FSA GROUP LIMITED — Annual Report 2020

Aug 13, 2020

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PRELIMINARY FINAL REPORT

Name of Entity ABN

FSA Group Limited 98 093 855 791

1. Details of the reporting period

Financial Year Ended 30 June 2020 Previous Corresponding Reporting Period 30 June 2019

2. Results for Announcement to the Market

		$’000	% Increase over corresponding period
2.1	Total Group operating income	68,180	-2%
	Profit from ordinary activities after tax attributable to
2.2	members of the parent	16,316	13%
2.3	Net profit for the period attributable to members	16,316	13%
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 23 of the Financial Statements and the accompanying notes

4. Statement of Financial Position with notes to the statement

Refer to page 24 of the Financial Statements and the accompanying notes

5. Statement of Cash Flows with notes to the statement

Refer to page 26 of the Financial Statements and the accompanying notes

6. Statement of Changes in Equity

Refer to page 25 of the Financial Statements and the accompanying notes

7. Dividends

Fully franked final dividend for the year ended 30 June 2019 of 3.00 cents per $3,752,778 ordinary share Fully franked interim dividend for the year ended 30 June 2020 of 3.00 cents $3,751,703 per ordinary share $7,504,481

1

Dividends payable subsequent to year end

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Date payable 11 September 2020 Record date to determine entitlement to the dividend 21 August 2020 Amount per share (fully franked) 3.00 cents Total dividend calculated on shares on issue as at the date of this report $3,742,850

8. Dividends reinvestment

There is no Dividend Reinvestment Plan in place.

9. NTA Backing

Current Period Corresponding period Net tangible asset backing per ordinary share after 36.3 cents 38.6 cents adjusting for non-controlling interests

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

Not applicable.

11. Associates and joint venture entities

Not applicable.

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.

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 1: Segment Information commencing at page 29 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 54 to 56. The audit report does not contain any qualification nor is there any dispute.

The Annual General Meeting is scheduled for Friday 27 November 2020.

Cellina Z Chen

Company Secretary

2

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FSA Group Limited Annual Report 2020

Challenges and opportunity.

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Our plan

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Earnings
Home
Loans
Capital
Management
Services
Personal
Loans
Opportunity
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Contents

• 1 Cautionary Statements and Disclaimer Regarding Forward-Looking Information

• 2 Our Business

• 3 Chairman’s Letter

• 4 Executive Directors’ Review

• 9 Financial Statements

FSA Group Limited 1 Annual Report 2020

For over 20 years, 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 and direct lending services, which we tailor to suit individual circumstances and to achieve successful outcomes for our clients.

Cautionary Statements and Disclaimer Regarding Forward-Looking Information

This Annual Report may contain forwardlooking statements, including statements about FSA Group Limited’s (Company) financial condition, results of operations, earnings outlook and prospects. Forwardlooking statements are typically identified by words such as “plan,” “aim”, “focus”, “target”, “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions.

The forward-looking statements contained in this Annual Report are predictive in character and not guarantees or assurances of future performance. These forward-looking statements involve and are subject to known and unknown risks and uncertainties many of which are beyond the control of the Company. Our ability to predict results or the actual effects of our plans and strategies is subject to inherent uncertainty.

Factors that may cause actual results or earnings to differ materially from these forward-looking statements include general economic conditions in Australia, interest rates, competition in the markets in which the Company does and will operate, and the inherent regulatory risks in the businesses of the Company, along with the credit, liquidity and market risks affecting the Company’s financial instruments described in the Annual Report.

Forward-looking statements are based on assumptions regarding the Company’s financial position, business strategies, plans and objectives of management for future operations and development and the environment in which the Company will operate. Those assumptions may not be correct or exhaustive.

Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

You are cautioned not to place undue reliance on any forward-looking statements.

Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed. The Company disclaims any responsibility to and undertakes no obligation to update or revise any forward-looking statement to reflect any change in the Company’s circumstances or the circumstances on which a statement is based, except as required by law.

The Company disclaims any responsibility for the accuracy or completeness of any forward-looking statement to the extent permitted by law. Unless otherwise stated, the projections or forecasts included in this Annual Report have not been audited, examined or otherwise reviewed by the independent auditors of the Company.

This Annual Report is not an offer or invitation for subscription or purchase of, or a recommendation of securities.

2

Our Business

Services

FSA Group offers a range of services to assist clients wishing to enter into a payment arrangement with their creditors. These services include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy.

Consumer Lending

FSA Group offers home loans to assist clients with property who wish to consolidate their debt and personal loans to assist clients who wish to purchase a motor vehicle.

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FSA Group Limited 3 Annual Report 2020

Chairman’s Letter

Dear Shareholders,

The 2020 financial year has been a year of challenges and has also presented opportunity.

The Services segment offers a range of services to assist clients wishing to enter into a payment arrangement with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy. FSA Group is the largest provider of these services in Australia. During the 2020 financial year we experienced a number of challenges. We launched our new service, an informal arrangement to assist non-home owners with their debt. And then COVID-19 led to a reduction in the number of new callers seeking our assistance. We believe demand for our services will start to increase in the months leading up to the withdrawal of both Government and Bank support packages. Despite these challenges we have successfully navigated this period.

During the 2020 financial year new client numbers for informal arrangements and debt agreements decreased by 5% and for personal insolvency agreements and bankruptcy decreased by 20% compared to the previous corresponding period. During the year informal arrangement and debt agreement clients under administration decreased to 19,736, down 9% and for personal insolvency agreements and bankruptcy increased to 1,304, up 1%. FSA Group manages $353 million of unsecured debt under informal arrangements and debt agreements and during the 2020 financial year paid $89 million in dividends to creditors.

The Consumer Lending segment offers home loans and personal loans to assist clients wishing to consolidate their debt or to purchase a motor vehicle. During the 2020 financial year our home loan and personal loan pools continued to grow, growing from $441 million to $457 million, a 4% increase.

On 18 December 2019, we announced our inaugural $200 million issue of non-conforming residential mortgage backed securities via sole arranger and manager Westpac. Accessing the debt capital markets is a key step in our strategy of diversifying our funding and de-risking the business. More importantly, it provides us with fresh funding capacity to pursue our home loan growth strategy.

In the first half of the 2021 financial year we plan to rebrand our Consumer Lending segment “Azora”. Azora will be led by one of the most experienced management teams in the non-bank sector.

For the 2020 financial year, FSA Group generated $68.2 million in operating income, a 2% decrease, and a profit after tax attributable to members of $16.3 million, a 13% increase compared to the results of 2019. Our net cash inflow from operating activities was $19.4 million, a 14% increase.

I advise that the Directors have declared a fully franked final dividend of 3.00 cents per share for the 2020 financial year. This brings the full year dividend to 6.00 cents per share.

Our focus for the 2021 financial year is outlined in the Executive Directors’ Review under “Strategy and Outlook”.

Finally I would like to announce my retirement. I have served as your Chairman for 17 years. I am proud of what we have achieved and have enjoyed every minute. I will be retiring on 2 September 2020 which will be my 83rd birthday. I would like to thank my fellow Directors, all our executives and staff for their contribution to the successes of the current year and wish them well for the future.

Yours sincerely,

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Sam Doumany Chairman

4

Executive Directors’ Review

Dear Shareholders,

The 2020 financial year has been a year of challenges and has also presented opportunity.

For the 2020 financial year, FSA Group generated $68.2 million in operating income, a 2% decrease, and a profit after tax attributable to members of $16.3 million, a 13% increase compared to the results of 2019. Our net cash inflow from operating activities was $19.4 million, a 14% increase.

We advise that the Directors have declared a fully franked final dividend of 3.00 cents per share for the 2020 financial year. This brings the full year dividend to 6.00 cents per share.

The Financial Overview below summarises our performance.

Financial Overview FY2019	FY2020 % Change
Operating income $69.7m	$68.2m 2%
Profit before tax $22.2m	$24.8m 12%
Profit after tax attributable to members $14.4m	$16.3m 13%
EPS basic 11.52c	13.05c 13%
Net cash inflow from operating activities $17.1m	$19.4m 14%
Dividend/share 5.00c	6.00c 20%
Shareholder equity attributable to members $51.0m	$59.4m 17%
Return on equity 30%	30%

Operational Performance

Our business operates across the following key segments, Services and Consumer Lending. The operating income and profitability of each segment is as follows:

Operating income by segment FY2019	FY2020 % Change
Services $46.8m	$41.1m 12%
Consumer Lending
Home Loans $11.2m	$13.7m 23%
Personal Loans $11.7m	$13.3m 14%
Other/unallocated $0.1m	$0.1m
operating income $69.7m	$68.2m 2%

FSA Group Limited 5 Annual Report 2020

Profit before tax by segment FY2019	FY2020 % Change
Services $11.6m	$11.7m 1%
Consumer Lending
Home Loans $5.9m	$7.4m 26%
Personal Loans $5.3m	$5.2m 3%
Other/unallocated ($0.7m) $0.4m
profit before tax $22.2m $24.8m 12%

Services

The Services segment offers a range of services to assist clients wishing to enter into a payment arrangement with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy. FSA Group is the largest provider of these services in Australia.

During the 2020 financial year we experienced a number of challenges.

In response to the amendments to the Bankruptcy Act 1966 which took effect from 27 June 2019, we launched our new service, an informal arrangement to assist non-home owners with their debt. The launch of our informal arrangements has been successful with positive feedback from clients and creditors.

COVID-19 led to a reduction in the number of new callers seeking our assistance. In response to this reduction we have restructured parts of our business to reduce costs. We believe demand for our services will start to increase in the months leading up to the withdrawal of both Government and Bank support packages.

Despite these challenges we have successfully navigated this period.

During the 2020 financial year new client numbers for informal arrangements and debt agreements decreased by 5% and for personal insolvency agreements and bankruptcy decreased by 20% compared to the previous corresponding period.

During the year informal arrangement and debt agreement clients under administration decreased to 19,736, down 9% and for personal insolvency agreements and bankruptcy increased to 1,304, up 1%. FSA Group manages $353 million of unsecured debt under informal arrangements and debt agreements and during the 2020 financial year paid $89 million in dividends to creditors.

Informals and Debt Agreements FY2018 FY2019	FY2020 % Change
New Clients 5,797 4,573	4,327 5%
Clients under administration 21,885 21,725	19,736 9%
Debt managed $398m $379m	$353m 7%
Dividends paid $82m $88m	$89m 1%
PIA’s and Bankruptcy FY2018 FY2019	FY2020 % Change
New Clients 415 436	347 20%
Clients under administration 1,253 1,290	1,304 1%

The Services segment achieved a profit before tax of $11.7 million, a 1% increase.

6

Consumer Lending

The Consumer Lending segment offers home loans and personal loans to assist clients wishing to consolidate their debt or to purchase a motor vehicle.

During the 2020 financial year our home loan and personal loan pools continued to grow, growing from $441 million to $457 million, an 4% increase.

