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FSA GROUP LIMITED — AGM Information 2021
Nov 24, 2021
64948_rns_2021-11-24_075c65f2-ccf5-416e-aab9-f818937d9f3a.pdf
AGM Information
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FSA Group AGM Presentation 25 November 2021
Agenda
• Overview
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• 2021 Financial Year
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Segments
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Services
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Lending
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Financials
• Our plan over the next 3 to 5 years
- 2022 Earnings and Capital Management
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FSA Group Ltd AGM presentation 2021
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Overview
What we do
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Australia’s largest provider of debt solutions; direct lender to individuals
What we do For over 20 years, FSA has helped thousands of Australians. Our large and experienced team of professionals offer a range of debt solutions and direct lending services, which we tailor to suit individual circumstances and to achieve successful outcomes for our clients. Segments Operates across 2 segments:
- Services - Lending
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FSA Group Ltd AGM presentation 2021
Services
Informal Arrangements and Debt Agreements PIAs and Bankruptcy
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FSA offers a range of services to assist clients wishing to enter into a payment arrangement with their creditors. These services include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy.
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FSA Group Ltd AGM presentation 2021
Lending
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Home Loans
FSA offers home loans to assist clients wishing to purchase a property or consolidate their debt.
Personal Loans FSA offers personal loans to assist clients wishing to purchase a motor vehicle.
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FSA Group Ltd AGM presentation 2021
History
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| 2000 | Founded with director loans of $50,000. Initial offering debt agreements then PIA’s and bankruptcy,then home loan brokering |
|---|---|
| 2002 | Back door listing raised $600,000 for shareholder spread |
| 2006 | Commenced home loan lending |
| 2009 | Raised $5.2m to underpin home loan pools |
| 2015 | Commenced personal loan lending |
| 2021 | PAT $20.1m, Shareholder equity $72m, ROE 31% |
| 2011 to 2021 | $81m returned to shareholders in buybacks and dividends |
| 2002 to 2021 | Shareholder return of 13% pa assuming dividends are re-invested |
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FSA Group Ltd AGM presentation 2021
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2021 Financial Year
Summary
Services
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COVID impacted and continues to impact the number of new callers seeking our assistance.
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In response we restructured parts of our business to materially reduce costs.
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We expect demand will start to return during 2H FY2022.
Lending
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During the year we focused on arrears and hardship management.
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Historically our Lending segment operated as a direct to consumer business. Going forward our focus will be on developing a broker channel and growing our loan pools.
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During the year upgrades were made to our system and procedures to accommodate brokers. These were successfully tested.
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FSA Group Ltd AGM presentation 2021
Services - Clients
New clients impacted by COVID
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| Informals and Debt Agreements |
FY2019 | FY2020 | FY2021 | % Change |
|---|---|---|---|---|
| New clients | 4,573 | 4,327 | 1,463 |
-66% |
| Clients under administration | 21,725 | 19,736 | 15,780 |
-20% |
| Debt managed | $379m | $353m | $209m | -41% |
| Dividends paid | $88m | $89m | $85m | -5% |
| PIA's and Bankruptcy | FY2019 | FY2020 | FY2021 | % Change |
| New clients | 436 | 347 | 89 | -74% |
| Clients under administration | 1,290 | 1,304 | 1,025 |
-21% |
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FSA Group Ltd AGM presentation 2021
Lending - Loan Pools
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| Loan Pool Data | Home Loans | Personal Loans |
|---|---|---|
| Weighted average loan size | $360,528 | $21,462 |
| Security type | Residential home | Motor vehicle |
| Weighted average loan to valuation ratio | 67% | 83% |
| Variable or fixed rate | Variable | Fixed |
| Geographical spread | All states | All states |
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FSA Group Ltd AGM presentation 2021
Lending - Loan Pools
Arrears and hardships back at Pre-COVID levels
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| Loan Pools | FY2019 | FY2020 | **FY2021 ** | % Change |
|---|---|---|---|---|
| Home loans | $382m | $394m | $382m |
-3% |
| Personal loans | $59m | $63m | $65m |
+3% |
| Total | $441m | $457m | $447m |
-2% |
| Arrears > 30 day | FY2019 | FY2020 | FY2021 | |
| Home loans | 1.42% | 2.55% | 1.04% | |
| Personal loans | 3.36% | 2.41% | 1.82% | |
| Losses | FY2019 | FY2020 | FY2021 | |
| Home loans | $278,405 | $171,265 | $384,098 |
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| Personal loans | $564,022 | $1,155,536* | $679,495 |
- The loss of $1,155,536 is distorted by a loss of $371,350 from the discontinued pilot product offering which we ran during the 2018 calendar year.
