Strong revenue growth not helping Yellow Brick Road's bottom line
Yellow Brick Road enjoyed strong growth in revenue during the year to June 2013, but even stronger growth in commissions, consultancy fees and other expenses meant the company's progress towards profitability was quite limited.Yesterday, Yellow Brick Road reported a loss of $6.6 million for the year to June, compared with a loss of $6.8 million for the previous corresponding period.Revenue increased by 68 per cent, to $24.8 million. The company's biggest expense item, commissions and consultancies fees, increased by 119 per cent.YBR's chief executive, Matt Lawler, said in a presentation that the company had completed the second year of a three-year "build phase" and it had "ticked all the boxes".Lawler said a lot of the growth in expenses was due to a doubling of marketing spend. YBR has undertaken an aggressive brand building and customer acquisition program.He said one of the highlights was YBR's mortgage distribution agreement with Macquarie Bank, which contributed to a doubling of YBR's mortgage book. Loans under administration increased from $865 million at the end of the 2011/12 financial year to $1.8 billion at the end of June.During the course of the year, YBR also launched a superannuation product, RetireRight. It did not provide details of these superannuation sales.Branch numbers grew from 120 to 168 during the course of the year. Branches contributed all the growth in revenue. YBR did not provide any details of how the branches performed on a like-for-like basis.The company's weak spot is its professional services division, whose revenue was down four per cent. The company has, in the past, said it was taking steps to sort out problems in this division but its efforts are yet to bear fruit.