In a statement on the ASX, Yellow Brick Road (YBR) executive chairman Mark Bouris said he was “disappointed YBR made a bottom line loss” but said this was indicative of the impact “APRA-induced regulation changes and the background of the royal commission” are having on the industry.
Despite the loss, YBR reported a $9.5 million increase in total revenue and a $0.5 million decrease in operating costs, with Mr Bouris adding that he is “particularly pleased” with the growth seen within the mortgage and wealth businesses’ revenue.
The statement said its wealth business had funds under management attributable to YBR of $1.05 billion.
“The fundamentals of the business are good. We have put in place the foundations for our mortgage and wealth businesses to grow strongly in coming years,” Mr Bouris said.
“A structural shift in the mortgage market means credit conditions imposed by banks have tightened. That’s impacted on the 2018 profit but it also provides opportunities in the future.”
Today’s announcement comes only a week after Mercantile OFM, helmed by corporate raider Sir Ron Brierly, made a takeover bid for the business.
Mr Bouris told ifa at the time that the offer made by Mercantile OFM “materially undervalues” YBR and that the takeover attempt was “opportunistic in its nature, timing and pricing”.
It’s very hard to automate such a relationship & personal experience business like financial advice. You can make money on FUM and loans (even risk) but very hard on the advice side however.
Wow, $9.5 mill increase in revenue and $0.5 mill decrease in costs and they still make a loss? The long suffering share holders are still being taken, this company has had 9 years now and I would say the business fundamentals are poor at best. It’s still being milked at the expense of the franchisees. Also some very ordinary ‘Key Management Personnel’ talent there that is way overpaid, the chairman still pulling out around a million a year, the $300 mill credit facility that fell through, a $100+k ASIC order to compensate clients for ‘Fees For No Advice’ and the whopping 25% franchise fee and insistence of a high street office that has little interest to any new franchisee. Can’t see much mention of all that in the 2018 interim report, it is still listing a $1.325 mill receipt this year from the sale of the accounting business from way back in 2016. Buyer beware.