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FSA Group Ltd AGM presentation 2021
Lending - Funding
Funding facilities renewed
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| Funding | Facility Type Provider Limit Maturity Date Drawn |
|---|---|
| Home Loans | Non-recourse warehouse Westpac $350m Oct-23 $230m |
| Non-recourse warehouse Institutional $20m Oct-23 $18m |
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| Securitised Institutional Mar-51 $130m |
|
| Personal Loans | Limited recourse warehouse Westpac $75m Apr-26 $42m |
| Corporate Westpac $15m Mar-24 - |
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FSA Group Ltd AGM presentation 2021
PBT by segment
Positively impacted by long term annuity income from clients, a material reduction in costs and in the cost of funding
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| FY2020 | FY2021 | % Change | ||
|---|---|---|---|---|
| Services | $11.7m | $12.1m | +3% | |
| Lending | Home Loans Personal Loans |
$7.4m $5.2m |
$9.7m $7.5m |
+30% +45% |
| Other/unallocated | $0.4m | $0.4m | ||
| Profit before tax | $24.8m | $29.7m | +20% |
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FSA Group Ltd AGM presentation 2021
Group financials
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| FY2020 | FY2021 | % Change | |
|---|---|---|---|
| Operatingincome | $68.2m | $61.4m | -10% |
| Profit before tax | $24.8m | $29.7m | +20% |
| Profit after tax attributable to members | $16.3m | $20.1m | +23% |
| EPS basic | 13.05c | 16.12c | +23% |
| Net cash inflow from operatingactivities | $19.4m | $29.5m | +52% |
| Dividend/share | 6c | 6c | |
| Shareholder equityattributable to members | $59.4m | $72.0m | +21% |
| Return on equity | 30% | 31% |
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FSA Group Ltd AGM presentation 2021
Operating cash flow
Positively impacted by long term annuity income from clients, a material reduction in costs and in the cost of funding
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| FY2019 | FY2020 | FY2021 | % Change | ||
|---|---|---|---|---|---|
| Net cash inflow from operatingactivities |
$17.1m | $19.4m | $29.5m | +52% | |
| No of clients / | Average client | ||||
| loan pool size | life inyears | ||||
| Services | 16,805 | 3 to 5 | |||
| Lending | $447m | 3 to 5 |
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FSA Group Ltd AGM presentation 2021
Balance Sheet
Strong financial position
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| Strong financial position | ||
|---|---|---|
| FY2020 | FY2021 | |
| Assets | ||
| Cash and equivalents | $8.0m | $18.9m |
| Restricted Cash | $31.9m | $16.2m |
| Personal loan assets | $63.2m | $64.9m |
| Home loan assets | $393.8m | $382.5m |
| Trade and other receivables | $27.0m | $22.7m |
| Right of use assets | $11.5m | $10.3m |
| Other assets | $3.6m | $4.3m |
| Intangible assets | $2.7m | $2.2m |
| Total Assets | $541.5m | $521.9m |
| Liabilities | ||
| Payables, provisions and contract liabilities | $9.9m | $8.3m |
| Lease liability | $11.4m | $10.6m |
| Other liabilities | $4.7m | $7.1m |
| Borrowings | $5.5m | - |
| Warehouse facilities | $268.6m | $290.2m |
| Securitisedfacilities | $178.7m | $130.2m |
| Total Liabilities | $478.6m | $446.3m |
| Net Assets | $62.9m | $75.7m |
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FSA Group Ltd AGM presentation 2021
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Our plan over the next 3 to 5 years Reshaping Our Future
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Expand lending offering to assist SMEs
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FSA’s subsidiary Azora Finance Group P/L (Azora) operates our home loan lending business.
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In September 2021, Azora acquired an asset finance lending business owned by Tuttle, Holmes and Sullivan (PDP). Lends to SMEs for vehicles and business-critical equipment. Average loan size around $27k.
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Azora now operates our home loan lending and asset finance businesses.
