Weak property market takes its toll on Yellow Brick Road

Weak property market takes its toll on Yellow Brick Road

Wealth managers Yellow Brick Road have posted a FY19 net loss after tax of $37.39 million, with the company blaming negative property market forces for the result.

The company says that this loss can be attributed to lending volumes being 19 per cent lower than the 2019 year, largely due to market forces.

The group was hit by a non-cash asset write down of $33.95 million on the carrying value of the wealth management business and lending business.

Revenues from ordinary activities was down 6.9 per cent to $211.6 million, and EBITDA was a loss of $4.6 million.

During the financial year, YBR realigned the business to focus primarily on mortgages.

To achieve this, the company has rolled out a brand franchise network, invested in a TV show to promote YBR as a mortgage funding alternative to banks, and invested in training staff at YBR branches.

"Establishing our own mortgage product has taken much longer and been more difficult to establish than I initially thought it would," says YBR executive chairman Mark Bouris (pictured).

"However, we are now well advanced in our negotiations to access the bank wholesale and debt capital markets to fund our own products. We expect to conclude arrangements for the remaining components of that funding matrix within this calendar year."

Bouris says the company is able to move forward with the confusion surrounding the banking and finance sector Royal Commission in the past.

"We believe the uncertainty for the broking sector caused by the Royal Commission is now firmly behind us," says Bouris.

"Mortgage brokers now have greater certainty in their remuneration structure. Gone too, are the threats to negative gearing and capital gains tax that put a damper on the mortgage market. I, and others, were highly vocal about the negative impact these policies would have had and I think the resurgence of confidence within our sector that we have seen since the Federal election is evidence that we were right to fight these moves."

In conjunction with its FY19 results, YBR has today announced that it has received final credit approval from an Australian bank to provide an initial $120 million residential mortgage-backed securities saucerisation warehouse facility.

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