FSA GROUP LIMITED — Interim / Quarterly Report 2018

Feb 8, 2018

Appendix 4D

Half yearly report

FSA Group Limited

ABN Half year ended (‘current reporting period’) 98 093 855 791 31 December 2017 2.0 Results for announcement to the market 2.1 Total Group operating income up 10% Operating income - continuing operations up 10% Operating income - discontinued operations - - 2.2 Profit from ordinary activities after tax attributable to members of the parent down 5% From continuing operations down 2% From discontinued operations down 390% 2.3 Net profit for the period attributable to members down 5%	Half year ended (‘current reporting period’)	‘Previous corresponding period’
	31 December 2017	31 December 2016
		$A’000 $A’000 from 33,520 to 36,823 from 33,520 to 36,823 - - - - from 7,310 to 6,937 from 7,362 to 7,192 from (52) to (255) from 7,310 to 6,937

2.4 Dividends

Interim dividend payable 16 March 2018 of 3.00 cents per share fully franked

2.5 Record date for determining entitlements to the interim dividend - 2 March 2017

• 2.6 Commentary on above details

Refer to Executive directors’ review and Financial Statements

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	65.0 cents	60.0 cents
4. Details of the entities over which control has been gained 5. Dividends Total dividends paid 6. Dividend reinvestment plans There are no dividend reinvestment plans	Notes or lost during the period Not applicable See Note 6

1. Associates and joint ventures

There are no associates and joint ventures

1. Foreign entities

There are no foreign entities

1. Independent audit report or review

See Page 17

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FSA GROUP LIMITED

ABN 98 093 855 791

Half Year Financial Report

31 December 2017

2

DIRECTORS' REPORT

The directors submit their report for the half year ended 31 December 2017.

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.

EXECUTIVE DIRECTORS’ REVIEW

For the half year ended 31 December 2017 FSA Group generated, from continuing operations, $36.8 million in operating income and a profit after tax attributable to members of $7.2 million, a 2% decrease compared to the half year ended 31 December 2016.

Normalised profit after tax attributable to members was $7.1 million, a 13% increase.

The directors have declared an interim fully franked dividend of 3.00 cents per share, with a record date of 2 March 2018 and payable on 16 March 2018.

The Financial Overview below summarises our performance from continuing operations.

Financial Overview	1HFY2017 1HFY2018 % Change
Operating income Profit before tax Profit after tax attributable to members EPS basic Net cash inflow from operating activities Interim dividend/share	$33.5m $36.8m +10% $11.5m $11.2m -2% $7.4m $7.2m -2% 5.89c 5.75c -2% $3.8m $5.0m +31% 3.00c 3.00c -

During 2015, we entered into interest rate swap agreements, locking in $80 million of our funding costs at a fixed rate for 5 years.

The Normalised Financial Overview below, summarises our performance from continuing operations, specifically excluding the before tax mark to market unrealised gain of $1,596,655 (after tax: $1,117,659) in the first half of the 2017 financial year and unrealised gain of $179,050 (after tax: $125,335) in the first half of the 2018 financial year on our 5 year interest rate swap agreements. Reference is to be made to “unrealised gain on fair value movement of derivatives” in the Statement of Profit or Loss and Other Comprehensive Income.

Normalised Financial Overview (excluding swaps)	1HFY2017 1HFY2018 % Change
Normalised profit before tax Normalised profit after tax attributable to members Normalised EPS basic	$9.9m $11.0m +12% $6.2m $7.1m +13% 4.99c 5.65c +13%

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DIRECTORS' REPORT continued

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:

income and profitability of each segment is as follows:
Operating income by segment	1HFY2017 1HFY2018 % Change
Services Consumer Lending Other/unallocated Operating income	$25.8m $27.5m +7% $7.5m $9.2m +22% $0.2m $0.1m - $33.5m $36.8m +10%
Profit before tax by segment	1HFY2017 1HFY2018 % Change
Services Consumer Lending Other/unallocated Profit before tax*	$6.5m $6.6m +1% $3.3m $4.4m +35% $1.7m $0.2m - $11.5m $11.2m -2%

*Note 1: “Other/unallocated” includes the before tax mark to market unrealised gain of $1,596,655 in the first half of the 2017 financial year and unrealised gain of $179,050 in the first half of the 2018 financial year on our 5 year interest rate swap agreements. Reference is to be made to “unrealised gain on fair value movement of derivatives” in the Statement of Profit or Loss and Other Comprehensive Income.

