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FSA GROUP LIMITED — AGM Information 2023
Nov 23, 2023
64948_rns_2023-11-23_e5ae9b34-fadd-4912-a769-2f9161b1160e.pdf
AGM Information
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FSA Group AGM Presentation 24 November 2023
Agenda
- Overview
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- 2023 Financial Year
• Strategy and Outlook
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FSA Group Ltd AGM presentation 2023
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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 2023
Lending
Home Loans
Personal Loans
Asset Finance
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Offers home loans to assist clients wishing to purchase a property or consolidate their debt.
Offers secured personal loans to assist clients wishing to purchase a motor vehicle and unsecured personal loans for any approved purpose. Offers asset finance to assist SMEs wishing to purchase a vehicle and business-critical equipment.
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FSA Group Ltd AGM presentation 2023
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 2023
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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 |
| 2023 | PAT $13.0m, Shareholder equity $88.0m, ROE 15% |
| 2011 to 2023 | $98m returned to shareholders in buybacks and dividends |
| 2002 to 2023 | Shareholder return of 12% pa assuming dividends are re-invested |
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FSA Group Ltd AGM presentation 2023
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2023 Financial Year
At a Glance
Lending
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Developed and enhanced our broker channels.
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Origination $314m (up 38%) and loan pools increased to $639m (up 18%).
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Invested in end-to-end automation.
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Two Australian banks providing warehousing facilities.
Services
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Financial institutions and government entities gradually eased COVID-19 related measures.
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Consumer stress due to cost of living pressures and increasing interest rates, resulted in an increase in Services enquiries.
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We moved Services out of “hibernation” in June 2023.
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FSA Group Ltd AGM presentation 2023
At a Glance
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Profitability
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Impacted by
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an increase in the cost of funding (cash rate) which materially impacted our margin on our fixed rate Lending products,
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a decrease in the number of clients under administration in the Services segment.
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FSA Group Ltd AGM presentation 2023
Lending - Loan Pools
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| Loan Pool Data | Home loans | Personal loans secured |
Personal loans unsecured |
Asset finance |
|---|---|---|---|---|
| Weighted average loan size | $440,068 | $26,928 | $15,347 | $28,473 |
| Security type | Residential home | Motor vehicle | Unsecured | Vehicles and equipment |
| Weighted average loan to valuation ratio |
65% | 100%+ on settlement |
Unsecured | 100%+ on settlement |
| Variable or fixed rate | Variable | Fixed | Fixed | Fixed |
| Geographical spread | All states | All states | All states | All states |
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FSA Group Ltd AGM presentation 2023
Lending - Loan Pools
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| Loan Pools | FY2021 | FY2022 | **FY2023 ** | % Change |
|---|---|---|---|---|
| Home loans | $382m | $389m | $377m | -3% |
| Personal loans secured | $64m | $68m | $98m | +44% |
| Personal loans unsecured | $1m | $4m | $6m | +42% |
| Asset finance | $81m | $158m | +95% | |
| Total | $447m | $541m | $639m | +18% |
| Arrears > 30 day | FY2021 | FY2022 | FY2023 | |
| Home loans | 1.04% | 1.95% | 3.66% | |
| Personal loans secured | 1.82% | 1.91% | 2.94% | |
| Personal loans unsecured | 0.25% | 6.92% | ||
| Asset finance | 2.55% | 2.62% | ||
| Losses | FY2021 | FY2022 | FY2023 | |
| Home loans | $384,098 | $198,805 | $190,021 | |
| Personal loans secured | $656,964 | $550,831 | $887,205 | |
| Personal loans unsecured | $22,531 | $36,971 | $171,054 | |
| Asset finance | $580,009 | $1,810,167 |
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FSA Group Ltd AGM presentation 2023
Lending - Funding
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| Borrowings | Facility type Provider Limit Maturity date Drawn Non-recourse warehouse Westpac $350m Oct-24 $293m Securitised Institutional - Mar-51 $57m Limited recourse warehouse Westpac $75m Apr-26 $54m Corporate Westpac $15m Mar-24 - Non-recourse warehouse Bank $200m May-24 $116m |
|---|---|
| Home loans | |
| Personal loans | |
| Asset finance |
- The senior non-recourse and limited recourse warehouses and securitised facilities are supported by mezzanine non-recourse facilities provided by institutional fund managers.
