FSA GROUP LIMITED — Interim / Quarterly Report 2011

Feb 24, 2011

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FSA Group Interim Results Six month period ending 31 December 2010 February 2011

Client acquisition

Direct client acquisition model

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• Via advertising and marketing – TV, web etc.

• Controlled, selective, low cost

• No third party referral channels

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Clients are ‘micro-managed’ efficiently

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• Assess client needs

• Tailor solutions - affordable, sustainable and viable

• Proactively manage for debt repayment and rehabilitation

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Overview of products and services

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Individuals
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Small Businesses
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• Debt Agreements

• Personal Insolvency Agreements

• Bankruptcy

• Other solutions

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Services

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Debt Agreements

• Largest provider – FY2010 market share 51%

• ‘Micro manages’ over $260m of unsecured debt on behalf of creditors under debt agreements

• Fee for service income

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• Debt Agreements

• Personal Insolvency

Personal Insolvency Agreements and Bankruptcy

  - One of the largest registered trustees in Australia

  - Fee for service income

• Agreements

• Bankruptcy

• Other solutions

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Home loan broking, lending & management

2003 Home Loan Broking

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• Largest non‐conforming broker in Australia

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• Up‐front and trail commission

• No balance sheet or funding risk

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2007 Home Loan Lending

• Current $235m non‐recourse facility from Westpac for non‐conforming lending

• Lender’s margin and annuity income

• Balance sheet risk limited to equity invested

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2010

Home Loan Management

• Prime home loan manager for Bendigo and Adelaide Bank

• Up‐front and manager trail commission

• No balance sheet or funding risk

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Consulting and factoring finance

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Small Businesses
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Consulting

• Provides a range of debt solutions to small businesses

Factoring Finance

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• Current $25m limited recourse facility from Westpac for the provision of factoring finance

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• Assigned receivables are credit insured

• Lender’s margin and annuity income

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Interim Results and Operating Performance

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Services

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Services – client numbers 1HFY2010 vs. 1HFY2011 Debt Agreements Up 10% Personal Insolvency Agreements and Up 16% Bankruptcy

• Continued high levels of consumer debt coupled with a higher interest rate environment are likely to drive demand for debt agreements, personal insolvency agreements and bankruptcy.

• Debt agreement market is competitive and there is continued pressure on fees from clients, creditors and competitors.

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Home loan lending

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FSA is one of the few remaining non‐conforming lenders operating in the market

• Funding $235m from Westpac

• Renewed to October 2012

• Balance sheet risk limited to equity invested

• High quality demand due to fewer competitors

• Currently lending to < 50% of potential clients

• Aiming to grow loan pool to $600m by 2013

	Home Loan Lending
	Loan Pool Size	$220m
	Security Type	1st Mortgage
	Average Loan Size	$203,000
	Average Weighted LVR	68%
	% Full Doc Borrowers	98%
	% Variable Rate Borrowers	100%
	Geographical Spread	Australia Wide
	>30 day arrears*	2.85%
	Loss of Capital since inception	$132,000
	Target Loan Pool 2013	$600m

*Competitors >30 day arrears as reported by the Standard & Poors Index was 11.93% at November 2010

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Factoring finance

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FSA also provides a range of debt solutions to small businesses including factoring finance

Factoring Finance

• Funding $25m from Westpac

• Renewed to June 2012

• High quality demand due to difficulties with small businesses obtaining credit

• Assigned receivables are credit insured

• Aiming to grow pool to $20m ‐ 25m by 2011 and to $45m by 2013

	Loan Pool Size	$16m
	Security Type	Assigned Receivables
	Average Loan Size	$220,000
	Average Weighted LVR	Ranges 55%‐65%
	% Variable Rate Borrowers	100%
	Geographical Spread	Australia Wide
	> 90 day arrears	4%
	Asset Insured	Yes
	Loss of Capital since inception	NIL
	Target Loan Pool 2011	$20m ‐ 25m
	Target Loan Pool 2013	$45m

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Interim Results

Revenue and Profit

	1H FY2010 1H FY2011 %
Revenue and Income	$24.70m $27.28m 10.5%
Profit Before Tax
Services	$4.32m $4.36m 0.9%
Home Loan Lending	$1.60m $1.72m 7.5%
Business Services & Lending	$0.21m $1.12m 433%
Other	($0.07m) ($0.10m) ‐
Profit Before Tax	$6.06m $7.10m 17.2%
Profit After Tax	$3.56m $3.97m 11.7%

