FSA GROUP LIMITED — AGM Information 2010

Nov 17, 2010

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FSA Group AGM Presentation 18 November 2010

Agenda

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1. Chairman’s address

2. Executive Director’s address

3. Ordinary business

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FSA Group – AGM 2010

Chairman’s address

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• FY2010 another successful year

• Business impacted by unusual macro economic conditions ‐ which temporarily slowed client demand

• Achieved a PAT of $7.52m down 15% on FY2009

• Strategy since 2007 ‐ to grow home loan lending and factoring finance loan pools ‐ annuity income. Funding lines increased and renewed by Westpac

• Recently launched home loan management division ‐ will allow us to move into the prime home loan market

• Strong first 4 months with PAT up 30% ‐ expect growth in 2011 and 2012

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FSA Group – AGM 2010

Executive Director’s address

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• Overview

• Markets

• Products and Services

• Operational Performance

• Outlook and FY2011 Profit Guidance

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FSA Group – AGM 2010

Overview and key investment highlights

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1. Founded in 2000, listed in 2002

2. FSA is Australia’s largest provider of debt solutions for individuals 3. 2007 transitioned from “fee for service” to “fee for service and lending” 4. Established lending business* which delivers secure, annuity income 5. FSA operates in growth markets with high barriers to entry 6. Solid track record of financial performance: 5‐year PBT CAGR of 50% 7. FSA positioned to deliver strong returns

• $260m of funding in place with Westpac Banking Corporation for lending

FSA Group – AGM 2010

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FSA operates in growth markets with high barriers to entry

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FSA has 51% market share for Debt Agreements

Individuals who rely upon a Debt Agreement (DA), or a Personal Market Insolvency Agreement or Bankruptcy to address debt Individuals are becoming more Growth aware a DA is an alternative to bankruptcy. Government impetus From 2007 - DA administrators Barriers now require a substantial capital base to operate

FSA is one of the few remaining non-conforming lenders

Market	Individuals who are unlikely to “conform” to the lending criteria of banks who rely upon a home loan product to consolidate debt
Growth	Due to the GFC - fewer competitors and stricter bank lending criteria
Barriers	Due to GFC - home loan lenders now require more capital to operate

FSA recently launched into the larger prime home loan market as a home loan manager for Bendigo and Adelaide Bank

FSA Group – AGM 2010

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Client acquisition

Direct client acquisition model

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• Via advertising and marketing – TV, web etc.

• Controlled, selective, low cost

• No third party referral channels

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Clients are ‘micro-managed’ efficiently

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• Assess client needs

• Tailor solutions - affordable, sustainable and viable

• Proactively manage for debt repayment and rehabilitation

FSA Group – AGM 2010

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Overview of products and services

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• Debt Agreements

• Personal Insolvency

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• Agreements

• Bankruptcy

• Other solutions

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FSA Group – AGM 2010

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Services

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Debt Agreements

• Largest provider – FY2010 market share 51%

• ‘Micro manages’ over $240m of unsecured debt on behalf of creditors under debt agreements

• Fee for service income with recurring income

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• Debt Agreements

• Personal Insolvency Agreements

Personal Insolvency Agreements and Bankruptcy

• One of the largest registered trustees in Australia

• Fee for service income with recurring income

• Bankruptcy

• Other solutions

FSA Group – AGM 2010

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Home loan broking, lending & management

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2003 Home Loan Broking

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• Largest non-conforming broker in Australia

• Up-front and trail commission

• No balance sheet or funding risk

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2007

Home Loan Lending

• Current $235m non-recourse facility from Westpac for non-conforming lending

• Lenders margin and annuity income

• Balance sheet risk limited to equity invested

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2010

Home Loan Management

• Launched into the larger prime home loan market as a home loan manager for Bendigo and Adelaide Bank

• Up-front and trail commission

• No balance sheet or funding risk

FSA Group – AGM 2010

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Operating Performance July to October

FSA Group – AGM 2010

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Services

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Services – client numbers Jul – Oct 2010 vs. Jul – Oct 2009 Debt Agreements Up 12% Personal Insolvency Agreements and Up 19% Bankruptcy

Services impacted by:

• Continuing high levels of consumer debt

• Government stimulus package ended

• Higher interest rate environment

FSA Group – AGM 2010

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Home loan lending

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FSA is one of the few remaining non‐conforming lenders operating in the market

• Funding $235m from Westpac

• Recently renewed to October 2012

• Balance sheet risk limited to equity invested

• High quality demand due to fewer competitors

• Currently lending to around 50% of potential clients ‐ settling $8m p.m.