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FSA Group Ltd AGM presentation 2023
Services - Clients
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| Debt Agreements | FY2021 | FY2022 | **FY2023 ** | % Change |
|---|---|---|---|---|
| New clients | 1,463 | 620 | 568 | -8% |
| Clients under administration | 15,780 | 11,252 | 6,316 | -44% |
| Debt managed | $209m | $109m | $52m | -52% |
| Dividendspaid | $85m | $65m | $41m | -36% |
| PIA's and Bankruptcy | FY2021 | FY2022 | **FY2023 ** | % Change |
|---|---|---|---|---|
| New clients | 89 | 97 | 100 | +3% |
| Clients under administration | 1,025 | 844 | 633 | -24% |
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FSA Group Ltd AGM presentation 2023
PBT by segment
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| FY2021 | FY2022 | FY2023 | % Change | |
|---|---|---|---|---|
| Lending | ||||
| Home loans and Asset finance | $9.7m | $10.0m | $9.2m | -7% |
| Personal loans | $7.5m | $9.9m | $9.0m | -5% |
| Services | $12.1m | $7.3m | $2.8m | -64% |
| Other/unallocated | $0.4m | ($0.2m) | ($0.1m) | - |
| Profit before tax | $29.7m | $26.9m | $21.0m | -22% |
Impacted by
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an increase in the cost of funding (cash rate) which materially impacted our margin on our fixed rate Lending products,
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a decrease in the number of clients under administration in the Services segment.
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FSA Group Ltd AGM presentation 2023
Group financials
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| FY2021 | FY2022 | **FY2023 ** | % Change | |
|---|---|---|---|---|
| Operating income | $61.4m | $55.6m | $54.6m | -2% |
| Profit before tax | $29.7m | $26.9m | $21.0m | -22% |
| Profit after tax attributable to members | $20.1m | $17.2m | $13.0m | -25% |
| EPS basic | 16.12c | 13.72c | 10.63c | -23% |
| Net cash inflow from operating activities | $29.5m | $26.2m | $22.3m | -15% |
| Dividend/share | 6.00c | 7.00c | 7.00c | |
| Shareholder equity attributable to members | $72.0m | $84.4m | $88.0m | +4% |
| Return on equity | 31% | 22% | 15% |
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FSA Group Ltd AGM presentation 2023
Balance Sheet
Strong financial position
| Strong financial position | ||
|---|---|---|
| Consolidated Entity | ||
| as at 30 June 2023 | 2023 | 2022 |
| $ | $ | |
| Assets | ||
| Cash and cash equivalents | $16.4m | $16.6m |
| Restricted cash | $20.0m | $19.3m |
| Trade and other receivables | $14.8m | $17.4m |
| Loans and advances | $638.7m | $541.5m |
| Other assets | $.3m | $.6m |
| Right of use assets | $8.2m | $9.2m |
| Plant and equipment | $1.8m | $1.9m |
| Intangible assets | $14.6m | $14.3m |
| Deferred tax assets | $2.4m | $1.6m |
| Total Assets | $717.2m | $622.4m |
| Liabilities | ||
| Trade and other payables | $3.7m | $3.5m |
| Current tax liabilities | $5.4m | $4.2m |
| Financing liabilities | $591.0m | $501.7m |
| Lease liabilities | $9.1m | $9.9m |
| Contract liabilities | $.3m | $.7m |
| Provisions | $3.2m | $3.0m |
| Deferred tax liabilities | $3.2m | $3.5m |
| Total Liabilities | $615.9m | $526.4m |
| Net Assets | $101.3m | $96.1m |
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FSA Group Ltd AGM presentation 2023
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Strategy and Outlook
Our Focus
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Lending Origination and Aiming to double new origination from our current $300m to over $600m per annum. This should see our loan pools grow to around $1.5b. Loan Pools Aiming to grow through automation which will likely see staff numbers hold at around current levels. Our business will benefit from higher Lending incremental margins due to operating leverage. Our objective is to double Costs and 2023 Lending PBT at loan pools of around $1.5b. Profitability HEADWIND: Rising cost of funding (cash rate) continues to materially impact our margin on our fixed rate Lending products. Services Regrow as demand returns.
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FSA Group Ltd AGM presentation 2023
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2024 Forecast - Origination up 30%, Loan Pools up 34%
New Origination and Loan Pools
450m 900m
852m
400m 800m
350m 700m
639m
300m 600m
541m
280m
250m 500m
457m
447m Budget Origination Nov 23 - Jun 24
Actual Origination
200m 400m
Loan pools
314m
150m 300m
227m
100m 200m
151m
127m 127m
50m 100m
m m
FY2020 FY2021 FY2022 FY2023 FY2024
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2024 Forecast - Origination up 30%, Loan Pools up 34%
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FSA Group Ltd AGM presentation 2023
Capital Management
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We restructured our funding facilities to provide greater access to liquidity. This will allow us to execute our capital management strategy:
Capital Management
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Invest in the growth of our loan pools where we see the highest risk adjusted return on capital.
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Return capital to shareholders in the form of an on market buy-back when price to value opportunities arise.
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Subject to business performance, a minimum annual dividend of 7c to 8c per share.
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FSA Group Ltd AGM presentation 2023
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 2023
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 2023