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. Our service Easy Debt Management assists our clients with paying their debts.

FSA Group is the largest provider of debt agreements, personal insolvency agreements and bankruptcy in Australia. Our focus is, and will continue to be, on providing a range of options to individuals who come to us for assistance which are affordable, viable, sustainable and deliver a benefit to the customer. Our market share for debt agreements remains under pressure. We will never sacrifice quality and customer benefit for volume and market share.

During the first half, new client numbers for debt agreements increased by 12% and for personal insolvency agreements and bankruptcy were steady compared to the previous corresponding period. Debt agreement clients under administration increased to 20,955, up 6% and for personal insolvency agreements and bankruptcy decreased to 1,262, down 15% compared to the previous corresponding period. FSA Group manages $382 million of unsecured debt under debt agreements and during the first half paid $40 million in dividends to creditors.

The Services division achieved a profit before tax of $6.6 million, a 1% increase.

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.

During the first half our loan pools continued to grow. We are pleased with our home loan pool growth and our personal loan pool growth continues to exceed our expectations.

Loan Pools	1HFY2017 1HFY2018 % Change
Home Loans	$279.7m $336.7m +20%
Personal Loans	$29.1m $40.7m +40%
Total	$308.8m $377.4m +22%

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DIRECTORS' REPORT continued

DIRECTORS' REPORT continued
Arrears > 30 day	1HFY2016 1HFY2017 1HFY2018
Home Loans	2.67% 1.30% 1.72%
Personal Loans	0.00% 0.69% 1.39%
Loan Pool Data	Home Loans Personal Loans
Average loan size	$340,755 $24,344
Security type	Residential home Motor vehicle
Average loan to valuation ratio	67% 100%+
Variable or fixed rate	Variable Fixed
Geographical spread	All states All states

As our loan pools grow we expect to increase and renew our facilities as required. During first half, Westpac Banking Corporation extended our $40 million personal loan facility to June 2018. We continue our discussions in relation to securing a larger long term facility to support future growth.

securing a larger long term	facility to support future growth.
Funding	Facility Type Provider Limit Renewal Date
Home Loans	Non-recourse senior Westpac $300m October 2019 Non-recourse senior Westpac $25m September 2019 Non-recourse mezzanine Institutional $25m October 2019
Personal Loans	Recourse corporate Westpac $40m June 2018

The Consumer Lending division achieved a profit before tax of $4.4 million, a 35% increase.

Net cash flow from operating activities from continuing 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 $5.0 million, a 31% increase. Net cash inflow is historically lower in the first half compared to the second half.

Strategy, Outlook and Guidance

We are in the third year of our 5 year strategic plan.

Consumer debt levels are at a record high, new enquiries are increasing and demand for our products and services is growing. This is currently occurring in a historically low interest rate environment. As interest rates normalise demand for our products and services will accelerate.

Over the 2018 financial year we expect higher new client numbers for our Services division and loan pool growth for both home loans and personal loans. We are targeting a June 2018 closing loan pool balance of around $400 million, broken down as to $350 million for home loans and $50 million for personal loans.

In our 2017 Annual Report we made the following comment in relation to our personal loans, “For personal loans, our focus until December 2017 is to maintain new monthly originations at the current level, allow the pool to age and closely monitor arrears and losses, at which point we accelerate new origination growth”. We plan to start increasing new monthly originations during the first quarter of calendar year 2018.

For the 2018 financial year, FSA Group expects its normalised profit after tax to members (excluding swaps) to be up 5% to 15% on the 2017 financial year with EPS in the range of 12.00 cents to 13.20 cents. The full year dividend is expected to be 7.00 cents per share.

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DIRECTORS' REPORT continued

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 7.

