Publicly-listed mortgage broking and wealth management business, Yellow Brick Road has announced a strategic review of its wealth management business after confirming a substantial loss to the Australian Securities Exchange (ASX).
The company today released its delayed half-year result describing it as an unqualified audit-review half year report which showed a net loss after tax of $34.15 million which included a non-cash asset write-down of $33.95 million on the carrying value of the wealth management and lending business and various other intangible asset across the Group.
It said the balance sheet reset had resulted in no goodwill being carried and only one remaining strategic intangible asset with underlying earnings before EBITDA being a $2.6 million loss versus a $2.10 profit in the previous corresponding period.
The announcement said the write-down had resulted from detailed consideration of the goodwill and other intangible assets in the context of the cumulative effect of challenging consumer and market trading conditions, the response from the banks to increased macro-prudential oversight, sentiment resulting from the Royal Commission and uncertainty regarding proposed changes to the future regulatory environment.
Commenting on the situation, YBR executive chairman, Mark Bouris said the first half of the financial year had been challenging for the sector and the company had taken decisive action.
“It has been an unusually tough six months,” he said. “Sentiment surrounding the Royal Commission, changes in credit approval processes, ore intense regulatory oversight and greater compliance requirements and costs have created significant uncertainty.”
“It is now particularly hard for mortgage originators and brokers to assist borrowers to obtain an approved home loan,” Bouris said. “In all the years of being involved in the home loan b usiness, I have never seen such difficult borrowing conditions.”
The YBR statement said that having simplified the company’s balance sheet, the board and management were currently undertaking a broad strategic and operational review to simplify the business, “including assessing the wealth management business and business structures, to ensure YBR remains competitive”.
The statement said the board would provide an update by the end of April.