FSA GROUP LIMITED

A ndix 4E ppe

==> picture [114 x 127] intentionally omitted <==

PRELIMINARY FINAL REPORT

RELIMINARY FINAL REPORT
Name of Entity	FSA Group Limited
ABN	98 093 855 791
Details of the reporting period
Financial Year Ended	30 June 2013
Previous Corresponding Reporting Period	30 June 2012

1. Details of the reporting period

Financial Year Ended Previous Corresponding Reporting Period

2. Results for Announcement to the Market

Results for Announcement to the Market
	$’000	% Increase / (decrease)
		over corresponding period
2.1 Revenue and other income from ordinary	64,419	9%
activities (net of Finance Expense)
2.2 Profit from ordinary activities after tax	10,759	26%
attributable to members
2.3 Net profit for the period attributable to	10,759	26%
members
2.4 Dividends – see item 7 below

2.5 Record date – see item 7 below -

2.6 Commentary on above details – refer to Executive directors’ review and Financial Statements

For an explanation of the information provided above at 2.1 to 2.4 refer to the accompanying Executive Directors’ Review and Financial Statements.

3. Statement of Profit or Loss and Other Comprehensive Income with notes to the statement

Refer to page 33 of the Financial Statements and the accompanying notes

4. Statement of Financial Position with notes to the statement

Refer to page 34 of the Financial Statements and the accompanying notes

5. Statement of Cash Flows with notes to the statement

Refer to page 36 of the Financial Statements and the accompanying notes

6. Statement of Changes in Equity

Refer to page 35 of the Financial Statements and the accompanying notes

7. Dividends

==> picture [114 x 127] intentionally omitted <==

Fully franked final dividend for the year ended 30 June 2012 of 1.55 cents per ordinary share

per ordinary share $1,982,615 Fully franked interim dividend for the year ended 30 June 2013 of 1.75 cents per ordinary share $2,201,232 $4,183,847 Dividends payable subsequent to year end Date payable 27 September 2013 Record date to determine entitlement to the dividend 13 September 2013 Amount per share (fully franked) 3.25 cents Total dividend calculated on shares on issue as at the date of this report $4,065,510

8. Dividends reinvestment

There is no Dividend Reinvestment Plan in place.

9. NTA Backing

Current Corresponding Period period Net tangible asset backing per ordinary share after adjusting for non-controlling interests 42.3 cents 37.8 cents

10. Entities over which control has been gained or lost during the period

Details of entities where control has been gained or lost during the period are included at Note 13 on pages 52 and 53 of the Financial Statements.

11. Associates and joint venture entities

Details of investment in associates is included at Note 28 on page 65 of the Financial Statements.

12. Ability to make an informed assessment of the entities financial performance and financial position.

Refer to the accompanying Executive Directors’ Review and Financial Statements.

13. Foreign entities

Not applicable.

==> picture [114 x 127] intentionally omitted <==

14. Results for the period

Refer to the accompanying Executive Directors’ Review and Financial Statements and segment commentary within, and supported by financial data contained in Note 26: Segment Information commencing at page 59 and page 60 of the Financial Statements.

15. Status of audit

The financial statements have been audited and a copy of the audit report is included in the Financial Statements at pages 69 and 70. The audit report does not contain any qualification nor is there any dispute.

The Annual General Meeting is scheduled for Friday 25 October 2013 at 2pm in Sydney.

Don Mackenzie Company Secretary 30 August 2013

==> picture [80 x 83] intentionally omitted <==

Annual Report 2013

A Strong

Australia’s largest provider of debt solutions

For more than a decade, FSA Group has helped thousands of Australians take control of their debt. Our large and experienced team of professionals offers a range of debt solutions, which we tailor to suit individual circumstances and to achieve successful outcomes for our clients.

1 Financial Results 3 Business Model 6 Chairman’s Letter

7 Executive Directors’ Review 11 Directors and Secretary 12 Financial Statements

FSA Group Limited ABN 98 093 855 791 B

==> picture [57 x 842] intentionally omitted <==

Financial Results

9[%]

Revenue

==> picture [220 x 164] intentionally omitted <==

----- Start of picture text -----

70
64.4
60 59.0
54.1
50.1 50.8
50
40 36.6
30
20
10
0
2008 2009 2010 2011 2012 2013
$ millions
----- End of picture text -----

49[%]

Net Cash Inflow from Operating Activities

==> picture [7 x 5] intentionally omitted <==

----- Start of picture text -----

20
----- End of picture text -----

==> picture [220 x 126] intentionally omitted <==

----- Start of picture text -----

15 14.0
10 9.4
5.6
5
2.8 2.5
0.2
0
2008 2009 2010 2011 2012 2013
$ millions
----- End of picture text -----

Profit After Tax (attributable to members)[26][%]

==> picture [219 x 164] intentionally omitted <==

----- Start of picture text -----

12
10.8
10
8.8 9.0
8.5
8 7.5
6
4
2.7
2
0
2008 2009 2010 2011 2012 2013
$ millions
----- End of picture text -----

36[%]

Basic Earnings Per Share

==> picture [218 x 164] intentionally omitted <==

----- Start of picture text -----

10
8.51
8 7.66
6.51
6.27
6 5.82
4
2.37
2
0
2008 2009 2010 2011 2012 2013
¢ cents
----- End of picture text -----

FSA GROUP LIMITED ANNUAL REPORT 2013 1

A strong performance leveraged by a proven integrated business model in growth markets with high barriers to entry

==> picture [35 x 140] intentionally omitted <==

==> picture [37 x 142] intentionally omitted <==

==> picture [36 x 142] intentionally omitted <==

==> picture [37 x 142] intentionally omitted <==

==> picture [457 x 91] intentionally omitted <==

==> picture [57 x 842] intentionally omitted <==

Proven Integrated Business Model

Services

FSA Group offers a range of simple and convenient 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.

Home Loans

FSA Group offers a range of simple and convenient products to assist clients with property wishing to consolidate their debt. FSA Group offers solutions both as a lender and manager of home loans.

Client

Small Business

FSA Group offers factoring fi nance to assist small businesses with cash fl ow management.

2013 Achievements

Services

The services market consists of individuals who rely upon a debt agreement or a personal insolvency agreement or bankruptcy to address their unmanageable debt. Debt agreements are an alternative to bankruptcy. They offer a simple way for an indebted individual to come to a payment arrangement with their creditors and yield superior returns to creditors when compared with bankruptcy. Competition in this market has remained steady because there are signifi cant barriers to entry. A new debt agreement administrator requires a substantial capital base to operate and this deters many potential competitors.

48% market share for debt agreements
5% increase in clients administered under debt agreements

$301m of unsecured debt managed under debt agreements

The Market

==> picture [250 x 183] intentionally omitted <==

----- Start of picture text -----

40000
35000
30000
25000
20000
15000
10000
5000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Bankruptcies Debt Agreements Personal Insolvency Agreements
----- End of picture text -----

Consistent low level of arrears

$79m paid to creditors under debt agreements

One of the largest providers of personal insolvency agreements and bankruptcy

Source: Insolvency and Trustee Service Australia

FSA GROUP LIMITED ANNUAL REPORT 2013 3

A strong performance delivered through tailored solutions that assist more clients to achieve successful outcomes

2013 Achievements

One of the few remaining non-conforming home loan lenders

Loan pool of $221m

Consistent low level of arrears and capital losses

Westpac non-recourse facility of $230m

Institutional non-recourse mezzanine facility of $20m

2013 Achievements

Loan pool of $20m

Consistent low level of arrears and capital losses

Westpac facility of $35m

Good platform in place for future growth

Home Loans

The non-conforming home loan market consists of lenders who provide loan products to an individual who is unlikely to conform to the lending criteria of the banks. Prior to the Global Financial Crisis, the market was characterised by a high number of competitors. Today fewer competitors remain with many exiting the market in 2008. Increased levels of capital are now required to operate a home loan lending business and this has increased the barriers to entry into the market. FSA Group is one of the few remaining non-conforming home loan lenders operating in the market.

==> picture [63 x 164] intentionally omitted <==

The Market

Prime Home Loan Market $200b p.a.

Non-Conforming Home Loan Market $ est 2b p.a.

Source: Datamonitor

Small Business

The factoring fi nance market consists of lenders who assist small to medium businesses with cash fl ow management by providing fi nance primarily secured against the unpaid invoices of a business. There are only a few competitors operating in the market, many having been casualties of the Global Financial Crisis. Competition is likely to increase over the next few years, although the level of capital required to operate a factoring fi nance business presents real barriers to entry. FSA Group offers factoring fi nance to assist small businesses with cash fl ow management.

==> picture [57 x 157] intentionally omitted <==

The Market

Invoice Discounting Turnover $58b p.a.

Factoring Finance Turnover $6b p.a.

Source: Institute for Factors and Discounters

==> picture [58 x 842] intentionally omitted <==

==> picture [35 x 145] intentionally omitted <==

==> picture [36 x 144] intentionally omitted <==

==> picture [37 x 145] intentionally omitted <==

==> picture [37 x 144] intentionally omitted <==

==> picture [386 x 108] intentionally omitted <==

==> picture [386 x 77] intentionally omitted <==

FSA GROUP LIMITED ANNUAL REPORT 2013 5

Chairman’s Letter

Dear Shareholders,

The 2013 fi nancial year has been a year of strong performance.

FSA Group generated $64.4 million in revenue and achieved a record profi t after tax attributable to members of $10.8 million, a 26% increase compared to the results of 2012.

Our Services division, which offers debt agreements, personal insolvency agreements and bankruptcy as an option to indebted individuals, maintained its position as the market leader for debt agreements with a 48% market share during 2013. We are also one of the largest providers of personal insolvency agreements and bankruptcy in the country.

Our Home Loans division offers a range of simple and convenient products to assist clients with property wishing to consolidate their debt. As a lender we have originated a high quality loan pool of $221 million. Our non-recourse home loan funding facilities consist of a $230 million senior facility provided by Westpac Banking Corporation and a $20 million mezzanine facility provided by Institutional investors. These facilities have been renewed until October 2016. The 2013 fi nancial year was a year of consolidation in our Home Loans division. Due to recent improvements in both our funding structure and market conditions, our focus now is growing our loan pool.

Our Small Business division offers factoring fi nance to assist small businesses with cash fl ow management. Through factoring fi nance, FSA Group has originated a high quality loan pool of $20 million. Our factoring fi nance funding facility was recently increased to $35 million and renewed for a further term, until June 2015, by Westpac Banking Corporation. This recent facility increase will enable us to continue the growth of our factoring fi nance lending activities to our small business clients.

As part of our ongoing capital management strategy, in October 2011 we commenced an on market share buyback which we continued throughout 2013. During the year we purchased a total of 7.7 million shares.

I advise that the Directors have declared a fully franked fi nal dividend of 3.25 cents per share for the 2013 fi nancial year. This brings the full year dividend to 5.00 cents per share.

I am confi dent of growth for FSA Group in the years ahead. I would like to thank my fellow Directors, all our executives and staff for their contribution to the successes of the current year.

Yours sincerely

Sam Doumany Chairman

Executive Directors’ Review

Dear Shareholders,

The 2013 fi nancial year has been a year of strong performance.

During the year demand for our solutions underpinned revenues of $64.4 million (2012: $59.0 million) and helped to deliver a record profi t after tax attributable to members of $10.8 million (2012: $8.5 million).

The Directors have declared a fully franked fi nal dividend of 3.25 cents per share for the 2013 fi nancial year. This brings the full year dividend to 5.00 cents per share.

Financial overview	FY2012	FY2013	% Change
Revenue and income	$59.0m	$64.4m	9%
Prof t before tax	$14.9m	$17.8m	19%
Prof t after tax (attributable to members of the parent)	$8.5m	$10.8m	26%
Net assets	$57.5m	$58.8m	2%
NTA backing/share	37.8c	42.3c	12%
EPS basic	6.27c	8.51c	36%

==> picture [57 x 322] intentionally omitted <==

During the 2013 fi nancial year, FSA Group achieved a signifi cant uplift in cash fl ow from operations to $14.0 million driven by the long term annuity income from an increased number of clients. FSA Group expects client numbers will continue to grow during the 2014 fi nancial year.

Cash f ow from operations	FY2011	FY2012	FY2013
Net cash f ow from operating activities	$5.6m	$9.4m	$14.0m
Funding	Facility Type	Amount	Renewal Date
Westpac Banking Corporation	Non-recourse senior home loan facility	$230m	October 2016
Institutional Investors	Non-recourse mezzanine home loan facility	$20m	October 2016
Westpac Banking Corporation	Factoring f nance facility	$35m	June 2015

FSA GROUP LIMITED ANNUAL REPORT 2013 7

Executive Directors’ Review continued

==> picture [106 x 152] intentionally omitted <==

==> picture [57 x 152] intentionally omitted <==

==> picture [57 x 691] intentionally omitted <==

A debt agreement, which was introduced into the Bankruptcy Act in 1996, is a simple way for an indebted individual to come to a payment arrangement with their creditors. It is an alternative to going bankrupt and is a binding agreement between the individual and their creditors.

Operational Performance

Our business operates across the following key segments, Services, Home Loans and Small Business. The profi tability of each segment is as follows:

Profitability	FY2012	FY2013	% Change
Services	$11.6m	$11.7m	1%
Home Loans	$4.1m	$5.1m	24%
Small Business	($0.7m)	$0.8m	211%
Other	($0.1m)	$0.1m	–
Profit before tax	$14.9m	$17.8m	19%
Prof t after tax (attributable to members of the parent)	$8.5m	$10.8m	26%

Services

Home Loans

The Services division offers a range of simple and convenient solutions to assist clients wishing to enter into a payment arrangement with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy.

The Home Loans division offers a range of simple and convenient solutions to assist clients with property wishing to consolidate their debt. The non-conforming home loan market consists of lenders who provide loan products to an individual who is unlikely to conform to the lending criteria of the banks.

FSA Group maintained its position as the market leader for debt agreements with a 48% market share during 2013. We are also one of the largest providers of personal insolvency agreements and bankruptcy in the country.

FSA Group has fi rmly established a track record in non-conforming home loan lending. We have originated a high quality loan pool of $221 million. Greater than 30 day arrears increased to 3.22% at June 2013 compared to 2.66% at June 2012.

During 2013 there was a 5% increase in the number of clients administered under debt agreements and a 15% increase in the number of clients administered under personal insolvency agreements and bankruptcy.

Our non-recourse home loan funding facilities consist of a $230 million senior facility provided by Westpac Banking Corporation and a $20 million mezzanine facility provided by Institutional investors. These facilities have been renewed until October 2016. The 2013 fi nancial year was a year of consolidation in our Home Loans division. Due to recent improvements in both our funding structure and market conditions, our focus now is growing our loan pool.

FSA Group manages $301 million of unsecured debt under debt agreements. During 2013, FSA Group paid $79 million in dividends to creditors. This was an increase of 8% compared to 2012.

FSA GROUP LIMITED ANNUAL REPORT 2013 9

Executive Directors’ Review continued

Small Business

The Small Business division offers factoring fi nance to assist small businesses with cash fl ow management. FSA Group has fi rmly established a track record in factoring fi nance. We have originated a high quality loan pool of $20 million. Our factoring fi nance funding facility was recently increased to $35 million and renewed for a further term, until June 2015, by Westpac Banking Corporation.

FSA Group is experiencing demand for factoring fi nance because the availability of credit for small businesses continues to remain tight. This recent facility increase will enable us to continue the growth of our factoring fi nance lending activities to our small business clients.

Our People

We would like to acknowledge the efforts of all our team during what has been another busy year. Investing in their professional development, particularly in the area of customer service, has been a focus and priority and this will continue. We would also like to thank our Board for their guidance and support during the year. Yours sincerely,

==> picture [142 x 32] intentionally omitted <==

Tim Odillo Maher Executive Director

Strategy and Outlook

Consumer debt levels are at a record high and demand for our products and services is steady. Our previous strategy for our Home Loans and Small Business divisions was to hold the growth in our loan pools until conditions improved. Our strategy moving forward is to focus on growing our loan pools.

==> picture [63 x 63] intentionally omitted <==

Deborah Southon Executive Director

==> picture [596 x 290] intentionally omitted <==

Directors and Secretary

Standing (L to R)

Don Mackenzie Sally Herman (Secretary)

Stan Kalinko

Seated (L to R) Tim Odillo Maher Sam Doumany

Deborah Southon

==> picture [246 x 105] intentionally omitted <==

==> picture [177 x 140] intentionally omitted <==

==> picture [176 x 140] intentionally omitted <==

==> picture [156 x 141] intentionally omitted <==

==> picture [36 x 418] intentionally omitted <==

==> picture [177 x 141] intentionally omitted <==

==> picture [176 x 141] intentionally omitted <==

==> picture [176 x 140] intentionally omitted <==

==> picture [36 x 278] intentionally omitted <==

==> picture [177 x 141] intentionally omitted <==

==> picture [176 x 141] intentionally omitted <==

==> picture [176 x 139] intentionally omitted <==

==> picture [247 x 104] intentionally omitted <==

----- Start of picture text -----

FSA GROUP LIMITED
----- End of picture text -----

==> picture [105 x 104] intentionally omitted <==

----- Start of picture text -----

11
----- End of picture text -----

Financial Statements

==> picture [281 x 245] intentionally omitted <==

----- Start of picture text -----

13 Directors’ Report 24 Auditor’s Independence Declaration
33 Statement of Profi t or Loss and Other Comprehensive Income
35 Statement of Changes in Equity 36 Statement of Cash Flows
68 Directors’ Declaration 69 Independent Auditor’s Report 71
73 Corporate Information
----- End of picture text -----

==> picture [283 x 245] intentionally omitted <==

----- Start of picture text -----

Corporate Governance Statement
34 Statement of Financial Position
37 Notes to the Financial Statements
Shareholder Information
----- End of picture text -----

==> picture [35 x 191] intentionally omitted <==

==> picture [316 x 211] intentionally omitted <==

==> picture [142 x 106] intentionally omitted <==

==> picture [37 x 142] intentionally omitted <==

==> picture [72 x 71] intentionally omitted <==

==> picture [35 x 313] intentionally omitted <==

==> picture [36 x 278] intentionally omitted <==

==> picture [37 x 244] intentionally omitted <==

==> picture [37 x 143] intentionally omitted <==

==> picture [37 x 209] intentionally omitted <==

==> picture [387 x 107] intentionally omitted <==

==> picture [37 x 174] intentionally omitted <==

Directors’ Report

for the year ended 30 June 2013

Directors

The Directors of the Company at any time during or since the end of the fi nancial year are:

Sam Doumany Tim Odillo Maher Deborah Southon Stan Kalinko Sally Herman

Sam Doumany (Non-Executive Chairman)

Experience and Expertise

Mr Doumany was appointed as a Non-Executive Director on 18 December 2002 and was appointed Chairman on 30 June 2003.

