YBR boosts revenue but expenses drive loss
Yellow Brick Road (YBR) has increased its overall revenue but high operating costs have led to a $6.83 million net loss before tax.
This was up from the $2.6 million loss in the previous financial year, with marketing and other operating costs jumping from $9.5 million to $14.2 million.
Overall revenue increased 31 per cent from $11.3 million to $14.8 million and wealth management revenue saw a fourfold increase.
Branch revenue (which includes wealth management) almost doubled to $7.88 million and funds under management increased 58 per cent to $185.9 million. Gross profit grew 11 per cent to $8.57 million.
The results reflect an "investing for growth" focus with significant expenditure in "building the brand", YBR stated in its annual results presentation posted on the Australian Securities Exchange.
YBR also identified opportunities in the advice space due to Future of Financial Advice reforms. Specifically, FOFA would pose a threat to established incumbents and provide an incentive for those entities to merge, YBR stated.
The big five would also find it hard to respond to an advice-based non-managed fund-dependent challenger, according to YBR.
Because consolidation is shrinking and polarising the 'independent' advice space, with larger brands like Count Financial and Plan B disappearing, that independent advice brand space and alternative to the oligopoly is available, YBR stated.
Consumers are also attracted to a trusted brand, simplicity and transparency, and are increasingly looking for packaged solutions, with YBR well placed to capitalise, the group stated.
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