Loan Pool Data Home Loans	Personal Loans
Weighted average loan size $356,157	$20,656
Security type Residential home	Motor vehicle
Weighted average loan to valuation ratio 67%	85%
Variable or fixed rate Variable	Fixed
Geographical spread All states	All states
Loan Pools FY2018 FY2019	FY2020 % Change
Home Loans $360m $382m	$394m 3%
Personal Loans $48m $59m	$63m 6%
total $408m $441m	$457m 4%
Arrears > 30 day FY2018 FY2019	FY2020 2.55% 2.41% FY2020 $171,265 *$1,155,536
Home Loans 1.40% 1.42%
Personal Loans 1.55% 3.36%
Losses FY2018 FY2019
Home Loans $501,494 $278,405
Personal Loans $263,251 $564,022

• The loss of $1,155,536 is distorted by a loss of $371,350 from the discontinued pilot product offering which we ran during the 2018 calendar year.

As our loan pools grow we expect to increase and renew our facilities as required and periodically utilise the debt capital markets. On 18 December 2019, we announced our inaugural $200 million issue of non-conforming residential mortgage backed securities via sole arranger and manager Westpac.

Accessing the debt capital markets is a key step in our strategy of diversifying our funding and de-risking the business. More importantly, it provides us with fresh funding capacity to pursue our home loan growth strategy.

Borrowings	Facility type	Provider	Limit	Maturity date	Drawn
Home Loans	Non-recourse warehouse	Westpac	$350m	Oct 2021	$198m
	Non-recourse warehouse	Institutional	$20m	Oct 2021	$15m
	Securitised	Institutional		Mar 2051	$178m
Personal Loans	Limited recourse warehouse	Westpac	$75m	Apr 2023	$42m
	Corporate	Westpac	$15m	Mar 2021	$5m

FSA Group Limited 7 Annual Report 2020

In the first half of the 2021 financial year, we plan to rebrand our Consumer Lending segment “Azora”. Azora will be led by one of the most experienced management teams in the non-bank sector with a proven track record in product design, credit policy development, responsible lending, loan underwriting, post-settlement servicing, and in managing warehouse funding, trust management and securitisation programs.

The Consumer Lending segment achieved a profit before tax of $12.6 million, a 12% increase.

Net cash inflow from operating activities

During the 2020 financial year, FSA Group maintained strong net cash inflow driven by long term annuity income from its clients. Net cash inflow from operating activities was $19.4 million, a 14% increase.

Net cash inflow from operating activities	FY2018 FY2019	FY2020 % Change
	$14.5m $17.1m	$19.4m 14%
Services	Informals/Debt Agreements	No of clients/loan pool size Average client life in years
		19,736 4.5 to 5.5
	PIA/Bankruptcy	1,304 3
Consumer Lending	Home Loans	$394m 3 to 4
	Personal Loans	$63m 4 to 5

COVID-19

We are very conscious of the impact COVID-19 has had and continues to have on our staff and clients.

We acted promptly to ensure we provided a safe working environment for our people and implemented flexible work arrangements including working from home.

We worked closely with clients affected by COVID-19 to ensure we achieved positive outcomes and we will continue with this strategy.

Arrears > 30 Day	31 Dec 2019	22 May 2020	20 Jul 2020	11 Aug 2020
Home Loans	1.76%	3.04%	2.13%	1.33%
Personal Loans	3.48%	4.43%	3.16%	1.74%
Hardships	31 Dec 2019	22 May 2020	20 Jul 2020	11 Aug 2020
Home Loans	2.66%	6.54%	4.07%	3.47%
Personal Loans	1.09%	4.05%	2.04%	1.29%

A noticeable impact of COVID-19 has been a reduction in the number of new callers seeking our assistance. We believe consumers are understandably more concerned about their health and job security and less concerned with their debt. In response to this reduction we have restructured parts of our business to reduce costs.

COVID-19 continues to impact the number of new callers seeking our assistance. We believe demand for our services will start to increase in the months leading up to the withdrawal of both Government and Bank support packages.

8

Strategy and Outlook

Our focus over the 2021 financial year will be as follows:

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Services Maintain our leading position in a niche market and improve our informal
arrangement offering, based on client and creditor feedback.
Consumer Lending Rebrand “Azora” and focus on growing our home loan and personal loan pools.
earnings Earning guidance will be provided during the 2021 financial year.
Capital management Due to our strong net cash inflow driven by long term annuity income from our
clients, we expect our full year dividend to be between 6 cents to 7 cents per share
with the balance of earnings to be re-invested to support the growing loan pools.
preparing our business Continuing with the offshoring to our Philippine (50 staff) and Indian (14 staff)
for the future offices a number of administrative tasks and automating others.
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Our People

Our work environment fosters diversity, equal employment opportunities, fairness and embraces and supports personal growth, continuous learning and training opportunities for all our team. We invest in our team to ensure that they have the skills, competencies, and knowledge they need to deliver excellent and ethical customer service and support. Our people are our greatest asset and we acknowledge and we thank them for their efforts during a challenging year. We also thank the Board for their guidance and support.

Yours sincerely,

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Tim Odillo Maher executive director

Deborah Southon executive director

FSA Group Limited 9 Annual Report 2020

Financial Statements

for the year ended 30 June 2020

• 10 Directors’ Report

• 22 Auditor’s Independence Declaration

• 23 Statement of Profit or Loss and Other Comprehensive Income

• 24 Statement of Financial Position

• 25 Statement of Changes in Equity

• 26 Statement of Cash Flows

• 27 General Information

• 28 Notes to the Financial Statements

• 53 Directors’ Declaration

• 54 Independent Auditor’s Report

• 57 Shareholder Information

• 59 Corporate Information

10

Directors’ Report

For the year ended 30 June 2020

The Directors present their report, together with the Financial Statements, on the Consolidated Entity consisting of FSA Group Limited (“Company” or “parent entity”) and the entities controlled and its interests in associates at the end of, and during, the year ended 30 June 2020.

Directors

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

Sam Doumany Tim Odillo Maher Deborah Southon Stan Kalinko (retired 22 November 2019) David Bower

Information on Directors

Sam Doumany (Non‑Executive Chairman)

experience and expertise

Mr Doumany was appointed 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 Queensland Parliament 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 firstly 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. Since 1983 Mr Doumany has operated a consultancy practice providing services in government relations, corporate strategy and market development. Mr Doumany was retained by Ernst & Young in an executive consultancy role between 1991 and 2002. 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

Nil

Special responsibilities

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

Interest in shares and options

Ordinary shares 1,100,000

Tim Odillo Maher (Executive Director)

experience and expertise

Mr Odillo Maher was appointed on 30 July 2002.

Mr Odillo Maher holds a Bachelor of Business Degree (majoring in Accounting and Finance) from Australian Catholic University and is a Certified Practising Accountant.

Other current (listed company) directorships

Nil

FSA Group Limited 11 Annual Report 2020

Former (listed company) directorships in last 3 years

Nil

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 an Executive Certificate 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) – retired 22 November 2019

experience and expertise

Mr Kalinko was appointed on 9 May 2007. Mr Kalinko retired on 22 November 2019.

David Bower (Non‑Executive Director)

experience and expertise

Mr David Bower was appointed on 23 April 2015.

Mr Bower has over 30 years of executive experience in financial services in Australia. He spent 26 years with Westpac Banking Corporation running business units in Corporate Banking, Commercial Bank, Retail Bank and Financial Markets. He also worked with ANZ and St George Bank. He is a graduate of the Australian Institute of Company Directors and holds a Bachelor of Economics degree.

Other current (listed company) directorships

Nil

Former (listed company) directorships in last 3 years

Nil

Special Responsibilities

Chairperson of the Audit & Risk Management Committee and Member of the Remuneration Committee. Interest in shares and options

Ordinary shares 90,800

12

Directors’ Report (continued)

For the year ended 30 June 2020

Company Secretary

Cellina Z Chen

Mrs Cellina Z Chen was appointed joint Company Secretary on 23 April 2015 and subsequently appointed as Company Secretary on 1 July 2015. Mrs Chen holds a Master of Commerce degree (major in accounting and finance) from the University of Sydney and is a Certified Practising Accountant. Mrs Chen has also completed the Australian Institute of Company Directors courses and holds a Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia. Mrs Chen joined the Company in 2001 and is the Chief Financial Officer.

Principal activities

The Consolidated Entity provides debt solutions and direct lending services to individuals.

Operating results

Total profit for the year and total comprehensive income for the year for the Consolidated Entity after providing for income tax and eliminating non‑controlling interests was $16,315,947 (2019: $14,411,166).

Dividends declared and paid during the year

• On 13 September 2019, a fully franked final dividend relating to the year ended 30 June 2019 of $3,752,778 was paid at 3.00c per share; and

• On 13 March 2020, a fully franked interim dividend of $3,751,703 was paid at 3.00c per share.

Dividends declared after the end of year

• On 14 August 2020, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on 11 September 2020 with a record date of 21 August 2020.

Operating and Financial Review

Detailed comments on operations are included separately in the Executive Directors’ Review, on pages 4 to 8 of the Annual Report.

Review of financial condition

Capital structure

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

• During the 2020 financial year, the Company bought back 330,930 shares under an on market share buy‑back.

Financial position

The net assets of the Consolidated Entity, which includes amounts attributable to non‑controlling interests, have increased from $54,112,380 at 30 June 2019 to $62,857,375 at 30 June 2020.

Treasury policy

The Consolidated Entity does not have a formally established treasury function. The Board is responsible for managing the Consolidated Entity’s finance facilities.

FSA Group Limited 13 Annual Report 2020

Liquidity and funding

The Consolidated Entity has sufficient funds to finance its operations, and also to allow the Consolidated Entity to take advantage of favourable business opportunities. Further details of the Consolidated Entities’ access to facilities are included in Note 12 of the Financial Statements.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Consolidated Entity during the financial year.

Matters subsequent to the end of the financial year

There have been no events since the end of the financial year that impact upon the financial performance or position of the Consolidated Entity as at 30 June 2020 except as follows:

• On 14 August 2020, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on 11 September 2020 with a record date of 21 August 2020.

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 financial 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 financial years other than the information contained in the Executive Directors’ Review.

Environmental regulations

There are no matters that have arisen in relation to environmental issues up to the date of this report. The operations of the Consolidated Entity are not subject to any significant environmental regulation under a law of the Commonwealth or of a State or Territory.

Share options

As at 30 June 2020 there were no options on issue and no shares were issued during the year.

Indemnification and insurance of directors and officers

Each of the Directors and the Officers of the Company has entered into an agreement with the Company whereby the Company has provided certain contractual rights of access to books and records of the Company to those Directors and Officers; and indemnifies those Directors and Officers against liabilities suffered in the discharge of their duties as Directors or Officers of the Company.

The Company has also insured all of the Directors and Officers 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.