• Planning to increase to $15m to $20m p.m. by expanding product range

• At $15m to $20m p.m. will grow loan pool to >$600m by 2013

• Currently exploring funding options

	Home Loan Lending	(Oct 2010)
	Loan Pool Size	$214m
	Security Type	1st Mortgage
	Average Loan Size	$205,086
	Average Weighted LVR	68%
	% Full Doc Borrowers	98%
	% Variable Rate Borrowers	100%
	Geographical Spread	Australia Wide
	>30 day arrears	2.43%
	Loss of Capital	$79,000
	Target 2013	$600m

Competitors >30 day arrears as reported by the Standard & Poors Index was 12.15% at June 2010

FSA Group – AGM 2010

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Factoring finance to small businesses

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FSA also provides a range of debt solutions to small businesses, including factoring finance

• Funding $25m from Westpac

• Renewed to June 2012

• High quality demand due to difficulties with small businesses obtaining credit

• Assigned receivables are credit insured

• Growing loan pool at > $1m p.m.

• Aiming to grow pool to $20m ‐ 25m by 2011 and to $45m by 2013

	Factoring Finance (Oct 2010)	Factoring Finance (Oct 2010)
	Loan Pool Size	$15m
	Security Type Average Loan Size	Assigned Receivables $151,086
	Average Weighted LVR	Ranges 55%-65%
	% Variable Rate Borrowers	100%
	> 90 day arrears	4.76%
	Asset Insured	Yes
	Loss of Capital	NIL
	Target 2011	$20m - 25m
	Target 2013	$45m

FSA Group – AGM 2010

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Outlook and FY2011 Profit Guidance

FSA Group – AGM 2010

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Outlook: growth across all divisions

Growth in: Driven by: Services Continuing high levels of consumer debt Home Loan Lending Fewer competitors, stricter bank lending criteria Factoring Finance Difficulties for small businesses obtaining credit Home Loan Expansion into the larger prime home loan Management market

FSA Group – AGM 2010

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FY2011 Profit guidance

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	FY2010	FY2011	%	Loan Pool
	Actual	Guidance	Change	Average (Closing)
Services	$8.6m	$8.5 ‐ $10.5m
Home Loan Lending	$3.4m	$4.0m		$225m ($240m)
Business Services and Lending1	$0.9m	$2.5m		$16.5m ($20m)
Profit Before Tax	$12.9m	$15 ­ $17m
Profit After Tax2	$7.5m	$8.6 ­ $10m	15% ­ 33%
NTA per share	29.9c	34.7 ‐ 35.7c
EPS basic	5.82c	6.22 ‐ 7.23c	7% ‐ 24%

Unaudited Profit After Tax for July to October FY2011 up 30%

1. Business Services and Lending = Predominantly Factoring Finance

2. Profit After Tax = Profit After Tax Attributable to Members

FSA Group – AGM 2010

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PBT : Annuity contribution growing
Fee for service
PBT CAGR 2005 - 2010 = 50% Guidance
Lending
FSA Group – AGM 2010 18
Profit before Tax
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2013 Targets

FSA Group – AGM 2010

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2013 Targets

Services Home Loan Lending Factoring Finance Home Loan Management

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PBT anticipated to grow at > 10% each year Aiming to grow loan pool from $214m to $600m Aiming to grow loan pool from $15m to $45m New product launch ‐ tremendous opportunity to capture market share in the larger prime home loan market

FSA Group – AGM 2010

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Investor relations contacts

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Mr. Tim Odillo Maher Ms. Jeannene O’Day Executive Director Consultant FSA Group Limited Lyon Group Pty Limited Level 3, 70 Phillip Street Level 1, 175 Macquarie Street Sydney NSW 2000 Sydney NSW 2000 T: 02 9293 6054 T: 0439 865 256 F: 02 9293 6032 F: 02 9223 2811 E: tmaher@fsagroup.com.au E: joday@lyongrp.com

Further information can be accessed from fsagroup.com.au

FSA Group – AGM 2010

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Disclaimer

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• This presentation is designed to provide a general overview of the activities and financial position of FSA Group Limited. The material set out in the presentation is current as at the date of this presentation . It is information in summary form and does not purport to be complete.

• This presentation includes forward looking statements about estimates and outcomes which may be affected by internal and external factors and involve known and unknown risks which may cause actual results and business performance to differ from those expressed or implied in such statements. No assurance or guarantee is, or should be taken to be, given in relation to the future business performance or the likelihood that the assumptions, estimates or outcomes will be achieved.

• Whilst management has taken every effort to ensure the accuracy of the material in this presentation, it is provided for information only. FSA Group Limited, its officers and management exclude and disclaim any liability in respect of anything done in reliance on this presentation.

• It is not intended that the material in this presentation be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered with or without professional advice, when deciding if an investment is appropriate.

FSA Group – AGM 2010

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FSA Group AGM Presentation 18 November 2010

FSA Group – AGM 2010