Mr Doumany commenced his career in economic research, agribusiness and marketing before embarking on a distinguished political career as a member of parliament in Queensland in 1974.

Between 1974 and 1983 Mr Doumany served on several parliamentary committees, the Liberal Party’s State and Federal Rural Policy Committees and the Queensland Liberal Party State Executive. Elevated to the Cabinet in 1978, Mr Doumany served fi rstly as Minister for Welfare and Corrective Services before serving as Minister for Justice, Queensland Attorney-General and the Deputy Leader of the Liberal Parliamentary Party until late 1983.

Throughout his parliamentary and ministerial career Mr Doumany worked closely, at a senior level, with a wide range of key professional, industry and community organisations.

Since 1983 Mr Doumany has operated a consultancy practice providing services in government relations, corporate strategy and market development. Mr Doumany was also retained by Ernst & Young in an executive consultancy role between 1991 and 2002. Signifi cant assignments for Ernst & Young include the Coutts and Bartlett Receiverships as well as major submissions to the Federal Government. He has also held numerous executive and Non-Executive board positions, many as Chairman, for private and public companies, industry authorities/associations and review committees.

Mr Doumany holds a Bachelor of Science (Agriculture) from the University of Sydney and is a member of the Australian Institute of Company Directors.

Other current (listed company) directorships

Nil

Former (listed company) directorships in the last 3 years

Lindsay Australia Limited (resigned 17 November 2010)

Special responsibilities

Chairman of the Audit & Risk Management Committee.

Interest in shares and options

Ordinary shares 1,075,000

Tim Odillo Maher (Executive Director)

Experience and Expertise

Mr Odillo Maher was appointed on 30 July 2002.

Mr Odillo Maher’s background has been in banking and fi nance, before concentrating on insolvency and corporate fi nance assignments. He has worked at ANZ Banking Group and Star Dean Wilcocks Chartered Accountants. Mr Odillo Maher holds a Bachelor of Business Degree (majoring in Accounting and Finance) from Australian Catholic University and is a Certifi ed Practising Accountant. His work experience has included special reviews of companies experiencing fi nancial diffi culties, the rationalisation and re-organisation of businesses, and the implementation of turnaround and exit strategies for businesses, including support plans and asset disposal programmes.

Other current (listed company) directorships

Nil

Former (listed company) directorships in last 3 years

Nil

FSA GROUP LIMITED ANNUAL REPORT 2013 13

cont. Directors’ Report

for the year ended 30 June 2013

Special responsibilities

Nil

Interest in shares and options

Ordinary shares 42,809,231

Deborah Southon (Executive Director)

Experience and Expertise

Ms Southon was appointed on 30 July 2002. Ms Southon has attained a wealth of experience in the government and community services sectors having worked for the Commonwealth Department of Health and Family Services, the former Department of Community Services, and the Smith Family. Ms Southon has successfully managed a programme and administration budget exceeding $150 million and was part of a management team which oversaw a signifi cant growth in client numbers and service delivery which stemmed from the implementation of fresh legislation.

Ms Southon has an Executive Certifi cate in Leadership & Management (University of Technology, Sydney) and a Bachelor of Arts Degree (Sydney University).

Other current (listed company) directorships

Nil

Former (listed company) directorships in last 3 years

Nil

Special responsibilities

Nil

Interest in shares and options

Ordinary shares 12,960,047

Stan Kalinko (Non-Executive Director)

Experience and Expertise

Mr Kalinko was appointed to the Board of FSA on 9 May 2007.

He has been a director of companies for many years, and, since his retirement from law on 30 June 2007, his main occupation has been as a director.

Mr Kalinko practised law for more than 30 years and was a merchant banker for 6 years.

Mr Kalinko is a fellow of the Australian Institute of Company Directors and also serves on the Boards of Hydro Tasmania, Indigenous Community Volunteers Limited, Seisia Enterprises Pty Ltd and the Central Synagogue.

He has a B.Com, LLB, a Higher Diploma in Tax and is an accredited mediator.

Other current (listed company) directorships

Nil

Former (listed company) directorships in last 3 years

Nil

Special Responsibilities

Member of the Audit & Risk Management Committee and Remuneration Committee

Interest in shares and options

Ordinary shares 58,263

cont. Directors’ Report

for the year ended 30 June 2013

Sally Herman (Non-Executive Director)

Experience and Expertise

Ms Herman was appointed on 24 January 2011.

Ms Herman has more than 25 years’ executive experience in fi nancial services in both Australia and in the United States. Her last executive role was at the Westpac Group where she spent 16 years until September 2010, having run major business units in almost every operating division of the Group. She also has broad board experience in the corporate and Not For Profi t Sector, currently sitting on several boards including Premier Investments Limited, Breville Group Limited, ME Bank Pty Ltd, Urbis Pty Ltd and the State Library of NSW Foundation.

She is also a graduate of the Australian Institute of Company Directors and holds a Bachelor of Arts degree.

Other current (listed company) directorships

Premier Investments Limited (appointed 14 December 2011)

Breville Group Limited (appointed 1 March 2013)

Former (listed company) directorships in last 3 years

Nil

Special responsibilities

Member of the Audit & Risk Management Committee and Chairperson of the Remuneration Committee

Interest in shares and options

Ordinary shares 40,000

Company Secretary

Mr Don Mackenzie was appointed Company Secretary on 19 November 2010. He commenced his professional career with Chartered Accounting fi rms, and in 1976 he commenced employment in a senior accounting role with a Queensland based listed public company. In 1993 he commenced practice as a Chartered Accountant providing corporate services predominantly to public companies until 2008 after which he acted in a personal capacity. In addition to his part time role at FSA Group Limited, he is currently a Director (appointed March 2004) and Chairman of the Audit & Risk Management Committee of Aveo Healthcare Limited (formerly Forest Place Group Limited) and Company Secretary of several other public companies.

He is also the Secretary to all Board committees.

Principal activities

The principal activities of the Consolidated Entity during the year were providing debt solutions and direct lending services to individuals and businesses. These activities have not changed since the prior year.

Operating results

The consolidated profi t from ordinary activities for the Consolidated Entity after providing for income tax and eliminating non-controlling interests was $10,759,096 (2012: $8,527,891).

Dividends declared and paid during the year

On 28 September 2012, a fully franked fi nal dividend of $1,982,615 was paid at 1.55c per share;
On 20 March 2013, a fully franked interim dividend of $2,201,232 was paid at 1.75c per share.

Dividends declared after the end of year

On 30 August 2013, the Directors declared a 3.25 cent fully franked fi nal dividend to shareholders to be paid on 27 September 2013 with a record date of 13 September 2013.

Review of operations

Detailed comments on operations are included separately in the Executive Directors’ review.

FSA GROUP LIMITED ANNUAL REPORT 2013 15

cont. Directors’ Report

for the year ended 30 June 2013

Review of financial condition

Capital structure

There have been no changes to the Company’s capital structure during or since the end of the fi nancial year except as follows:

During fi nancial year 2013, FSA Group Limited bought back 7,694,510 shares under an on market share buy-back.
Issue of 1,600,000 shares as part consideration for acquiring the non-controlling interest in 180 Group Pty Ltd.

Financial position

The net assets of the Consolidated Entity have increased from $57,530,319 at 30 June 2012 to $58,759,180 at 30 June 2013.

Treasury policy

The Consolidated Entity does not have a formally established treasury function. The Board is responsible for managing the Consolidated Entity’s currency risks and fi nance facilities. The Consolidated Entity does not currently undertake hedging of any kind.

Liquidity and funding

The Consolidated Entity has suffi cient funds to fi nance its operations, and also to allow the Consolidated Entity to take advantage of favourable business opportunities.

Significant changes in the state of affairs

There were no signifi cant changes in the state of affairs of the Consolidated Entity in the fi nancial year.

Matters subsequent to the end of the financial year

There have been no events since the end of the fi nancial year that impact upon the fi nancial statements as at 30 June 2013 except as follows:

On 29 August 2013, Westpac renewed the non-recourse senior home loan facility limit of $230 million to 15 October 2016.
On 29 August 2013, a $20 million non-recourse mezzanine home loan facility was secured.
On 30 August 2013, the Directors declared a 3.25 cents fully franked fi nal dividend to shareholders to be paid on 27 September 2013 with a record date of 13 September 2013.

Likely developments and expected results of operations

Likely developments in the operations of the Consolidated Entity and the expected results of those operations in subsequent fi nancial years have been discussed where appropriate in the Annual Report in the Executive Directors’ review.

There are no further developments that the Directors are aware of which could be expected to affect the results of the Consolidated Entity’s operations in subsequent fi nancial years other than the information contained in the Executive Directors’ review.

Environmental issues

There are no matters that have arisen in relation to environmental issues up to the date of this report.

Share options

As at 30 June 2013 there were 500,000 (2012: 500,000) unissued ordinary shares under option.

Indemnification and insurance of directors and officers

Each of the Directors and the Offi cers of the Company has entered into a Deed with the Company whereby the Company has provided certain contractual rights of access to books and records of the Company to those Directors and Offi cers; and indemnifi es those Directors and Offi cers against liabilities suffered in the discharge of their duties as Directors or Offi cers of the Company.

The Company has also insured all of the Directors and Offi cers of FSA Group Limited. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act 2001 does not require disclosure of the information in these circumstances.

cont. Directors’ Report

for the year ended 30 June 2013

Indemnity and insurance of auditor

The Company has not, during or since the fi nancial year, indemnifi ed or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

During the fi nancial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Remuneration Report (Audited)

This Remuneration Report sets out the remuneration information, pertaining to the Company’s Directors and Senior Executive who comprise the Key Management Personnel of the Consolidated Entity for the purposes of the Corporations Act 2001 and the Accounting Standards for the year ended 30 June 2013.

Key Management Personnel have the authority and responsibility for planning, directing and controlling the activities of the Group.

Remuneration policy

The performance of the Group depends upon the quality of its Directors and Senior Executive. To prosper, the Group must attract, motivate and retain highly skilled Directors and Senior Executive.

The Board has a Remuneration Committee but does not have a Nomination Committee. The Directors consider that the Company is not of a size, nor are its affairs of such complexity, as to justify the formation of a Nominations Committee. All matters which might be dealt with by that Committee are reviewed by the Directors in meeting as a Board. The Remuneration Committee is responsible for determining and reviewing compensation arrangements for the Directors and Senior Executive. The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such offi cers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefi t from the retention of a high quality Board and Executive Team. Such offi cers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefi ts. The Board’s policy is to align Directors and Senior Executive objectives with shareholder and business objectives by providing a fi xed remuneration component and offering short and long-term incentives. In accordance with best practice corporate governance, the structure of Non-Executive Director, Executive Director and Senior Executive remuneration is separate and distinct.

In consultation with external remuneration consultants in prior year, the Remuneration Committee structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the Consolidated Entity.

Alignment to shareholders’ interests:

has economic profi t as a core component of plan design;
focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-fi nancial drivers of value; and
attracts and retains high calibre executives.

Alignment to program participants’ interests:

rewards capability and experience;
refl ects competitive reward for contribution to growth in shareholder wealth; and
provides a clear structure for earning rewards.

FSA GROUP LIMITED ANNUAL REPORT 2013 17

cont. Directors’ Report

for the year ended 30 June 2013

Non-Executive Director Remuneration

The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

The Constitution of the Company and the ASX Listing Rules specify that the Non-Executive Directors are entitled to remuneration as determined by the Company in General Meeting. The total aggregate annual remuneration payable to Non-Executive Directors of the Company was determined at the Annual General Meeting held on 18 November 2010 at $500,000.

If a Non-Executive Director performs extra services, which in the opinion of the Directors are outside the scope of the ordinary duties of the Director, the Company may remunerate that Director by payment of a fi xed sum determined by the Directors in addition to the remuneration referred to above. A Non-Executive Director is entitled to be paid travel and other expenses properly incurred by them in attending Directors’ or General Meetings of the Company or otherwise in connection with the business of the Group.

The remuneration of Non-Executive Directors for the year ended 30 June 2013 is detailed in Table 1 of this Remuneration Report.

Executive Directors and Senior Executive Remuneration

The Company aims to reward the Executive Directors and Senior Executive with a level and mix of remuneration commensurate with their position and responsibilities within the Group and so as to:

reward Executives for company and individual performance against targets set by reference to appropriate benchmarks;
align the interests of Executives with those of shareholders;
link reward with the strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.

The remuneration of the Executive Directors and Senior Executive is fi xed by the Board. The remuneration will comprise a fi xed remuneration component and also may include offering specifi c short and long-term incentives, in the form of:

base pay and non-monetary benefi ts;
short-term performance incentives; and
other remuneration such as superannuation and long service leave.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefi ts are reviewed annually by the Remuneration Committee, based on individual and business unit performance, the overall performance of the Consolidated Entity and comparable market remunerations.

Executives may receive their fi xed remuneration in the form of cash or other fringe benefi ts (for example motor vehicle benefi ts) where it does not create any additional costs to the Consolidated Entity and provides additional value to the executive.

The short-term incentives program (“STI”) has been set to align the targets of the business units with the targets of the responsible executives. STI payments are granted to executives based on specifi c annual targets and key performance indicators (‘KPI’s’) being achieved. KPI’s include profi t contribution, customer satisfaction, leadership contribution and portfolio management.

A review of bonuses paid to the Executive Directors over the previous fi ve years is consistent with the operational performance of the Group in those periods.

The remuneration of the Executive Directors and Senior Executive for the year ended 30 June 2013 is detailed in Table 1 of this Remuneration Report.

A Securities Trading Policy has been adopted for employees’ and directors’ dealings in the Company’s securities.

Employment contracts

It is the Board’s policy that employment agreements are entered into with the Executive Directors, Senior Executive and employees. Employment contracts are for no specifi c fi xed term unless otherwise stated.

cont. Directors’ Report

for the year ended 30 June 2013

Executive Directors and Senior Executive

The employment contract entered into with the Executive Directors and Senior Executive contains the following key terms:

Event	Company Policy
Performance based salary increases and/or bonuses	Board assessment based on KPI achievement
Short and long-term incentives, such as options	Board assessment based on KPI achievement
and shares
Resignation/notice period	Three months
Serious misconduct	Company may terminate at any time
Payouts upon resignation or termination, outside	Board discretion
industrial regulations (i.e. ‘golden handshakes’)

(a) Details of Directors and Key Management Personnel

(i) Non-Executive Directors

Sam Doumany Non-Executive Chairman Stan Kalinko Non-Executive Director Sally Herman Non-Executive Director

(ii) Executive Directors

Tim Odillo Maher Executive Director Deborah Southon Executive Director

(iii) Senior Executive

Cellina Chen

FSA GROUP LIMITED ANNUAL REPORT 2013 19

cont. Directors’ Report

for the year ended 30 June 2013

(b) Remuneration of Directors and Key Management Personnel

The Key Management Personnel of the Group include Tim Odillo Maher, Deborah Southon and Cellina Chen, being the only executive offi cers of the Group’s parent company, FSA Group Limited.

Table 1

Table 1
					Post-		Performance
		Short-term		Long-term	Employment	Total	based
	Salary &	Cash	Non-cash	Non-cash	Super-
	Fees	Bonus	benef ts	benef ts	annuation
	$	$	$	$	$	$	%
Non-Executive Directors
Sam Doumany
2013	130,000	–	–	–	–	130,000	–
2012	100,348	–	–	–	9,031	109,379	–
Stan Kalinko
2013	79,999	–	–	–	–	79,999	–
2012	59,746	–	–	–	7,036	66,782	–
Sally Herman
2013	77,982	–	–	–	7,018	85,000	–
2012	54,371	–	–	–	12,623	66,994	–
Executive Directors
Tim Odillo Maher
2013	526,833	*85,000	–	–	–	611,833	14%
2012	399,667	50,000	–	–	–	449,667	11%
Deborah Southon
2013	489,199	*85,000	11,494	–	43,165	628,858	14%
2012	360,521	50,000	19,083	34,216	22,908	486,728	10%
Senior Executive
Cellina Chen
2013	169,313	^36,697	17,447	–	19,147	242,604	15%
2012	164,962	25,000	7,268	3,634	17,288	218,152	11%
Total Remuneration
2013	1,473,326	206,697	28,941	–	69,330	1,778,294
2012	1,139,615	125,000	26,351	37,850	68,886	1,397,702

Bonus (representing 100% of the total bonus to be paid) was paid on 5 March 2013 in relation to the performance during fi nancial year 2012. The bonus was approved by the Board as part of discretionary performance based remuneration. The Executive Directors abstained from the vote.

^ Bonus (representing 100% of the total bonus to be paid) was paid on 1 November 2012 in relation to the performance during fi nancial year 2012. The bonus was approved by the Board as part of discretionary performance based remuneration.

Bonus in relation to current fi nancial year performance will be paid in the subsequent fi nancial year with an estimated range of:

Executive Directors: Tim Odillo Maher: $350,000 – $450,000, Deborah Southon: $350,000 – $450,000

Senior Executive: Cellina Chen: $50,000 – $75,000

cont. Directors’ Report

for the year ended 30 June 2013

Consolidated Entity’s earnings and movement in shareholders wealth for the last fi ve years is as follows:

30 June 2013	30 June 2012	30 June 2011	30 June 2010	30 June 2009
Revenue and income (Net) $64,419,491	$58,965,143	$54,139,504	$50,780,366	$50,073,622
Net prof t before tax $17,763,474	$14,914,460	$15,328,466	$12,868,122	$13,939,337
Net prof t after tax $12,239,748	$10,706,394	$11,015,591	$9,177,212	$10,021,632
Share price at the start of the year $0.32	$0.24	$0.36	$0.38	$0.16
Share price at the end of the year $0.70	$0.32	$0.24	$0.36	$0.38
Basic EPS (cents) 8.51	6.27	6.51	5.82	7.66
Diluted EPS (cents) 8.51	6.27	6.51	5.82	7.15

A review of discretionary performance bonuses over the previous fi ve years is consistent with the levels required to attract and retain Directors and Key Management Personnel in companies of a comparable size.

