FSA GROUP LIMITED — AGM Information 2013

Oct 24, 2013

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FSA Group AGM Presentation 25 October 2013

Agenda

1. Chairman’s address

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1. Executive Director’s address

3. Ordinary business

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Chairman’s address

• A year of strong performance

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• PAT of $10.8m up 26%

• Operating cash flow of $14m up 49%

• Dividend per share of 5c up 127%

• Bought back 7.7m shares on market

• In a strong financial position

• Well positioned for growth

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Executive Director’s address

• Core division – Services

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• Growth divisions – Home Loans and Small Business

• Financial results

• Strategy and Outlook

• Guidance and Capital Management

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Core Division Services

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What drives demand? Levels of debt and ability to service

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Credit Card Debt $bn Debt to Disposable Income %
$ bn Total Balances Repayments %
180%
$60
150%
$50
120%
$40
$30 90%
$20 60%
$10 30%
$0 0%
Source: RBA Source: RBA
Aug-2002 Apr-2003 Dec-2003 Aug-2004 Apr-2005 Dec-2005 Aug-2006 Apr-2007 Dec-2007 Aug-2008 Apr-2009 Dec-2009 Aug-2010 Apr-2011 Dec-2011 Aug-2012 Apr-2013 Mar-1977 Sep-1979 Mar-1982 Sep-1984 Mar-1987 Sep-1989 Mar-1992 Sep-1994 Mar-1997 Sep-1999 Mar-2002 Sep-2004 Mar-2007 Sep-2009 Mar-2012
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How does FSA assist?

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FSA assists individuals wishing to enter into a formal payment arrangement with their creditors through:

1. Debt Agreement

2. Personal Insolvency Agreement 3. Bankruptcy

FSA is Australia’s largest provider of debt solutions

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FSA’s Services division

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Largest provider – market share 48%* Over 17,500 clients, owing $301m to creditors Debt Agreements Low arrears, $79m paid to creditors in 2013 Superior returns to creditors compared to market Fee for service income, delivering annuity cash flow Personal Insolvency One of the largest providers Agreements and Over 1,500 clients Bankruptcy Fee for service income, delivering annuity cash flow

• Calculated using AFSA (formally ITSA) statistics

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FSA is the leader in debt agreements
FSA’s Market Share Market Size
FSA’s Market Total Number of
Share % Agreements
60%
12,000
50%
10,000
40%
8,000
30%
6,000
20%
4,000
10%
2,000
0% 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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Growth Divisions Home Loans and Small Business

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Home Loans

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FSA assists individuals with property, who are unlikely to conform to the lending criteria of banks, wishing to consolidate their debt

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

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Small Business

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FSA assists small to medium businesses with cash flow management by providing factoring finance secured against invoices

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Loan Pools at 30 June

Home Loans	Home Loans
Loan Pool Size	$221m
Average Loan Size	$233,000
Average Weighted LVR	67%
Variable Rate Borrowers	100%
Geographical Spread	Australia Wide
>30 day arrears	3.22%

Funding

• Non‐recourse funding of $250m

• WBC Senior $230m

• Institutional Mezzanine $20m

• Renewed to October 2016

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Small Business

Loan Pool Size	$20m
Average Loan Size	$256,000
Average Weighted LVR	Ranges 55% to 65%
Variable Rate Borrowers	100%
Geographical Spread	Australia Wide
>90 day arrears	4.75%

Funding

• Funding of $35m from WBC

• Renewed to June 2015

• FSA 15% equity

• Lender’s margin, delivering annuity cash flow

• FSA’s balance sheet risk limited to 3% equity

• Lender’s margin, delivering annuity cash flow

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Strategy: Home Loans & Small Business

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Develop a track record in lending Previously Limit growth in loan pools until conditions improve Today Focus on growing loan pools

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Financial Results

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PBT by division

	FY2011	FY2012	FY2013	%
Services	$10.6m	$11.6m	$11.7m	1%
Home Loans	$4.2m	$4.1m	$5.1m	24%
Small Business	$0.6m	($0.7m)	$0.8m	211%
Other	($0.1m)	($0.1m)	$0.1m	‐
Profit before tax	$15.3m	$14.9m	$17.8m	19%
Home Loans pool	$229m	$232m	$221m
Small Business pool	$12m	$25m	$20m

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Group financials

	FY2011	FY2012	FY2013	%
Revenue and income	$54.1m	$59.0m	$64.4m	9%
Profit before tax	$15.3m	$14.9m	$17.8m	19%
Profit after tax1	$9.0m	$8.5m	$10.8m	26%
Operating cash flow2	$5.6m	$9.4m	$14.0m	49%
NTA backing/share	34.9c	37.8c	42.3c	12%
EPS basic	6.51c	6.27c	8.51c	36%
Dividend/share	1.0c	2.2c	5.0c	127%

1. Profit after tax attributable to members

2. Net cash inflow from operating activities

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PAT compared with Operating cash flow
16
14
12
10
8
6
4
2
-
2008 2009 2010 2011 2012 2013
Net profit after tax attributable to members Net cash inflow from operating activities
Millions
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What's driving operating cash flow? Long-term annuity income from an increased number of clients

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	FY2010	FY2011	FY2012	FY2013	Avg client life (years)
Operating cash flow	$2.5m	$5.6m	$9.4m	$14.0m
Debt Agreement clients	11,050	14,394	16,681	17,751	4.5 to 5
PIA/Bankruptcy clients	909	1,119	1,316	1,515	3
Home Loans pool	200m	229m	232m	221m	3 to 4
Small Business pool	10m	12m	25m	20m	2.5 to 3.5

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Capital requirements for growth

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Operating cash flow ‐ $9.4m in 2012 and $14.0m in 2013

Investing cash flow ‐ CAPEX around $500k pa (stable)

Business now generating around $12m a year in free cash flow

Future capital requirements to support loan pool growth

• Home Loans ‐ $3.0m capital required for $100m increase in pool

• Small Business ‐ $1.5m capital required for $10m increase in pool

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Strategy and Outlook

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Strategy and 3 year outlook

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Services Maintain our leading position in a niche market Home Loans Growth in loan pool Small Business Growth in loan pool Opportunities Personal loans ‐ Product trial in early 2014

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Guidance and Capital Management

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Guidance and Capital Management

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FY2012 PAT $8.5m Profit Guidance FY2013 PAT $10.8m FY2014 PAT up 8% to 13% FY2012 ‐ 2.2c Dividends FY2013 ‐ 5.0c FY2014 ‐ 5.25c to 6.0c, subject to trading performance On Market Buy‐Back To continue with buy‐back, subject to price

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Investor Relations Contacts

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Mr. Tim Odillo Maher Ms. Deborah Southon Executive Director Executive Director FSA Group Limited FSA Group Limited Level 3, 70 Phillip Street Level 3, 70 Phillip Street Sydney NSW 2000 Sydney NSW 2000 T: 02 9293 6054 T: 02 9293 6058 F: 02 9293 6032 F: 02 9293 6032 E: tmaher@fsagroup.com.au E: dsouthon@fsagroup.com.au

Further information can be accessed from

fsagroup.com.au

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Disclaimer

• 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.

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