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 9 February 2018

6

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 2017, 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 in 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, 9 February 2018

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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FSA Group Limited

Consolidated statement of profit or loss and other comprehensive income

For the six months ended 31 December 2017		Consolidated Entity	Consolidated Entity
		31 December 2017	31 December 2016
	Notes	$	$
Continuing operations
Revenue and other income
Fees from services		27,893,035	26,388,603
Finance income		15,772,639	12,989,469
Finance expense		(6,842,601)	(5,858,534)
Net finance income		8,930,038	7,130,935
Total operating income		36,823,073	33,519,538
Marketing expenses		(4,287,732)	(4,278,827)
Administrative expenses		(5,304,123)	(4,488,338)
Operating expenses		(16,224,129)	(14,881,620)
Unrealised gain on fair value movement of derivatives		179,050	1,596,655
Expenses from continuing operations		(25,636,934)	(22,052,130)
Profit before income tax from continuing operations		11,186,139	11,467,408
Income tax expense		(3,398,209)	(3,521,544)
Net profit from continuing operations		7,787,930	7,945,864
Total profit for the period from continuing operations for the
period attributable to:
Non-controlling interests		596,151	583,714
Members of the parent		7,191,779	7,362,150
		7,787,930	7,945,864
Discontinued operations
Loss from disposed and discontinued operations after tax		(254,622)	(52,500)
Net profit for the period		7,533,308	7,893,364
Other comprehensive income		-	-
Total comprehensive income for the period		7,533,308	7,893,364
Total profit for the period and total comprehensive income for
the period attributable to:
Non-controlling interests		596,151	583,714
Members of the parent		6,937,157	7,309,650
		7,533,308	7,893,364
Earnings per share
Earnings per share from continuing operations
Basic earnings per share (cents per share)		5.75	5.89
Diluted earnings per share (cents per share)		5.75	5.89
Earnings per share from disposed and discontinued operations
Basic earnings per share (cents per share)		(0.20)	(0.04)
Diluted earnings per share (cents per share)		(0.20)	(0.04)
Total earnings per share
Basic earnings per share (cents per share)		5.55	5.85
Diluted earnings per share (cents per share)		5.55	5.85

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

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FSA Group Limited

Consolidated statement of financial position

As at 31 December 2017		Consolidated Entity	Consolidated Entity
		31 December 2017	30 June 2017
	Notes	$	$
Current Assets
Cash and cash equivalents		2,731,645	4,193,401
Trade and other receivables		37,649,443	36,527,421
Other assets		443,353	806,778
Total Current Assets		40,824,441	41,527,600
Non-Current Assets
Trade and other receivables		47,669,475	45,004,628
Investments		385	385
Plant and equipment		688,209	527,824
Deferred tax assets		4,481	5,890
Intangible assets		2,046,165	2,018,007
Total Non-Current Assets		50,408,715	47,556,734
Financing Assets
Personal loan cash and cash equivalents		89,620	129,701
Home loan cash and cash equivalents		7,267,260	4,745,492
Personal loan assets		40,594,641	35,257,582
Home loan assets financed by non-recourse financing liabilities		337,360,141	306,329,792
Total Financing Assets		385,311,662	346,462,567
Total Assets		476,544,818	435,546,901
Current Liabilities
Trade and other payables		4,048,777	5,092,257
Current tax liabilities		459,220	755,720
Borrowings		844,420	681,389
Provisions		2,047,586	2,117,272
Total Current Liabilities		7,400,003	8,646,638
Non-Current Liabilities
Provisions		495,279	669,588
Deferred tax liabilities		18,993,010	18,078,416
Derivatives		737,877	916,927
Total Non-Current Liabilities		20,226,166	19,664,931
Financing Liabilities
Borrowings to finance personal loan assets		33,840,172	27,028,411
Non-recourse borrowings to finance home loan assets		329,284,027	296,942,075
Total Financing Liabilities		363,124,199	323,970,486
Total Liabilities		390,750,368	352,282,055
Net Assets		85,794,450	83,264,846
Equity
Share capital		6,707,233	6,707,233
Retained earnings		76,096,749	74,163,296
Total equity attributable to members of the parent		82,803,982	80,870,529
Non-controlling interest		2,990,468	2,394,317
Total Equity		85,794,450	83,264,846