(c) Options issued as part of remuneration for the year ended 30 June 2013

There were no options issued as part of remuneration during or since the end of the fi nancial year.

(d) Shares issued on exercise of remuneration options

There were no shares issued on the exercise of remuneration options during or since the end of the fi nancial year.

(e) Option holdings of Directors and Key Management Personnel

There were no options held by Directors and Key Management Personnel.

(f) Shareholdings of Directors and Key Management Personnel

(f) Shareholdings of Directors and Key Management Personnel
Shares held in FSA Group Ltd Balance 1 July 2012 Purchased on market Options Exercised Other Changes	Balance 30 June 2013
Directors Sam Doumany 1,040,541 34,459 – – Tim Odillo Maher 42,809,231 – – – Deborah Southon 12,960,047 – – – Stan Kalinko 15,406 42,857 – – Sally Herman 40,000 – – Senior Executive Cellina Chen – – – –
	1,075,000
	42,809,231
	12,960,047
	58,263
	40,000

	–
Total 56,865,225 77,316 – –	56,942,541

This concludes the remuneration report, which has been audited.

FSA GROUP LIMITED ANNUAL REPORT 2013 21

cont. Directors’ Report

for the year ended 30 June 2013

Directors’ Meetings

The number of meetings of Directors held during the year and the number of meetings attended by each Director are as follows:

are as follows:
Number of meetings	Meetings
held while in off ce	attended
Sam Doumany 7 Tim Odillo Maher 7 Deborah Southon 7 Stan Kalinko 7 Sally Herman 7 Total number of meetings held during the f nancial year 7	6 7 6 7 7

Audit & Risk Management Committee Meetings

The number of meetings of the Audit & Risk Management Committee held during the year and the number of meetings attended by each member of the Audit & Risk Management Committee is as follows:

	Number of meetings	Meetings
	held while in off ce	attended
Sam Doumany	2	1
Stan Kalinko	2	2
Sally Herman	2	2
Total number of meetings held during the f nancial year	2

Remuneration Committee Meetings

The number of meetings of the Remuneration Committee held during the year and the number of meetings attended by each member of the Remuneration Committee is as follows:

by each member of the Remuneration Committee is as follows:
	Number of meetings	Meetings
	held while in off ce	attended
Sam Doumany	2	1
Stan Kalinko	2	2
Sally Herman	2	2
Total number of meetings held during the f nancial year	2

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

cont. Directors’ Report

for the year ended 30 June 2013

Non-Audit Services

The Board of Directors, in accordance with advice from the Audit & Risk Management Committee, is satisfi ed that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfi ed that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

all non-audit services are reviewed and approved by the Audit & Risk Management Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

The following fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2013: Tax compliance services $58,432 Taxation advice and consulting $90,550

Auditor’s Independence Declaration

The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 forms part of the Directors’ Report and can be found on page 24.

Auditor Details

BDO East Coast Partnership continues in offi ce in accordance with section 327(4) of the Corporations Act 2001 .

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of FSA Group Limited support and have adhered to the principles of corporate governance. A Statement of Corporate Governance is separately contained in the Annual Report.

Signed in accordance with a resolution of the Directors.

==> picture [123 x 27] intentionally omitted <==

Tim Odillo Maher Executive Director

Sydney 30 August 2013

FSA GROUP LIMITED ANNUAL REPORT 2013 23

Auditor’s Independence Declaration

==> picture [477 x 674] intentionally omitted <==

Corporate Governance Statement

for the year ended 30 June 2013

FSA Group Limited (the Company) and the Board of Directors (the Board) are committed to achieving and demonstrating the highest standards of corporate governance. The Board endorses the 2nd edition of the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles) issued in August 2007, including the 2010 amendments.

The Company’s Corporate Governance Charter is available on the Company website www.fsagroup.com.au.

The table below summarises how the Company complies with the ASX Principles, and if not why not.

Principle		Compliance
Number	Best Practice Recommendation	(Yes/No)	Comments
1	Lay solid foundations for management and oversight
1.1	Establish the functions reserved to the Board and those delegated	Yes	–
	to senior executives and disclose these functions.
1.2	Disclose the process for evaluating the performance of senior executives.	Yes	–
1.3	Provide the information in the Guide to reporting on Principle 1.	Yes	–
2	Structure the Board to add value
2.1	A majority of the Board should be independent Directors.	Yes	–
2.2	The chair should be an independent Director.	Yes	–
2.3	The roles of the Chair and Managing Director or similar roles should	Yes	–
	not be exercised by the same individual.
2.4	The Board should establish a nominations committee.	No	Page 28
2.5	Disclose the process for evaluating the performance of the Board,	Yes	–
	its committees and individual Directors.
2.6	Provide the information in the Guide to reporting on Principle 2.	Yes	–
3	Promote ethical and responsible decision making
3.1	Establish a code of conduct and disclose the code or summary of the code as to:
	• the practices necessary to maintain conf dence in the Company’s integrity;	Yes	–
	• the practices necessary to take into account their legal obligations and the	Yes	–
	reasonable expectations of their stakeholders; and
	• the responsibility and accountability of individuals for reporting and	Yes	–
	investigating reports of unethical practices.
3.2	Establish a policy concerning diversity and disclose the policy or summary of	Yes	–
	that policy. The policy should include requirements for the Board to establish
	measurable objectives for achieving gender diversity for the Board to assess
	annually both the objectives and progress in achieving them.
3.3	Disclose in each annual report the measurable objectives for achieving gender	Yes	–
	diversity set by the Board in accordance with the diversity policy and progress
	towards achieving them.
3.4	Disclose in each annual report the proportion of women employees in the	Yes	Page 32
	whole organisation, women in senior executive positions and women on
	the Board.
3.5	Provide the information in the Guide to reporting on Principle 3.	Yes	–
4	Safeguard integrity in financial reporting
4.1	The Board should establish an audit committee.	Yes	–
4.2	The audit committee should be structured so that it:
	• consists only of Non-Executive Directors;	Yes	–
	• consists of a majority of independent Directors;	Yes	–
	• is not chaired by the Chair of the Board; and	No	Page 30
	• has at least three members.	Yes	–
4.3	The Audit Committee should have a formal Charter.	Yes	–
4.4	Provide the information in the Guide to reporting on Principle 4.	Yes	–

FSA GROUP LIMITED ANNUAL REPORT 2013 25

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle		Compliance
Number	Best Practice Recommendation	(Yes/No)	Comments
5	Make timely and balanced disclosures
5.1	Establish written policies designed to ensure compliance with ASX Listing Rule	Yes	–
	disclosure requirements and to ensure accountability at a senior executive level
	for that compliance and disclose those policies or a summary of those policies.
5.2	Provide the information in the Guide to reporting on Principle 6.	Yes	–
6	Respect the rights of shareholders
6.1	Design a communication policy for promoting effective communication with	Yes	–
	shareholders and encouraging their participation at general meetings and
	disclose their policy or a summary of that policy.
6.2	Provide the information in the Guide to reporting on Principle 6.	Yes	–
7	Recognise and manage risk
7.1	Establish policies for the oversight and management of material business risks	Yes	–
	and disclose a summary of those policies.
7.2	The Board should require management to design and implement a risk	Yes	–
	management and internal control system to manage the Company’s material
	business risks and report to it on whether those risks are being managed
	effectively. The Board should disclose that management has reported to it as to
	the effectiveness of the Company’s management of its material business risks.
7.3	The Board should disclose whether it has received assurance from the	Yes	–
	Managing Director (or equivalent) and the Chief Financial Off cer (or equivalent)
	that the declaration provided in accordance with section 295A of the
	Corporations Act is founded on a sound system of risk management and
	internal control and that the system is operating effectively in all material
	respects in relation to f nancial reporting risks.
7.4	Provide the information in the Guide to reporting on Principle 7.	Yes	–
8	Remunerate fairly and responsibly
8.1	The Board should establish a remuneration committee.	Yes	–
8.2	The remuneration committee should be structured so that it:
	• consists of a majority of independent Directors;	Yes	–
	• is chaired by an independent Chair; and	Yes	–
	• has at least three members.	Yes	–
8.3	Clearly distinguish the structure of Non-Executive Directors’ remuneration from	Yes	–
	that of Executive Directors and Senior Executive.
8.4	Provide the information in the Guide to reporting on Principle 8.	Yes	–

Set out below is commentary on the practical application of each of the ASX Principles noted above.

Principle 1: Lay solid foundations for management and oversight

The Directors are responsible to the shareholders for promoting and managing the performance of the Company in both the short and longer term. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Company is properly managed. The functions, powers and responsibilities of the Board are governed by the Corporations Act 2001 and general law.

The Board has established the functions reserved for the Board and those delegated to Executive Directors and Senior Executive and disclosure of those functions are included in the Corporate Governance Charter which can be found on the Company’s website.

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle 2: Structure the Board to add value

The Board operates in accordance with the broad principles set out in the Corporate Governance Charter which includes:

to aim for, so far as is practicable given the size of the Company, a majority of the Board being independent directors;
to aim for, so far as is practicable given the size of the Company, the appointment of a chairperson who is an independent director;
to aim for, so far as is practicable given the size of the Company, a chairperson who is not the Managing Director;
to aim for, so far as is practicable given the size of the Company, a board comprising of members with diverse backgrounds;
to have at least three directors; and
The Non-Executive Directors meet from time to time without the Executive Directors present.

Directors’ independence

In assessing the independence of directors, the Company has regard to Principle 2 of the Corporate Governance Principles and Recommendations and regards an independent director as a Non-Executive director (that is, not a member of management) who:

is not a substantial shareholder of the Company or an offi cer of, or otherwise associated directly with, a substantial shareholder of the Company;
within the last three years has not been employed in an executive capacity by the Company or another Company member, or been a director after ceasing to hold any such employment;
within the last three years has not been a principal of a material professional advisor or a material consultant to the Company or another Company member, or an employee materially associated with the service provided;
is not a material supplier or customer of the Company or other group member, or an offi cer of or otherwise associated directly or indirectly with a material supplier or customer;
has no material contractual relationship with the Company or another group member other than as a director of the Company;
has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the directors’ ability to act in the best interests of the Company; and
is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the directors’ ability to act in the best interests of the Company.

The Board regularly assesses whether each Non-Executive Director is independent.

Board members

The names, skills and experience of the Directors in offi ce at the date of this Statement, and the period of offi ce of each Director, are set out in the Directors’ Report. At the date of signing the Directors’ Report, the Board comprised two Executive Directors and three Non-Executive Directors (including the Chairman). The three Non-Executive Directors have no relationships adversely affecting independence and so are deemed independent under the principles set out above.

Mr Timothy Odillo Maher, an Executive Director, is a substantial shareholder of the Company and accordingly he is not considered to be independent of the Company based on the ASX Principles. Mr Odillo Maher has a long association with FSA Group and the Board considers that it is in the best interests of all shareholders to have a Director with Mr Odillo Maher’s industry and business expertise and Company history as a member of the Board.

Ms Deborah Southon, an Executive Director, is a substantial shareholder of the Company and accordingly she is not considered to be independent of the Company based on the ASX Principles. Ms Southon has a long association with FSA Group and the Board considers that it is in the best interests of all shareholders to have a Director with Ms Southon’s industry and business expertise and Company history as a member of the Board.

Term of office

The Company’s Constitution requires that one third (or the nearest number thereto but not less than one third) of the Directors, other than the Managing Director, must retire from offi ce at each Annual General Meeting. Director/s retiring by rotation are eligible for re-election. The Company’s Constitution does not provide exclusions from re-election by rotation for the Executive Directors.

FSA GROUP LIMITED ANNUAL REPORT 2013 27

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle 2: Structure the Board to add value cont.

The Chairperson

The Chairperson is responsible for leadership of the Board, for effi cient organisation and conduct of the Board’s function and the briefi ng of all Directors in relation to issues arising at Board meetings. The Chairperson is also responsible for shareholder communication and arranging Board performance evaluation.

Joint Executive Directors

Joint Executive Directors are responsible for running the affairs of the Company under delegated authority from the Board and to implement the policies and strategies set by the Board. In carrying out these responsibilities, the Joint Executive Directors must report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company’s fi nancial position and operating results.

Nomination Committee

The Company has not established a Nominations Committee and the Board currently performs the functions of this Committee, and in doing so, observes the Nominations Committee Charter which is incorporated into the Corporate Governance Charter. The Directors in deciding not to have a separate Nominations Committee concluded that the Company was not of a size nor are its affairs of such complexity as to justify the formation of this Committee.

Board selection process

The Board, acting in the capacity of the Nominations Committee, and observing the Nominations Committee Charter contained in the Corporate Governance Charter properly assesses prospective Directors. In doing so it ensures there are complementary board skills and experience in place, and where necessary, engages consultants to assist in this process.

The Board seeks to have a balanced diversity in Board members and currently has two female Board members out of a Board comprising fi ve members.

Induction and education

The induction provided to new Directors enables them to actively participate in Board decision-making as soon as possible. It also ensures that they have a full understanding of the Company’s fi nancial position, strategies, operations and risk management policies.

It also explains the respective rights, duties, responsibilities and roles of the Board.

Directors are encouraged to participate in continuing education so as to maintain and update their skills.

Company Secretary

The Company Secretary’s appointment is determined by the Board, and is accountable to the Board, through the Chairman, on all governance matters.

Commitment

Details of the attendance of Directors at Board and committees of the Board in the year ended 30 June 2013 are disclosed on page 22 of the annual report. Non-Executive Directors are expected to spend at least 20 days a year preparing for and attending Board and Committee meetings and associated Board activities.

The commitments of Non-Executive Directors are considered by the Board prior to the Director’s appointment and are reviewed each year as part of the annual performance assessment.

Prior to appointment or being submitted for re-election, each Non-Executive Director is required to specifi cally acknowledge that they have and will continue to have the time available to discharge their responsibilities to the Company.

Independent professional advice

Directors have the right, in connection with their duties and responsibilities, to seek independent professional advice at the Company’s expense. Prior approval of the Chairman is required, but this will not be unreasonably withheld. The advice obtained must be made available to all Board members.

Board performance

The Board undertakes a regular self-assessment of the performance of the Board as a whole (including its Committees and governance processes) and as part of this process considers Board renewal as and when appropriate.

Performance of individual Directors is assessed against a range of criteria. This review includes assessing the ability of the Director to consistently create shareholder value, contribute to the development of strategies, participate in risk identifi cation, mentoring senior management, consider the views of other Directors and members of management and key third party stakeholders. The performance assessment also considers the ability for the Director to discharge his duties and obligations to the Company.

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle 2: Structure the Board to add value cont.

Board Committees

The Board has established an Audit & Risk Management Committee and a Remuneration Committee to assist in the execution of its duties and to allow detailed consideration of complex issues. Both committees comprise only Non-Executive Directors.

Each Committee has its own Charter which sets out its role and responsibilities, composition, structure, membership requirements and the manner in which the committee is to operate. Charters are reviewed on an annual basis. All matters determined by the committees are submitted to the Board as recommendations for Board consideration. Minutes of committee meetings are tabled at the subsequent Board meeting.

Principle 3: Promote ethical and responsible decision-making

Code of Conduct

A Code of Conduct has been determined and is set out in the Corporate Governance Charter. The Board, management and employees of the Company are encouraged to comply when dealing with each other, shareholders, and the broader community, and covers the following areas:

Compliance required with legal obligations, responsibilities to shareholders and the fi nancial community generally;
Responsibilities to clients, customers and consumers;
Employment practices which ensures that the Company will employ the best available staff, both male and female, from a diverse background, with skills required to carry out their roles;
The Company will ensure that diversity objectives are adopted at all levels of the Company;
The Company will ensure a safe work place and maintain proper occupational health and safety practices commensurate with the nature of the Company’s business and activities;
Responsibility to the community;
Responsibility to the individual; and
Obligations relative to fair trading and dealing.

Gender diversity

A gender diversity policy has also been adopted and is included as a separate policy together with the Corporate Governance Charter on the Company’s website.

The Board continues to consider suitable diversity targets to work towards achieving greater diversity at all levels of the workforce. The targets will then be assessed by the Board on an annual basis.

Data which details the proportion of women employees in the Company, women in senior executive positions and women on the Board is contained at page 32 of the annual report.

Conflicts of interest

The Board, management and employees must not involve themselves in situations where there is a real or apparent confl ict of interest between them as individuals and the interest of the Company (excluding those matters which may be subject to legal professional privilege). Where a real or apparent confl ict of interest arises the matter should be brought to the attention of the Chairperson in the case of a board member or the Managing Director (if any), the Managing Director in the case of a member of Management and a supervisor in the case of an employee, so that it may be considered and dealt with in an appropriate manner for all concerned.

Compliance with the code

Any breach of compliance with this code is to be reported directly to the Managing Director or Chairperson, as appropriate.

Periodic review of code

The Company will monitor compliance with the code periodically by liaising with the Board, Management and staff especially in relation to any areas of diffi culty which arise from the code and any other ideas or suggestions for improvement of the code. Suggestions for improvements or amendments to the code can be made at any time.

Code of conduct for employees (including contractors)

The Company shall ensure that the above principles are implemented and adopted by employees and contractors of the Company.

FSA GROUP LIMITED ANNUAL REPORT 2013 29

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle 3: Promote ethical and responsible decision-making cont.

Trading in Company securities by Directors, senior management and employees

The Company issued a Securities Trading Policy with effect from 1 January 2011 which regulates dealings by Directors, senior management and employees in shares, options and other securities issued by the Company.

The Securities Trading Policy provides that trading is prohibited in the period from 1 January and 1 July each year until the fi nancial results are released to the Australian Securities Exchange in or around the third week of February and August respectively with such periods coinciding with the release of the half year and full year fi nancial results. A copy of this policy is available on the Company’s website.

