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FSA GROUP LIMITED — AGM Information 2022
Nov 23, 2022
64948_rns_2022-11-23_8b35e8b1-2111-407f-932a-ed88593769ce.pdf
AGM Information
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FSA Group AGM Presentation 24 November 2022
Agenda
• Overview
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- 2022 Financial Year
• Strategy and Outlook
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FSA Group Ltd AGM presentation 2022
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Overview
What we do
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Direct lender to individuals and businesses Australia’s largest provider of debt solutions
What we do
Segments
FSA Group has helped thousands of Australians for more than 20 years. Our large and experienced team of professionals offer a range of lending products and debt solutions, which we tailor to suit individual circumstances to achieve successful outcomes for our clients. Operates across 2 segments:
- Lending - Services
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FSA Group Ltd AGM presentation 2022
Lending
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Offers home loans to assist clients wishing to purchase a Home Loans property or consolidate their debt.
Personal Loans
Offers personal loans to assist clients wishing to purchase a motor vehicle.
Asset Finance
Offers asset finance to assist SMEs wishing to purchase a vehicle and business-critical equipment.
- Asset Finance was acquired September 2021.
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FSA Group Ltd AGM presentation 2022
Services
Informal Arrangements and Debt Agreements PIAs and Bankruptcy
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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 2022
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History
| 2000 | Founded with director loans of $50,000. Offered debt agreements, PIA’s,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 |
| Sept 2021 | Acquired asset finance lending business |
| 2022 | PAT $17.2m, Shareholder equity $84m, ROE 22% |
| 2011 to 2022 | $90m returned to shareholders in buybacks and dividends |
| 2002 to 2022 | Shareholder return of 12% pa assuming dividends are re-invested |
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FSA Group Ltd AGM presentation 2022
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2022 Financial Year
Summary
Lending
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Historically operated as a direct-to-consumer business.
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Asset finance was acquired September 2021. This allows us to assist SMEs and therefore has broadened our client base.
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Our focus is on further developing our broker channel and growing our loan pools.
Services
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The various COVID related remedies are slowly being unwound by financial institutions and governments.
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Services earnings will continue to be under pressure until demand returns.
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FSA Group Ltd AGM presentation 2022
Lending - Loan Pools
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| Loan Pool Data | Home loans | Personal loans | Asset finance |
|---|---|---|---|
| Weighted average loan size | $402,732 | $22,494 | $28,473 |
| Security type | Residential home | Motor vehicle | Vehicles and equipment |
| Weighted average loan to valuation ratio |
67% | 100%+ on settlement |
100%+ on settlement |
| Variable or fixed rate | Variable | Fixed | Fixed |
| Geographical spread | All states | All states | All states |
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FSA Group Ltd AGM presentation 2022
| Lending - Loan Pools | Lending - Loan Pools | ||||
|---|---|---|---|---|---|
| Arrears and hardships back at | Pre-COVID | levels | |||
| Loan Pools | FY2020 | FY2021 | **FY2022 ** | % Change | |
| Home loans | $394m | $382m | $389m | + 2% | |
| Personal loans | $63m | $65m | $72m | + 11% | |
| Asset finance | $81m | ||||
| Total | $457m | $447m | $541m | + 21% | |
| Arrears > 30 day | FY2020 | FY2021 | FY2022 | ||
| Home loans | 2.55% | 1.04% | 1.95% | ||
| Personal loans | 2.41% | 1.82% | 1.91% | ||
| Asset finance | 2.55% | ||||
| Losses | FY2020 | FY2021 | FY2022 | ||
| Home loans | $171,265 | $384,098 | $198,805 | ||
| Personal loans | $1,155,536 | $679,495 | $587,802 | ||
| Asset finance | $580,009 |
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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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*Asset Finance losses are for the entire 12 month period.
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FSA Group Ltd AGM presentation 2022
Lending - Funding
Funding facilities renewed
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| Borrowings | Facility type Provider Limit Maturity date Drawn |
|---|---|
| Home loans | Non-recourse warehouse Westpac $350m Oct-23 $272m |
| Non-recourse warehouse Institutional $20m Oct-23 $20m |
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| Securitised Institutional - Mar-51 $90m |
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| Personal loans | Limited recourse warehouse Westpac $75m Apr-26 $44m |
| Corporate Westpac $15m Mar-24 - |
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| Asset finance | Non-recourse warehouse Bendigo $68m Jul-22 $62.5m |
| Non-recourse warehouse Institutional $3.5m Jan-23 $3.5m |
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| Non-recourse warehouse Institutional $6m Jun-23 $6m |
*On 30 June 2022 an Australian “big four” bank approved a $100m non-recourse warehouse asset finance facility. This senior facility will replace the Bendigo facility. The senior facility is supported by a non-recourse mezzanine facilities provided by institutional fund managers.
