an even stronger market presence in this area.

At the date of authorisation of these interim financial statements a detailed assessment of the fair value of the identifiable net assets has not been completed.

Fair value of consideration paid

                                                                                                                                                £'000

Cash                                                                                                                                         460

There were no other material events after the reporting period, which have a bearing on the understanding of the consolidated interim financial statements.

Investment in non-listed equity shares

PD Innovations Limited, trading as Boomin, is in the process of raising capital and an update as to the implications for the valuation of MAB's shareholding will be provided in due course.

Head Office refurbishment project

In September 2022, the Group made a capital commitment for c.£3 million to refurbish its head office premises located in Derby.

There were no other material events after the reporting period, which have a bearing on the understanding of the consolidated interim financial statements.