Principle 4: Safeguard integrity in financial reporting

Audit & Risk Management Committee

The Board has an Audit & Risk Management Committee to advise on the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Company. The Committee consists of the following independent Non-Executive Directors:

Mr Sam Doumany (Committee Chairman);
Ms Sally Herman; and
Mr Stan Kalinko.

When Mr Doumany was appointed as Chairman of the Audit & Risk Management Committee in May 2011, the Board acknowledged that this appointment was contrary to the ASX Principles of good corporate governance which provides that the Chairman of the Company should not also be the Chairman of the Audit & Risk Management Committee. However the Board noted that the appointment was transitionary in nature and the situation will be remedied after the reporting date.

Ms Sally Herman, was appointed a Director on 24 January 2011, and from this date became a member of the Audit & Risk Management Committee.

Details of members’ qualifi cations and their attendance at Audit & Risk Management Committee meetings are set out in the Directors’ Report on pages 13, 14, 15 and 22, respectively.

The Committee’s primary audit function is set out in the Corporate Governance Charter, and which is included on the Company’s website.

External Auditor

The Company and Audit & Risk Management Committee policy is to appoint an external auditor who clearly demonstrates quality and independence. The performance of the external auditor is reviewed annually. BDO East Coast Partnership was appointed as the external auditor in 2003 and it is their policy to rotate audit engagement partners on listed companies at least every fi ve years. An analysis of fees paid to the external auditor, including a break-down of fees for non-audit services, is provided in the Directors’ Report and in the notes to the fi nancial statements. The external auditor provides a declaration of their independence to the Audit & Risk Management Committee each time they report to the Company.

The external auditor is requested to attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Principle 5: Make timely and balanced disclosures

The Company has an established policy and procedure for timely disclosure of material information concerning the Company. This includes internal reporting procedures to ensure that any required market announcements are reported to the Company Secretary in a timely manner.

The Company Secretary has been nominated as the person responsible for communication with the ASX.

All information disclosed to the ASX is posted on the Company’s corporate website as soon as it is disclosed to the ASX. When analysts are briefed following half year and full year results announcements, the material used in the presentations is released to the ASX prior to the commencement of the briefi ng. This information is also posted on the Company’s corporate website.

The Company is committed to ensuring that all stakeholders and the market are provided with relevant and accurate information regarding its activities in a timely manner.

A copy of the disclosure policy is incorporated in the Company’s corporate website.

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle 6: Respect the rights of shareholders

The Company aims to keep shareholders informed of the Company’s performance and all major developments in an ongoing manner. Information is communicated to shareholders through:

fi nancial reports (including the full year fi nancial report, and the half-year fi nancial report) all of which are published on the Company’s corporate website and for annual reports are distributed to shareholders where nominated;
the Annual General Meeting, and any other formally convened Company meetings; and
all other information released to the ASX is posted to the Company’s corporate website.

The Company’s corporate website maintains, at a minimum, information about the last three years’ press releases or announcements.

A copy of the Shareholder Communications Policy is contained in the Corporate Governance Charter and is available on the Company’s corporate website.

Principle 7: Recognise and manage risk

The Board, through the Audit & Risk Management Committee, is responsible for ensuring the adequacy of the Company’s risk management and compliance framework and system of internal controls and for regularly reviewing its effectiveness.

Considerable importance is placed on maintaining a strong control environment. There is an organisation structure with clearly drawn lines of accountability and delegation of authority. The Board actively promotes a culture of quality and integrity.

The Company has implemented a risk management system based on ASX Principles and the Audit & Risk Management Committee’s additional function is to assist the Board in discharging its responsibility to exercise due care, diligence and skill in relation to the Company by:

ensuring the development of an appropriate risk management policy framework that will provide guidance to Management in implementing appropriate risk management practices throughout the Company’s operations, practices and systems;
defi ning and periodically reviewing risk management as it applies to the Company and clearly identify all stakeholders;
ensuring the Committee clearly communicates the Company’s risk management philosophy, policies and strategies to Directors, Management, employees, contractors and appropriate stakeholders;
ensuring that Directors and Management establish a risk aware culture which refl ects the Company’s risk policies and philosophies;
reviewing methods of identifying broad areas of risk and setting parameters or guidelines for business risk reviews;
making informed decisions regarding business risk management, internal control systems, business policies and practices and disclosures; and
considering capital raising, treasury and market trading activities with particular emphasis on risk treatment strategies, products and levels of authorities.

The Executive Directors are responsible for identifying, evaluating and monitoring risk in accordance with the risk management framework and are responsible for the accuracy and validity of risk information reported to the Board and also for ensuring clear communication to the Board on risk throughout the Company.

In particular, at the Board and Executive Directors’ strategy planning sessions, an evaluation is undertaken to identify key business and fi nancial risks which could prevent the Company from achieving its objectives.

Additionally, a formal risk assessment process is part of any major business acquisitions, major capital expenditures or signifi cant business initiatives.

Certification of financial reports

The Managing Director and/or Joint Executive Directors together with the Chief Financial Offi cer shall be required to state in writing to the Board that in accordance with section 295A of the Corporations Act 2001 and the relevant assurances required under recommendation 7.3 of the ASX Principles that to the best of their knowledge and belief:

the statements made in relation to the fi nancial integrity of the fi nancial reports are founded on a sound system of risk management and internal compliance and control;
the system of risk management in operation at 30 June 2013 implements the policies adopted and delegated by the Board and was operating effectively; and
the systems relating to fi nancial reporting were operating effectively in all material respects.

FSA GROUP LIMITED ANNUAL REPORT 2013 31

cont. Corporate Governance Statement

for the year ended 30 June 2013

Principle 8: Remunerate fairly and responsibly

Remuneration Committee

The Remuneration Committee which operates in accordance with the Corporate Governance Charter, is responsible for the review and recommendation to the Board on the following matters:

the Company’s remuneration, recruitment, retention and termination policies and procedures for senior executives;
remuneration framework for Directors (in consultation with external consultants when appropriate); and
remuneration by gender.

The Committee comprises the following independent Non-Executive Directors:

Ms Sally Herman (Committee Chair);
Mr Sam Doumany; and
Mr Stan Kalinko.

The performance of senior management is reviewed by the Executive Directors, and in accordance with guidelines issued by the Remuneration Committee with the review having commenced in June 2013.

Details of Directors’ attendance at Remuneration Committee meetings are set out in the Directors’ Report on page 22.

Structure of remuneration

Details of the nature and amount of each element of remuneration for Executive Directors and senior management of the Company are set out in the “Remuneration Report” section of the Directors’ Report.

Fees and payments to Non-Executive Directors refl ect the demands which are made on, and the responsibilities of, the Directors. Fees and payments are reviewed annually by the Remuneration Committee. Non-Executive Director remuneration takes the form of a set fee plus superannuation entitlements and where applicable includes an allowance for Board Committees. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting. The maximum amount which has been approved by the Company’s shareholders for payment to Non-Executive Directors is $500,000. Fees for Non-Executive Directors are not linked to the performance of the Company.

Diversity

The Board is committed to having an appropriate blend of diversity on the Board and in the Group’s senior executive and senior management. The Board has established a policy regarding gender, age, ethnic and cultural diversity, details of the policy are available on the Company’s website.

The key elements of the diversity policy are to work towards:

increased gender diversity in the Board and senior executive and senior management positions; and
an annual assessment by the Board of performance against the objectives.

30 June	2013	30 June	2012
Female (%)	Male (%)	Female (%)	Male (%)
Non-executive directors 33	67	33	67
Key Management Personnel 67	33	67	33
Senior management 20	80	20	80
Group 52	48	48	52

Statement of Profit or Loss and Other Comprehensive Income

for the year ended 30 June 2013

for the year ended 30 June 2013
Notes	Consolidated Entity 2013 $ 2012 $
Revenue and other income Fees from services 2	47,046,226 44,929,578
Finance income 2 Finance expense 2	31,637,246 31,679,103 (14,260,434) (16,863,420)
Net f nance income 2 Other losses 2	17,376,812 14,815,683 (3,547) (780,118)
Total revenue and other income net of finance expense and other losses	64,419,491 58,965,143
Marketing expenses Administrative expenses Operating expenses	(6,729,010) (6,342,263) (12,677,972) (13,327,059) (27,250,389) (24,385,960)
Expenses from continuing activities 3 Share of prof ts of an associate using the equity accounting method	(46,657,371) (44,055,282) 1,354 4,599
Profit before income tax Income tax expense 5(a)	17,763,474 14,914,460 (5,523,726) (4,208,066)
Profit after income tax	12,239,748 10,706,394
Other comprehensive income, net of tax Share of other comprehensive income of associates	– – – –
Total comprehensive income for the year	12,239,748 10,706,394
Total prof t for the year and total comprehensive income for the year attributable to: Non-controlling interests Members of the parent	1,480,652 2,178,503 10,759,096 8,527,891
	12,239,748 10,706,394
Earnings per share Basic earnings per share (cents per share) 7 Diluted earnings per share (cents per share) 7	8.51 6.27 8.51 6.27

The Statement of Profi t or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Financial Statements.

FSA GROUP LIMITED ANNUAL REPORT 2013 33

Statement of Financial Position

as at 30 June 2013

Notes	Consolidated Entity 2013 $ 2012 $
Current Assets Cash and cash equivalents 8 Trade and other receivables 9 Other assets 10	11,017,074 4,653,570 28,953,886 26,017,092 537,302 954,137
Total Current Assets	40,508,262 31,624,799
Non-Current Assets Trade and other receivables 9 Investments in associates 28 Investment 11 Plant and equipment 14 Deferred tax assets 5c Intangible assets 15	33,060,421 30,894,720 – 68,574 60 – 448,171 408,365 523,987 370,777 3,418,219 3,258,280
Total Non-Current Assets	37,450,858 35,000,716
Financing Assets Factoring cash and cash equivalents 8 Mortgage cash and cash equivalents 8 Factoring assets 12 Mortgage assets f nanced by non-recourse f nancing liabilities 12	2,921,272 1,845,171 9,154,366 12,021,320 19,612,162 24,860,771 224,509,977 237,765,162
Total Financing Assets	256,197,777 276,492,424
Total Assets	334,156,897 343,117,939
Current Liabilities Trade and other payables 16 Current tax liabilities Borrowings 17 Provisions 18	11,510,609 9,696,952 3,041,916 2,204,024 3,660,909 4,465,234 1,052,019 884,171
Total Current Liabilities	19,265,453 17,250,381
Non-Current Liabilities Borrowings 17 Provisions 18 Deferred tax liabilities 5d Other payables	– 1,918,000 460,212 322,681 13,291,583 12,820,209 2,425,000 –
Total Non-Current Liabilities	16,176,795 15,060,890
Financing Liabilities Borrowings to f nance factoring assets 17 Non-recourse borrowings to f nance mortgage assets 17	22,265,899 25,290,469 217,689,570 227,985,880
Total Financing Liabilities	239,955,469 253,276,349
Total Liabilities	275,397,717 285,587,620
Net Assets	58,759,180 57,530,319
Equity Share capital 19 Reserves 20 Retained earnings	6,657,475 9,275,913 (2,509,387) 104,652 52,117,970 45,542,721
Total equity attributable to members of the parent Non-controlling interest	56,266,058 54,923,286 2,493,122 2,607,033
Total Equity	58,759,180 57,530,319

The Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.

Statement of Changes in Equity

for the year ended 30 June 2013

		Share			Non-
	Share	Option	Other	Retained	Controlling
	Capital	Reserve	Reserve	Earnings	Interest	Total
	$	$	$	$	$	$
Balance at 1 July 2011	11,692,255	745,831	–	39,285,112	2,841,265	54,564,463
Prof t after income tax for the year	–	–	–	8,527,891	2,178,503	10,706,394
Other comprehensive income
for the year, net of tax	–	–	–	–	–	–
Total Comprehensive
Income for the year	–	–	–	8,527,891	2,178,503	10,706,394
Transactions with owners
in their capacity as owners:
Share buy-back	(2,916,342)	–	–	–	–	(2,916,342)
Share-based payment expense	–	15,450	–	–	–	15,450
Acquisition of
non-controlling interest	500,000	–	(656,629)	–	(743,371)	(900,000)
Dividend paid	–	–	–	(2,270,282)	–	(2,270,282)
Distributions to
non-controlling Interests Balance at 30 June 2012 Prof t after income tax for the year Other comprehensive income for the year, net of tax Total Comprehensive Income for the year Transactions with owners in their capacity as owners: Share buy-back Share-based payment expense Acquisition of non-controlling interest Dividend paid Distributions to non-controlling interests Balance at 30 June 2013	– 9,275,913 – – – (3,232,688) – 614,250 – – 6,657,475	– 761,281 – – – – 8,093 – – – 769,374	– (656,629) – – – – – (2,622,132) – – (3,278,761)	– 45,542,721 10,759,096 – 10,759,096 – – – (4,183,847) – 52,117,970	(1,669,364) 2,607,033 1,480,652 – 1,480,652 – – (747,869) – (846,694) 2,493,122	(1,669,364) 57,530,319 12,239,748 – 12,239,748 (3,232,688) 8,093 (2,755,751) (4,183,847) (846,694) 58,759,180

The Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.

FSA GROUP LIMITED ANNUAL REPORT 2013 35

Statement of Cash Flows

for the year ended 30 June 2013

Notes	Consolidated Entity 2013 $ 2012 $
	Inf ows/ (Outf ows) Inf ows/ (Outf ows)
Cash flows from operating activities Receipts from customers and debtors Payments to suppliers and employees Finance income received Finance cost paid Net cash payments for institutional creditor distributions Income tax paid	47,027,294 40,026,515 (46,174,063) (43,063,303) 32,457,095 31,776,729 (14,788,561) (17,088,259) (193,817) (887,146) (4,362,372) (1,373,814)
Net cash inflow from operating activities 21	13,965,576 9,390,722
Cash flows from investing activities Acquisition of property, plant and equipment 14 Acquisition of intangibles 15 Acquisition of subsidiary (net of cash acquired) 13 Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment 28 Net decrease/(increase) in mortgage f nance assets Net decrease in bridging f nance assets Net decrease/(increase) in factoring f nance assets Net increase in other loans	(271,546) (208,745) (268,819) (61,185) (330,750) (900,000) – 301,356 68,514 – 10,559,751 (9,413,302) 139,854 412,062 4,690,846 (12,837,300) (140,000) (882,000)
Net cash inflow/(outflow) from investing activities	14,447,850 (23,589,114)
Cash flows from financing activities Net (repayment)/proceeds from borrowings Payment of distributions to non-controlling interests Share buyback Dividends paid to company’s shareholders	(15,515,079) 21,953,861 (909,161) (856,258) (3,232,688) (2,916,342) (4,183,847) (2,270,282)
Net cash (outflow)/inflow from financing activities	(23,840,775) 15,910,979
Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the f nancial year	4,572,651 1,712,587 18,520,061 16,807,474
Cash and cash equivalents at the end of the financial year 8	23,092,712 18,520,061

The Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.

Notes to the Financial Statements

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies

FSA Group Limited and its controlled entities (“Group” or “Consolidated Entity”) is a for-profi t listed public company, incorporated and domiciled in Australia.

The fi nancial statements are general purpose fi nancial statements that have been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 , as appropriate for for-profi t oriented entities. The consolidated fi nancial statements of the Group comply with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

The following is a summary of the material accounting policies adopted in the preparation of the fi nancial statements. The accounting policies have been consistently applied, unless otherwise stated.

The fi nancial statements were authorised for issue by the Directors on 30 August 2013.

Basis of preparation

The fi nancial statements are presented in Australian dollars and rounded to the nearest dollar.

Reporting basis and conventions

The fi nancial statements are based on historical costs modifi ed by the revaluation of selected non-current assets, and fi nancial assets and fi nancial liabilities for which the fair value basis of accounting has been applied.

Principles of Consolidation

The consolidated fi nancial statements incorporate the assets and liabilities of all subsidiaries of FSA Group Limited (“Company” or “parent entity”) as at 30 June 2013 and the results of all subsidiaries for the year then ended. FSA Group Limited and its subsidiaries together are referred to in these fi nancial statements as the “Consolidated Entity”.

Subsidiaries are all those entities over which the Consolidated Entity has the power to govern the fi nancial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated Entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Consolidated Entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the “business combinations” accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profi t or loss and other comprehensive income, statement of fi nancial position and statement of changes in equity of the Consolidated Entity.

Income Tax

The charge for current income tax expense is based on the profi t for the year adjusted for any non-assessable or non-deductible items. It is calculated using the tax rates that have been enacted or are substantially enacted by the reporting date.

Deferred tax is accounted for using the “balance sheet” liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements. No deferred income tax is recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profi t or loss.

Deferred tax is calculated at the tax rates expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Profi t or Loss and Other Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profi ts will be available against which deductible temporary differences and unused tax losses can be utilised.

The amount of tax benefi ts brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity will derive suffi cient future assessable income to enable the benefi t to be realised and comply with the conditions of deductibility imposed by the law.

FSA GROUP LIMITED ANNUAL REPORT 2013 37

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

Tax consolidation

FSA Group Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax Consolidation Regime. In prior periods, 180 Group Pty Ltd and its wholly-owned Australian subsidiaries (controlled by FSA Group Limited) formed a tax consolidated group and entered tax sharing and tax funding arrangements. From 1 December 2012, 180 Group Pty Ltd became wholly-owned Australian subsidiary of FSA Group Limited, and therefore it joined the FSA Group Limited tax consolidation group.

As at 30 June 2013, as the head entity of the consolidated group and the controlled entities, FSA Group Limited continues to account for their own current and deferred tax amounts. The tax consolidated group has applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

The tax consolidated group has entered into a tax sharing agreement whereby each company in the group contributes to the income tax payable of the consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefi t of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

Financial instruments

Non-derivative financial instruments

Non-derivative fi nancial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

Non-derivative fi nancial instruments are recognised initially at fair value plus, for instruments not at fair value through profi t and loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition,

A fi nancial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised if the Group’s contractual rights to cashfl ows from the fi nancial assets expire or the Group transfers the fi nancial asset to another party without retaining control or substantially all the risks and rewards of the asset. Regular way purchases and sales of fi nancial assets are accounted for at trade date i.e. the date the Group commits itself to purchase or sell an asset. Financial liabilities are de-recognised if the Group’s obligations specifi ed in the contract expire, are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management and are included as a component of cash and cash equivalents for the purposes of the Statement of Cash Flows.

