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Firstfolio has said it ended the financial year in a “much stronger position” despite moving from profit to loss.
The group reported a $4.1 million loss for the 12 months to 30 June 2014, compared to a $1.3 million profit the year before.
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However, the underlying result was a $2.5 million profit, although this was down 58.3 per cent.
Firstfolio includes a retail loan aggregation and broking division, eChoice, and a wholesale finance, franchise and leasing business, Folio Mortgage & Finance.
Group revenue fell 4.2 per cent to $78.6 million and operating expenses declined 3.4 per cent to $18.9 million.
Net debt fell by 9.2 per cent to $56.3 million, thanks to “continued strong operating cash flows”.
The group’s loan book fell 3.7 per cent to $18.2 billion. Mortgage settlements grew 15 per cent to $3.2 billion, with aggregation and broking representing 92.4 per cent of those settlements.
Chairman Eric Dodd said Firstfolio had a “strong underlying cash flow” and a loan book that continued to perform above expectations.
“Our results for the financial year reflect lower margins associated with ongoing competitive conditions in the Australian mortgage market, which significantly impacted our wholesale business, and a number of one-off items in our results,” he said.
Mr Dodd also said Firstfolio had addressed several strategic challenges during 2013/2014, including the refinancing of its senior debt facility and the resignation of its chief executive.
“Despite the significant challenges faced by the company during the year, Firstfolio finished the year in a much stronger position to benefit from a pick-up in the mortgage market,” he said.
Mr Dodd said the group’s businesses had size and brand recognition in their favour.
“In the coming year, we expect to benefit from ongoing improvements in settlement volumes across the Australian market,” he said.
“However, the market will remain highly competitive with pressure on margins continuing.
“In this environment, Firstfolio’s settlement volumes will continue to be weighted towards the lower margin aggregation and broking business, with wholesale settlement volumes subdued.”
[Related: Firstfolio half-year result]