Indemnity and insurance of auditor

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

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

14

Directors’ Report (continued)

For the year ended 30 June 2020

Remuneration Report (Audited)

This Remuneration Report sets out the remuneration information, pertaining to the Directors and the Senior Executive. The Directors and the Senior Executive comprise the Key Management Personnel of the Consolidated Entity for the purposes of the Corporations Act 2001 for the year ended 30 June 2020.

Key Management Personnel have the authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity directly or indirectly.

Remuneration policy

The performance of the Consolidated Entity depends upon the quality of its personnel. To prosper, the Consolidated Entity must attract, motivate and retain highly skilled people. To that end, the Consolidated Entity embodies the following principles in its remuneration framework:

• provide competitive rewards to attract high calibre executives;

• focus on creating sustained shareholder value;

• significant portion of executive remuneration at risk, and aligned with shareholder interests; and

• differentiation of individual rewards commensurate with contribution to overall results and according to individual accountability, performance and potential.

The Company has a Remuneration Committee but does not have a Nominations 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 meetings as a Board. The Remuneration Committee is responsible for determining and reviewing compensation arrangements for the Directors and the Senior Executive. The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit from the retention of highly skilled people.

Non‑Executive Director Remuneration

Non‑executive directors

Sam Doumany Non‑Executive Chairman David Bower Non‑Executive Director

The Board seeks to set aggregate remuneration at a level which provides the Consolidated Entity 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 to be no more than $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 Non‑Executive Director, the Company may remunerate that Non‑Executive Director by payment of a fixed 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 Consolidated Entity.

The remuneration of Non‑Executive Directors for the year ended 30 June 2020 is detailed in Table 1 of this Remuneration Report.

Executive Directors and Senior Executive Remuneration

executive director

Deborah Southon Executive Director

Senior Executive

Cellina Chen Chief Financial Officer/Company Secretary

FSA Group Limited 15 Annual Report 2020

The Company aims to reward the Executive Director and Senior Executive with a level and mix of remuneration commensurate with their position and responsibilities within the Consolidated Entity 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 Consolidated Entity; and

• ensure total remuneration is competitive by market standards.

The remuneration of the Executive Director and Senior Executive is agreed by the Remuneration Committee. The remuneration will comprise a fixed remuneration component and also may include offering specific short and long‑term incentives, in the form of:

• base pay and non‑monetary benefits;

• short‑term performance incentives;

• long‑term performance incentives; and

• other remuneration such as superannuation and long service leave.

Fixed remuneration, consisting of base salary, superannuation and non‑monetary benefits 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 fixed remuneration in the form of cash or other fringe benefits 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 operating segments with the targets of the responsible executives. STI payments are granted to Executives based on specific annual targets and key performance indicators (‘KPI’s’) being achieved. KPI’s include profit contribution, customer satisfaction, leadership contribution and portfolio management.

The long‑term incentives programme (“LTI”) has been set to align the targets of the Consolidated Entity’s five‑year plan with the targets of the responsible Executives. LTI payments will be granted to the Senior Executive based on specific 5 year targets being achieved. Those targets include earnings growth rate; the services division market share, arrears and termination rates; home loan and personal loan portfolio growth, arrears and bad debts; client complaint levels and employee satisfaction levels. Subject to the Board being reasonably satisfied that the above indicators have been achieved, the Senior Executive will be eligible for a payment of up to $500,000.

The remuneration of the Executive Director and Senior Executive for the year ended 30 June 2020 is detailed in Table 1 of this Remuneration Report.

Executive Director

Tim Odillo Maher

Executive Director

The Consolidated Entity has entered into a consultancy agreement with ATMR Corporation Pty Ltd. Tim Odillo Maher is one of the key personnel of ATMR Corporation Pty Ltd.

The remuneration paid to ATMR Corporation Pty Ltd for the year ended 30 June 2020 is detailed in Table 2 of this Remuneration Report.

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

Employment contracts and consultancy agreement

It is the Board’s policy that employment agreements are entered into with the Executive Directors (with the exception of Tim Odillo Maher), Senior Executive and employees. The Consolidated Entity has entered into a consultancy agreement with ATMR Corporation Pty Ltd. Tim Odillo Maher is one of the key personnel of ATMR Corporation Pty Ltd. Employment contracts and the consultancy agreement are for no specific fixed term unless otherwise stated.

16

Directors’ Report (continued)

For the year ended 30 June 2020

Remuneration Report (Audited) (continued)

Executive Directors and Senior Executive

The employment contracts entered into with the Executive Director and Senior Executive contain the following key terms:

Event	Company Policy
Performance based salary increases and/or bonuses	Board assessment based on KPI achievement
Short‑term incentives	Board assessment based on KPI achievement
Long‑term incentives	Board assessment based on 5 year plan achievement
Resignation/notice period	Three months
Serious misconduct	Company may terminate at any time
Payouts upon resignation or termination, outside
industrial regulations (i.e. ‘golden handshakes’)	Board discretion

The consultancy agreement entered into with ATMR Corporation Pty Ltd of which Tim Odillo Maher is one of the key personnel contain the following key terms:

personnel contain the following key terms:
Event	Company Policy
Success fee	Board assessment based on outcomes
Material breaches period	Company may terminate at any time
Termination for convenience period	Three months

(a) Details of Directors and Key Management Personnel

(i) Non‑Executive Directors

Sam Doumany Non‑Executive Chairman David Bower Non‑Executive Director Stan Kalinko Non‑Executive Director (retired on 22 November 2019)

(ii) Executive Directors

Tim Odillo Maher Executive Director Deborah Southon Executive Director

(iii) Senior Executive

Cellina Chen Chief Financial Officer/Company Secretary The Directors and the Senior Executive comprise the Key Management Personnel of the Consolidated Entity.

FSA Group Limited 17 Annual Report 2020

(b) Remuneration of Directors and Key Management Personnel

Table 1					Post‑		Perfor‑
					Employ‑		mance
		Short‑term		Long‑term	ment	Total	based
					Super‑
					annuation
	Salary	Cash	Non‑cash	Non‑cash	and other
	& Fees	Bonus	benefits	benefits	benefits
	$	$	$	$	$	$	%
Non‑executive directors
Sam Doumany
2020 2019	141,775 145,125	– –	– –	– –	13,469 13,787	155,244 158,912	– –
Stan Kalinko – retired 2020 38,658 2019 91,375		– –	– –	– –	3,673 8,680	42,331 100,055	– –
David Bower 2020 2019	73,513 75,249	– –	– –	– –	6,984 7,149	80,497 82,398	– –
executive director Deborah Southon 2020 2019	514,461 522,500	*125,000 325,000	**3,794 32,264	**(18,906) 8,732	25,000 25,000	649,349 913,496	19% 37%
Senior executive Cellina Chen 2020 2019	224,162 227,842	^100,000 130,000	**26,799 33,171	**4,167 4,179	21,002 20,531	376,130 415,723	27% 31%
Total Remuneration 2020 992,569		225,000	30,593	(14,739)	70,128	1,303,551
2019	1,062,091	455,000	65,435	12,911	75,147	1,670,584

• Bonus was paid to Deborah Southon in relation to the performance during financial year 2019. The bonus was approved by the Board as part of discretionary performance based remuneration. The Executive Director abstained from the vote.

^ Bonus was paid to Cellina Chen in relation to the performance during financial year 2019. The bonus was approved by the Board as part of discretionary performance based remuneration.

** Annual leave and long service leave accrual movement has been included in the non‑cash benefits above.

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

Executive Director: Deborah Southon: Nil Senior Executive: Cellina Chen: $75,000 – $150,000

The long‑term incentive bonus will be paid in the subsequent financial year estimated at: Senior Executive: Cellina Chen: Up to $250,000

18

Directors’ Report (continued)

For the year ended 30 June 2020

Remuneration Report (Audited) (continued)

Consultancy fees excluding GST paid to ATMR Corporation Pty Ltd of which Tim Odillo Maher is one of the key personnel.

Table 2		Success	Total
	Fees	Fees	Fees
	$	$	$
executive director
Tim Odillo Maher
2020	538,375	^^125,000	663,375
2019	547,500	325,000	872,500

^^ Success fees paid to ATMR Corporation Pty Ltd in relation to the performance during financial year 2019. The success fee was approved by the Board as part of discretionary performance based assessment. The Executive Director abstained from the vote. Success fees in relation to current financial year performance will be paid in the subsequent financial year with an estimated range of: $Nil.

Consolidated Entity’s earnings and movement in shareholder’s wealth for the last five years is as follows:

30 June 2020 30 June 2019 30 June 2018 30 June 2017 30 June 2016

Operating income prior to adoption of AASB 15 Operating income after adoption of new AASB 15 Net profit before tax prior to adoption of AASB 15 Net profit before tax after adoption of new AASB 15 Net profit and other comprehensive income after tax attributable to members prior to adoption of AASB 15 Net profit and other comprehensive income after tax attributable to members after adoption of new AASB 15 Share price at the start of the year Share price at the end of the year Dividends declared for the year Basic EPS (cents) prior to adoption of AASB 15 Basic EPS (cents) after adoption of new AASB 15 Diluted EPS (cents) prior to adoption of AASB 15 Diluted EPS(cents)

– – – $70,630,226 $62,078,752 $68,180,292 $69,742,110 $66,155,145 – – – – – $23,492,625 $16,842,459 $24,750,627 $22,164,979 $19,670,917 – – – – – $15,116,886 $13,478,685 $16,315,946 $14,411,166 $12,606,598 – – $1.02 $1.40 $1.36 $1.01 $1.27 $0.865 $1.02 $1.40 $1.36 $1.01 6.00c 5.00c 7.00c 7.00c 7.00c – – – 12.08 10.78 13.05 11.52 10.08 – – – – – 12.08 10.78 13.05 11.52 10.08 – –

FSA Group Limited 19 Annual Report 2020

A review of bonuses paid to the Executive Director and Senior Executive, and the success fee paid to ATMR Corporation Pty Ltd of which Tim Odillo Maher is one of the key personnel, over the previous five years is consistent with the operational performance of the Consolidated Entity in those periods.

(c) Options issued as part of remuneration for the year ended 30 June 2020

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

(e) Option holdings of Directors and Key Management Personnel

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

(f) Shareholdings of Directors and Key Management Personnel

Shares held in FSA Group Ltd	Balance 1 July 2019 Purchased on market Other Changes Balance 30 June 2020
directors Sam Doumany Tim Odillo Maher Deborah Southon David Bower Senior executive Cellina Chen	1,100,000 – – 1,100,000 42,809,231 – – 42,809,231 12,960,047 – – 12,960,047 90,800 – – 90,800 – – – –
total	56,960,078 – – 56,960,078

(g) Loans to Directors and Key Management Personnel

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

(h) Other transactions with Directors and Key Management Personnel and related parties

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 $Nil (2019: $7,320). The supplies were purchased on normal commercial terms.

(i) Voting and comments made at the Company’s 2019 Annual General Meeting (“AGM”)

At the 2019 AGM, 98.88% of the votes received supported the adoption of the Remuneration Report for the year ended 30 June 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.

This concludes the Remuneration Report which has been audited.