Ordinary share capital

Ordinary shares are classifi ed as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when declared during the fi nancial year and at the discretion of the Company.

Held-to-maturity investments

If the Group has the positive intent and ability to hold debt securities to maturity, then they are classifi ed as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

Available-for-sale financial assets

The Group’s investments in equity securities and certain debt securities are classifi ed as available-for-sale fi nancial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognised as a separate component of equity. When an investment is de-recognised, the cumulative gain or loss in equity is transferred to profi t or loss.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

Investments at fair value through profit or loss

An instrument is classifi ed as at fair value through profi t or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profi t or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profi t or loss when incurred. Financial instruments at fair value through profi t or loss are measured at fair value, and changes therein are recognised in profi t or loss.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with fi nancial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

Loans and Receivables

Loans and receivables are held at amortised cost. Loan assets held at amortised cost are non-derivative fi nancial instruments with fi xed or determinable payments that are not quoted in an active market.

Loans and Receivables comprise trade and other receivables and mortgage loans. Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Loans arise when a mortgage loan is originated in the Statement of Financial Position. These are accounted for at amortised cost using the effective interest method.

Property, plant and equipment

Property, plant and equipment are measured on the cost basis less accumulated depreciation and accumulated impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profi t or Loss and Other Comprehensive Income during the fi nancial year in which they are incurred.

Depreciation

Property, plant and equipment are depreciated on a straight-line basis over their useful lives to the Group commencing from the time the asset is held ready for use.

The useful lives used for each class of asset are:

Class of Asset	Useful life
Plant and equipment	2 to 5 years
Computers and off ce equipment	2 to 5 years
Furniture and f ttings	2 to 5 years
Motor vehicles	5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of Profi t or Loss and Other Comprehensive Income.

Leases

Leases of property plant and equipment where the Group, as lessee, has substantially all the risks and benefi ts incidental to the ownership of the asset are classifi ed as fi nance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the year.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

Lease payments for operating leases, where substantially all the risks and benefi ts remain with the lessor are charged to The Statement of Profi t or Loss and Other Comprehensive Income on a straight line basis over the period of the lease.

FSA GROUP LIMITED ANNUAL REPORT 2013 39

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

Impairment of assets

At each reporting date, the Group reviews the carrying values of its assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Profi t or Loss and other Comprehensive Income.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Employee benefits

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefi ts, and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave

The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible,

Equity settled compensation

Share based compensation benefi ts are provided to employees via the FSA Group Limited Employee Share Option Plan (“ESOP”). Information relating to the ESOP is set out in Note 20.

The fair value of options granted under the ESOP is recognised as an employee benefi t expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to refl ect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profi tability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the Group revises its estimate of the number of options that are expected to become exercisable. The employee benefi ts expense recognised each period takes into account the most recent estimate.

Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital.

Under the employee share scheme, shares issued to employees for no cash consideration vest immediately on grant date. On this date, the market value of the shares issued is recognised as an employee benefi ts expense with a corresponding increase in equity.

Bonuses and profit sharing arrangements

A provision is recognised for the amount expected to be paid under short term cash bonus or profi t-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outfl ow of economic benefi ts will result and that outfl ow can be reliably measured.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

Revenue recognition

Revenue is recognised when it is probable that the economic benefi ts will fl ow to the entity and the revenue can be reliably measured.

The following specifi c recognition criteria must also be met before revenue is recognised:

Rendering of Services – Personal Insolvency

When the outcome of a contract to provide services under the Bankruptcy Act can be estimated reliably, revenue is recognised by reference to the right to be compensated for services and where the stage of completion of the service can be reliably estimated, specifi cally:

Debt agreement application fees

Upon the completion of preparing the debt agreement proposal for consideration by the creditors and the Insolvency and Trustee Service of Australia.

Debt agreement administration fees

Revenue from rendering of debt agreement administration services is recognised in profi t or loss in proportion to the stage of completion of the administration at the reporting date.

Trustee fees bankruptcy and personal insolvency agreements

Trustee fees are recognised as work in progress and time billed. Fee income is only recognised to the extent fees have been approved by creditors or where relevant in accordance with statutory provisions.

Refinance fees

When the outcome of a contract to provide services can be estimated reliably, either upon receipt of upfront fees and subsequent trail commission, in the case of non-conforming lending, or in the case of conforming lending, trail commission revenue and receivables are recognised at fair-value being the future trail commission receivable discounted to their net present value.

Interest

Interest income is recognised in The Statement of Profi t or Loss and Other Comprehensive Income using the effective interest method. The effective interest method is the method of calculating the amortised cost of a fi nancial asset or fi nancial liability and allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts the estimated future cash receipts or payments over the expected life of the fi nancial instrument to the net carrying amount of the fi nancial asset or fi nancial liability (which includes, where applicable, the unamortised balance of transaction costs).

Finance fee income

Finance fee income is recognised in either of two ways, either upfront where the fee represents a recovery of costs or a charge for services provided to customers (e.g. loan application fees, risk assessment fees and factoring servicing fees) or, where income relates to loan origination, income is deferred and amortised over the effective life of the loan using the effective interest method. Deferred establishment fees are establishment fees which the borrower is contracted to pay but payment is deferred until such time as they repay the outstanding loan balance. These fees are waived if the loan is repaid after the qualifying period. These fees are recognised over the current average life of the loan, where this is less than the qualifying period.

Goods & Services Tax (GST)

Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred

Where not recoverable, GST is recognised as part of the acquisition of the asset or as part of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.

Cash fl ows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of fi nancing and investing activities, which are disclosed as operating cash fl ows.

Comparative figures

Where required by Australian Accounting Standards, comparative fi gures have been adjusted to conform to changes in presentation for the current fi nancial year.

FSA GROUP LIMITED ANNUAL REPORT 2013 41

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

Investments in subsidiaries

Investments are brought to account on the cost basis in the parent entity’s fi nancial statements and using the acquisition method, after initially being recognised at cost in the Consolidated Entity’s fi nancial statements. The carrying amount of investments is reviewed annually by Directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed from the shares’ current market value or the underlying net assets in the particular entities. The expected net cash fl ow from investments has not been discounted to their present value in determining the recoverable amounts, except where stated.

Intangibles

Goodwill on consolidation has an indefi nite life, and is initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of a subsidiary include the carrying amount of goodwill relating to the subsidiary sold.

Software is measured on the cost basis less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its useful life of 2 years.

Trade and other payables

Trade payables and other amounts are carried at amortised cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.

Monies received (and not yet distributed pursuant to the debt agreements under the pre 1 July 2007 regime) on behalf of institutional creditors are recorded as current liabilities.

Investments in associates and jointly controlled entities (equity accounted investees)

Investments in associates and jointly controlled entities are accounted for under the equity method and are initially recognised at cost. The cost of investment includes transaction costs.

Associates are those entities in which the Group has signifi cant infl uence, but not control, over the fi nancial and operating policies. Associates are accounted for using the equity method (equity accounted investees). The consolidated fi nancial statements include the Group’s share of the income and expenses of the equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date the signifi cant infl uence commences until the date where signifi cant infl uence ceases. When the Group’s share of the loss extends its interest in the equity accounted investee, the carrying amount of that interest (including any long term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. Where fair value cannot be reliably measured, investments are carried at initial cost.

Finance income and costs

Finance income is measured and recognised as per Revenue recognition above.

Finance costs comprise interest expense on borrowings, unwinding of discount on provisions, dividends on preference shares classifi ed as liabilities, foreign currency losses, changes in fair value of fi nancial assets at fair value through profi t or loss, impairment losses recognised on fi nancial assets and losses on hedging instruments that are recognised in profi t or loss. All fi nance costs are recognised in profi t or loss using the effective interest method.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting profi t or loss attributable to the ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

Operating segments

An operating segment is a component of a group that engages in business activities from which it may earn revenue and incur expenses (including revenues and expenses relating to transactions with other components of the same group); whose operating results are regularly reviewed by the group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and for which discrete fi nancial information is available.

Operating segments are distinguished and presented based on the differences in providing services and providing fi nance products.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

Financial guarantee contracts

Financial guarantee contracts are recognised as a fi nancial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate.

Removal of parent entity financial statements

The Group has applied amendments to the Corporations Act 2001 that remove the requirement for the Group to lodge parent entity fi nancial statements. Parent entity fi nancial statements have been replaced by the specifi c parent entity disclosures in Note 30.

Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions about future events. The key estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities in the next annual reporting period are:

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated (refer to Note 15 in the fi nancial statements).

Impairment of receivables

Debt agreement receivables

Impairment of debt agreement receivables is assessed on a collective basis based on historical collections data. Considering the length of time it takes to collect debts in administration and the inherent uncertainty over the collection of these amounts this method represents management’s best estimate of the recoverability of debtors in the debt agreement business. Impairment is provided for and recorded in a separate allowance account. Amounts are written off against this account as bad when there is no practical likelihood of recovery (e.g. when debt agreements are terminated by creditors).

The evaluation process is subject to a series of estimates and judgments. The frequency of default, loss history, current and future economic conditions are considered.

Changes in these estimates could have a direct impact on the level of provision determined (refer to Note 9 in the fi nancial statements).

Other loans and advances

For other loans and advances individually assessed provisions are raised where there is objective evidence of impairment and full recovery of the principal is considered doubtful. Provisions are established after considering the estimates of the fair value of the collateral taken and recorded in a separate allowance account. Amounts are written off against the account as bad after management establishes amounts which will not be recovered from available evidence.

For mortgage receivables, the assessment process includes reviewing of the loan to value ratio, location of the property, current and future property market condition, also the economic conditions.

New standards and interpretations issued not yet effective or adopted

Certain new accounting standards, amendments to standards and interpretations have been published that are not mandatory for the 30 June 2013 reporting period. The Consolidated Entity’s assessment of the impact of these new standards, amendments to standards and interpretations in the period of initial application is set out below.

(i) AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 and 2012-6 Amendments to Australian Accounting Standards arising from AASB 9

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2015 and completes phase I of the IASB’s project to replace IAS 39 (being the international equivalent to AASB 139 ‘Financial Instruments: Recognition and Measurement’). This standard introduces new classifi cation and measurement models for fi nancial assets, using a single approach to determine whether a fi nancial asset is measured at amortised cost or fair value. The accounting for fi nancial liabilities continues to be classifi ed and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. The Consolidated Entity will adopt this standard from 1 July 2015 but the impact of its adoption is yet to be assessed by the Consolidated Entity.

FSA GROUP LIMITED ANNUAL REPORT 2013 43

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 1. Summary of significant accounting policies cont.

(ii) AASB 10 Consolidated Financial Statements

This standard is applicable to annual reporting periods beginning on or after 1 January 2013. The standard has a new defi nition of ‘control’. Control exists when the reporting entity is exposed, or has the rights, to variable returns (e.g. dividends, remuneration, returns that are not available to other interest holders including losses) from its involvement with another entity and has the ability to affect those returns through its ‘power’ over that other entity. A reporting entity has power when it has rights (e.g. voting rights, potential voting rights, rights to appoint key management, decision making rights, kick out rights) that give it the current ability to direct the activities that signifi cantly affect the investee’s returns (e.g. operating policies, capital decisions, appointment of key management). The Consolidated Entity will not only have to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes. The adoption of this standard from 1 July 2013 have no or minimal impact on the accounting.

(iii) AASB 12 Disclosure of Interests in Other Entities

This standard is applicable to annual reporting periods beginning on or after 1 January 2013. It contains the entire disclosure requirement associated with other entities, being subsidiaries, associates and joint ventures. The disclosure requirements have been signifi cantly enhanced when compared to the disclosures previously located in AASB 127 ‘Consolidated and Separate Financial Statements’, AASB 128 ‘Investments in Associates’, AASB 131‘Interests in Joint Ventures’ and Interpretation 112 ‘Consolidation – Special Purpose Entities’. The adoption of this standard from 1 July 2013 has signifi cantly increased the amount of disclosures required to be given by the Consolidated Entity such as signifi cant judgements and assumptions made in determining whether it has a controlling or Non-controlling interest in another entity and the type of non-controlling interest and the nature and risks involved.

(iv) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The standard provides a single robust measurement framework, with clear measurement objectives, for measuring fair value using the ‘exit price’ and it provides guidance on measuring fair value when a market becomes less active. The ‘highest and best use’ approach would be used to measure assets whereas liabilities would be based on transfer value. As the standard does not introduce any new requirements for the use of fair value, its impact on adoption by the Consolidated Entity from 1 July 2013 should be minimal, although there will be increased disclosures where fair value is used.

(v) AASB 119 Employee Benefi ts (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011)

This revised standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendments eliminate the corridor approach for the deferral of gains and losses; streamlines the presentation of changes in assets and liabilities arising from defi ned benefi t plans, including requiring re-measurements to be presented in other comprehensive income; and enhances the disclosure requirements for defi ned benefi t plans. The amendments also changed the defi nition of short-term employee benefi ts, from ‘due to’ to ‘expected to’ be settled within 12 months. This will require annual leave that is not expected to be wholly settled within 12 months to be discounted allowing for expected salary levels in the future period when the leave is expected to be taken. The adoption of the revised standard from 1 July 2013 is expected to reduce the reported annual leave liability and increase disclosures of the Consolidated Entity.

(vi) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement

These amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoption not permitted. They amend AASB 124 ‘Related Party Disclosures’ by removing the disclosure requirements for individual key management personnel (‘KMP’). The adoption of these amendments from 1 July 2013 has removed the duplication of information relating to individual KMP in the notes to the fi nancial statements and the directors report. As the aggregate disclosures are still required by AASB 124 and during the transitional period the requirements may be included in the Corporations Act or other legislation, it is expected that the amendments will not have a material impact on the Consolidated Entity.

(vii) AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities [AASB 7 & AASB 132]

These amendments are applicable to annual reporting periods beginning on or after 1 January 2013. This Standard amends the required disclosures in AASB 7 to include information that will enable users of an entity’s fi nancial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised fi nancial assets and recognised fi nancial liabilities, on the entity’s fi nancial position. This Standard also amends AASB 132 to refer to the additional disclosures added to AASB 7 by this Standard. The Consolidated Entity will adopt this standard from 1 July 2013 but the impact of its adoption is yet to be assessed by the Consolidated Entity.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 2. Revenue and other income net of finance expense Fees from services – Personal insolvency – Ref nance broking and mortgage management – Corporate – Other services Total revenue Finance income – Interest income – mortgage assets – Finance fee income – mortgage assets – Finance income – factoring assets – Other interest income Finance expense – Interest expense – warehouse facilities – Interest expense – other lending facilities Net Finance income Other losses Loss on option valuation – fair value through prof t or loss Loss on disposal of plant and equipment	45,475,411 42,746,705 1,415,648 1,278,209 12,378 706,975 142,789 197,689
	47,046,226 44,929,578
	21,112,771 22,086,232 1,873,623 3,152,577 8,062,639 5,929,168 588,213 511,126
	31,637,246 31,679,103
	(12,704,955) (15,913,419) (1,555,479) (950,001)
	(14,260,434) (16,863,420)
	17,376,812 14,815,683
	– (600,420) (3,547) (179,698)
	(3,547) (780,118)

FSA GROUP LIMITED ANNUAL REPORT 2013 45

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 3. Profit for the year Expenses Expenses from continuing activities excluding f nance costs, classif ed by function: Marketing expenses Administrative expenses Operating expenses Prof t for the year from continuing operations has been arrived at after charging: Depreciation on plant and equipment Depreciation on investment properties Amortisation of software Impairment in value – trade receivables Reversal of impairment in value – trade receivables Net impairment Rental expense on operating lease – minimum lease payment Employee and contractor expenses Share-based payments expense Legal consulting – client services Note 4. Equity – Dividends Final dividend for the year ended 30 June 2012 of 1.55 cents (2011: 1.00 cents) per ordinary share Interim dividend for the year ended 30 June 2013 of 1.75 cents (2012: 0.65 cents) per ordinary share On 30 August 2013, the directors declared a fully franked f nal dividend for the year ended 30 June 2013 of 3.25 cents per ordinary share. Franking credits available at the reporting date based on a tax rate of 30% Franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date based on a tax rate of 30% Franking credits available for subsequent f nancial years based on a tax rate of 30%	6,729,010 6,342,263 12,677,972 13,327,059 27,250,389 24,385,960
	46,657,371 44,055,282
	228,192 201,876 – 7,549 108,880 120,738
	337,072 330,163
	10,710,973 10,332,181 (1,375,187) (637,659)
	9,335,786 9,694,522
	1,010,877 1,004,499 22,052,335 19,020,532 8,093 15,450 1,180,813 1,009,990
	1,982,615 1,382,538 2,201,232 887,744
	4,183,847 2,270,282
	7,318,729 4,342,638 2,861,179 1,151,135
	10,179,908 5,493,773

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 5. Income Tax (a) Income tax expense Current tax expense Deferred tax expense Over provision in a prior period Deferred income tax expense included in income tax expense comprises: Decrease in deferred tax assets Increase in deferred tax liabilities (b) Numerical reconciliation of income tax expense to prima facie tax payable Prof t before income tax Tax at the Australian tax rate of 30% (2012: 30%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Non-deductible expenses Non-assessable income Non-deductible employee costs Under/(over) provision in the prior year Income tax expense (c) Deferred tax assets Provisions Capital legal expenses Accrued expenditure Tax losses carried forward Other Deferred tax liability offset on tax consolidation Total deferred tax assets (d) Deferred tax liabilities Temporary difference on assessable income Deferred tax liability offset on tax consolidation Total deferred tax liabilities Note 6. Auditors’ Remuneration Amounts received or due and receivable by BDO East Coast Partnership: Audit and review of financial statements Taxation compliance services Taxation advice and consulting	5,095,632 2,169,032 318,164 2,039,144 109,930 (110)
	5,523,726 4,208,066
	544,169 599,614 (226,005) 1,439,530
	318,164 2,039,144
	17,763,474 14,914,460
	5,329,042 4,474,338 59,598 10,892 22,728 (281,689) 2,428 4,635
	5,413,796 4,208,176 109,930 (110)
	5,523,726 4,208,066
	1,240,186 1,034,775 28,481 79,907 72,104 120,050 4,489 8,380 502,448 305,136
	1,847,708 1,548,248 (1,323,721) (1,177,471)
	523,987 370,777
	14,615,304 13,997,680 (1,323,721) (1,177,471)
	13,291,583 12,820,209
	207,700 207,823 58,432 77,380 90,550 152,269
	356,682 437,472

FSA GROUP LIMITED ANNUAL REPORT 2013 47

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 7. Earnings Per Share (a) Reconciliation of earnings used to calculate basic and dilutive earnings per share Total comprehensive income attributable to members of the parent for the year ($) Basic earnings per share (cents) Diluted earnings per share (cents) (b) Weighted average number of ordinary shares outstanding during the year Weighted average number of ordinary shares outstanding during the year used in calculating basic and dilutive EPS (share options outstanding at the reporting date are not considered to be dilutive) Note 8. Cash and Cash Equivalents Current Cash on hand and at bank Assets financed by financing liabilities Mortgage cash on hand and at bank Factoring cash on hand and at bank Note 9. Trade and Other Receivables Current Trade receivables Provision for impairment Sundry receivables Non-current Trade receivables Provision for impairment Total The movement in the provision for impairment Opening balance Provision for impairment recognised Unused provision reversed Bad debts Closing balance	10,759,096 8,527,891 8.51 6.27 8.51 6.27 126,407,094 135,937,627 11,017,074 4,653,570 9,154,366 12,021,320 2,921,272 1,845,171
	23,092,712 18,520,061
	34,751,449 33,651,066 (6,001,649) (7,860,533)
	28,749,800 25,790,533 204,086 226,559
	28,953,886 26,017,092
	40,268,329 37,066,921 (7,207,908) (6,172,201)
	33,060,421 30,894,720
	62,014,307 56,911,812
	14,032,734 12,647,155 7,447,809 8,819,237 (1,398,333) (637,659) (6,872,653) (6,795,999)
	13,209,557 14,032,734

Some amounts have been written off as bad debts during the year, as incurred and were not provided for. These are included in the Statement of Profi t or Loss and Other Comprehensive Income. The additional provision amount in this reconciliation will therefore not agree to the impairment in value amount disclosed in Note 3.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 9. Trade and Other Receivables cont.