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

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FSA Group Limited

Consolidated statement of cash flows

For the six months ended 31 December 2017		Consolidated Entity	Consolidated Entity
		31 December 2017	31 December 2016
	Notes	$	$
		Inflows/	Inflows/
		(Outflows)	(Outflows)
Cash flow from continuing operations:
Cash flows from operating activities
Receipts from customers		22,084,883	22,469,446
Payments to suppliers and employees		(24,144,802)	(23,081,278)
Finance income received		15,612,858	13,067,554
Finance cost paid		(6,578,889)	(5,925,099)
Income tax paid		(2,026,869)	(2,749,617)
Net cash inflow from operating activities		4,947,181	3,781,006
Cash flows from investing activities
Acquisition of property, plant and equipment		(283,349)	(303,521)
Acquisition of intangibles		(275,558)	(740,893)
Net increase in home loan assets		(31,149,150)	(18,076,970)
Net increase in personal loan assets		(5,604,469)	(9,438,135)
Net increase in other loans		(485,000)	(315,000)
Net cash outflow from investing activities		(37,797,526)	(28,874,519)
Cash flows from financing activities
Net receipt of borrowings		38,873,981	25,380,406
Payment of distributions to non-controlling interests		-	(20,000)
Dividends paid to company's shareholders		(5,003,704)	(5,003,704)
Net cash inflow from financing activities		33,870,277	20,356,702
Cash flow from disposed and discontinued operations:
Net cash outflow from operating activities		-	(236,771)
Net cash flow from investing activities		-	-
Net cash flow from financing activities		-	-
Net cash outflow from disposed and discontinued operations		-	(236,771)
Net increase / (decrease) in cash and cash equivalents		1,019,932	(4,973,582)
Cash and cash equivalents at the beginning of the period		9,068,593	17,375,879
Cash and cash equivalents at the end of the period		10,088,525	12,402,297

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

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FSA Group Limited

Consolidated statement of changes in equity

For the six month ended 31 December 2017

For the six month ended 31 December 2017
	Share Capital Other Reserve Retained Earnings Non- controlling Interest Total $ $ $ $
Balance at 30 June 2016 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-based payment expense Dividends paid Distributions to non-controllingInterests	6,707,233 (3,278,761) 71,081,654 2,249,023 76,759,149 - - 7,309,650 583,714 7,893,364 - - - - -
	- - 7,309,650 583,714 7,893,364 - - 3,278,761 (3,278,761) - - - - (5,003,704) - (5,003,704) - - - (20,000) (20,000)
Balance at 31 December 2016	6,707,233 - 70,108,839 2,812,737 79,628,809
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	- - 7,807,236 561,580 8,368,816 - - - - -
	- - 7,807,236 561,580 8,368,816 - - (3,752,779) - (3,752,779) - - - (980,000) (980,000)
Balance at 30 June 2017	6,707,233 - 74,163,296 2,394,317 83,264,846
Total comprehensive income for the period:
Profit after income tax for the period	- - 6,937,157 596,151 7,533,308
Other comprehensive income for the period, net of tax	- - - - -
Total comprehensive income for the period	- - 6,937,157 596,151 7,533,308
Transactions with owners in their capacity as owners:	-
Share-based payment expense	- - - - -
Dividendspaid	- - (5,003,704) - (5,003,704)
Balance at 31 December 2017	6,707,233 - 76,096,749 2,990,468 85,794,450

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

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FSA Group Limited

Notes to the consolidated half year financial report

31 December 2017

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 2017 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in associates.

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

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 2017 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 9 February 2018.

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 2017.

4. SEGMENT INFORMATION

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

• Services; including debt agreements, personal insolvency agreements, bankruptcy and Easy Debt Management;

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

• 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.

The Group operates in one geographic region – Australia.