20

Directors’ Report (continued)

For the year ended 30 June 2020

Directors’ Meetings

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

	Number of meetings	Meetings
	held while in office	attended
Sam Doumany	10	10
Tim Odillo Maher	10	10
Deborah Southon	10	10
Stan Kalinko (retired)	5	3
David Bower	10	10
Total number of meetings held during the financial year	10

Audit & Risk Management Committee Meetings

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

	Number of meetings	Meetings
	held while in office	attended
Sam Doumany	2	2
Stan Kalinko (retired)	1	1
David Bower	2	2
Total number of meetings held during the financial year	2

Remuneration Committee Meetings

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

	Number of meetings	Meetings
	held while in office	attended
Sam Doumany	2	2
Stan Kalinko (retired)	1	‑
David Bower	2	2
Total number of meetings held during the financial year	2

Proceedings on behalf of the Company

No proceedings have been brought, or intervened in, on behalf of FSA Group Limited, nor has any application for leave been made in respect of FSA Group Limited under section 237 of the Corporations Act 2001 .

FSA Group Limited 21 Annual Report 2020

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 22.

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of FSA Group Limited are committed to achieving and demonstrating the highest standards of corporate governance. The Board endorses the 4th edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles). The Company’s Corporate Governance Charter and a statement of Corporate Governance are available on the Company website www.fsagroup.com.au.

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001 .

Signed in accordance with a resolution of the Directors.

==> picture [90 x 30] intentionally omitted <==

tim odillo maher Executive Director Sydney 14 August 2020

22

Auditor’s Independence Declaration

==> picture [473 x 620] intentionally omitted <==

FSA Group Limited 23 Annual Report 2020

Statement of Profit or Loss and Other Comprehensive Income

For the year ended 30 June 2020

Notes	Consolidated Entity
	2020 $ 2019 $
revenue and other income Fees from services 2	41,746,293 47,489,297
Finance income 2 Finance expense 2	40,778,763 39,466,776 (14,344,764) (17,213,963)
Net finance income 2	26,433,999 22,252,813
total operating income Employee benefit expense Marketing expense Operating expenses Impairment expenses Office facility expenses Depreciation and amortisation expense Unrealised gains or (loss) on fair value movement of derivatives	68,180,292 69,742,110 (23,846,974) (26,535,088) (7,585,677) (9,466,078) (5,519,160) (5,390,074) (4,765,349) (3,329,637) (2,017,928) (1,843,197) (643,546) (386,572) 948,969 (626,485)
total expenses	(43,429,665) (47,577,131)
profit before income tax	24,750,627 22,164,979
Income tax expense 17	(7,419,410) (6,707,505)
profit after income tax other comprehensive income, net of tax	17,331,217 15,457,474 – –
total comprehensive income for the year	17,331,217 15,457,474
total profit and comprehensive income for the year attributable to: Non‑controlling interests Members of the parent	1,015,271 1,046,308 16,315,946 14,411,166
Net profit for the year	17,331,217 15,457,474
earnings per share Basic earnings per share (cents per share) 3 Diluted earnings per share (cents per share) 3	13.05 11.52 13.05 11.52

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

24

Statement of Financial Position

as at 30 June 2020

Notes	Consolidated Entity
	2020 $ 2019 $
Current Assets Cash and cash equivalents Trade and other receivables 4 Other assets	7,980,442 3,303,166 19,399,262 22,077,714 1,320,277 665,635
total Current Assets	28,699,981 26,046,515
Non‑Current Assets Trade and other receivables 4 Right of use assets 8 Investments Plant and equipment Intangible assets 6 Deferred tax assets 17	7,555,304 8,771,602 11,451,345 – 385 385 1,491,367 529,440 2,653,447 2,689,888 742,248 958,720
total Non‑Current Assets	23,894,096 12,950,035
Financing Assets Personal loan cash and cash equivalents Home loan cash and cash equivalents Personal loan assets 5 Home loan assets 5	4,010,137 2,414,087 27,915,984 6,356,612 63,159,110 59,402,449 393,815,196 381,636,117
total Financing Assets	488,900,427 449,809,265
total Assets	541,494,504 488,805,815
Current Liabilities Trade and other payables 7 Contract liabilities 2 Lease liability 8 Provisions 9 Current tax liabilities Borrowings 12 Derivatives	5,847,151 6,504,759 405,745 490,481 723,960 – 2,426,822 2,293,985 1,290,118 2,129,633 447,547 1,024,869 401,134 630,827
total Current Liabilities	11,542,477 13,074,554
Non‑Current Liabilities Contract liabilities 2 Lease liability 8 Provisions 9 Deferred tax liabilities 17 Derivatives	822,782 790,427 10,647,457 – 432,259 443,859 2,962,275 2,676,565 – 716,326
total Non‑Current Liabilities	14,864,773 4,627,177
Financing Liabilities Borrowings to finance personal loan assets 12 Limited‑recourse borrowings to finance personal loan assets 12 Non‑recourse borrowings to finance home loan assets 12	5,010,874 8,057,675 42,393,650 37,861,944 404,825,356 371,072,085
total Financing Liabilities	452,229,880 416,991,704
total Liabilities	478,637,130 434,693,435
Net Assets	62,857,375 54,112,380
equity Share capital 10 Retained earnings	6,360,492 6,707,233 53,059,345 44,247,880
total equity attributable to members of the parent Non‑controlling interests	59,419,837 50,955,113 3,437,538 3,157,267
total equity	62,857,375 54,112,380

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

FSA Group Limited 25 Annual Report 2020

Statement of Changes in Equity

For the year ended 30 June 2020

			Non‑
	Share	Retained	controlling
	capital	earnings	interests	Total
	$	$	$	$
Balance at 30 June 2018	6,707,233	37,342,271	2,740,959	46,790,463
Profit after income tax for the year	–	14,411,166	1,046,308	15,457,474
Other comprehensive income for the year,
net of tax	–	–	–	–
total comprehensive income for the year	–	14,411,166	1,046,308	15,457,474
Transactions with owners in their capacity
as owners:
Dividends paid	–	(7,505,557)	–	(7,505,557)
Distributions to non‑controlling interests	–	–	(630,000)	(630,000)
Balance at 30 June 2019 Profit after income tax for the year Other comprehensive income for the year, net of tax	6,707,233 – –	44,247,880 16,315,946 –	3,157,267 1,015,271 –	54,112,380 17,331,217 –
total comprehensive income for the year Transactions with owners in their capacity as owners: Dividends paid Distributions to non‑controlling interests Share buy‑back	– – – (346,741)	16,315,946 (7,504,481) – –	1,015,271 – (735,000) –	17,331,217 (7,504,481) (735,000) (346,741)
Balance at 30 June 2020	6,360,492	53,059,345	3,437,538	62,857,375

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

26

Statement of Cash Flows

For the year ended 30 June 2020

Notes	Consolidated Entity
	2020 $ 2019 $
	Inflows/ (Outflows) Inflows/ (Outflows)
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Finance income received Finance cost paid Income tax paid	41,863,283 41,461,781 (38,769,660) (40,995,382) 40,796,691 39,322,444 (16,700,370) (17,204,093) (7,756,743) (5,504,295)
Net cash inflow from operating activities 16	19,433,201 17,080,455
Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of intangibles 6 Acquisition of right of use assets Net increase in home loan assets Net increase in personal loan assets Net decrease in other loans	(1,298,915) (89,008) (270,116) (570,534) (21,069) – (12,730,099) (21,748,188) (5,963,910) (12,916,270) 312,226 7,500
Net cash outflow from investing activities	(19,971,883) (35,316,500)
Cash flows from financing activities Net receipt of borrowings Payment of lease liability Payment of distributions to non‑controlling interests Share buy‑back 10 Dividends paid to the Company’s shareholders	37,016,461 28,646,152 (58,859) (735,000) (630,000) (346,741) – (7,504,481) (7,505,557)
Net cash inflow from financing activities	28,371,380 20,510,595
Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year	27,832,698 2,274,550 12,073,865 9,799,315
Cash and cash equivalents at the end of the financial year	39,906,563 12,073,865

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

FSA Group Limited 27 Annual Report 2020

General Information

For the year ended 30 June 2020

Consolidated entity

FSA Group Limited is a for‑profit listed public company (ASX: FSA), incorporated and domiciled in Australia.

The consolidated Financial Statements incorporate the financial information of FSA Group Limited (“Company” or “parent entity’) and the entities controlled and its interests in associates together referred to as the “Consolidated Entity”.

Principal activities

The Consolidated Entity provides debt solutions and direct lending services to individuals.

Basis of preparation

The Financial Statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations other authoritative pronouncements of the Australian Accounting Standards Board (“accounting standards”), and the Corporations Act 2001 .

The Financial Statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, certain classes of property, plant and equipment and derivative financial instruments. The Financial Statements are presented in Australian dollars and rounded to the nearest dollar.

Judgements and estimates

In the process of applying the Consolidated Entity’s accounting policies, management have made a number of judgements and applied estimates of future events.

Accounting policy – depreciation

Plant and equipment are depreciated on a straight‑line basis over their useful lives. The useful lives used for each class of asset are:

class of asset are:
Class of Asset	Useful life
Plant and equipment	2 to 5 years
Computers and office equipment	2 to 5 years
Furniture and fittings	2 to 5 years

Judgements and estimates that are material to the Financial Statements are disclosed in the following Notes:

Page	30	Note	2	Revenue and income	Page 40	Note 13	Financial instruments
Page	33	Note	4	Trade and other receivables	Page 41	Note 14	Financial risk management
Page	34	Note	5	Financing assets

New and amending accounting standards

The Consolidated Entity adopted AASB 16 Leases on 1 July 2019. No material adjustment arose from the adoption of this accounting standard on that date.

New and amending accounting standard that are not yet mandatory have not been early adopted.

Other than for the adoption of AASB 16, the accounting policies of the Consolidated Entity have been consistently applied.

Enhanced communication

The Financial Statements have been prepared using principles of enhanced communication, including using simple descriptions and sentence structures, avoiding the use of boilerplate narratives, ranking information that highlights its importance, and presenting information in a suitable format to make it easier to understand.

Authorisation

The Financial Statements are authorised for issue by the Directors on 14 August 2020.

28

Notes to the Financial Statements

For the year ended 30 June 2020

The Notes to the Financial Statements are arranged in five sections:

29 PERFORMANCE

• 29 Note 1. Segment information

• 30 Note 2. Revenue and income

• 32 Note 3. Earnings per share

33 FINANCIAL ASSETS

• 33 Note 4. Trade and other receivables

• 34 Note 5. Financing assets

• 35 Note 6. Intangible assets

36 FINANCIAL LIABILITIES

• 36 Note 7. Trade and other payables

• 36 Note 8. Leases

• 37 Note 9. Provisions

38 EQUITY AND BORROWINGS

• 38 Note 10. Share capital

• 38 Note 11. Dividends

• 39 Note 12. Borrowings

• 40 Note 13. Financial instruments

• 41 Note 14. Financial risk management

• 44 Note 15. Fair value measurement

45 OTHER

• 45 Note 16. Cash flow information

• 45 Note 17. Income tax

• 47 Note 18. Auditor’s remuneration

• 47 Note 19. Key Management Personnel disclosures

• 47 Note 20. Interests in subsidiaries

• 50 Note 21. Parent entity information

• 50 Note 22. Deed of cross guarantee

• 52 Note 23. Contingent liabilities

• 52 Note 24. Events occurring after reporting date

FSA Group Limited 29 Annual Report 2020

PERFORMANCE

This section focuses on the Consolidated Entity’s performance and returns to shareholders for the year ended 30 June 2020.

Note 1. Segment information

Reportable segments

The Consolidated Entity’s operating segments are distinguished and presented based on the differences in providing services and providing finance products. From this information, the Consolidated Entity’s chief operating decision makers have identified reportable segments that are subject to different regulatory environments and legislation:

Reportable segment	Description
Services	Offering a range of services to assist clients wishing to enter into a payment
	arrangement with their creditors, including informal arrangements, debt agreements,
	personal insolvency agreements and bankruptcy.
Consumer Lending	Offering non‑conforming home loans and personal loans to assist clients wishing
	to consolidate their debt or to purchase a motor vehicle.
other/unallocated	Including unrealised gain or loss on fair value movement of derivatives, parent entity
	services and intercompany investments, balances and transactions, which are
	eliminated upon consolidation.

Segment information

The results of the reportable segments are reconciled to the Consolidated Entity’s financial information as follows:

Operating Segments	Services Consumer Lending Other/Unallocated Consolidated Total	Services Consumer Lending Other/Unallocated Consolidated Total	Services Consumer Lending Other/Unallocated Consolidated Total	Services Consumer Lending Other/Unallocated Consolidated Total
	2020 $	2019 $ 2020 $	2019 $ 2020 $	2019 $ 2020 $ 2019 $
revenue and income: Fees from services Finance Income Finance expense		46,821,496 528,359 11,064 40,761,038 (333) (14,312,496)	620,059 47,747 39,437,525 15,791 (17,213,630) 23	47,583 41,746,293 47,489,138 18,187 40,778,763 39,466,776 – (14,344,764) (17,213,963)
	41,170,187
	1,934
	(32,291)
Net finance income Total revenue and income net of finance expenses Results: Segment profit before tax Income tax (expense)/benefit	(30,357)	10,731 26,448,542 46,832,227 26,976,901 11,616,192 12,617,442 (3,508,230) (3,757,432)	22,223,895 15,814 22,843,954 63,561 11,233,659 405,128 (3,243,187) (112,096)	18,187 26,433,999 22,252,813 65,770 68,180,292 69,741,951 (684,872) 24,750,627 22,164,979 43,912 (7,419,410) (6,707,505)
	41,139,830
	11,728,057
	(3,549,882)
profit for the year	8,178,175	8,107,962 8,860,010	7,990,472 293,032	(640,960) 17,331,217 15,457,474
Segment assets Reclassification	49,428,767	36,666,098 493,066,826	453,498,016 26,476,146	22,195,397 568,971,739 512,359,511 (27,477,234) (23,553,696)
total Assets				541,494,505 488,805,815

Each reportable segment accounts for transactions consistently with the Consolidated Entity’s accounting policies. Centrally incurred costs for shared services are allocated between segments based on employee numbers as a percentage of the total head count.

30

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 2. Revenue and income

Fees from services

Fees from services comprise fees from contracts with customers for personal insolvency services.

Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity is expected to be entitled (“the transaction price”) in exchange for transferring distinct performance obligations to clients as follows:

Service	Fees	Performance obligations	Revenue recognition
debt agreements	Application fees and	Performance obligations comprises	Revenue is recognised
and informal	administration fees	two distinct services:	as follows:
arrangements		(1) Initial service to prepare debt	(1) The initial service at
		proposal for consideration by	a point in time when
		the creditors and the Australia	the debt proposal is
		Financial Security Authority, and	completed, and
		(2) Monthly or periodic activities	(2) Over time when
		that include setting up the	the monthly or
		debt agreement or informal	periodic activities
		arrangement, managing and	are delivered.
		collecting debtor payments and	The total consideration in
		agreement variations, calculating	the contract is collected
		and distributing dividends to	over the contract term.
		creditors and periodic reporting
		to creditors and the Australian
		Financial Security Authority.
Bankruptcy and	Trustee fees	Estate administration	Recognised over time
personal			as work progresses
insolvency			and time is billed.
agreements

Application of accounting policy

For each contract with a customer, the Consolidated Entity identifies the contract with a customer, identifies the performance obligations in the contract, determines the transaction price including an estimate of any variable consideration, allocates the transaction price to the separate performance obligations on the basis of the relative stand‑alone selling price of each distinct service to be delivered, and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the services promised.

Judgements

When applying the revenue recognition accounting policy to debt agreements and informal arrangements, management have determined that:

• The stand‑alone selling price of the initial service is based on the Consolidated Entity’s set up costs using a gross‑plus margin approach.

• The monthly or periodic activities represent a series of distinct services that are substantially the same – revenue is recognised using an output method based on the numbers of time periods (e.g. months) to be provided over the term of the contract. Revenue for these services is recognised substantially in line with the pattern of collection of cash from the debtor’s monthly or periodic cash payments.

Goods & Services Tax (GST)

The Consolidated Entity is liable for GST when the consideration for the application and administration service provided is received, and recognises the GST liability at this point.

FSA Group Limited 31 Annual Report 2020

Unsatisfied performance obligations

The aggregate amount of the transaction price allocated to debt agreement and informal arrangement administration services that are unsatisfied at the end of the reporting period is $61,108,522 as at 30 June 2020 ($78,625,610 as at 30 June 2019) and is expected to be recognised as revenue in future periods as follows:

	Consolidated Entity
	2020 $ 2019 $
Within 12 months 12 to 24 months 24 to 36 months 36 to 60 month	24,714,263 27,973,338 19,396,213 22,343,432 11,655,095 15,940,148 5,342,951 12,368,692
	61,108,522 78,625,610

Unrecoverable payments

When a debtor is behind in their monthly or periodic payments, the Consolidated Entity continues to recognise the revenue that it is entitled to collect for services transferred, but that may not be recoverable. Impairment is assessed as outlined in Note 4.

Contract liability

When a debtor pays in advance of their monthly payment, the Consolidated Entity recognises a Contract Liability in the Statement of Financial Position to recognise the collection of an amount that represents the obligation to provide the future services associated with the advance collection.

the Statement of Financial Position to recognise the collection of an amount that the future services associated with the advance collection.	represents the obligation to provide
	Consolidated Entity
	2020 $ 2019 $
Current contract liability Non‑current contract liability	405,745 490,481 822,782 790,427
	1,228,527 1,280,908
Reconciliation of the carrying amount: Opening balance Payments received in advance Transfer to revenue – included in the opening balance Transfer to revenue – other balances	1,280,908 1,849,949 689,740 366,354 (742,121) (940,033) – 4,638
	1,228,527 1,280,908

Net finance income

Finance income comprises interest income and finance fee income:

• Interest income is recognised using the effective interest method.

• 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 or, where income relates to loan origination, income is deferred and amortised over the effective life of the loan using the effective interest method.

Net finance income is presented net of finance costs, which comprise interest expense on borrowings using the effective interest method.

32

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 2: Revenue and income (continued)

Disaggregation of revenue

Disaggregation of revenue Note 2: Revenue and income (continued)
	Consolidated Entity
	2020 $ 2019 $
Fees from services – Personal insolvency – Refinance broking – Other services	41,170,186 46,213,759 528,282 661,841 47,825 613,697
total revenue	41,746,293 47,489,297
Finance income – Home loan assets – Personal loan assets – Other interest income	25,844,528 26,485,647 14,916,509 12,874,562 17,726 106,567
	40,778,763 39,466,776
Finance expense – Interest expense – home loan facilities – Interest expense – personal loan facilities – Interest expense – other lending facilities	(12,666,597) (16,155,143) (1,645,899) (1,058,487) (32,268) (333)
	(14,344,764) (17,213,963)
Net finance income	26,433,999 22,252,813
total revenue and other comprehensive income net of finance expense	68,180,292 69,742,110

Note 3. Earnings per share

The Consolidated Entity calculated basic and diluted earnings per share as follows:

	Consolidated Entity
	2020 $ 2019 $
Total profit attributable to the members of the parent for the year	16,315,946 14,411,166
	Number Number
Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share (cents) Diluted earnings per share (cents)	124,987,712 125,092,610 124,987,712 125,092,610 13.05 11.52 13.05 11.52

FSA Group Limited 33 Annual Report 2020

FINANCIAL ASSETS

This section focuses on the financial assets that the Consolidated Entity requires to operate its business.

Note 4. Trade and other receivables

Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for impairment using the expected credit loss method. Trade and other receivables comprise:

Receivable type Description

debt agreement Receivables are receipted on a pro rata and informal basis, in parity with other parties to the arrangement debt proposal throughout the debt receivables proposal administration period (contract term), which is generally 2 to 5 years.

Bankruptcy Receivables are receipted on a pro rata and personal basis, in accordance with statutory insolvency approval of trustee remuneration, agreement throughout the administration period, receivables which is generally 3 years.

Sundry Other receivables receivables

Approach to impairment

Debts which are known to be uncollectable are written off by reducing the carrying amount directly. Impairment allowances are estimated through an assessment of the receivables on a collective (portfolio) basis based on historical collections data and losses incurred.

Debts which are known to be uncollectable are written off by reducing the carrying amount directly. Impairment allowances are estimated through an assessment of the receivables on both collective (portfolio) basis based on historical loss incurred, and also adjusted by individual matter assessment on an ongoing basis.

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.

Consolidated Entity

	Consolidated Entity
	2020 $ 2019 $
Current Trade receivables Provision for impairment	20,873,323 23,979,666 (1,474,061) (1,901,952)
	19,399,262 22,077,714
Non‑current Trade receivables Provision for impairment	7,738,441 8,958,179 (183,137) (186,577)
	7,555,304 8,771,602
total	26,954,566 30,849,316
the movement in the provision for impairment Opening balance Provision for impairment recognised Unused provision reversed Bad debts	2,088,529 2,264,131 761,923 1,172,532 (174,914) (77,347) (1,018,340) (1,270,787)
Closing balance	1,657,198 2,088,529

34

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 4. Trade and other receivables (continued)

Credit risk

Details of the Consolidated Entity’s credit risk is included in Note 14.