Ageing Analysis

			Consolidated Entity	Consolidated Entity
		2013			2012
	Gross	Allowance	Net	Gross	Allowance	Net
	$	$	$	$	$	$
Trade and other
receivables
Not past due	72,432,564	(12,085,420)	60,347,144	67,704,235	(12,176,949)	55,527,286
Past due 0-30 Days	160,851	(90,158)	70,693	111,227	(110,475)	752
Past due 31-60 Days	71,177	(39,525)	31,652	61,921	(41,356)	20,565
Past due 61-90 Days	52,832	(30,564)	22,268	57,644	(29,959)	27,685
Past 90 Days	2,506,440	(963,890)	1,542,550	3,009,519	(1,673,995)	1,335,524
Total	75,223,864	(13,209,557)	62,014,307	70,944,546	(14,032,734)	56,911,812

Debt agreement receivables

Debt agreement receivables are receipted on a pro rata basis, in parity with other parties to the debt agreement.

These debtors are assessed as being in arrears where they do not make their periodic payments as required by their debt agreements and where the terms of this payment have not been re-negotiated and approved by creditors to the debt agreement. This is monitored continuously by the Company’s internal collection department.

Impairment of debt agreement receivables is assessed on a collective (portfolio) basis based on historical collections data and loss incurred. Considering the length of time it takes to collect debts in administration and the inherent uncertainty over the collection of these amounts this method represents management’s best estimate of the recoverability of debtors in the debt agreement business. Amounts are written off against this account, when the Company has no realistic possibility of recovery.

Bridging finance receivables

The Company does not currently offer bridging fi nance products and is only active in pursuing recovery of this portfolio. Impairment of bridging fi nance receivables is assessed primarily by the equity in the underlying mortgage security (collateral), any fi xed and fl oating charges over the borrower’s business assets.

These debtors are assessed as being in arrears where they do not make their payment obligations as required by their fi nance contracts and where the terms of this payment have not been re-negotiated. This is monitored monthly by management.

At reporting date there are certain bridging fi nance receivables that were past due and are not impaired. Management has reviewed these receivables, their underlying mortgage security (collateral) and other information available, and have considered these to be recoverable. Of the $2,506,440 of receivables which are past 90 days in arrears, $674,182 represents bridging fi nance receivables which have underlying collateral and security as mentioned above and are not impaired.

Other trade and sundry receivables

Other trade and sundry receivables are generally on 14 to 30 day terms.

Impairment of other trade and sundry receivables is assessed on an individual basis with regard to the credit quality of the debtor, payment history and any other information available.

These debtors are assessed as being in arrears where they do not pay on their invoice terms and where the terms of this payment have not been re-negotiated. This is monitored monthly by management.

At reporting date there are certain other trade and sundry receivables that were past due and are not impaired.

Management has reviewed these receivables, their payment history and other information available, and have considered these to be recoverable.

FSA GROUP LIMITED ANNUAL REPORT 2013 49

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 10. Other Assets Current Prepayments Other Note 11. Investments Investments at cost Movements during year (Investments) Beginning of the year Additions Impairment in value	527,536 948,937 9,766 5,200
	537,302 954,137
	60 –
	– – 60 – – –
	60 –

On 9 April 2013, FSA Group Ltd, through its 100% owned subsidiary 180 Equity Partners Pty Ltd, exercised the option granted to it for 30% shareholding in Aircom Group Pty Ltd. The investment is recognised at cost of $60, which is approximate to its fair value.

Note 12. Financing Assets

(a) Mortgage assets

Non-securitised mortgage assets Provision for impairment Maturity analysis Amounts to be received in less than 1 year Amounts to be received in greater than 1 year The movement in the provision for impairment Opening balance Provision for impairment recognised Bad debts Closing balance	225,651,301 238,232,812 (1,141,324) (467,650)
	224,509,977 237,765,162
	3,794,183 3,470,855 221,857,118 234,761,957
	225,651,301 238,232,812 467,650 464,223 1,487,800 600,522 (814,126) (597,095)
	1,141,324 467,650

Impairment

An impairment loss is recognised if the total expected recoveries in regard to an individual loan do not exceed the mortgage balance. In the event that actual or expected sales proceeds do not exceed the mortgage loan balance, this difference and any realisation costs would equal the impairment loss. Total recoveries include expected or actual net sales proceeds resulting from enforced sale of property security.

Impairment has been assessed on an individual basis with primary regard to the underlying equity in the mortgage security (collateral) for each of the loans receivable and also with regard to the credit quality of the debtor, payment history and any other information available.

A mortgage loan is classifi ed as being in arrears at the reporting date on the basis of “past due” amounts. Any loan with an amount that is past due (either instalment arrears or total arrears comprising of any instalments arrears plus any other charges) is classifi ed as being in arrears and the total amount of the loan is recorded as in arrears. Ageing of arrears is determined by dividing total arrears over instalment amount and multiplying this by the instalment frequency (i.e. weekly, fortnightly, and monthly).

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 12. Financing Assets cont.

At reporting date, the Group had registered mortgages over real property (comprising of residential land and buildings) for each of the mortgage loan receivables. The weighted average loan to valuation ratio (at the fair values of the underlying real property securities) at reporting date was 67% (2012: 67.87%). The valuations of the underlying property securities have been obtained at the later of the original loan application or subsequent loan variation date and do not take into account any other realisation costs.

Ageing analysis – mortgage assets

				Consolidated Entity	Consolidated Entity
		2013				2012
	Gross	Allowance		Net	Gross	Allowance		Net
	$		$	$	$		$	$
Not past due	197,430,908		–	197,430,908	212,720,016		–	212,720,016
Past due 0-30 Days	20,284,057		–	20,284,057	19,307,888		–	19,307,888
Past due 31-60 Days	2,031,959		–	2,031,959	2,604,560		–	2,604,560
Past due 61-90 Days	2,281,985		–	2,281,985	933,137		–	933,137
Past 90 Days	3,622,392	(1,141,324)		2,481,068	2,667,211	(467,650)		2,199,561
Total	225,651,301	(1,141,324)		224,509,977	238,232,812	(467,650)		237,765,162

	Consolidated Entity 2013 $ 2012 $
(b) Factoring assets Factoring f nance receivables Provision for impairment The movement in the provision for impairment Opening balance Provision for impairment recognised Bad debts Closing balance	20,937,535 25,160,771 (1,325,373) (300,000)
	19,612,162 24,860,771
	300,000 – 1,200,495 300,000 (175,122) –
	1,325,373 300,000

Impairment

Impairment of factoring receivables is assessed primarily by assigned receivables in the case of factoring fi nance operations, credit quality of the debtor, payment history and any other information available. Factoring fi nance receivables are credit insured up to 90c in every dollar of approved receivables.

Ageing analysis – factoring assets

			Consolidated Entity	Consolidated Entity
		2013			2012
	Gross	Allowance	Net	Gross	Allowance		Net
	$	$	$	$		$	$
Not past due	13,297,406	–	13,297,406	18,317,961		–	18,317,961
Past due 0-30 Days	5,236,237	–	5,236,237	5,156,282		–	3,058,819
Past due 31-60 Days	1,477,034	(398,515)	1,078,519	1,076,978		–	610,425
Past due 61-90 Days	283,794	(283,794)	–	255,835		–	32,808
Past 90 Days	643,064	(643,064)	–	353,715	(300,000)		8,677
Total	20,937,535	(1,325,373)	19,612,162	25,160,771	(300,000)		24,860,771

FSA GROUP LIMITED ANNUAL REPORT 2013 51

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 13. Controlled Entities

Note 13. Controlled Entities
Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2013 % 2012 %
Prospex Prof le Pty Ltd(2) Australia FSA Australia Pty Ltd(2) Australia Fox Symes Financial Pty Ltd(1) Australia Fox Symes & Associates Pty Ltd(1) Australia Fox Symes Debt Relief Services Pty Ltd(1) Australia Fox Symes Home Loans Pty Ltd(2) Australia 180 Group Holdings Pty Ltd(2) Australia Aravanis Insolvency Pty Ltd(1) Australia Fox Symes Business Services Pty Ltd(1) Australia 180 Group Pty Ltd(3) Australia	100 100 100 100 100 100 100 100 100 100 100 100 100 100 65 65 75 75 100 70

(1) Investment held by FSA Australia Pty Ltd

(2) Investment held by FSA Group Limited

(3) Investment held by 180 Group Holdings Pty Ltd

On 30 November 2012, FSA Group Limited, through its wholly controlled entity 180 Group Holdings Pty Limited, acquired the remaining 30% of 180 Group Pty Limited ordinary shares, so becoming the sole shareholder and owner of 180 Group Pty Limited and making 180 Group Pty Limited a fully integrated, wholly-owned subsidiary of FSA Group Limited.

The shares were transferred for an initial consideration (settled in cash and shares in FSA Group Limited), as well as a deferred consideration component due to be paid on or after 30 June 2015. As at 30 June 2013, FSA Group Limited has used relevant valuation techniques in order to recognise a deferred consideration payable. The consideration recognised by FSA Group Limited in excess of the carrying amount of the non-controlling interest in 180 Group Pty Limited is recognised in Other Reserves as at 30 June 2013. In accordance with the Accounting Standards, this excess is recognised directly in equity and attributable to the owners of the parent.

The following entities are subsidiaries of 180 Group Pty Ltd

Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2013 % 2012 %
180 Capital Finance Pty Ltd Australia 180 Corporate Pty Ltd Australia 180 Property Holdings Pty Ltd Australia 180 Equity Partners Pty Ltd Australia 180 Capital Funding Pty Ltd Australia One Financial Corporation Pty Ltd Australia	100 100 100 100 100 100 100 100 100 100 100 100

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 13. Controlled Entities cont.

The following entities are subsidiaries of Fox Symes Home Loans Pty Ltd

Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2013 % 2012 %
Fox Symes Home Loans (Services) Pty Ltd Australia Fox Symes Home Loans (Management) Pty Ltd Australia Fox Symes Home Loans (Mortgage Management) Pty Ltd Australia Fox Symes Home Loans (Special Services) Pty Ltd Australia Fox Symes Home Loans Warehouse Trust No.1 Australia Fox Symes Home Loans Warehouse Trust BEN Australia	100 100 100 100 100 100 100 100 100 85 100 100

On 14 August 2012, Fox Symes Home Loans Pty Ltd acquired the remaining 15% income units of Fox Symes Home Loans Warehouse Trust No.1.

==> picture [478 x 469] intentionally omitted <==

----- Start of picture text -----

Consolidated Entity
2013 2012
$ $
Note 14. Plant and Equipment
Computer equipment at cost 2,156,859 1,980,220
Accumulated depreciation (1,870,387) (1,755,692)
Net carrying amount 286,472 224,528
Office equipment at cost 511,150 476,126
Accumulated depreciation (418,544) (358,662)
Net carrying amount 92,606 117,464
Furniture and fittings at cost 308,035 282,385
Accumulated depreciation (254,815) (240,682)
Net carrying amount 53,220 41,703
Motor vehicles at cost 47,372 47,372
Accumulated depreciation (31,499) (22,702)
Net carrying amount 15,873 24,670
Total plant and equipment at cost 3,023,416 2,786,103
Total accumulated depreciation (2,575,245) (2,377,738)
Total net carrying amount 448,171 408,365
Computer Offi ce Furniture Motor
Equipment Equipment & Fittings Vehicles Total
$ $ $ $ $
Movements
Balance at 1 July 2012 181,224 144,356 45,760 33,663 405,003
Additions 161,963 30,440 16,341 – 208,745
– –
Disposals (2,153) (1,354) (3,507)
Depreciation (116,506) (55,978) (20,398) (8,993) (201,876)
Balance at 30 June 2012 224,528 117,464 41,703 24,670 408,365
Additions 201,680 41,760 28,106 – 271,546
–
Disposals (52) (3,158) (338) (3,548)
Depreciation (139,684) (63,460) (16,251) (8,797) (228,192)
Balance at 30 June 2013 286,472 92,606 53,220 15,873 448,171
----- End of picture text -----

FSA GROUP LIMITED ANNUAL REPORT 2013 53

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 15. Intangible Assets Goodwill Recognised on consolidation Accumulated impairment Software at cost Accumulated amortisation Movements during year (Goodwill): Beginning of the year Impairment Movements during year (Software): Beginning of the year Additions Disposal/write off Amortisation	3,222,136 3,222,136 (49,263) (49,263)
	3,172,873 3,172,873
	1,075,190 806,371 (829,844) (720,964)
	245,346 85,407
	3,418,219 3,258,280
	3,172,873 3,172,873 – –
	3,172,873 3,172,873
	85,407 329,404 268,819 61,185 – (184,444) (108,880) (120,738)
	245,346 85,407

Included in the carrying amount of Goodwill is an amount of $2,827,749 which relates to the Goodwill acquired on acquisition of 180 Group Holdings Pty Ltd and its controlled entities, and $345,124 which relates to the original investment by the parent company in FSA Australia Pty Ltd and its controlled entities. The 180 Group represents a separate cash generating unit (CGU).

Impairment

The recoverable amount of goodwill attributable to the 180 Group CGU, is determined based on “value in use” calculations, by estimating the future cash infl ows and outfl ows to be derived by the CGU and applying an appropriate discount rate to those future cashfl ows. The major key assumption relating to the forecast information is the continued growth of the factoring fi nance division and the utilisation of its funding lines. The cashfl ows have been projected over a two year period using average historical earnings margins and then adjusted for non-cash items. The cashfl ows beyond the two year period are extrapolated using a constant growth rate of 2.5%, which does not exceed the long-term average growth rate for the industry. An average pre-tax discount rate of 18.5% has been applied to the net cashfl ows.

The directors have assessed that, the carrying value of goodwill attributable to the original investment by the parent company in FSA Australia Pty Ltd and its controlled entities does not exceed the recoverable amount of this balance at reporting date.

The directors have determined that there are no reasonable changes in the key assumptions on which the recoverable amounts of goodwill are based, for either 180 Group Holdings Pty Ltd or FSA Australia Pty Ltd, which would cause the carrying amount to exceed the recoverable amount.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

	Consolidated Entity 2013 $ 2012 $
Note 16. Trade and Other Payables Current Unsecured trade payables Factoring client payables Institutional creditors Sundry payables and accruals Note 17. Borrowings Current Unsecured Other loans Secured Bank loan – other lending facilities Non-current Secured Bank loan – other lending facilities Financing liabilities Secured Factoring facilities Warehouse facilities (a) Total current, non-current and financing liabilities: Bank loans – other lending facilities Factoring facilities Non-recourse warehouse facilities (b) The carrying amounts of financing assets pledged as security are: Fixed charge over assets Factoring assets Loan and other assets in the Fox Symes Home Loans Warehouse Trust No. 1	911,957 1,007,884 923,607 455,997 449,640 647,430 9,225,405 7,585,641
	11,510,609 9,696,952
	627,475 599,376
	3,033,434 3,865,858
	3,033,434 3,865,858
	3,660,909 4,465,234
	– 1,918,000
	– 1,918,000
	22,265,899 25,290,469 217,689,570 227,985,880
	239,955,469 253,276,349 3,033,434 5,783,858 22,265,899 25,290,469 217,689,570 227,985,880
	242,988,903 259,060,207
	22,533,434 26,705,942 233,664,343 249,786,482
	256,197,777 276,492,424

Bank loans – other lending facilities consist of two funding facilities:

i) A full recourse funding facility to support home loan mortgage operations, which is secured by a fl oating charge over the assets of Fox Symes Home Loans Pty Ltd and its controlled entities, and the other wholly-owned subsidiaries of FSA Group Limited excluding 180 Group Pty Ltd, amounting to $3,033,434. This facility expires on 31 December 2013. Interest is payable on this facility at reporting date at 6.36%; and

ii) A factoring fi nance facility, amounting to $22,265,899 (2012: $25,290,469). This facility expires on 28 June 2015. Interest is payable on this facility at reporting date at 4.66%.

