FSA GROUP LIMITED — Interim / Quarterly Report 2016

Feb 24, 2016

Appendix 4D

Half yearly report

FSA Group Limited

ABN Half year ended (‘current reporting period’) 98 093 855 791 31 December 2015 2.0 Results for announcement to the market	Half year ended (‘current reporting period’)	‘Previous corresponding period’ 31 December 2014 $A'000	‘Previous corresponding period’ 31 December 2014 $A'000	‘Previous corresponding period’ 31 December 2014 $A'000
	31 December 2015	31 December 2014
2.1 Total operating income up 0.1% To 34,444 2.2 Profit from ordinary activities after tax attributable to members down 17% To 5,770 2.3 Net profit for the period attributable to members down 17% To 5,770 2.4 Dividends Interim dividend payable 18 March 2016 of 3.00 cents per share fully franked 2.5 Record date for determining entitlements to the interim dividend 4 March 2016. 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 49.3 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			53.6 cents	49.3 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 auditors review report				See Page 14

FSA GROUP LIMITED

ABN 98 093 855 791

Half Year Financial Report

31 December 2015

DIRECTORS' REPORT

The directors submit their report for the half year ended 31 December 2015.

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 David Bower Non-Executive Director

All directors were in office from the start of the half year, unless otherwise stated.

Principal activities

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

EXECUTIVE DIRECTORS’ REVIEW

Financial Overview

FSA Group’s profit after tax attributable to members for the half year ended 31 December 2015 was $5.8m. This result represents a 17% decrease when compared to the half year ended 31 December 2014.

FinancialOverview	Note 1HFY2016 %Change
Operating income Profit before tax Profit after tax attributable to members EPS basic Net cash inflow from operating activities Interim dividend/share	1 $34.4m 0% 2 $9.3m -11% 2 $5.8m -17% 2 4.61c -17% $4.5m +52% 3.00c 0%

Note 1: In response to the ongoing change in the collection patterns associated with debt agreement application fees, from 1 July 2015 the Group has recognised the associated revenue net of amounts expected to be unrecoverable as a result of the creditors’ rate of return inherent in a debt agreement. Had the change not occurred, the creditors’ rate of return would have been recognised as revenue with a corresponding increase in bad debt expense. Whilst this change has had no impact on reported profit, had the previous method been used operating income would have increased 5% from the prior comparative period, with a corresponding dollar increase in the bad debt expense.

Note 2: Profitability and EPS were impacted by a mark to market unrealised loss of $0.5m on our 5 year interest rate swap agreements. (see commentary under Consumer and Business Lending divisions).

Operational Performance

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

Profit before tax by segment	Note 1HFY2015 1HFY2016
Services	$6.3m $6.5m
Consumer Lending	2 $2.9m $2.0m
Business Lending	$1.2m $0.7m
Profit before tax	2 $10.5m $9.3m
Profit after tax attributable to members	2 $7.0m $5.8m

1

DIRECTORS' REPORT continued

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, bankruptcy and Easy Bill Pay (EBP). EBP is a bill payment service which enables a customer to pay their current bills on time and plan for and take control of future bills.

FSA Group is the largest provider of debt agreements, personal insolvency agreements and bankruptcy in Australia. Our debt agreement market share for the 2015 financial year was 48%.

During the first half new client numbers for debt agreements were 2,445, which was a decrease of 6% and for personal insolvency agreements and bankruptcy 163 or a decrease of 20%.

FSA Group manages $334m of unsecured debt under debt agreements. During the first half, FSA Group paid $39m in dividends to creditors.

EBP is performing well and had 1,589 clients under management. We are continuing to invest in educating and up-skilling staff, while improving our systems, processes and procedures.

The division achieved a profit before tax of $6.5m, which was a 3% increase compared with the previous corresponding period.

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

Our focus has been and will remain on growing our loan pools. During the first half we continued our upfront investment in the future growth of our loan pools.

We are confident about our home and personal loan products and their performance and we will continue to increase staff numbers and marketing spend to accelerate loan pool growth. This upfront investment and increase in the fixed cost base has impacted profitability. However as we grow our loan pools our business will benefit from higher incremental margins due to fixed cost leverage. This will result in profits growing at a faster rate than revenues.

Loan Pools	1HFY2015 1HFY2016 % Change
Home Loans	$223.9m $246.1m +10%
Personal Loans	$3.5m $10.9m +206%
FactoringFinance	$28.9m $34.2m +18%
Total	$256.3m $291.2m +14%

Arrears	Type 1HFY2015 1HFY2016
Home Loans	>30 day 2.35% 2.67%
Personal Loans	> 30 day 1.26% NIL
FactoringFinance	> 90 day 7.76% 8.93%

Loan Pool Data	Home Loans Personal Loans Factoring Finance
Average loan size	$294,810 $25,296 $284,681
Securitytype	Residential home Motor vehicle Invoices
Average loan to valuation ratio	67% 100% 55% to 65%
Variable or fixed rate	Variable Fixed Variable
Geographical spread	All states All states All states

2

DIRECTORS' REPORT continued

On 20 October 2015, Westpac Banking Corporation increased our personal loan facility from $10m to $20m and renewed the facility until July 2017. On 2 June 2015 we entered into an interest rate swap agreement, locking in $40m of our funding costs at a fixed rate for 5 years. On 12 November 2015 we locked in a further $40m for 5 years. These swap agreements were put in place to enable us to protect our borrowers on a case by case basis in the event of interest rates increasing.

Funding	Facility Type	Provider Limit Renewal Date
Home Loans	Non-recourse senior	Westpac $250m October 2016
	Non-recourse mezzanine	Institutional $20m October 2016
Personal Loans	Recourse corporate	Westpac $20m July2017
FactoringFinance	Recourse structured	Westpac $35m June 2017

The Consumer Lending division achieved a profit before tax of $2.0m. Profitability was impacted by a mark to market unrealised loss of $0.5m on our 5 year interest rate swap agreements, an increase in staff numbers and marketing spend together with a decrease in our upfront settlement fee. The upfront settlement fees were reduced to stimulate lending growth.

The Business Lending division achieved a profit before tax of $0.7m. Profitability was impacted by an increase in provision for impairment. We are currently undertaking an internal review of factoring finance to evaluate the long term growth, risk and return profile of this product.

Cash flow from operations

During the first half, FSA Group maintained strong cash inflow driven by long term annuity income from our clients. Net cash inflow from operating activities for the first half was $4.5m.

Dividends

The directors have declared an interim fully franked dividend of 3.00 cents per share, with a record date of 4 March 2016 and payable on 18 March 2016.

Strategy and Outlook

In our 2015 Annual Report we disclosed our 5 year strategic plan. A key component of our plan is to ensure our Services division maintains its leading position in a niche market; grow Easy Bill Pay; and to continue to expand our product offering in the Consumer and Business Lending divisions. Our aim is to grow our loan pools to around $500m.

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.

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Tim Odillo Maher Director Sydney 25 February 2016

3

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

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DECLARATION OF INDEPENDENCE BY ARTHUR MILNER TO THE DIRECTORS OF FSA GROUP LIMITED

As lead auditor for the review of FSA Group Limited for the half-year ended 31 December 2015, 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.

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Arthur Milner Partner

BDO East Coast Partnership

Sydney, 25 February 2016

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 2015 Note Revenue and other income Fees from services Finance income Finance expenses Net finance income Total revenue and other income net of finance expense Marketing expenses Administrative expenses Operating expenses Fair value gain or loss on derivatives 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 interest Members of the parent Basic earnings per share (cents per share) 5 Diluted earnings per share (cents per share) 5	Consolidated Entity 31 December 2015 31 December 2014 $ $ 25,454,573 25,699,667
	14,865,219 14,768,954 (5,875,418) (6,072,704)
	8,989,801 8,696,250
	34,444,374 34,395,917
	(4,517,138) (4,103,276) (4,830,289) (4,358,834) (15,349,045) (15,468,985) (448,896) -
	9,299,006 10,464,822 (2,841,214) (3,124,400)
	6,457,792 7,340,422 - -
	6,457,792 7,340,422
	688,051 369,022 5,769,741 6,971,400
	6,457,792 7,340,422
	4.61 5.57 4.61 5.57

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 2015	Consolidated Entity 31 December 2015 30 June 2015 $ $
Current Assets Cash and cash equivalents Trade and other receivables Other assets Derivatives	5,618,604 8,094,387 35,923,576 33,618,443 517,917 483,258 - 39,708
Total Current Assets	42,060,097 42,235,796
Non-Current Assets Trade and other receivables Investments Plant and equipment Deferred tax assets Intangible assets	42,825,427 41,048,433 385 385 348,268 297,639 13,558 11,870 3,545,171 3,596,827
Total Non-Current Assets	46,732,809 44,955,154
Financing Assets Factoring cash and cash equivalents Personal loan cash and cash equivalents Home loan cash and cash equivalents Factoring assets Personal loan assets Home loan assets financed bynon-recourse financingliabilities	1,349,847 2,822,648 115,772 46,492 5,927,930 8,851,591 34,164,140 31,519,042 10,869,581 5,878,322 246,130,427 232,967,277
Total Financing Assets	298,557,697 282,085,372
Total Assets	387,350,603 369,276,322
Current Liabilities Trade and other payables Current tax liabilities Borrowings Other payables Provisions	11,291,524 12,096,371 1,063,731 853,459 469,277 174,408 700,000 2,100,000 1,909,466 1,881,412
Total Current Liabilities	15,433,998 17,105,650
Non-Current Liabilities Provisions Borrowings Derivatives Deferred tax liabilities	647,197 635,346 906,000 - 409,187 - 15,608,770 15,330,862
Total Non-Current Liabilities	17,571,154 15,966,208
Financing Liabilities Non-recourse borrowings to finance home loan assets Borrowings to finance factoring assets Borrowings to financepersonal loan assets	241,029,965 230,861,879 29,271,130 28,453,453 10,594,000 5,518,326
Total Financing Liabilities	280,895,095 264,833,658
Total Liabilities	313,900,247 297,905,516
Net Assets	73,450,356 71,370,806
Equity Share capital Reserves Retained earnings	6,707,233 6,707,233 (3,278,761) (3,278,761) 67,125,489 65,733,990
Total equity attributable to members of the parent Non-controllinginterest	70,553,961 69,162,462 2,896,395 2,208,344
Total Equity	73,450,356 71,370,806

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 2015		Consolidated Entity	Consolidated Entity
		Six months ended	Six months ended
		31 December 2015	31 December 2014
	Notes	$	$
		Inflows/	Inflows/
		(Outflows)	(Outflows)
Cash flows from operating activities
Receipts from customers and debtors		20,339,836	20,541,665
Payments to suppliers and employees		(22,802,616)	(23,832,750)
Finance income received		15,104,630	15,344,283
Finance cost paid		(5,803,914)	(5,954,305)
Income tax paid		(2,354,722)	(3,140,410)
Net cash inflow from operating activities		4,483,214	2,958,483
Cash flows from investing activities
Acquisition of property, plant and equipment		(153,883)	(112,496)
Acquisition of intangibles		(71,678)	(95,551)
Payment of deferred consideration		(1,400,000)	-
Net increase in home loan assets		(13,593,139)	(3,413,004)
Net increase in personal loan assets		(4,954,339)	(2,439,262)
Net decrease in bridging finance assets		24,936	102,500
Net increase in factoring assets		(3,517,845)	(4,931,425)
Net increase in other loans		(472,500)	(437,500)
Net cash outflow from investing activities		(24,138,448)	(11,326,738)
Cash flows from financing activities
Net proceeds from borrowings		17,230,511	10,246,461
Dividends paid to company's shareholders		(4,378,242)	(4,378,243)
Net cash inflow from financing activities		12,852,269	5,868,218
Net decrease in cash and cash equivalents		(6,802,965)	(2,500,037)
Cash and cash equivalents at the beginning of the financial period		19,815,118	21,187,328
Cash and cash equivalents at the end of the financial period		13,012,153	18,687,291

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

7

FSA Group Limited Consolidated statement of changes in equity

For the six month ended 31 December 2015

For the six month ended 31 December 2015
	Share Share Option Other Retained Non- Controlling Capital Reserve Reserve Earnings Interest Total $ $ $ $ $ $
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 the year - - - 6,971,400 369,022 7,340,422 Other comprehensive income for the year, net of tax - - - - - - Total comprehensive income for the year - - - 6,971,400 369,022 7,340,422 Transactions with owners in their capacity as owners: Reclassification of expired share based payment reserve - (769,374) - 769,374 - - Dividendspaid - - - (4,378,243) - (4,378,243)	6,707,233 769,374 (3,278,761) 58,407,384 2,345,225 64,950,455 - - - 6,971,400 369,022 7,340,422 - - - - - -
Balance at 31 December 2014	6,707,233 - (3,278,761) 61,769,915 2,714,247 67,912,634
Profit after income tax for the year - - - 7,716,853 719,097 8,435,950 Other comprehensive income for the year, net of tax - - - - - - Total comprehensive income for the year - - - 7,716,853 719,097 8,435,950 Transactions with owners in their capacity as owners: Dividends paid - - - (3,752,778) - (3,752,778) Distributions to non-controllingInterests - - - - (1,225,000) (1,225,000)	- - - 7,716,853 719,097 8,435,950 - - - - - -
Balance at 30 June 2015 6,707,233 - (3,278,761) 65,733,990 2,208,344 71,370,806
Total comprehensive income for the year:
Profit after income tax for the year - - - 5,769,741 688,051 6,457,792
Other comprehensive income for the year,net of tax - - - - - -
Total comprehensive income for the year - - - 5,769,741 688,051 6,457,792
Transactions with owners in their capacity as owners: -
Dividendspaid - - - (4,378,242) - (4,378,242)
Balance at 31 December 2015 6,707,233 - (3,278,761) 67,125,489 2,896,395 73,450,356

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 2015

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 2015 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 2015 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 25 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 2015.

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 2015

4. SEGMENT INFORMATION continued

Business segment Revenue and Results - half-year ended 31 December 2015

Revenue and Income External sales Finance Income Finance expense Net Finance Income Other net income Internal sales and income Eliminations Total Revenue and 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
	31/12/2015	31/12/2014	31/12/2015	31/12/2014	31/12/2015	31/12/2014	31/12/2015	31/12/2014	31/12/2015	31/12/2014
	$ 24,862,368 6,024 -	$ 25,014,870 9,298 (89)	$ 468,439 - 10,650,886 (5,256,510)	$ 620,711 - 10,500,791 (5,493,624)	$ 123,766 - 4,184,069 (618,006)	$ 64,086 - 4,216,241 (577,855)	$ - - 24,240 (902)	$ - - 42,624 (1,136)	$ 25,454,573 14,865,219 (5,875,418)	$ 25,699,667 14,768,954 (6,072,704)
	6,024 - 461,512 -	9,209 - 439,600 -	5,394,376 (448,896) - -	5,007,167 - - -	3,566,063 - - -	3,638,386 - - -	23,338 - - -	41,488 - - -	8,989,801 (448,896) 461,512 (461,512)	8,696,250 - 439,600 (439,600)
	25,329,904 6,530,793 (1,984,953)	25,463,679 6,339,038 (1,893,698)	5,413,919 2,038,133 (624,725)	5,627,878 2,870,461 (862,132)	3,689,829 745,650 (232,842)	3,702,472 1,245,357 (378,832)	23,338 (15,570) 1,306	41,488 9,966 10,262	33,995,478 9,299,006 (2,841,214)	34,395,917 10,464,822 (3,124,400)
	4,545,840	4,445,340	1,413,408	2,008,329	512,808	866,525	(14,264)	20,228	6,457,792	7,340,422
	Services		Home	Loans	Small Business		Other/Unallocated		Consolidated Total
	31/12/2015	30/06/2015	31/12/2015	30/06/2015	31/12/2015	30/06/2015	31/12/2015	30/06/2015	31/12/2015	30/06/2015
	150,670,379	142,823,305	279,485,947	262,817,637	37,729,264	37,876,307	28,134,643	40,577,629	496,020,233 (108,669,630)	484,094,878 (114,818,556)
									387,350,603	369,276,322

10

FSA Group Limited

Notes to the consolidated half-year financial report

31 December 2015

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-15 31-Dec-14 Value Value 5,769,741 6,971,400 4.61 5.57 4.61 5.57 Number Number 125,092,610 125,092,610

125,092,610 125,092,610

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% 11-Sep-15

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

Dividends paid during financial year 2015 are:

Final - ordinary Interim – ordinary	Value per share Total Amount Franked Date of Payment
	$ 0.035 $4,378,243 100% 26-Sep-14 0.030 $3,752,778 100% 11-Mar-15

On 25 February 2016, the directors declared a fully franked dividend of 3.00 cents to be paid on 18 March 2016, a total estimated distribution of $4,378,243 based on ordinary shares on issue as at 19 February 2016.

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-15 31-Dec-14 Number Number 125,092,610 125,092,610 - -
	125,092,610 125,092,610

11

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

31 December 2015

8. FINANCIAL INSTRUMENTS

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 Factoring assets Home loan assets financed by non-recourse financing liabilities	Dec-15 Dec-15 Book value Fair value $ $
	19,734,666 19,734,666 33,143,095 32,088,825 10,869,581 12,984,892 34,164,140 34,164,140 246,130,427 257,409,552
Financial liabilities Borrowings to finance personal loan assets Borrowings to finance factoring assets Non-recourse borrowings to finance home loan assets	10,594,000 10,594,000 29,271,130 29,271,130 241,029,965 241,029,965

*Included in current and non-current receivables is an amount of $68,222,506 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 $15,344,745.

9. COMMITMENTS

At the reporting date loan applications accepted by the Group, but not yet settled amounted to $5,996,289 (2015: $6,802,562).

10. SUBSEQUENT EVENTS

There have been no events since 31 December 2015 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.

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

31 December 2015

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 2015 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.

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Tim Odillo Maher Director Sydney 25 February 2016

13

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

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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 2015, 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 2015 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.

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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 2015 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

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Arthur Milner Partner

Sydney, 25 February 2016

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