FSA Group AGM Presentation 18 November 2010

Transcription

1 FSA Group AGM Presentation 18 November 2010

2 Agenda 1. Chairman s address 2. Executive Director s address 3. Ordinary business 2

3 Chairman s address FY2010 another successful year Business impacted by unusual macro economic conditions which temporarily slowed client demand Achieved a PAT of $7.52m down 15% on FY2009 Strategy since 2007 to grow home loan lending and factoring finance loan pools annuity income. Funding lines increased and renewed by Westpac Recently launched home loan management division will allow us to move into the prime home loan market Strong first 4 months with PAT up 30% expect growth in 2011 and

4 Executive Director s address Overview Markets Products and Services Operational Performance Outlook and FY2011 Profit Guidance 4

5 Overview and key investment highlights 1. Founded in 2000, listed in FSA is Australia s largest provider of debt solutions for individuals transitioned from fee for service to fee for service and lending 4. Established lending business* which delivers secure, annuity income 5. FSA operates in growth markets with high barriers to entry 6. Solid track record of financial performance: 5 year PBT CAGR of 50% 7. FSA positioned to deliver strong returns * $260m of funding in place with Westpac Banking Corporation for lending 5

6 FSA operates in growth markets with high barriers to entry FSA has 51% market share for Debt Agreements FSA is one of the few remaining non-conforming lenders Market Individuals who rely upon a Debt Agreement (DA), or a Personal Insolvency Agreement or Bankruptcy to address debt Market Individuals who are unlikely to conform to the lending criteria of banks who rely upon a home loan product to consolidate debt Growth Individuals are becoming more aware a DA is an alternative to bankruptcy. Government impetus Growth Due to the GFC - fewer competitors and stricter bank lending criteria Barriers From DA administrators now require a substantial capital base to operate Barriers Due to GFC - home loan lenders now require more capital to operate FSA recently launched into the larger prime home loan market as a home loan manager for Bendigo and Adelaide Bank 6

7 Client acquisition Direct client acquisition model Clients are micro-managed efficiently Via advertising and marketing TV, web etc. