FSA GROUP LIMITED — Interim / Quarterly Report 2015

Feb 16, 2015

Appendix 4D

Half yearly report

FSA Group Limited

ABN Half year ended (‘current reporting period’) 98 093 855 791 31 December 2014 2.0 Results for announcement to the market	Half year ended (‘current reporting period’)	‘Previous corresponding period’ 31 December 2013 $A'000	‘Previous corresponding period’ 31 December 2013 $A'000	‘Previous corresponding period’ 31 December 2013 $A'000
	31 December 2014	31 December 2013
2.1 Total operating income up 10.4% To 34,396 2.2 Profit from ordinary activities after tax attributable to members up 18.5% To 6,971 2.3 Net profit for the period attributable to members up 18.5% To 6,971 2.4 Dividends Interim dividend payable 11 March 2015 of 3.00 cents per share fully franked 2.5 Record date for determining entitlements to the interim dividend 25 February 2015. 2.6 For an explanation of the figures in 2.1 to 2.4 above, refer to the “Executive Directors’ Review” contained in the Directors’ Report which forms part of the financial statements.
				Previous corresponding period 43.7 cents Notes Not applicable See Note 6 See Page 14
3.0 Net tangible assets per ordinary security			Current reporting period	Previous corresponding period
Net tangible assets per ordinary security, after adjusting for non- controllinginterests			49.3 cents	43.7 cents
				Notes
4. Details of the entities over which control has been gained or lost during the period				Not applicable
5. Dividends
Total dividends paid				See Note 6
6. Dividend reinvestment plans
There are no dividend reinvestment plans
7. Associates and joint ventures
There are no associates and joint ventures
8. Foreign entities
There are no foreign entities
9. Independent audit report or review				See Page 14

FSA GROUP LIMITED

ABN 98 093 855 791

Half Year Financial Report

31 December 2014

DIRECTORS' REPORT

The directors submit their report for the half year ended 31 December 2014.

DIRECTORS

The names of the directors of FSA Group Limited (“FSA Group”) in office during the half-year and until the date of this report are shown below.

Sam Doumany Non-Executive Chairman Tim Odillo Maher Executive Director Deborah Southon Executive Director Stan Kalinko Non-Executive Director Sally Herman Non-Executive Director – resigned 28 November 2014

Principal activities

The principal activities of FSA Group are the provision of debt solutions and direct lending services to individuals and businesses. These activities have not changed during the half year.

EXECUTIVE DIRECTORS’ REVIEW

Financial Overview

FSA Group’s profit after tax attributable to members for the half year ended 31 December 2014 was $7.0m. This result represents a 19% increase when compared to the half year ended 31 December 2013.

FinancialOverview	1HFY2015 %Change
Total operating income Profit before tax Profit after tax attributable to members EPS basic Net cash inflow from operating activities Interim dividend/share	$34.4m +10% $10.5m +14% $7.0m +19% 5.57c +19% $3.0m - 51% 3.00c +20%

Operational Performance

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

Profitability	1HFY2015 1HFY2014
Services	$6.3m $4.6m
Consumer Lending	$2.9m $3.4m
Business Lending	$1.2m $1.2m
Profit before tax	$10.5m $9.2m
Profit after tax attributable to members	$7.0m $5.9m

Services

The Services division 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. We are trialling a new service called Easy Bill Pay, which will assist our clients with paying their bills.

FSA Group is the largest provider of debt agreements in Australia with approximately 45% market share. We are also one of the largest providers of personal insolvency agreements and bankruptcy in the country.

During the first half, there was a substantial increase in new client numbers, when compared to the previous corresponding period, as follows:

Debt Agreements	+18%
Personal InsolvencyAgreements and Bankruptcy	+8%

1

DIRECTORS' REPORT continued

FSA Group manages over $321m of unsecured debt under debt agreements. During the first half, FSA Group paid $39m in dividends to creditors. This was a decrease of 1% when compared to the previous corresponding period. Our new service, Easy Bill Pay is performing well with current client numbers around 200.

The division achieved a profit before tax of $6.3m driven by the substantial increase in new client numbers and supported by a continued and sustained reduction in the level of arrears and recovery of doubtful debts.

Consumer Lending

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

Our home loan pool increased to $224m at December 2014 compared to $221m at June 2014. Greater than 30 day arrears decreased to 2.35% at December 2014 compared to 3.32% at June 2014. Our non-recourse home loan funding facilities consist of a $230m senior facility provided by Westpac Banking Corporation and a $20m mezzanine facility provided by institutional investors. These facilities have been renewed until October 2016.

Our personal loan pool increased to $3.5m at December 2014 compared to $1.1m at June 2014. Greater than 30 day arrears increased to 1.26% at December 2014 compared to nil at June 2014. Our personal loan funding facility of $10m is provided by Westpac Banking Corporation and has been renewed until December 2015.

During the first half a business development manager (“BDM”) team was established to initiate referrals for home loans. We are focussed on growing this loan pool. We are still trialing our personal loan product.

The division achieved a profit before tax of $2.9m. Profitability was impacted by the costs associated with the establishment of the BDM team and the personal loan trial.

Business Lending

The Business Lending division offers factoring finance to assist small businesses with cash flow management.

Our loan pool increased to $29m at December 2014 compared to $24m at June 2014. Greater than 90 day arrears increased to 7.76% at December 2014 compared to 5.89% at June 2014.

Our factoring finance funding facility of $35m is provided by Westpac Banking Corporation. This facility is due for renewal in June 2015. We have commenced the renewal discussion with Westpac and expect this facility to be renewed on substantially the same terms for a further period of two years.

During the first half our BDM team was expanded for factoring finance. We are focussed on growing this loan pool.

The division achieved a profit before tax of $1.2m. Profitability was impacted by the costs associated with the increase in the BDM team.

Cash flow from operations

During the first half, FSA Group maintained strong cash inflow driven by long term annuity income from its clients. The reduction in net cash inflow from operations, when compared to the previous corresponding period, is provided for in the notes below.

2

DIRECTORS' REPORT continued

Cash flows from operating activities Receipts from customers1 Payments to suppliers and employees2 Finance income received Finance costs paid Net cash payments for institutional creditor distributions Income taxpaid3	1HFY2015 1HFY2014
	$ $ 23,939,727 23,952,010 (27,230,812) (25,242,343) 15,344,283 15,508,517 (5,954,305) (6,674,897) - (34,921) (3,140,410) (1,416,742)
Net cash inflow from operating activities	2,958,483 6,091,624

Note 1 – There was a substantial increase in new client numbers for our Services division, see commentary under Services. For Services, reported revenue for these new clients precedes cash collections because receivables are collected over future periods.

Note 2 – We are focused on growing our loan pools, see commentary under Consumer Lending and Business Lending. Upfront investment in future growth resulted in an increase of $1.3m in employment related payments. We expect to see growth in these loan pools over 2015.

Note 3 – Income tax paid increased by $1.7m due to a timing shift. We expect total income tax payments for FY2015 to be similar to that of FY2014.

Dividends

The directors have declared an interim fully franked dividend of 3.00 cents per share, with a record date of 25 February 2015 and payable on 11 March 2015.

Outlook and Guidance

Consumer debt levels are at a record high and demand for our products and services is growing.

Our strategy for our Consumer Lending and Business Lending divisions is to focus on growing our loan pools. We expect to see growth in these loan pools over 2015. Growth in these pools will be the key to growing profitability at an above average annual rate.

For Easy Bill Pay, we plan to increase client numbers over 2015.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration under Section 307C of the Corporations Act 2001 is attached to this director’s report on page 4.

Signed in accordance with a resolution of directors made pursuant to section 306(3) of the Corporations Act, on behalf of the board of directors.

==> picture [160 x 55] intentionally omitted <==

Tim Odillo Maher Director Sydney 17 February 2015

3

Tel: +61 2 9251 4100 Level 11, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

==> picture [78 x 31] intentionally omitted <==

DECLARATION OF INDEPENDENCE BY GRANT SAXON TO THE DIRECTORS OF FSA GROUP LIMITED

As lead auditor for the review of FSA Group Limited for the half-year ended 31 December 2014, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of FSA Group Limited and the entities it controlled during the period.

==> picture [117 x 52] intentionally omitted <==

Grant Saxon Partner

BDO East Coast Partnership

Sydney, 17 February 2015

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

4

FSA Group Limited

Consolidated statement of profit or loss and other comprehensive income

For the six months ended 31 December 2014

Note Revenue and other income Fees from services Finance income Finance expenses Net finance income Total operating income Marketing expenses Administrative expenses Operating expenses Profit before income tax expense Income tax expense Profit after income tax expense Other comprehensive income, net of tax Total comprehensive income for the period Total comprehensive income for the period attributable to: Non-controlling interests Members of the parent Basic earnings per share (cents per share) 5 Diluted earnings per share (cents per share) 5	31 December 2014 31 December 2013 $ $ 25,699,667 22,752,625
	14,768,954 14,472,854 (6,072,704) (6,066,240)
	8,696,250 8,406,614
	34,395,917 31,159,239
	(4,103,276) (3,729,083) (4,358,834) (3,782,251) (15,468,985) (14,489,066)
	10,464,822 9,158,839 (3,124,400) (2,799,696)
	7,340,422 6,359,143 - -
	7,340,422 6,359,143
	369,022 477,881 6,971,400 5,881,262
	7,340,422 6,359,143
	5.57 4.70 5.57 4.70

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

5

FSA Group Limited Consolidated statement of financial position

As at 31 December 2014	31 December 2014 30 June 2014 $ $
Current Assets Cash and cash equivalents Trade and other receivables Other assets	5,116,197 7,772,612 32,358,788 30,478,709 622,762 725,254
Total Current Assets	38,097,747 38,976,575
Non-Current Assets Trade and other receivables Investments Plant and equipment Deferred tax assets Intangible assets	38,705,339 35,883,582 385 385 387,734 413,608 8,530 1,800 3,535,755 3,631,108
Total Non-Current Assets	42,637,743 39,930,483
Financing Assets Factoring cash and cash equivalents Home loan cash and cash equivalents Factoring assets Personal loan assets Home loan assets financed bynon-recourse financingliabilities	3,686,264 5,167,815 9,884,830 8,246,901 28,888,630 24,278,727 3,549,407 1,087,807 223,913,047 221,131,945
Total Financing Assets	269,922,178 259,913,195
Total Assets	350,657,668 338,820,253
Current Liabilities Trade and other payables Current tax liabilities Borrowings Provisions	9,880,746 11,623,089 872,500 1,648,607 618,999 730,257 1,640,526 1,489,589
Total Current Liabilities	13,012,771 15,491,542
Non-Current Liabilities Provisions Deferred tax liabilities Otherpayables	652,315 543,193 14,500,318 13,731,551 2,425,000 2,425,000
Total Non-Current Liabilities	17,577,633 16,699,744
Financing Liabilities Borrowings to finance factoring assets Borrowings to finance personal loan assets Non-recourse borrowings to finance home loan assets	26,078,335 22,960,277 3,502,129 1,000,434.00 222,574,166 217,717,801
Total Financing Liabilities	252,154,630 241,678,512
Total Liabilities	282,745,034 273,869,798
Net Assets	67,912,634 64,950,455
Equity Share capital Reserves Retained earnings	6,707,233 6,707,233 (3,278,761) (2,509,387) 61,769,915 58,407,384
Total equity attributable to members of the parent Non-controllinginterest	65,198,387 62,605,230 2,714,247 2,345,225
Total Equity	67,912,634 64,950,455

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

6

FSA Group Limited Consolidated statement of cash flows

For the six months ended 31 December 2014

For the six months ended 31 December 2014
	Six months ended Six months ended 31 December 2014 31 December 2013 $ $
	Inflows/ Inflows/ (Outflows) (Outflows)
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Finance income received Finance costs paid Net cash payments for institutional creditor distributions Income tax paid	23,939,727 23,952,010 (27,230,812) (25,242,343) 15,344,283 15,508,517 (5,954,305) (6,674,897) - (34,921) (3,140,410) (1,416,742)
Net cash inflow from operating activities	2,958,483 6,091,624
Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of intangibles Net (increase)/decrease in home loan assets Net increase in personal loan assets Net decrease in bridging finance assets Net increase in factoring assets Net increase in other loans	(112,496) (170,624) (95,551) (182,082) (3,413,004) 8,261,754 (2,439,262) - 102,500 18,500 (4,931,425) (5,429,174) (437,500) (437,500)
Net cash (outflow)/inflow from investing activities	(11,326,738) 2,060,874
Cash flows from financing activities Net proceeds from /(repayments) to borrowings Share issue Dividends paid to company's shareholders	10,246,461 (3,588,673) - 49,758 (4,378,243) (4,065,510)
Net cash inflow/(outflow) from financing activities	5,868,218 (7,604,425)
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period	(2,500,037) 548,073 21,187,328 23,092,712
Cash and cash equivalents at the end of the financial period	18,687,291 23,640,785

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

7

FSA Group Limited Consolidated statement of changes in equity

For the six month ended 31 December 2014

For the six month ended 31 December 2014
	Share Share Option Other Retained Non- Controlling Capital Reserve Reserve Earnings Interest Total $ $ $ $ $
Balance at 30 June 2013 Profit after income tax for the period Other comprehensive income for the period, net of tax Total comprehensive income for the period Transactions with owners in their capacity as owners: Share issue Dividendpaid	6,657,475 769,374 (3,278,761) 52,117,970 2,493,122 58,759,180 - - - 5,881,262 477,881 6,359,143 - - - - - -
	- - - 5,881,262 477,881 6,359,143 49,758 - - - - 49,758 - - - (4,065,510) - (4,065,510)
Balance at 31 December 2013	6,707,233 769,374 (3,278,761) 53,933,722 2,971,003 61,102,571
Profit after income tax for the period Other comprehensive income for the period, net of tax Total comprehensive income for the period Transactions with owners in their capacity as owners: Dividends paid Distributions to non-controllinginterests	- - - 7,600,979 545,201 8,146,180 - - - - - -
	- - - 7,600,979 545,201 8,146,180 - - - (3,127,317) - (3,127,317) - - - - (1,170,979) (1,170,979)
Balance at 30 June 2014	6,707,233 769,374 (3,278,761) 58,407,384 2,345,225 64,950,455
Profit after income tax for theperiod	- - - 6,971,400 369,022 7,340,422
Other comprehensive income for the period,net of tax
	- - - - - -
Total comprehensive income for the period Transactions with owners in their capacity as owners: Reclassification of expired share based payment reserve
	- - - 6,971,400 369,022 7,340,422
	-
	- (769,374) - 769,374 - -
Dividendspaid	- - - (4,378,243) - (4,378,243)
Balance at 31 December 2014	6,707,233 - (3,278,761) 61,769,915 2,714,247 **67,912,634 **

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

8

FSA Group Limited

Notes to the consolidated half year financial report

31 December 2014

1. REPORTING ENTITY

FSA Group Limited (the ‘Company’) is a for-profit company domiciled in Australia. The consolidated half year financial report of the Company as at and for the six months ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in associates and jointly controlled entities.

The principal activities of the Group are the provision of debt solutions and direct lending services to individuals and businesses.

2. BASIS OF PREPARATION

Statement of compliance

This consolidated half year financial report has been prepared in accordance with Australian Accounting Standard AASB 134 “ Interim Financial Reporting ” and the Corporations Act 2001 and does not include all of the information and notes of the type normally required for full annual financial statements. Accordingly these half year financial statements are to be read in conjunction with the annual report for the year ended 30 June 2014 and any public announcement made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

These consolidated interim financial statements were approved by the board of directors on 17 February 2015.

New, revised, or amending Accounting Standards and Interpretations adopted

The Group has adopted all new, revised, or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.

Any new, revised or amending Accounting Standards or Interpretations that are not mandatory yet have not been early adopted.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2014.

4. SEGMENT INFORMATION

FSA Group Limited is an Australian entity whose principal activities are:

• Services; including debt agreements, personal insolvency agreements, bankruptcy and Easy Bill Pay;

• Consumer Lending; including home loan lending, home loan broking and personal loan lending;

• Business Lending; including factoring finance and other related services;

• Other / corporate; including parent entity services and intercompany investments, balances and transactions, which are eliminated upon consolidation.

The Group operates in one geographic region – Australia.

9

FSA Group Limited

Notes to the consolidated half-year financial report

31 DECEMBER 2014

4. SEGMENT INFORMATION continued

Business segment Revenue and Results - half-year ended 31 December 2014

Revenue Service income Finance income Finance expense Net finance income Internal sales and income Eliminations Total operating income Results Segment profit before tax Income tax (expense)/benefit Profit for the year Assets Segment assets Eliminations Total assets*	Services	Services	Consumer Lending	Consumer Lending	Business Lending	Business Lending	Other/Corporate	Other/Corporate	Consolidated Total	Consolidated Total
	31/12/2014	31/12/2013	31/12/2014	31/12/2013	31/12/2014	31/12/2013	31/12/2014	31/12/2013	31/12/2014	31/12/2013
	$ 25,014,870 9,298 (89)	$ 22,018,883 17,347 -	$ 620,711 10,500,791 (5,493,624)	$ 667,602 10,475,160 (5,540,200)	$ 64,086 4,216,241 (577,855)	$ 66,140 3,911,192 (526,040)	$ - 42,624 (1,136)	$ - 69,155 -	$ 25,699,667 14,768,954 (6,072,704)	$ 22,752,625 14,472,854 (6,066,240)
	9,209 439,600 -	17,347 405,599 -	5,007,167 - -	4,934,960 - -	3,638,386 - -	3,385,152 - -	41,488 - -	69,155 **5,389,776 -	8,696,250 439,600 (439,600)	8,406,614 5,795,375 (5,795,375)
	25,463,679 6,339,038 (1,893,698)	22,441,829 4,595,496 (1,406,359)	5,627,878 2,870,461 (862,132)	5,602,562 3,378,517 (1,013,449)	3,702,472 1,245,357 (378,832)	3,451,292 1,233,255 (396,027)	41,488 9,966 10,262	5,458,931 (48,429) 16,139	34,395,917 10,464,822 (3,124,400)	31,159,239 9,158,839 (2,799,696)
	4,445,340	3,189,137	2,008,329	2,365,068	866,525	837,228	20,228	(32,290)	7,340,422	6,359,143
	Services		Consumer Lending		Business Lending		Other/Corporate		Consolidated Total
	31/12/2014	30/06/2014	31/12/2014	30/06/2014	31/12/2014	30/06/2014	31/12/2014	30/06/2014	31/12/2014	30/06/2014
	133,207,034	126,927,015	252,366,964	245,308,892	34,494,742	30,747,829	28,876,504	43,061,110	448,945,244 (98,287,576)	446,044,846 (107,224,593)
									350,657,668	338,820,253

*Eliminations are related to intercompany balances.

10

FSA Group Limited

Notes to the consolidated half-year financial report

31 DECEMBER 2014

5. EARNINGS PER SHARE

(a) Reconciliation of earnings used to calculated basic and dilutive earnings per share Total comprehensive income attributable to members of the parent for the period ($) Basic earnings per share (cents) Diluted earnings per share (cents)

(b) Weighted average number of ordinary shares outstanding during the year Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS

31-Dec-14	31-Dec-13
Value	Value
6,971,400	5,881,262
5.57	4.70
5.57	4.70
Number	Number
125,092,610	125,021,675
125,092,610	125,021,675

6. DIVIDENDS

Dividends recognised in the current financial period by FSA Group Limited are:

Final - ordinary	Value per share Total Amount Franked Date of Payment
	$ 0.035 $4,378,243 100% 26-Sep-14

Franked dividends declared or paid during the financial year were franked at a tax rate of 30%.

Dividends paid during financial year 2014 are:

Final - ordinary Interim – ordinary	Value per share Total Amount Franked Date of Payment
	$ 0.0325 $4,065,510 100% 27-Sep-13 0.0250 $3,127,317 100% 21-Mar-14

On 17 February 2015, the directors declared a fully franked dividend of 3.00 cents to be paid on 11 March 2015, a total estimated distribution of $3,752,778 based on ordinary shares on issue as at 17 February 2015.

7. SHARE CAPITAL

The following movements in share capital arose during the half year period:

Shares on issue at 1 July Add shares issued as part consideration for acquisition Shares on issue at 31 December	31-Dec-14 31-Dec-13 Number Number 125,092,610 125,020,077 - 72,533
	125,092,610 125,092,610

11

FSA Group Limited Notes to the consolidated half-year financial report

31 DECEMBER 2014

8. FINANCIAL INSTRUMENTS

• a) Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial liabilities are determined (in particular, the valuation techniques and inputs used). Other financial liabilities are the only financial instrument subsequently measured at fair value on Level 3 fair value measurement. No gain or loss for the year relating to other financial liabilities has been recognised in profit or loss.

Financial assets / financial liabilities
	Fair value as at 31/12/2014
		Fair value hierarchy	Valuation techniques	Unobservable inputs	Range of inputs	Relationship of unobservable inputs to fair value
Other financial liabilities	$2,425,000	Level 3	Discounted cash flow	Risk-adjusted discount rate	16.5% - 18.3%	A change in the discount rate by 100 bps would increase/decrease the fair value by around $185,000 -$230,000
				Expected present value of future cash inflows	16.1 m – 16.8m	If expected future cash inflows were 5% higher or lower, the FV would increase / decrease by around$110,000
				Short term loan poolgrowth rate	20% - 36%	The higher the loan pool growth rate,the higher the fair value.
				Long term revenue growth rate	1.50%	The higher the long term revenue growth rate, the higher the fair value.

• b) 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.

Financial assets Current receivables net of deferred tax Non-current receivables net of deferred tax Personal loan assets Home loan assets financed bynon-recourse financingliabilities	Dec-14 Dec-14
	Book value Fair value $ $ 17,890,926 17,890,926 29,892,349 28,772,292 3,549,407 4,145,746 223,913,047 234,154,816
Financial liabilities Borrowings to finance personal loan assets Borrowings to finance factoring assets Non-recourse borrowings to finance home loan assets	3,502,129 3,502,129 26,078,335 26,078,335 222,574,166 222,574,166

*Included in current and non-current receivables is an amount of $61,647,398 relating to debt agreement receivables. These assets are taxed on a cash basis, and consequently to present the book value on a consistent basis with the computation of fair value, current and non-current receivables have been presented net of associated deferred tax liabilities amounting to $13,864,123.

9. COMMITMENTS

At the reporting date loan applications accepted by the Group, but not yet settled amounted to $6,802,562 (2013: $5,174,842).

10. SUBSEQUENT EVENTS

There have been no events since 31 December 2014 that may significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future financial years other than the dividends declared as disclosed in Note 6.

12

FSA Group Limited Notes to the consolidated half-year financial report

31 DECEMBER 2014

Directors’ Declaration

In the Directors' opinion:

1. the attached financial statements and notes thereto comply with the Corporations Act 2001 , Australian Accounting Standard AASB 134 ' Interim Financial Reporting' , the Corporations Regulations 2001 and other mandatory professional reporting requirements;

2. the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December 2014 and of its performance for the financial half-year ended on that date; and

3. there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5) of the Corporations Act 2001.

On behalf of the Directors.

==> picture [160 x 55] intentionally omitted <==

Tim Odillo Maher Director Sydney 17 February 2015

13

Tel: +61 2 9251 4100 Level 11, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

==> picture [78 x 31] intentionally omitted <==

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of FSA Group Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of FSA Group Limited, which comprises the consolidated statement of financial position as at 31 December 2014, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year ended on that date, notes comprising a statement of accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of FSA Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of FSA Group Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

14

==> picture [78 x 31] intentionally omitted <==

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of FSA Group Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001

BDO East Coast Partnership

==> picture [114 x 101] intentionally omitted <==

Grant Saxon

Partner

Sydney, 17 February 2015

15