The ageing profile of trade and other receivables is as follows:

Credit risk Details of the Consolidated Entity’s credit risk is included in Note 14. The ageing profile of trade and other receivables is as follows:
	Consolidated Entity
	2020 $ 2019 $
Aging analysis – trade and other receivables Not past due Past due	19,150,187 25,864,506 9,461,577 7,073,339
total	28,611,764 32,937,845

Note 5. Financing assets

Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for impairment using the expected credit loss method. Financing assets comprise:

Loan type	Description	Type	Term	Approach to impairment
Home loan	Loans secured	Secured	3‑4 years	An impairment loss on an individual basis is recognised
assets	against			if the total expected or actual sale proceeds, resulting
	residential			from enforced sale of security, in regard to an individual
	property.			loan do not exceed the loan balance. In the event that
personal loan assets	Loans secured against motor vehicles.	Secured	4‑5 years	expected or actual sales proceeds do not exceed the loan balance, this difference and any realisation costs would equal the impairment loss.

An impairment allowance on a collective basis is recognised with regard to the underlying equity in the security or risk grade of the debtor for the loans receivable and also with regard to the payment history and any other information available, such as forward looking information that is available without undue cost of effort.

FSA Group Limited 35 Annual Report 2020

	Consolidated Entity Consolidated Entity	Consolidated Entity Consolidated Entity
	Home loan assets Personal loan assets
	2020 $	2019 $ 2020 $ 2019 $
Non‑securitised financing assets Securitised financing assets Total financing assets Provision for impairment	217,836,666	381,953,238 65,673,999 60,808,327 – – 381,953,238 65,673,999 60,808,327 (317,121) (2,514,889) (1,405,878)
	176,622,537
	394,459,203
	(644,007)
	393,815,196	381,636,117 63,159,110 59,402,449
Security Weighted average loan to valuation ratio interest rate type Aging analysis Not past due Past due 0 – 30 days Past due 30 days		67% 85% 91% Variable Fixed Fixed 345,852,009 61,033,969 55,892,504 30,687,965 3,056,345 2,875,080 5,413,264 1,583,685 2,040,743
	67%
	Variable
	357,759,181
	26,683,392
	10,016,630
total	394,459,203	381,953,238 65,673,999 60,808,327
maturity analysis Amounts to be received in less than 1 year Amounts to be received in greater than 1 year		7,022,503 15,449,970 12,386,996 374,930,735 50,224,029 48,421,331
	7,885,901
	386,573,302
	394,459,203	381,953,238 65,673,999 60,808,327
the movement in the provision for impairment Opening balance Increase/(decrease) in provision Bad debts		169,462 1,405,878 732,737 426,130 2,215,805 1,220,288 (278,471) (1,106,794) (547,147)
	317,121
	498,151
	(171,265)
Closing balance	644,007	317,121 2,514,889 1,405,878

Note 6. Intangible assets

Intangible
assets	Intangible assets recognition	Life	Impairment
Goodwill	Goodwill comprises an amount of $345,124	Indefinite	Goodwill is tested annually for
	that is the amount by which the purchase		impairment and carried at cost less
	price for the business of FSA Australia Pty		accumulated impairment losses.
	Ltd and its controlled entities exceeded the
	fair value attributed to its net assets at date
	of acquisition by the parent company.
Software	Software is measured on the basis of	2 – 5 years	Software is tested for impairment
	the cost of acquisition or development of		only if there is an indication that the
	software less subsequent accumulated		carrying amount of the software
	amortisation and accumulated		may be impaired.
	impairment losses

36

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 6. Intangible assets (continued)

Note 6. Intangible assets (continued)
	Consolidated Entity
	2020 $ 2019 $
Goodwill Recognised on consolidation	345,124 345,124
	345,124 345,124
Software Software at cost Accumulated amortisation	4,903,771 4,633,654 (2,595,448) (2,288,890)
	2,308,323 2,344,764
total intangible assets	2,653,447 2,689,888
movements during year (Software): Beginning of the year Additions Amortisation	2,344,764 1,863,535 270,116 570,534 (306,557) (89,305)
	2,308,323 2,344,764

FINANCIAL LIABILITIES

This section focuses on the Consolidated Entity’s financial liabilities.

Note 7. Trade and other payables

Trade payables and other payables 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 Consolidated Entity.

	Consolidated Entity
	2020 $ 2019 $
Current Unsecured trade payables Employee benefits payables and accruals Sundry payables and accruals	1,484,908 1,840,130 4,101,672 4,292,150 260,571 372,479
	5,847,151 6,504,759

Note 8. Leases

The Consolidated Entity leases its office premises. The Consolidated Entity adopted AASB 16 Leases on 1 July 2019. On that date, the existing lease of the Company’s office premises had a remaining lease term of 12 months and all other operating leases were short term or low value. The Company entered into a new lease of office premises on 17 February 2020 and the lease has been capitalised as a right of use asset addition during the current year. The lease liability on initial recognition is measured at the present value of the contractual payments due to the lessor over the lease term of 10 years, with the discount rate determined at the Consolidated Entity’s incremental borrowing rate on the commencement of the lease.

The right of use asset is depreciated over the lease term. The lease liability is accounted for using an effective interest method.

FSA Group Limited 37 Annual Report 2020

	Consolidated Entity
	2020 $ 2019 $
right‑of‑use assets Property Lease liabilities Current Non‑current	11,451,345 – 723,960 10,647,457
	11,371,417 –
Additions of the right‑of‑use assets during the year ended 30 June 2020 were $11,547,575 Amounts recognised in profit or loss Depreciation charge of right‑of‑use‑assets Interest expense (included in finance cost) Operating rental expense Rental on previous office premises (short term)	96,230 – 32,291 498,338 475,718 1,188,374 1,139,040
	1,815,233 1,614,758

Note 9. Provisions

Provisions are recognised when the Consolidated Entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Employee benefits

A provision has been recognised for employee benefits relating to annual leave and long service leave.

As at 30 June 2020, the Consolidated Entity employed 127 full‑time equivalent employees (2019: 164) plus a further 2 independent contractors (2019: 4).

Short‑term employee benefits

Liabilities for wages and salaries, including non‑monetary benefits, annual leave and long service 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‑term employee benefits

The liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

pay increases through promotion and inflation have been taken into account.
	Consolidated Entity
	2020 $ 2019 $
Current Employee benefits Non‑current Employee benefits	2,426,822 2,293,985 432,259 443,859

38

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

EQUITY AND BORROWINGS

This section focuses on the Consolidated Entity’s capital structure and borrowing activities.

Note 10. Share capital

Share capital comprises:

	Consolidated Entity
	2020 $ 2019 $
124,761,680(2019: 125,092,610)Fully paid ordinaryshares	6,360,492 6,707,233
	Number Number
Ordinary shares Balance 1 July Less shares bought back during year	125,092,610 125,092,610 (330,930) –
Balance 30 June	124,761,680 125,092,610

On 22 November 2019, the Company announced an on market buy‑back in line with its capital management strategy.

Note 11. Dividends

Dividends are recognised when declared during the financial year and at the discretion of the Company. Dividends recognised in the current financial period by FSA Group Limited are:

	Value per			Date of
Financial Year 2020	share $	Total Amount	Franked	Payment
Final – ordinary Interim – ordinary	0.03 0.03	$3,752,778 $3,751,703	100% 100%	13‑Sep‑19 13‑Mar‑20
	Value per			Date of
Financial Year 2019	share $	Total Amount	Franked	Payment
Final – ordinary	0.04	$5,003,704	100%	27‑Sep‑18
Interim – ordinary	0.03	$2,501,853	100%	28‑Mar‑19

On 14 August 2020, the Directors declared a fully franked final dividend for the year ended 30 June 2020 of 3.00 cents per ordinary share. This brings the full year dividend to 6.00 cents per year.

	Consolidated Entity
	2020 $ 2019 $
Franking credits 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%	20,865,090 16,020,026 1,290,118 2,129,633
Franking credits available for subsequent financial years based on a tax rate of 30%	22,155,208 18,149,659

FSA Group Limited 39 Annual Report 2020

Note 12. Borrowings

Borrowings comprise:

Borrowings	Facility type	Provider Limit Maturity date Drawn Security	Provider Limit Maturity date Drawn Security
Home loans	Non‑recourse warehouse	Westpac $350m Oct‑21 $197,536,443This facility is secured against current and future home loan assets of Fox Symes Home Loans Warehouse Trust 1. Institutional $20m Oct‑21 $15,363,947
	Securitised	Institutional Mar‑51 $178,490,083 This facility is secured against current and future home loan assets of the Fox Symes Home Loans 2019‑1 PP Trust.
personal loans	Limited recourse warehouse	Westpac $75m Apr‑23 $42,350,000 This facility is secured against current and future personal loan assets of the Fox Symes Personal Loans Warehouse Trust 1.
	Corporate	Westpac $15m Mar‑21 $5,007,558 This facility is secured by a fixed and floating charge over the assets of FSA Group Limited and its controlled entities.
			Consolidated Entity
			2020 $ 2019 $
Current – unsecured Credit cards			447,547 1,024,869
Financing Liabilities – secured Bank loan to finance personal loan assets Limited recourse borrowings to finance personal loan assets Non‑recourse borrowings to finance home loan assets			5,010,874 8,057,675 42,393,650 37,861,944 404,825,356 371,072,085
the carrying amounts of assets pledged as security are: Personal loan assets Home loan assets			452,229,880 416,991,704 67,169,247 61,816,536 421,731,180 387,992,729
			488,900,427 449,809,265

40

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 13. Financial instruments

The Consolidated Entity undertakes transactions in a range of financial instruments, the risks associated with those financial instrument and recognition as follows:

Financial

Financial
instrument	Type of instruments Risks Recognition
Non‑derivative financial instruments	Trade and other receivables Home loan assets Personal loan assets Cash and cash equivalents Other financial assets Credit risk & Market risk Non‑derivative financial instruments (other than lease liabilities reported in Note 8) are recognised initially at fair value plus adjusted for any directly attributable transaction costs. Subsequent to initial recognition, non‑derivative financial instruments are measured at amortised cost using the effective interest rate method. Financial assets are reduced by the estimated of expected credit losses. Trade and other payables Lease liabilities Short term loans Bank loans Warehouse facilities Securtised facilities Liquidity risk & Market risk
derivative financial instruments	Interest rate swap contracts Market risk Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re‑measured to their fair value at each reporting date.

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

These financial instruments represented in the Statement of Financial Position ar Financial Instruments: Recognition and Measurement as follows:	e categorised under AASB 139
	Consolidated Entity
	2020 $ 2019 $
Financial Assets Cash and cash equivalents Trade and other receivables Financing assets	7,980,442 3,303,166 26,954,566 30,849,316 488,900,427 449,809,265
Assets and receivables at amortised cost	523,835,435 483,961,747
Financial Liabilities Payables at amortised cost Financing liabilities	6,294,698 7,529,628 452,229,880 416,991,704
payables at amortised cost	458,524,578 424,521,332
Assets and liabilities measured at fair value through profit and loss: derivatives – interest rate swap contracts	(401,134) (1,347,153)

FSA Group Limited 41 Annual Report 2020

Note 14. Financial risk management

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.

Credit risk

Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial 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 financial instruments entered into by the Consolidated Entity.

