The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Tuesday, July 31, 2012

Bell Potter on YBR's quarterly results

From Bells yesterday (I am a director of YBR Funds Management Pty Ltd):

YBR released their June 2012 Quarterly Cashflow and Update (attached) on Friday. Key Points:

•There was a dramatic and continued improvement in the bottom line net cash outflow, which improved by 32% ($0.46m) to -$1.00m. This is now the 3rd consecutive quarter of improving cash flow at the operating level.

•Receipts from customers increased by a very strong 41% to $4.12m – a record quarterly result.

•Staff related costs increased by only 4% to $1.89m, despite the strong headline growth in revenue.

•Significant brand development continued throughout the quarter.

•As at the end of July, YBR has signed 125 branches. This is a key milestone and importantly supports the move to sign 150 branches by year end. At that level, YBR can turn more of its attention to branch productivity, strategic initiatives and product manufacture/rollout.

•YBR’s mortgage book grew by 19% to $865m. Once again this is off a low base, but it is nonetheless a very solid performance on the back of the 19% increase in the March quarter.

•Most pleasingly, financial planning revenue increased by 129% on the back of increased adviser accreditation. This momentum has continued into July and is expected to grow noticeably over the coming months.

•We stated in our last quarterly review that Q2 2012CY was a watershed quarter for YBR. We believe that YBR has delivered over this quarter, and continues to move towards a crossover into positive cashflow in the first half of the 2013 CY.

•This is a highly leveraged business model. The fixed cost structure currently in place can support a much larger organisation. Incremental (net) revenue will flow straight through to the bottom line and provide rapid earnings growth once achieved.

•YBR continues to have $7.2m in cash on hand and substantial advertising credits. This would appear to be sufficient to support the business over the next 2-3 quarters until the business becomes cash flow positive.

•No other financial services company in Australia today is growing as rapidly as YBR. In fact we are unable to identify another new national wealth management business at all? With the recent takeover of Plan B, there only remains a small (and declining) array of independent, national wealth management companies.

•YBR is well positioned to capitalise on a host of opportunities for those who remain. However it must firstly cross off the all important milestone of becoming cashflow positive – something we anticipate that they are well on the road to achieving.