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FSA Group Ltd AGM presentation 2022
Services - Clients
New clients impacted by COVID
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| Informals and Debt Agreements |
FY2020 | FY2021 | **FY2022 ** | % Change |
|---|---|---|---|---|
| New clients | 4,327 | 1,463 | 620 | -58% |
| Clients under administration | 19,736 | 15,780 | 11,252 | -29% |
| Debt managed | $363m | $209m | $109m | -48% |
| Dividends paid | $89m | $85m | $65m | -24% |
| PIA's and Bankruptcy | FY2020 | FY2021 | **FY2022 ** | % Change |
|---|---|---|---|---|
| New clients | 347 | 89 | 97 | +9% |
| Clients under administration | 1,304 | 1,025 | 844 | - 18% |
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FSA Group Ltd AGM presentation 2022
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 | FY2022 | % Change | |
|---|---|---|---|---|
| Lending | ||||
| Home loans and Asset finance | $7.4m | $9.7m | $10.0m | +3% |
| Personal loans | $5.2m | $7.5m | $9.9m | +32% |
| Services | $11.7m | $12.1m | $7.3m | -39% |
| Other/unallocated | $0.4m | $0.4m | ($0.2m) | |
| Profit before tax | $24.8m | $29.7m | $26.9m | -9% |
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FSA Group Ltd AGM presentation 2022
Group financials
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| FY2020 | FY2021 | **FY2022 ** | % Change | |
|---|---|---|---|---|
| Operating income | $68.2m | $61.4m | $58.3m | -5% |
| Profit before tax | $24.8m | $29.7m | $26.9m | -9% |
| Profit after tax attributable to members | $16.3m | $20.1m | $17.2m | -14% |
| EPS basic | 13.05c | 16.12c | 13.72c | -15% |
| Net cash inflow from operating activities | $19.4m | $29.5m | $26.2m | -11% |
| Dividend/share | 6.0c | 6.0c | 7.0c | +17% |
| Shareholder equity attributable to members | $59.4m | $72.0m | $84.4m | +17% |
| Return on equity | 30% | 31% | 22% |
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FSA Group Ltd AGM presentation 2022
Balance Sheet
Strong financial position
| Strong financial position | ||
|---|---|---|
| FY2021 | FY2022 | |
| Assets | ||
| Cash and equivalents | $18.9m | $16.6m |
| Restricted Cash | $16.2m | $19.3m |
| Personal loan assets | $64.9m | $71.8m |
| Home loan assets | $382.5m | $388.9m |
| Asset finance assets | - | $80.8m |
| Trade and other receivables | $22.7m | $17.4m |
| Right of use assets | $10.3m | $9.2m |
| Other assets | $4.3m | $4.1m |
| Intangible assets | $2.2m | $14.3m |
| Total Assets | $521.9m | $622.4m |
| Liabilities | ||
| Payables, provisions and contract liabilities | $8.3m | $7.1m |
| Lease liability | $10.6m | $9.9m |
| Other liabilities | $7.1m | $7.9m |
| Borrowings | - | $3.2m |
| Warehouse facilities | $290.2m | $408.3m |
| Securitisedfacilities | $130.2m | $89.9m |
| Total Liabilities | $446.3m | $526.4m |
| Net Assets | $75.7m | $96.1m |
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FSA Group Ltd AGM presentation 2022
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Strategy and Outlook
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Our plan over the next 3 to 5 years
Further developing our broker channel and growing our loan pools
Home loans
Personal loan Asset finance
Services
Increase new origination to around $40m per month Grow our loan pool to around $1.2b Increase new origination to around $7m per month Grow our loan pool to around $200m Increase new origination to around $12m per month Grow our loan pool to around $300m Regrow as demand continues to increase
FSA Group Ltd AGM presentation 2022
2023 New origination
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New Origination
350m
295m
300m
250m 227m
200m
64m 202m Nov to Jun FY2023 Forecast
151m
150m 126m
34m
31m
6m
100m 28m 32m
34m
128m
50m 17m Jul to Oct FY2023 Actual
92m 88m
42m
m
FY2020 FY2021 FY2022 FY2023
Home loans Personal loans Asset finance
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FSA Group Ltd AGM presentation 2022
2023 Earnings and Capital Management
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Earnings
Services earnings will continue to be under pressure until demand returns. Lending earnings are being impacted by an increase in the cost of funding. Expect 2023 earnings to be down around 10% when compared to 2022.
Expect our full year dividend to be 7 to 8 cents per share. Capital Balance of earnings to be re-invested to support the growing loan pools. Management
We plan to continue with our on market share buy-back as opportunities arise.
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FSA Group Ltd AGM presentation 2022
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 2022
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 2022