FSA GROUP LIMITED ANNUAL REPORT 2013 55

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 17. Borrowings cont.

(c) Warehouse facility

Warehouse facilities are used to fund mortgages prior to securitisation and include revolving Senior and Mezzanine Note facilities. As at 30 June 2013, the drawdown limit under the Senior and Mezzanine Note facilities was $230 million and $7.5 million respectively and $208,339,323 and $6,791,500 respectively had been drawn down at reporting date.

The Warehouse facilities are 3 years rolling facilities. As at 30 June 2013, the facility was due to expire on 15 October 2015. Interest is payable at the applicable BBSW rate plus a margin. The interest rate at 30 June 2013 for the Senior and Mezzanine Notes was 5.35% and 10.82% respectively. The facilities are secured against current and future mortgage fi nance assets (refer Note 12). All borrowing covenants were met during the year.

(refer Note 12). All borrowing covenants were met during the year.
	Consolidated Entity 2013 $ 2012 $
Note 18. Provisions Current Employee benef ts Non-current Employee benef ts	1,052,019 884,171
	460,212 322,681

Provision for employee benefits

A provision has been recognised for employee benefi ts relating to annual leave and long service leave. The measurement and recognition criteria relating to employee benefi ts have been included in Note 1 to this report.

As at 30 June 2013, the Consolidated Entity employed 175 full-time equivalent employees (2012: 163) plus a further fi ve independent contractors (2012: fi ve).

Note 19. Share Capital

Note 19. Share Capital
125,020,077 (2012: 131,114,587) Fully paid ordinary shares (a)Ordinaryshares	6,657,475 9,275,913
	2013 Number 2012 Number
Balance 1 July Less shares bought back during year Add shares issued as partial consideration for acquisition of non-controlling interest Balance 30 June	131,114,587 138,253,785 (7,694,510) (8,780,684) 1,600,000 1,641,486
	125,020,077 131,114,587

2013

On 2 December 2012, 1,600,000 shares were issued as partial consideration to acquire the non-controlling interest in 180 Group Pty Ltd.

During fi nancial year 2013, FSA Group Limited bought back 7,694,510 shares under an on market share buy-back.

2012

On 27 April 2012, 1,641,486 shares were issued as partial consideration to acquire the non-controlling interest in Fox Symes Home Loans Pty Ltd;

During fi nancial year 2012, FSA Group Limited bought back 8,780,684 shares under an on market share buy-back, including 24,970 shares which were purchased and settled prior to 30 June 2012 but not cancelled with ASIC until 3 July 2012.

(b) Options

As at 30 June 2013, there were 500,000 options to be exercised before 2 July 2013. The options were not exercised and lapsed on 2 July 2013.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 20. Reserves

Share based payments reserve

The share based payments reserve records items recognised as expenses on valuation of employee share options. For the year ended 30 June 2013, $8,093 was credited to this reserve and recognised as an expense in the Statement of Profi t or Loss and Other Comprehensive Income.

Terms & Conditions of options on issue as at 30 June 2013

				Fair Value per
				option at grant
Grant Date	Grant Number	Vest Date	Expiry Date	date ($)	Exercise Price
02 July 2010	100,000	30 April 2011	02 July 2013	$0.10	$0.50
02 July 2010	125,000	30 April 2012	02 July 2013	$0.10	$0.50
02 July 2010	275,000	30 April 2013	02 July 2013	$0.10	$0.50

Weighted average exercise price – $0.50

Weighted average remaining contract life – 2 days

Other Reserve

The balance recognised in Other Reserves represents the residual consideration paid in excess of the carrying amount of the non-controlling interests in Fox Symes Home Loans Pty Ltd and 180 Group Pty Ltd. In accordance with AASB127, this is recognised directly in equity and attributable to the owners of the parent.

	Consolidated Entity 2013 $ 2012 $
Note 21. Cash Flow Information Reconciliation of cash flows from operations to profit after tax Prof t after tax Non-cash f ows in prof t/(loss): Depreciation Amortisation – intangibles Loss on f nancial asset at FVTPL Loss on disposal of intangibles Gain on disposal of plant & equipment Changes in assets and liabilities: Increase in trade and other receivables (Increase)/decrease in other current assets (Decrease)/increase in trade and other payables Increase in employee entitlements Increase in other liabilities Cash flows from operating activities Note 22. Commitments (i) Operating leases (non-cancellable): Minimum lease payments – not later than one year – later than one year and not later than f ve years	12,239,748 10,706,394 228,190 209,425 108,881 120,738 – 600,420 – 184,444 3,547 (3,851) (1,798,074) (4,455,807) 417,135 (63,047) 1,423,078 (956,498) 305,378 51,363 1,037,693 2,997,141
	13,965,576 9,390,722
	1,061,668 1,017,228 1,133,465 2,135,836
	2,195,133 3,153,064

Operating leases relate to the lease of the Consolidated Entity’s business premises, and printing equipment rental.

FSA GROUP LIMITED ANNUAL REPORT 2013

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 23. Key Management Personnel Disclosures

(a) Details of Directors and Key Management Personnel

(i) Directors

Sam Doumany Non-Executive Chairman Tim Odillo Maher Executive Director Deborah Southon Executive Director Stan Kalinko Non-Executive Director Sally Herman Non-Executive Director

(ii) Key Management Personnel of the Consolidated Entity

Tim Odillo Maher Executive Director Deborah Southon Executive Director Cellina Chen

(b) Remuneration of Directors and Key Management Personnel

(b) Remuneration of Directors and Key Management Personnel
	Consolidated Entity 2013 $ 2012 $
Short-term employee benefits Post-employment benefits Share-based payments	1,708,964 1,290,966 69,330 68,886 – –
	1,778,294 1,359,852

Information about the remuneration of Directors and Key Management Personnel which is currently required under Section 300A of the Corporations Act and under Accounting Standard AASB 124 “Related Party Disclosures” is included in the Remuneration Report within the Directors’ Report on pages 17 to 21.

(c) Options issued as part of remuneration for the year ended 30 June 2013

There were no options issued as part of remuneration during or since the end of the fi nancial year.

(d) Shares issued on exercise of remuneration options

There were no shares issued on the exercise of remuneration options during or since the end of the fi nancial year.

(e) Option holdings of Directors and Key Management Personnel

No options are held by Key Management Personnel as at 30 June 2013.

(f) Shareholdings of Directors and Key Management Personnel

Shares held in FSA Group Ltd Balance 1 July 2012 Purchased on market Options Exercised Other Changes	Balance 30 June 2013
Directors Sam Doumany 1,040,541 34,459 – – Tim Odillo Maher 42,809,231 – – – Deborah Southon 12,960,047 – – – Stan Kalinko 15,406 42,857 – – Sally Herman 40,000 – – Senior Executive Cellina Chen – – – –
	1,075,000
	42,809,231
	12,960,047
	58,263
	40,000

	–
Total 56,865,225 77,316 – –	56,942,541

(g) Loans to Directors and Key Management Personnel

There were no loans to Directors or Key Management Personnel during the year.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 23. Key Management Personnel Disclosures cont.

(h) Other transactions to Directors and Key Management Personnel

Other transactions with Directors and Key Management Personnel and related parties

During the year, the Consolidated Entity provided factoring fi nance to Skin Patrol Pty Ltd, a company which is associated with Mr Tim Odillo Maher. The total of all factoring fees received was $44,895 for the year ended 30 June 2013 (2012: $52,078). The fi nance facility and factoring fees charged were provided on normal commercial terms.

During the year the Consolidated Entity purchased supplies from the Ethan Group Pty Ltd, a company which is associated with Mr Tim Odillo Maher. The total amount purchased was $15,430 (2012: $24,010). The supplies were purchased on normal commercial terms.

Note 24. Events Occurring after Reporting date

There have been no events since the end of the fi nancial year that impact upon the fi nancial statements as at 30 June 2013 except as follows:

On 29 August 2013, Westpac renewed the non-recourse senior home loan facility limit of $230 million to 15 October 2016.
On 29 August 2013, a $20 million non-recourse mezzanine home loan facility was secured.
On 30 August 2013, Directors declared a 3.25 cent fully franked fi nal dividend to shareholders to be paid on 27 September 2013 with a record date of 13 September 2013.

Note 25. Related Party Disclosures

(a) Key Management Personnel

Disclosures relating to Key Management Personnel are set out in Note 23.

(b) Subsidiaries

Interests in subsidiaries are set out in Note 13.

(c) Transactions with related parties

Transactions with related parties of Directors or Key Management Personnel are as disclosed in Note 23 (h).

(d) Outstanding related party balances at the reporting date arising from sales/purchase of goods or services

	Consolidated Entity 2013 $ 2012 $
Current factoring receivables – Skin Patrol Pty Ltd.	122,882 111,951

Note 26. Segment Information

Identification of reportable segments

The Consolidated Entity’s Chief Operating Decision Maker has identifi ed three reportable segments based on the differences in providing services and providing fi nance products. These three segments are subject to different regulatory environments and legislation.

The three identifi ed reportable segments are:

Services;
Home Loans; and
Small Business.

Information about operating segments

Services include debt agreement proposal preparation and administration, trustee services and other related services.

Home Loans includes the provision of mortgage fi nance, home loan broking and mortgage management.

Small Business includes corporate consultancy service, the provision of bridging fi nance, factoring fi nance and other related services.

The Consolidated Entity operates in one geographic region – Australia.

Measurement

Each identifi ed reportable segment accounts for transactions consistently with the Accounting policies mentioned in Note 1 to these fi nancial statements. Inter-segment transactions are highlighted as eliminated to reconcile to the profi t, total assets and liabilities amounts of the Consolidated Entity. Centrally incurred costs for shared services are allocated between segments based employee numbers as a percentage of the total head count.

FSA GROUP LIMITED ANNUAL REPORT 2013 59

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 26. Segment Information cont. Operating Segments

Services Home Loans Small Business Other/Unallocated Consolidated Total 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $	Services Home Loans Small Business Other/Unallocated Consolidated Total 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $
Revenue and income: External sales 45,187,080 42,932,041 1,709,476 1,105,026 149,670 892,511 – – 47,046,226 44,929,578 Finance income 12,218 4,166 23,238,282 25,635,608 8,156,424 5,929,168 230,322 110,161 31,637,246 31,679,103 Finance expense (1,775) (3,180) (12,962,392) (15,689,250) (1,296,267) (1,170,990) – – (14,260,434) (16,863,420)
Net f nance income 10,443 986 10,275,890 9,946,358 6,860,157 4,758,178 230,322 110,161 17,376,812 14,815,683 Other gains/(losses) (1,891) (186,641) – – (1,656) (593,477) – – (3,547) (780,118) Internal sales and income 617,124 530,100 – – – – 8,788,538 – 9,405,662 530,100 Eliminations – – – – – – – – (9,405,662) (530,100)
Total revenue and income 45,812,756 43,276,486 11,985,366 11,051,384 7,008,171 5,057,212 9,018,860 110,161 64,419,491 58,965,143 Results: Segment prof t before tax 11,716,727 11,581,034 5,090,592 4,108,772 819,130 (737,912) 137,025 (37,434) 17,763,474 14,914,460 Income tax (expense)/benef t (3,566,551) (3,479,590) (1,545,401) (957,672) (212,879) 222,602 (198,895) 6,594 (5,523,726) (4,208,066)
Prof t for theyear 8,150,176 8,101,444 3,545,191 3,151,100 606,251 (515,310) (61,870) (30,840) 12,239,748 10,706,394
Items included in prof t for the year Share of the prof ts of an associate using the Equity Accounting Method – – – – – – 1,354 4,599 Depreciation and amortisation 304,528 287,196 24,015 27,379 8,529 15,588 – – Impairment in value – goodwill – – – – – – – – Impairment in value – trade receivables 7,627,772 7,799,776 1,551,436 702,540 1,531,765 1,829,865 – – Reversal of impairment in value – trade receivables (1,338,803) (637,659) – – (36,384) – – – Employee and contractor expenses 17,386,709 14,364,431 2,531,692 2,744,480 2,133,775 1,911,621 159 – Share based payments expense – – – – – – 8,093 15,450 Legal and consultancy 32,153 99,412 668,616 612,838 475,052 278,578 4,992 19,162 Rental expense on operating lease – minimum lease payment 952,646 946,932 23,689 11,460.00 34,542 46,107 – – Assets: Segment assets 110,298,730 94,132,984 248,830,094 262,108,899 28,231,418 29,564,557 37,113,622 20,014,063 Eliminations Total assets Included in segment assets Investment in associate – – – – – – 60 68,574 Liabilities: Segment liabilities 74,325,378 59,466,987 226,795,493 242,968,825 27,683,529 26,252,920 25,022,366 7,713,534 Eliminations Total liabilities	1,354 4,599 337,072 330,163 – – 10,710,973 10,332,181 (1,375,187) (637,659) 22,052,335 19,020,532 8,093 15,450 1,180,813 1,009,990 1,010,877 1,004,499 424,473,864 405,820,503 (90,316,967) (62,702,564)
	334,156,897 343,117,939
	60 68,574 353,826,766 336,402,266 (78,429,049) (50,814,646)
	275,397,717 285,587,620

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 27. Financial Instruments

Financial and Capital Risk Management

The Consolidated Entity undertakes transactions in a range of fi nancial instruments including:

Cash and cash equivalents;
Trade and other receivables;
Mortgage fi nance assets (mortgage receivables);
Other fi nancial assets;
Payables (including Institutional creditor liabilities); and
Interest bearing liabilities including note facility funding, bank loans and mortgage loans.

These fi nancial instruments represented in the Statement of Financial Position are categorised under AASB 139 Financial Instruments: Recognition and Measurement as follows:

Instruments: Recognition and Measurement as follows:
	Consolidated Entity
	2013	2012
	$	$
Financial Assets
Cash and cash equivalents	23,092,712	18,520,061
Loans and receivables at amortised cost	306,136,446	319,537,745
Financial Liabilities
Payables at amortised cost (excluding tax liabilities)	255,126,987	269,356,535

The Consolidated Entity has exposure to the following risks from these fi nancial instruments:

credit risk;
liquidity risk; and
market (interest) risk.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework through the work of the Audit & Risk Management Committee. The Audit & Risk Management Committee is responsible for developing and monitoring risk management policies. The Chairman of the Audit & Risk Management Committee reports to the Board of Directors on its activities.

Risk management procedures are established by the Audit & Risk Management Committee and carried out by management to identify and analyse the risks faced by the Consolidated Entity and to set controls and monitor risks.

These are discussed individually below.

Capital Management

The Consolidated Entity’s objectives in managing its capital is the safeguard of the Consolidated Entity’s ability to continue as a going concern, maintain the support of its investors and other business partners, support the future growth initiatives of the Consolidated Entity and maintain an optimal capital structure to reduce the costs of capital. These objectives are reviewed periodically by the Board.

The Consolidated Entity assesses the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity mix) in line with these objectives.

Gearing is used to monitor levels of debt capital used by the Consolidated Entity to fund its operations. The ratio is calculated as Net Interest Bearing Liabilities divided by Tangible Assets (less Cash Assets).

The gearing ratio at 30 June 2013, excluding the Consolidated Entity’s special purpose entity Fox Symes Home Loans Warehouse Trust #1 whose liabilities are non-recourse to the Consolidated Entity, was 31.2% (2012: 37.9%).

It was the policy of the Consolidated Entity during the 2013 fi nancial year to maintain a gearing ratio, excluding the Consolidated Entity’s special purpose entity Fox Symes Home Loans Warehouse Trust #1 of less than 50% (2012: 50%)

The Consolidated Entity defi nes capital as total equity reported in the Statement of Financial Position.

FSA GROUP LIMITED ANNUAL REPORT 2013 61

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 27. Financial Instruments cont.

Fair values of financial instruments

The carrying values of the Consolidated Entity’s fi nancial assets and liabilities approximate their fair values.

Credit Risk

Credit risk is the risk of fi nancial loss to the Consolidated Entity if a customer or counterparty to a fi nancial instrument fails to meet its contractual obligations. The Consolidated Entity does not have any material credit risk exposure to any single debtor or group of debtors under fi nancial instruments entered into by the Consolidated Entity. Credit risk is concentrated in two categories of fi nancial instruments:

Trade and other receivables, including bridging fi nance receivables;
Factoring fi nance receivables; and
Mortgage fi nance assets (mortgage receivables).

Credit and lending policies have been established for all lending operations whereby each new borrower is analysed individually for creditworthiness and serviceability prior to the Consolidated Entity doing business with them. This includes where applicable credit history checks and affordability assessment and, in the case of lending activities, confi rming the existence and title of the property security, and assessing the value of the security provided. These are monitored by the Audit & Risk Management Committee though the management of the Consolidated Entity.

Mortgage fi nance assets are secured by fi rst mortgage security over real property. Bridging fi nance receivables are secured by fi rst or second mortgage security, and factoring fi nance receivables are secured by fi xed and fl oating charges over business assets.

The Consolidated Entity retains the mortgages over the secured real property (consisting of land and buildings) until the loans are repaid. The Consolidated Entity is entitled to take possession of and enforce the sale of the secured real property in the event that the borrower defaults under the terms of their mortgage.

Personal insolvency (debt agreement and personal insolvency agreements under the Bankruptcy Act) receivables are unsecured, though debtors are assessed for serviceability and affordability prior to inception of each agreement.

The above minimises the Consolidated Entity’s credit risk exposure to acceptable levels.

The Audit & Risk Management Committee also establishes the Consolidated Entity’s allowance for impairment policy which is discussed in Notes 9 and 12.

Liquidity Risk

Liquidity risk is the risk that the Consolidated Entity will not be able to meet its fi nancial obligations as they fall due.

The Consolidated Entity’s approach in managing liquidity is to ensure that it will always have suffi cient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage to the Consolidated Entity’s reputation.

The Consolidated Entity’s liquidity risk management policies include cashfl ow forecasting, which is reviewed and monitored monthly by management as part of the Consolidated Entity’s master budget and having access to funding through credit facilities.

The contractual maturity of the Consolidated Entity’s fi xed and fl oating rate fi nancial liabilities are as follows. The amounts represent the future undiscounted principal and interest cashfl ows.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 27. Financial Instruments cont.

