Yellow Brick Road released their quarterly update to end March 2017.
Operating cash surpluses have improved despite tougher lending market conditions. Higher margins and the benefits of the Company’s rationalised operating structure have delivered improved operating cash surpluses.
This improvement has been achieved despite an 8% decline in settlement volumes, vs Prior Comparable Period (PCP:Q3 FY2016).
The net operating cash result for the quarter was a $0.5m surplus, an improvement of 340% ($0.4m) from Q3FY2016 ($0.1m). Underlying cash trends are positive. Compared with Q3 FY2016, on an underlying basis these trends are:
- Receipts from customers improved 8%.
- Surplus of receipts over direct costs improved by 10%
- Underlying cash outflows increased by 4% due to increased marketing outflows.
Underlying, revenue generating, assets of the business are continuing to grow, for example:
- The Company’s wealth operations continue to gain scale FUM are up by 87% to $1.3b (vs PCP).
- The group book of loans under management grew 19% vs PCP to $42.5b
Recent initiatives by regulators seeking to limit the volume of certain types of lending, including investment loans and interest only loans, have affected the lending market.
The Company has seen lower than expected lending volumes as a result of the changes. To date the reduction has not been sufficient to materially affect the Company’s ability to continue to meet market expectations (a FY2017 full year profit). The medium-term impact of the changes on lending volume is unable to be quantified at this time.
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