1. Business Services & Lending = Predominantly Factoring Finance

2. Profit After Tax = Profit After Tax Attributable to Members

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FSA Group

Interim Results O eratin Cash flow p g

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Cash Flows from FY2009 FY2010 1HFY2011 Operating Activities 12 months 12 months 6 months Cash flow Cash Flow from Operations $1.06m $5.26m $3.47m continues Number of debt agreements to build under management 7,180 11,050 12,800

1HFY2011 includes a pre‐payment outflow of $379,847 for advertising and marketing

During 1HFY2011 the total number of clients administered under debt agreements increased to 12,800. Each debt agreement client pays an average fee to FSA of around $100 per month for 4.5 years. FSA forecasts that client numbers will grow to around 17,500 by the end of FY2012. The costs of administering these additional clients will be negligible and therefore we will continue to see a steady and sustained increase in operating cash flow.

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FSA Group

Interim Results Net O eratin Cash Flow p g

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Cash Flows from Operating Activities	FY2009 12 months FY2010 12 months 1HFY2011 6 months $1.06m $5.26m $3.47m $1.42m ($2.13m) ($0.31m) $0.40m ($0.67m) ($0.37m) $2.88m $2.46m $2.78m Cash flow continues to build
Cash Flow from Operations
Net cash receipts/(payments) for institutional creditor distributions*
Income taxes (paid) refunded
Net Cash Flows Provided by Operating Activities

*FSA will continue to record cash outflows of “net cash payments for institutional creditor distributions” over the next three years. This cash outflow relates to monies received on behalf of and paid to creditors for debt agreements (DA’s) under the pre‐July 2007 legislation ‐ whatever FSA receives it ultimately pays to creditors. The last year this line item should appear is 2013 as DA’s under the pre‐July 2007 legislation should have been finalised. As at 31 December 2010, FSA has an accrual of $2.4m to be paid to creditors so the maximum cumulative “Net Cash Payments” will be $2.4m over this period. For all debt agreements administered post‐July 2007, monies are banked into a separate trust bank account, which is not part of the consolidated group.

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FSA Group

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Outlook and FY2011 Profit Guidance

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Outlook: growth across all divisions

Growth in:

Driven by:

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Services Home Loan Lending Factoring Finance Home Loan Management

Continuing high levels of consumer debt Fewer competitors, stricter bank lending criteria Difficulties for small businesses obtaining credit Expansion into the prime home loan market

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FY2011 Profit guidance – unchanged

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	FY2010	FY2011	%	Loan Pool Average
	Actual	Guidance	Change	(Closing)
Services	$8.6m	$8.5 ‐ $10.5m
Home Loan Lending	$3.4m	$4.0m		$225m ($240m)
Business Services & Lending	$0.9m	$2.5m		$16.5m ($20m)
Profit Before Tax	$12.9m	$15 ‐ $17m
Profit After Tax	$7.5m	$8.6 ‐ $10m	15% ‐ 33%
NTA per share	29.9c	34.7 ‐ 35.7c
EPS basic	5.82c	6.22 ‐ 7.23c	7% ‐ 24%

1. Business Services & Lending = Predominantly Factoring Finance

2. Profit After Tax = Profit After Tax Attributable to Members

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PBT before minorities : Annuit contribution rowin y g g

Fee for service PBT CAGR 2005 - 2010 = 50% Guidance Lending

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Investor relations contacts

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Mr. Tim Odillo Maher Ms. Jeannene O’Day Executive Director Consultant FSA Group Limited Lyon Group Pty Limited Level 3, 70 Phillip Street Level 1, 175 Macquarie Street Sydney NSW 2000 Sydney NSW 2000 T: 02 9293 6054 T: 0439 865 256 F: 02 9293 6032 F: 02 9223 2811 E: tmaher@fsagroup.com.au E: joday@lyongrp.com

Further information can be accessed from fsagroup.com.au

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Disclaimer

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• This presentation is designed to provide a general overview of the activities and financial position of FSA Group Limited. The material set out in the presentation is current as at the date of this presentation . It is information in summary form and does not purport to be complete.

• This presentation includes forward looking statements about estimates and outcomes which may be affected by internal and external factors and involve known and unknown risks which may cause actual results and business performance to differ from those expressed or implied in such statements. No assurance or guarantee is, or should be taken to be, given in relation to the future business performance or the likelihood that the assumptions, estimates or outcomes will be achieved.

• Whilst management has taken every effort to ensure the accuracy of the material in this presentation, it is provided for information only. FSA Group Limited, its officers and management exclude and disclaim any liability in respect of anything done in reliance on this presentation.

• It is not intended that the material in this presentation be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered with or without professional advice, when deciding if an investment is appropriate.

FSA Group

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FSA Group Interim Results Six month period ending 31 December 2010 February 2011

FSA Group