Type of
instruments	Security	Risk Management	Impairment Assessment
personal	Unsecured	Debtors are assessed for	Debts which are known to be
insolvency		serviceability and affordability	uncollectable are written off by
receivables		prior to inception of	reducing the carrying amount directly.
(debt agreements,		each agreement	Significant financial difficulties of the
informal			debtor, probability that the debtor
arrangements,			will enter bankruptcy or financial
personal			reorganisation and default or
insolvency			delinquency in payments are
agreements and			considered indicators that the trade
bankruptcy)			receivable may be impaired.
Home loan assets	1st registered	Credit and lending policies have	A loan is classified as being in arrears
	mortgage over	been established for all lending	at the reporting date on the basis of
	residential	operations whereby each new	“past due” amounts. Any loan with an
	property	borrower is analysed individually	amount that is past due is classified
		for creditworthiness and	as being in arrears and the total
		serviceability prior to the	amount of the loan is recorded as
		Consolidated Entity doing	in arrears. Ageing of arrears is
		business with them. This includes	determined by dividing total arrears
		where applicable credit history	over instalment amount and
personal loan	Motor vehicle	checks and affordability	multiplying this by the instalment
asset		assessment and, in the case of	frequency (i.e. weekly, fortnightly,
		lending activities, confirming the	and monthly).
		existence and title of the security, and assessing the value of the security provided.	A loan is classified as being in hardship when a hardship application has been submitted and accepted.

42

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 14. Financial risk management (continued)

Liquidity risk

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

Type of
instruments	Risk Management	Assessment
trade and other	The Consolidated Entity’s approach in	The Directors are satisfied that The
payables	managing liquidity is to ensure that it will	Consolidated Entity will be able to meet
Lease liabilities	always have sufficient liquidity to meet its	its financial obligations as they fall due.
Short term loans	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 cash flow
	forecasting, which is reviewed and monitored
	monthly by management as part of the
	Consolidated Entity’s master budget and
	having access to funding through facilities.
Bank loans	The Consolidated Entity is reliant on the	The Directors are satisfied that an event of
Warehouse	renewal of existing facilities, the negotiation	default in relation to the Consolidated Entity’s
facilities Securitised	of new facilities, or the issuance of residential mortgage backed securities. Each facility is structured so that if it is not renewed or	home loan or personal loan facilities will not affect the Consolidated Entity’s ability to continue as a going concern.
facilities	otherwise defaults there is only limited
	recourse to the Consolidated Entity.

The contractual maturity of the Consolidated Entity’s fixed and floating rate financial liabilities are as follows. The amounts represent the future undiscounted principal and interest cash flows.

	Consolidated Entity
	30 June 2020
	Carrying amount $ Contractual Cash flows $ 12 months or less $ 1 to 2 years $ 2 to 5 years $ 5‑10 years $
Trade and other payables Leases Other short term loans Bank loans Warehouse facilities Securitised facilities	5,847,151 5,847,151 5,847,151 – – –
	11,371,417 13,579,770 1,098,341 1,153,015 3,809,396 7,519,018
	447,547 447,547 447,547 – – –
	5,010,874 5,062,658 5,062,658 – – –
	268,553,016 281,685,344 22,226,681 216,407,846 43,050,817 –
	178,665,990 283,104,146 1,084,097 3,243,404 10,441,097 268,335,548
total	469,895,995 589,726,616 35,766,475 220,804,265 57,301,310 275,854,566

FSA Group Limited 43 Annual Report 2020

	Consolidated Entity
	30 June 2019
	Carrying amount $ Contractual Cash flows $ 12 months or less $ 1 to 2 years $ 2 to 5 years $ 5‑25 years $
Trade and other payables Other short term loans Bank loans Warehouse facilities	6,504,759 6,504,759 6,504,759 – – – 1,024,869 1,024,870 1,024,870 – – – 8,057,675 8,698,330 376,297 8,322,033 – – 408,934,029 447,906,189 14,750,987 15,313,630 417,841,572 –
total	424,521,332 464,134,147 27,321,542 23,635,663 417,841,572 –

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 financial 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.

Type of
instruments	Risk Management	Assessment
Home loans	Home loan assets are lent on variable interest	The Consolidated Entity performs interest
	rates and are financed by variable rate	rate sensitivity analysis to assess the effect
	borrowings, which mitigate the Consolidated	on profit after tax if interest rates had been 50
	Entity’s exposure to interest rate risk on these	basis points (bps) higher or lower at reporting
	borrowings to an acceptable level. These	date on the Consolidated Entity’s floating rate
	borrowings are on a non‑recourse basis	financial instruments and interest rate swap
	to the Consolidated Entity.	agreement. The first interest rate swap
personal loans	Personal loan assets are lent on fixed interest rates and are financed by variable rate borrowings. Personal loan terms average around 4 to 5 years which mitigate the Consolidated Entity’s exposure to interest rate risk on these borrowings. These	contract expired in June 2020 and the second interest swap contract will expire in November 2020, it is unlikely there will be sharp movements in the interest rate cycle within the next six months therefore the impact to the profit after tax is immaterial.
	borrowings are on a limited‑recourse basis
	to the Consolidated Entity.
interest rate	The Board and Management have previously
swap contracts	adopted the policy of fixing approximate $80
	– $100 million of borrowings to mitigate the
	risk of future interest rate movements.

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.

44

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 15. Fair value measurement

Fair value measurement hierarchy

The Consolidated Entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

• (a) The Consolidated Entity measures and recognises the interest rate swap financial instrument at fair value on a recurring basis after initial recognition. Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates.

Valuation techniques and inputs used to measure Level 2 Fair Values:

	Fair Value at
Description	30 June 2020 ($)	Valuation Technique(s)	Inputs Used
Financial liability:
Interest rate swap	401,134	Income approach using discounted cash flow	Overnight Index
		methodology and the funding valuation	Swap rate
		adjustment framework

(b) The fair value of assets and liabilities classified as Level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs. Except as detailed in the following table, the Directors consider that due to their short‑term nature the carrying amounts of financial assets and financial liabilities, which include cash, current trade receivables, current payables and current borrowings, are assumed to approximate their fair values. For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short‑term nature.

	Jun‑20 Book value $ Jun‑20 Fair value $
Financial assets Current receivables net of deferred tax Non‑current receivables net of deferred tax	5,711,053 5,711,053 7,060,838 6,971,579
Financing assets Personal loan assets Home loan assets	63,159,110 69,678,202 393,815,196 413,131,099

FSA Group Limited 45 Annual Report 2020

OTHER

Note 16. Cash flow information

OTHER Note 16. Cash flow information
	Consolidated Entity
	2020 $ 2019 $
reconciliation of cash flows from operations to profit after tax Profit after tax Non‑cash flows in profit/(loss): Depreciation and amortisation Unrealised (gain)/loss on derivatives Loss on write off investments Increase/decrease in assets and liabilities: Trade and other receivables Other current assets Tax assets/liabilities Trade and other payables Provisions	17,331,217 15,457,474 643,546 386,572 (948,969) 626,485 1,278,059 816,109 5,065,686 (1,911,788) (706,355) (154,136) (337,334) 953,030 (3,013,885) 921,097 121,236 (14,388)
Cash flows from operating activities	19,433,201 17,080,455

Note 17. Income tax

Income tax

The Consolidated Entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Consolidated Entity recognises liabilities for anticipated tax audit issues based on the consolidated entity’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

The charge for current income tax expense is based on the profit 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.

Tax consolidation

FSA Group Limited and its wholly‑owned Australian subsidiaries have formed an income tax consolidated group under the Tax Consolidation Regime. 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.

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 benefit 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.

46

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 17. Income tax (continued)

Note 17. Income tax (continued)
	Consolidated Entity
	2020 $ 2019 $
(a) income tax expense Current tax expense Deferred tax expense Overprovision for current taxpayable in apriorperiod	6,921,216 6,274,363 502,182 460,137 (3,988) (26,995)
	7,419,410 6,707,505
Deferred income tax expense included in income tax expense comprises: Decrease in deferred tax assets Increase in deferred tax liabilities	(2,893,685) (699,158) 3,395,867 1,140,898
	502,182 441,740
(b) Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax	24,750,627 22,164,979
Tax at the Australian tax rate of 30% (2019: 30%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income Non‑deductible expenses Adjustment for overseas tax rates	7,425,188 6,649,494 38,297 44,882 (1,286) (2,779)
Under provision in the prior year Tax Offsets	7,462,199 6,691,597 69,578 166,763 (112,367) (150,855)
Income tax expense	7,419,410 6,707,505
(c) deferred tax assets Provisions Capital legal expenses Accrued expenditure Lease liability Tax losses carried forward Other	2,173,736 1,838,376 25,140 23,563 764,137 1,596,581 3,411,425 – – 227 84,592 106,598
Deferred tax liabilityoffset on tax consolidation	6,459,030 3,565,345 (5,716,782) (2,606,625)
Total deferred tax assets	742,248 958,720
(d) deferred tax liabilities Temporary difference on assessable income Temporary difference on lease Deferred tax liabilityoffset on tax consolidation	5,243,653 5,283,190 3,435,404 – (5,716,782) (2,606,625)
Total deferred tax liabilities	2,962,275 2,676,565

FSA Group Limited 47 Annual Report 2020

Note 18. Auditor’s remuneration

Note 18. Auditor’s remuneration
Auditors of the Consolidated Entity – BDO* and related network firms	Consolidated Entity
	2020 $ 2019 $
Audit and review of financial statements Consolidated Entity Controlled entities andjoint operations	159,000 182,806 28,500 39,500
total audit and review of financial statements	187,500 222,356
other statutoryassurance services	9,000 11,650
Non‑audit services Taxation compliance services Taxation advice and consulting Other trainingand consulting	63,280 69,975 76,405 43,955 4,000 8,960
total non‑audit services	143,685 122,890
total servicesprovided byBdo	340,185 356,896

• The BDO entity performing the audit of the Consolidated Entity transitioned from BDO East Coast Partnership to BDO Audit Pty Ltd on 1 August 2020. The disclosures includes amounts received or due and receivable by BDO East Coast Partnership, BDO Audit Pty Ltd and their respective related entities.