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FSA Group Limited

Notes to the consolidated half-year financial report

31 December 2017

4. SEGMENT INFORMATION continued

Business segment Revenue and Results - half-year ended 31 December 2017

Revenue and Income External sales Finance Income Finance expense Net Finance Income Other Income Internal sales and income Eliminations Total Revenue and Income Results Segment profit before tax Income tax expense Profit for the year from continuing operations Assets Segment assets Eliminations Total assets	Services	Services	Consumer Lending	Consumer Lending	Other/Unallocated	Other/Unallocated	Consolidated Total	Consolidated Total
	31/12/2017	31/12/2016	31/12/2017	31/12/2016	31/12/2017	31/12/2016	31/12/2017	31/12/2016
	$ 27,518,311 6,176 -	$ 25,848,194 5,708 -	$ 349,874 - 15,712,661 (6,842,601)	$ 523,620 - 12,869,588 (5,858,106)	$ 24,850 - 53,802 -	$ 35,975 - 114,173 (428)	$ 27,893,035 15,772,639 (6,842,601)	$ 26,407,789 12,989,469 (5,858,534)
	6,176 - 452,280 -	5,708 (19,186) 384,940 -	8,870,060 - - -	7,011,482 - - -	53,802 - - -	113,745 - - -	8,930,038 - 452,280 (452,280)	7,130,935 (19,186) 384,940 (384,940)
	27,976,767 6,554,825 (1,973,559)	26,219,656 6,503,765 (1,976,414)	9,219,934 4,419,126 (1,325,997)	7,535,102 3,269,940 (981,171)	78,652 212,188 (98,653)	149,720 1,693,703 (563,959)	36,823,073 11,186,139 (3,398,209)	33,519,538 11,467,408 (3,521,544)
	4,581,266	4,527,351	3,093,129	2,288,769	113,535	1,129,744	7,787,930	7,945,864
	Services		Consumer Lending		Other/Unallocated		Consolidated Total
	31/12/2017	30/06/2017	31/12/2017	30/06/2017	31/12/2017	30/06/2017	31/12/2017	30/06/2017
	176,844,157	160,023,200	401,582,313	362,996,700	49,874,073	51,815,762	628,300,543 (151,755,725)	574,835,662 (139,288,761)
							476,544,818	435,546,901

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FSA Group Limited

Notes to the consolidated half-year financial report

31 December 2017

5. EARNINGS PER SHARE

Earnings per share (a) Reconciliation of earnings used to calculate basic and dilutive earnings per share Earnings per share from continuing operations Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Earnings per share from disposed and discontinued operations Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Total earnings per share Basic earnings per share (cents per share) Diluted earnings per share (cents per share) (b) Weighted average number of ordinary shares outstanding during the period Weighted average number of ordinary shares outstanding during the period used in calculating dilutive EPS

31-Dec-17 31-Dec-16 Value Value 5.75 5.89 5.75 5.89 (0.20) (0.04) (0.20) (0.04) 5.55 5.85 5.55 5.85 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
	$ 0.04 $5,003,704 100% 6-Sep-17

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

Dividends paid during financial year 2017 were:

Final - ordinary Interim – ordinary	Value per share Total Amount Franked Date of Payment
	$ 0.04 $5,003,704 100% 13-Sep-16 0.03 $3,752,778 100% 16-Mar-17

On 9 February 2018, the directors declared a fully franked dividend of 3.00 cents to be paid on 16 March 2018, a total estimated distribution of $3,752,778 based on ordinary shares on issue as at 2 March 2018.

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

31 December 2017

7. FINANCIAL INSTRUMENTS

• a) The Group 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	31 December 2017 ($)	Valuation Technique(s)	Inputs Used
Financial liability:
Interest rate swap	737,877	Income approach using discounted cash flow methodology and the funding valuation adjustment framework	Overnight Index Swap rate

• 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 by non-recourse financing liabilities	Dec-17 Dec-17 Book value Fair value $ $
	19,592,590 19,592,590 35,775,898 34,838,490 40,594,641 47,344,007 337,360,141 351,417,435
Financial liabilities Borrowings to finance personal loan assets Non-recourse borrowings to finance home loan assets	33,840,172 33,840,172 329,284,027 328,546,150

*Included in current and non-current receivables is an amount of $61,280,227 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 $18,386,728.

8. COMMITMENTS

At the reporting date loan applications accepted by the Group, but not yet settled amounted to $13,378,601 (1HFY2017: $7,676,131).

9. SUBSEQUENT EVENTS

There have been no events since 31 December 2017 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 2017

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 2017 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 9 February 2018

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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

Conclusion

We have reviewed the half-year financial report of FSA Group Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2017, 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 halfyear then ended, and notes comprising a statement of accounting policies and other explanatory information, and the directors’ declaration.

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 the Group is not in accordance with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

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 Group’s financial position as at 31 December 2017 and its financial 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 the Group, 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

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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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 the Group, 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

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Arthur Milner Partner

Sydney, 9 February 2018

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