Liquidity Risk cont.

Consolidated Entity 30 June 2013

	Carrying	Contractual	6 months	6-12	1 to 2	2 to 5	5-25
	amount	Cash f ows	or less	months	years	years	years
Trade and other	$	$	$	$	$	$	$
payables	1,835,564	1,835,564	1,835,564	–	–	–	–
Institutional creditors	449,640	449,640	449,640	–	–	–	–
Other payables	9,225,405	9,225,405	9,225,405	–	–	–	–
Other short term loans	3,660,909	3,660,909	3,660,909	–	–	–	–
Bank loans	22,265,899	27,725,115	3,725,526	568,424	23,431,165	–	–
Other f nancial
payables	2,425,000	2,425,000	–	–	–	2,425,000	–
Warehouse facilities	217,689,570	256,468,723	5,561,847	5,940,914	11,914,470	233,051,492	–
			Consolidated Entity
				30 June 2012
	Carrying	Contractual	6 months	6-12	1 to 2	2 to 5	5-25
	amount	Cash f ows	or less	months	years	years	years
	$	$	$	$	$	$	$
Trade and other
payables	1,463,881	1,463,880	1,463,880	–	–	–	–
Institutional creditors	647,430	647,430	647,430	–	–	–	–
Other payables	7,585,641	7,585,641	7,585,641	–	–	–	–
Other short term loans	347,108	347,108	347,108	–	–	–	–
Bank loans	31,326,595	33,136,288	3,073,218	2,711,380	27,351,690	–	–
Other f nancial
payables	–	–	–	–	–	–	–
Warehouse facilities	227,985,880	246,794,541	7,231,027	7,189,135	232,374,379	–	–

FSA Group Limited has a secured note facility comprising of senior and mezzanine debt through a special purpose entity, the Fox Symes Home Loans Warehouse Trust No.1. As at 30 June 2013, the facility has a combined drawdown limit of $237,500,000. This facility is secured against the book of loan assets created by the trust. As at 30 June 2013 the Consolidated Entity had withdrawn $215,130,823 from this facility. It had unused credit at the end of the year of $22,369,177.

FSA Group Limited’s subsidiary 180 Capital Funding Pty Ltd has a secured loan facility supporting its lending activities. The factoring fi nance facilities have drawdown limits of $35,000,000. As at 30 June 2013, the Company had withdrawn $22,265,899 from the factoring fi nance facility. Provided that there is suffi cient factoring receivables to secure the loan, no repayment is required until the facility expiry date on 28 June 2015.

Warehouse facilities

The Consolidated Entity is reliant on the renewal of existing warehouse facilities, the negotiation of new warehouse facilities, or the issuance of residential mortgage backed securities.

Each warehouse facility is structured so that if it is not renewed or otherwise defaults there is only limited recourse to the Consolidated Entity. If a warehouse facility is not renewed or otherwise defaults and its assets are liquidated, the primary impact to the Consolidated Entity would be the loss of future income streams from excess spread, being the difference between our mortgage rate and the cost of funds, fee income and the write off of any unamortised balance of deferred transaction costs.

The Directors are satisfi ed that any sale of mortgages in repayment of warehouse facilities or an event of default in relation to the Consolidated Entity’s warehouse facilities will not affect the Consolidated Entity’s ability to continue as a going concern.

FSA GROUP LIMITED ANNUAL REPORT 2013 63

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 27. Financial Instruments cont.

Market risk

Market risk is the risk that changes in market prices will affect the Consolidated Entity’s income or the value of holdings in its fi nancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Market risk of the Consolidated Entity is concentrated in interest rate risk.

Mortgage fi nance assets are lent on variable interest rates and are fi nanced by variable rate borrowings, which mitigate the Consolidated Entity’s exposure to interest rate risk on these borrowings to an acceptable level. These borrowings are provided to the Consolidated Entity on a two year rolling facility and are non-recourse to the Consolidated Entity unless there is material event of default or breach of borrowing covenants.

Bridging fi nance assets and factoring fi nance assets are provided to borrowers on fi xed and variable rate terms. Factoring fi nance assets are fi nanced by variable rate borrowings. There was no borrowing against the bridging fi nance assets. The returns on the products are suffi cient to mitigate adverse interest rate movements on the borrowings. As such the risk does not warrant the cost of purchasing derivative fi nancial instruments to mitigate this risk completely. The Board and Management are satisfi ed that this policy is appropriate for the Consolidated Entity at this time. These assets are fi nanced by long term debt facilities.

All other sources of fi nance are immaterial to the Consolidated Entity in amount and exposure.

Interest rate sensitivity analysis

The tables below show the effect on fi nance costs and profi t after tax if interest rates had been 50 basis points (bps) higher or lower at reporting date on the Consolidated Entity’s fl oating rate fi nancial instruments (2012: 50 bps). A 50 bps sensitivity is considered reasonable given the current level of both short-term and long-term Australian interest rates. This would represent approximately two rate increases/decreases. In the current economic environment, where uncertainty remains about a second serious worldwide economic recession, it is the Company’s view that it is unlikely there will be a sharp upwards movement in the interest rate cycle over the next 12 months. The analysis is based on interest rate risk exposures at reporting date on both fi nancial assets and liabilities.

	Consolidated Entity Prof t after tax 2013 $ 2012 $
If interest rates increased by 50bps (2012: 50bps) If interest rates decreased by 50bps (2012: 50bps)	107,897 74,254 (107,897) (74,254)

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 28. Investment in Associates

The Consolidated Entity had investment in an associate which it accounted for using the equity accounting method. The associate, Huntingdale Smythe Lawyers Pty Ltd is a company incorporated in Australia and provides legal services. The Consolidated Entity had 50% ownership and 50% of the voting power in the entity. During fi nancial year 2013, the Consolidated Entity received full and fi nal distribution from its investment in Hunting Smythe Lawyers Pty Ltd.

	Consolidated Entity 2013 $ 2012 $
Equity accounted investments in associates Purchase consideration Inter-entity loan Share of associates retained earnings Investment in associates Information about the Associate is as follows: Consolidated Entity’s share of: Revenue Prof t before tax Income tax expense Prof t for the year Total Assets Total Liabilities Net Assets	– 7,963 – (49,270) – 109,881
	– 68,574
	1,935 10,104
	1,935 4,599 (581) (1,380)
	1,354 3,219
	– 127,258 – (1,088)
	– 126,170

Note 29. Contingent Liabilities

There were no contingent liabilities relating to the Group at reporting date except the following:

2013

Mortgage loans

At reporting date loan applications that had been accepted by the Group but not yet settled amount to $5,461,400. Mortgages are usually settled within 4 weeks of acceptance.

2012

Mortgage loans

At reporting date loan applications that had been accepted by the Group but not yet settled amount to $6,278,550. Mortgages are usually settled within 4 weeks of acceptance.

FSA GROUP LIMITED ANNUAL REPORT 2013 65

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 30. Parent Entity Information

The accounting policies of the parent entity, which have been applied in determining the fi nancial information shown below, are the same as those applied in the consolidated fi nancial statements. Refer to Note 1 for a summary of the signifi cant accounting policies relating to the Group.

Financial position

Financial position
	2013 $ 2012 $
Total Current Assets Total Non-Current Assets Total Assets Total Current Liabilities Total Liabilities Net Assets Equity Share capital Share based payment reserve Dividends to shareholders Accumulated prof t / (loss) Total Equity Financial performance Prof t/(loss)after income tax Other comprehensive income Total comprehensive income/(loss)for the year	17,066,071 3,196,466 11,826,990 11,826,989
	28,893,061 15,023,455
	20,209,729 8,272,600
	20,209,729 8,272,600
	8,683,332 6,750,855
	6,657,475 9,275,912 769,374 761,281 (4,183,847) (2,270,282) 5,440,330 (1,016,056)
	8,683,332 6,750,855
	8,726,669 (53,827) – –
	8,726,669 (53,827)

During the fi nancial year, the parent entity received distribution income from its subsidiaries.

Guarantees entered into by the parent entity relation to the debts of its subsidiaries

FSA Group Limited has entered into a deed of cross guarantee with two of its wholly owned subsidiaries, FSA Australia Pty Ltd and Fox Symes Debt Relief Services Pty Ltd. Refer to Note 31 for further details.

There are no contingent liabilities or commitments in the parent entity (2012: Nil).

Note 31. Deed of Cross Guarantee

The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:

FSA Group Limited

FSA Australia Pty Ltd

Fox Symes Debt Relief Services Pty Ltd

By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a fi nancial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission (‘ASIC’).

The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are controlled by FSA Group Limited, they also represent the ‘Extended Closed Group’.

Notes to the Financial Statements cont.

for the year ended 30 June 2013

Note 31. Deed of Cross Guarantee cont.

Set out below is a consolidated Statement of Profi t or Loss and Other Comprehensive Income and Statement of Financial Position of the ‘Closed Group’.

Statement of Profit or Loss and Other Comprehensive Income

	2013 $ 2012 $
Revenue and other income Fees from services Finance income Finance expense Net f nance income Total revenue and other income net of finance expense Expenses from continuing activities Profit before income tax Income tax expense Profit after income tax Other comprehensive income Total comprehensive income for the year Statement of Financial Position Current Assets Cash and cash equivalents Trade and other receivables Current tax assets Total Current Assets Non-Current Assets Trade and other receivables Investments Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Tax liabilities Total Current Liabilities Non-Current Liabilities Deferred tax liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Reserves Retained earnings Total Equity	27,382,986 26,072,003
	236,757 1,509,416 – –
	236,757 1,509,416
	27,619,743 27,581,419
	(3,294,290) (4,251,757)
	24,325,453 23,329,662 (7,533,602) (6,595,375)
	16,791,851 16,734,287
	– –
	16,791,851 16,734,287
	4,954,236 6,312,515 12,096,109 13,828,432 3,449 –
	104,931,521 20,140,947
	120,938,148 105,576,415 11,826,990 11,826,990
	44,887,411 117,403,405
	149,818,932 137,544,352
	6,229,156 8,334,614 2,861,179 1,151,135
	9,090,335 9,485,749
	12,032,046 11,263,681
	12,032,046 11,263,681
	21,122,381 20,749,430
	128,696,551 116,794,922
	6,657,477 9,275,914 769,374 761,281 121,269,700 106,757,727
	128,696,551 116,794,922

FSA GROUP LIMITED ANNUAL REPORT 2013 67

Directors’ Declaration

In the Directors’ opinion:

The fi nancial statements, comprising the statement of profi t or loss and other comprehensive income, statement of fi nancial position, statement of cash fl ows, statement of changes in equity, accompanying notes, are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards and the Corporations Regulations 2001; and
b. give a true and fair view of the Consolidated Entity’s fi nancial position as at 30 June 2013 and of its performance for the year ended on that date.
The Company has included in the notes to the fi nancial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations by the Executive Directors and Chief Financial Offi cer required by section 295A. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 .

FSA Group Limited, FSA Australia Pty Ltd and Fox Symes Debt Relief Services Pty Ltd identifi ed in note 31 are parties to the deed of cross guarantee under which each company guarantees the debts of the others. At the date of this declaration there are reasonable grounds to believe that the companies which are parties to this deed of cross guarantee will as a Consolidated Entity be able to meet any obligations or liabilities to which they are, or may become, subject to, by virtue of the deed of cross guarantee described in note 31.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:

==> picture [124 x 27] intentionally omitted <==

Tim Odillo Maher Executive Director Sydney 30 August 2013

==> picture [63 x 62] intentionally omitted <==

Deborah Southon Executive Director Sydney 30 August 2013

Independent Auditor’s Report

To the members of FSA Group Limited

==> picture [477 x 674] intentionally omitted <==

FSA GROUP LIMITED ANNUAL REPORT 2013 69

cont. Independent Auditor’s Report To the members of FSA Group Limited

==> picture [477 x 674] intentionally omitted <==

Shareholder Information

Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 13 August 2013.

(a) Distribution of equity securities

The number of holders, by size of holding, in each class of security are:

	Quoted Ordinary shares	Quoted Ordinary shares
	Number	Number
	of holders	of shares
1 – 1,000	124	17,864
1,001 – 5,000	254	813,536
5,001 – 10,000	210	1,817,464
10,001 – 100,000	313	11,071,499
100,001 and over	102	111,372,247
Total	1,003	125,092,610

The number of shareholders holding less than a marketable parcel of shares (556) are 107 (holding a total of 3,861 ordinary shares).

	Unquoted $0.50 options	Unquoted $0.50 options
	exercisable on or before
	2 July 2013
	Number	Number
	of holders	of options
1 – 1,000	–	–
1,001 – 5,000	–	–
5,001 – 10,000	–	–
10,001 – 100,000	–	–
100,001 and over	1	500,000
Total	1	500,000

FSA GROUP LIMITED ANNUAL REPORT 2013 71

Shareholder Information cont.

(b) Twenty largest holders

The names of the twenty largest holders, in each class of quoted security are (ordinary shares):

1 Capital Management Corporation Pty Ltd 2 Mazamand Group Pty Ltd 3 ADST Pty Ltd 4 BJR Investment Holdings Pty Ltd 5 Atkone Pty Ltd 6 Ruminator Pty Limited 7 Investment Custodial Services Limited 8 J P Morgan Nominees Austra Limited 9 Harness Capital Pty Ltd 10 Contemplator Pty Limited 11 Ms Danita Rae Lowes 12 Goran Turner 13 Bulwarra Pty Ltd 14 Mr David Matthew Fite 15 Dundas Ritchie Investments Pty Ltd 16 Berne No 132 Nominees Pty Ltd<323731 A/C> 17 Wavet Fund No 2 Pty Ltd 18 Berne No 132 Nominees Pty Ltd<323733 A/C> 19 Karia Investment Pty Ltd 20 Croxted Investments Pty Ltd	26,000,000 20.78%
	16,809,231 13.44%
	12,960,047 10.36%
	11,000,000 8.79%
	2,631,506 2.10%
	2,385,174 1.91%
	2,133,271 1.71%
	2,117,229 1.69%
	2,023,774 1.62%
	1,927,551 1.54%
	1,852,953 1.48%
	1,641,486 1.31%
	1,600,000 1.28%
	1,312,314 1.05%
	1,224,429 0.98%
	940,541 0.75%
	800,000 0.64%
	790,541 0.63%
	666,666 0.53%
	660,541 0.53%
Top 20	91,477,254 73.13%
Total	125,092,610 100%

(c) Substantial shareholders

The names of substantial shareholders who have notifi ed the Company in accordance with section 671B of the Corporations Act 2001 are:

Number of shares

Number of shares
Mazamand Group Pty Ltd	16,809,231
ADST Pty Ltd	12,960,047
BJR Investment Holdings Pty Ltd	11,000,000

(d) Voting rights

All ordinary shares carry one vote per share without restriction.

(e) Restricted securities

As at the date of this report there were no ordinary shares subject to voluntary restriction agreements.

(f) Business objectives

The entity has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives.

Corporate Information

Directors

Sam Doumany – Non-Executive Chairman Tim Odillo Maher – Executive Director Deborah Southon – Executive Director Stan Kalinko – Non-Executive Director Sally Herman – Non-Executive Director

Chief Financial Officer

Cellina Chen

Company Secretary

Don Mackenzie

Registered Office and Corporate Office

Level 3 70 Phillip Street Sydney NSW 2000 Phone: +61 (02) 8985 5565 Fax: +61 (02) 8985 5290

Solicitors

Hopgood Ganim Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000

Share Register

Link Market Services Ltd Locked Bag A14 Sydney South, NSW 1235 Phone: +61 (02) 8280 7454

Auditors

BDO East Coast Partnership Level 11 1 Margaret Street Sydney New South Wales 2000

Country of Incorporation

Australia

Securities Exchange Listing

Australian Securities Exchange Ltd ASX Code: FSA

Internet Address

www.fsagroup.com.au

Australian Business Number

ABN 98 093 855 791

www.colliercreative.com.au #FSA0002

FSA GROUP LIMITED ANNUAL REPORT 2013 73

==> picture [596 x 72] intentionally omitted <==

AI assistant

FSA GROUP LIMITED — Annual Report 2013

64948_rns_2013-08-29_8b5df0e1-c2db-43e1-97b5-4209a265ff58.pdf

A ndix 4E ppe

PRELIMINARY FINAL REPORT

1. Details of the reporting period

2. Results for Announcement to the Market

3. Statement of Profit or Loss and Other Comprehensive Income with notes to the statement

4. Statement of Financial Position with notes to the statement

5. Statement of Cash Flows with notes to the statement

6. Statement of Changes in Equity

7. Dividends

8. Dividends reinvestment

9. NTA Backing

10. Entities over which control has been gained or lost during the period

11. Associates and joint venture entities

12. Ability to make an informed assessment of the entities financial performance and financial position.

13. Foreign entities

14. Results for the period

15. Status of audit

FSA Group Limited

Financial Results

Revenue

Proven Integrated Business Model

Services

Home Loans

Client

Small Business

2013 Achievements

Services

The Market

2013 Achievements

Home Loans

The Market

Small Business

The Market

Chairman’s Letter

Dear Shareholders,

Yours sincerely

Executive Directors’ Review

Dear Shareholders,

Executive Directors’ Review continued

Operational Performance

Services

Home Loans

Small Business

Our People

Strategy and Outlook

Directors and Secretary

Financial Statements

Directors’ Report

Directors

Sam Doumany (Non-Executive Chairman)

Experience and Expertise

Other current (listed company) directorships

Former (listed company) directorships in the last 3 years

Special responsibilities

Interest in shares and options

Tim Odillo Maher (Executive Director)

Experience and Expertise

Other current (listed company) directorships

cont. Directors’ Report

Special responsibilities

Interest in shares and options

Deborah Southon (Executive Director)

Experience and Expertise

Other current (listed company) directorships

Nil

Former (listed company) directorships in last 3 years

Special responsibilities

Nil

Interest in shares and options

Stan Kalinko (Non-Executive Director)

Experience and Expertise

Other current (listed company) directorships

Nil

Former (listed company) directorships in last 3 years

Nil

Special Responsibilities

Interest in shares and options

FSA GROUP LIMITED Annual Report 2013