Note 19. Key Management Personnel disclosures

Remuneration of Directors and Key Management Personnel	Consolidated Entity
	2020 $ 2019 $
Short‑term employee benefits Long‑term employee benefits Post‑employment benefits	1,911,537 2,455,026 (14,739) 12,911 70,128 75,147
	1,966,926 2,543,084

Note 20. Interests in subsidiaries

Investments in subsidiaries

Investments are brought to account on the cost basis in the parent entity’s Financial 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 flow from investments has not been discounted to their present value in determining the recoverable amounts, except where stated.

present value in determining the recoverable amounts, except where stated.
Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2020 % 2019 %
FSA Australia Pty Ltd(2) 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 Fox Symes Personal Loans Pty Ltd(3) Australia Easy Bill Pay Pty Ltd(1) Australia 104 880 088 Group Holdings Pty Ltd(2) Australia Aravanis Insolvency Pty Ltd(1) Australia Fox Symes Business Services PtyLtd(1) Australia	100 100 100 100 100 100 100 100 100 – 100 100 100 100 65 65 75 75

(1) Investment held by FSA Australia Pty Ltd

(2) Investment held by FSA Group Limited

(3) Investment was previously held by Fox Symes Home Loans Pty Ltd, now held by FSA Group Limited

48

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 20. Interests in subsidiaries (continued)

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
	2020 % 2019 %
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 Financial Pty Ltd Australia Fox Symes Personal Loans Pty Ltd Australia Fox Symes Home Loans Warehouse Trust No.1 Australia FSHL Prime Warehouse Trust 1 Australia Fox Symes Home Loans 2019‑1 PP Trust Australia	100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 –

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

Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2020 % 2019 %
Fox Symes Personal Loans Warehouse Trust 1 Australia	100 100

The following entities are subsidiaries of 104 880 088 Group Holdings Pty Limited

Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2020 % 2019 %
110 294 767 Capital Finance Pty Limited Australia 102 333 111 Corporate Pty Limited Australia 111 044 510 Equity Partners Pty Limited Australia One Financial Corporation Pty Ltd Australia	100 100 100 100 100 100 100 100

The following entities are subsidiary of Aravanis Insolvency Pty Limited

Name Country of Incorporation	Percentage of equity interest held by the Consolidated Entity
	2020 % 2019 %
Aravanis Advisory Limited India	99.99 –

FSA Group Limited 49 Annual Report 2020

The consolidated Financial Statements incorporate the assets, liabilities and results of the following subsidiaries with non‑controlling interests in accordance with the accounting policy described in Note 1 of the Financial Statements:

Name Principal place of business/ Country of incorporation Principal activities	Parent Non‑controlling interests	Parent Non‑controlling interests	Parent Non‑controlling interests
	Ownership interest 2020	Ownership interest 2019 Ownership interest 2020 Ownership interest 2019
Aravanis Insolvency Pty Limited Australia Personal insolvency agreements and Bankruptcies	65%		65% 35% 35%
Fox Symes Business Services Pty Limited Australia Accounting and taxation	75%		75% 25% 25%
			Aravanis Insolvency Pty Limited
			2020 $ 2019 $
Summarised Statement of Financial position Current assets Non‑current assets			13,500,429 12,662,482 413,900 440,631
total assets Current liabilities Non‑current liabilities			13,914,329 13,103,113 825,804 1,130,514 3,375,664 3,059,857
total liabilities			4,201,468 4,190,371
Net assets			9,712,861 8,912,742
Summarised Statement of profit or Loss and other Comprehensive income Revenue Expenses			9,800,157 10,535,724 (5,651,347) (6,264,141)
profit before income tax expense Income tax expense			4,148,810 4,271,583 (1,248,691) (1,283,891)
profit after income tax expense other comprehensive income			2,900,119 2,987,692 – –
total comprehensive income			2,900,119 2,987,692
Summarised Statement of Cash Flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities			3,038,354 1,279,556 (20,410) 94,295 (2,099,382) (1,795,839)
Net increase/(decrease) in cash and cash equivalents			918,562 (421,988)
other financial information profit attributable to non‑controlling interests Accumulated non‑controlling interests at the end of reporting period			1,015,044 1,045,692 3,429,362 3,149,317

The non‑controlling interest of Fox Symes Business Services Pty Limited was insignificant and therefore information has not been provided.

50

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 21. Parent entity information

The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated Financial Statements. Refer to Note 1 and other relevant notes within these Financial Statements for a summary of the significant accounting policies relating to the Consolidated Entity.

	2020 $ 2019 $
Financial position Total current assets Total non‑current assets	13,008,119 12,911,310 8,465,084 8,465,084
total assets	21,473,203 21,376,394
Total current liabilities	1,596,886 2,230,050
total liabilities	1,596,886 2,230,050
Net assets	19,876,317 19,146,344
equity Share capital Dividends to shareholders Accumulated profit/(loss)	6,360,492 6,707,233 (7,504,481) (7,505,557) 21,020,306 19,944,668
total equity	19,876,317 19,146,344
Financial performance Profit after income tax Other comprehensive Income total Comprehensive income/(loss)for the year	8,603,876 9,961,016 – –
	8,603,876 9,961,016

During the financial 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 22 for further details.

There are no contingent liabilities or commitments in the parent entity (2019: $Nil).

Note 22. 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 and 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 financial report and directors’ report under ASIC Corporation (Wholly owned companies) Instrument 2017/785 (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’.

Set out below is a consolidated Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Position of the ‘Closed Group’.

FSA Group Limited 51 Annual Report 2020

	2020 $ 2019 $
Statement of profit or Loss and other Comprehensive income revenue and other income Fees from services	26,389,609 29,364,105
Finance income Finance expense	15,756 19,269 23 (293)
Net finance income	15,779 18,976
total revenue and other income net of finance expense	26,405,388 29,383,081
Total expense	(492,235) (557,919)
profit before income tax	25,913,153 28,825,162
Income tax expense	(8,049,194) (8,639,638)
profit after income tax Other Comprehensive Income	17,863,959 20,185,524 – –
total Comprehensive income for the year	17,863,959 20,185,524
Statement of Financial position Current Assets Cash and cash equivalents Trade and other receivables Other assets	4,528,647 580,675 2,615,988 3,603,743 2 2
total Current Assets	7,144,637 4,184,420
Non‑Current Assets Trade and other receivables Investments	205,817,821 190,674,945 8,465,084 8,465,084
total Non‑Current Assets	214,282,905 199,140,029
total Assets	221,427,542 203,324,449
Current Liabilities Trade and other payables Contract liability Tax Liabilities	210,547 1,466,207 405,745 490,481 1,607,155 2,343,500
total Current Liabilities	2,223,447 4,300,188
Non‑Current Liabilities Contract liability Deferred tax liabilities	822,782 790,428 1,279,263 1,142,257
total Non‑Current Liabilities	2,102,045 1,932,685
total Liabilities	4,325,492 6,232,873
Net Assets	217,102,050 197,091,576
equity Share capital Retained earnings	6,360,496 6,707,237 210,741,554 190,384,339
total equity	217,102,050 197,091,576

52

Notes to the Financial Statements (continued)

For the year ended 30 June 2020

Note 23. Contingent liabilities

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

Home loans

At reporting date, home loan applications that had been accepted by the Consolidated Entity but not yet settled amount to $8,188,250 (2019: $6,397,932). Home loans are usually settled within 4 weeks of acceptance.

Personal loans

At reporting date, all personal loan applications that had been accepted by the Consolidated Entity were settled. Personal loans are usually settled within one week of acceptance.

Note 24. Events occurring after reporting date

There have been no events since the end of the financial year that impact upon the financial performance or position of the Consolidated Entity as at 30 June 2020 except as follows:

• On 14 August 2020, Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on 11 September 2020 with a record date of 21 August 2020. This brings the full year dividend to 6.00 cents per share.

FSA Group Limited 53 Annual Report 2020

Directors’ Declaration

In the Directors’ opinion:

• The Financial Statements, comprising the Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Cash Flows, 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 other mandatory professional reporting requirements; and

• b. give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and of its performance for the year ended on that date.

• The Company has included in the Notes to the Financial 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 Officer required by Section 295A of the Corporations Act 2001 .

FSA Group Limited, FSA Australia Pty Ltd and Fox Symes Debt Relief Services Pty Ltd identified in Note 22 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 22.

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:

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tim odillo maher Executive Director Sydney 14 August 2020

deborah Southon Executive Director Sydney 14 August 2020

54

Independent Auditor’s Report

To the members of FSA Group Limited

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FSA Group Limited 55 Annual Report 2020

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56

Independent Auditor’s Report (continued)

To the members of FSA Group Limited

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FSA Group Limited 57 Annual Report 2020

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 3 August 2020.

(a) Distribution of equity securities

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

(a) Distribution of equity securities The number of holders, by size of holding, in each class of security are:
	Quoted Ordinary shares
	Number of holders Number of shares
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	310 120,092
	442 1,391,479
	260 2,222,588
	353 10,090,780
	78 110,936,041
total	1,443 124,761,680

The number of security investors holding less than a marketable parcel of 538 securities ($0.930 on 03/08/2020) is 196 and they hold 22,589 securities.

(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 26,000,000 20.84%
2	Mazamand Group Pty Ltd (investor group) 16,809,231 13.47%
3	ADST Pty Ltd (investor group) 12,960,047 10.39%
4	BJR Investment Holdings Pty Ltd 11,111,111 8.91%
5	J P Morgan Nominees Australia Limited 8,159,004 6.54%
6	UBS Nominees Pty Ltd 4,451,848 3.57%
7	Ruminator Pty Limited 3,491,440 2.80%
8	Contemplator Pty Limited 2,597,622 2.08%
9	Bulwarra Pty Ltd 1,773,775 1.42%
10	Dundas Ritchie Investments Pty Ltd 1,500,000 1.20%
11	Investment Custodial Services Limited 1,364,904 1.09%
12	Microequities Asset Management Pty Ltd 1,154,557 0.93%
13	HSBC Custody Nominees (Australia) Limited 1,100,387 0.88%
14	Samuel Doumany (investor group) 1,100,000 0.88%
15	Karia Investment Pty Ltd (investor group) 966,666 0.77%
16	National Nominees Limited 880,000 0.71%
17	Fernane Pty Ltd 877,168 0.70%
18	Harold Cripps Holdings Pty Ltd 700,541 0.56%
19	Garrett Smythe Ltd 684,710 0.55%
20	Gattenside PtyLtd 590,541 0.47%
	top20 98,273,552 78.77%
	total 124,761,680 100%

58

Shareholder Information (continued)

(c) Substantial shareholders

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

(c) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section of the_Corporations Act 2001_are:	671B
	Number of
	shares
Mazamand Group Pty Ltd	16,809,231
ADST Pty Ltd	12,960,047
BJR Investment Holdings Pty Ltd	11,111,111

(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 Consolidated Entity has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives.

FSA Group Limited 59 Annual Report 2020

Corporate Information

Directors

Sam doumany – Non‑Executive Chairman tim odillo maher – Executive Director deborah Southon – Executive Director david Bower – Non‑Executive Director

Share Register

Link Market Services Ltd

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

Chief Financial Officer

Cellina Chen

Company Secretary

Auditors

BDO Audit Pty Ltd

Level 11 1 Margaret Street Sydney NSW 2000

Cellina Chen

Country of Incorporation

Registered Office and Corporate Office

Level 13 1 Oxford Street Darlinghurst NSW 2010 Phone: +61 (02) 8985 5565 Fax: +61 (02) 8985 5358

Australia

Securities Exchange Listing

Australian Securities Exchange Ltd

ASX Code: FSA

Internet Address

Solicitors

www.fsagroup.com.au

Hopgood Ganim

Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000

Australian Business Number

ABN 98 093 855 791

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www.colliercreative.com.au #FSA0015

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www.fsagroup.com.au