• Azora will:
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Focus on lending to Australia’s underserved SMEs.
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Specialise in home loans to self-employed borrowers and asset finance for vehicles and business-critical equipment.
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Distribute products through direct, broker and other third-party intermediary channels.
FSA Group Ltd AGM presentation 2021
Expand lending offering to assist SMEs
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Azora is managed by PDP.
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Azora is owned 76% by FSA and 24% by PDP.
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PDP have been issued Performance Shares (PS) which will progressively convert into ordinary shares if Azora achieves annual PBT of up to and greater than $30m on or before 2026. If all PS convert PDP will own 32% (from 24%).
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Azora expects PBT of around $12.5m for 2022, broken down as $9.2m for home loans and $3.3m for asset finance.
FSA Group Ltd AGM presentation 2021
Digitisation and unsecured personal loans
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Focus on a digital future - Building a new technology platform which will automate the customer application process, the underwriting decisions with digital loan contracts and same day funding.
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Expand our lending offering into unsecured personal loans.
FSA Group Ltd AGM presentation 2021
Develop broker channel, grow loan pools
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Services Regrow as demand returns Increase origination from around $10m to $40m per month Home Loans Grow loan pool from $382m to around $1.2b Increase origination from around $3m to $7m per month Personal Loans Grow loan pool from $65m to around $200m Increase origination from around $4m to $12m per month Asset Finance Grow loan pool from $40m to around $300m
FSA Group Ltd AGM presentation 2021
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2022 Earnings and Capital Management
2022 Earnings and Capital Management
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We expect FY2022 earnings to be in line with FY2021.
Earnings
The impact of COVID will start to negatively impact our Services earnings during FY2023. We expect this to be offset by increased Lending earnings.
Capital Management
Due to our strong net cash inflow driven by long term annuity income from clients, we expect FY2022 full year dividend to be between 6 cents to 7 cents per share with the balance of earnings to be re-invested to support the growing loan pools.
We plan to continue with our on market share buy-back as opportunities arise.
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FSA Group Ltd AGM presentation 2021
Investor Relations Contacts
| Mr. Tim Odillo Maher Executive Director FSA Group Limited Level 13, 1 Oxford Street Darlinghurst NSW 2010 T:02 8985 5090 F:02 8985 5310 E:[email protected] |
Ms. Deborah Southon Executive Director FSA Group Limited Level 13, 1 Oxford Street Darlinghurst NSW 2010 T:02 8985 5091 F:02 8985 5333 E:[email protected] |
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Further information can be accessed from fsagroup.com.au
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FSA Group Ltd AGM presentation 2021
Cautionary Statements and Disclaimer Regarding Forward-Looking Information
This release may contain forward-looking statements, including statements about FSA Group Limited’s ( Company ) financial condition, results of operations, earnings outlook and prospects. Forward-looking statements are typically identified by words such as “plan,” “aim”, “focus”, “target”, “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions.
The forward-looking statements contained in this release are predictive in character and not guarantees or assurances of future performance. These forward-looking statements involve and are subject to known and unknown risks and uncertainties many of which are beyond the control of the Company. Our ability to predict results or the actual effects of our plans and strategies is subject to inherent uncertainty.
Factors that may cause actual results or earnings to differ materially from these forward-looking statements include general economic conditions in Australia, interest rates, competition in the markets in which the Company does and will operate, and the inherent regulatory risks in the businesses of the Company, along with the credit, liquidity and market risks affecting the Company’s financial instruments described in the Company’s latest Annual Report.
Forward-looking statements are based on assumptions regarding the Company’s financial position, business strategies, plans and objectives of management for future operations and development and the environment in which the Company will operate. Those assumptions may not be correct or exhaustive.
Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements.
Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed. The Company disclaims any responsibility to and undertakes no obligation to update or revise any forward-looking statement to reflect any change in the Company’s circumstances or the circumstances on which a statement is based, except as required by law.
The Company disclaims any responsibility for the accuracy or completeness of any forward-looking statement to the extent permitted by law. Unless otherwise stated, the projections or forecasts included in this release have not been audited, examined or otherwise reviewed by the independent auditors of the Company.
This release is not an offer or invitation for subscription or purchase of, or a recommendation of securities.
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FSA Group Ltd AGM presentation 2021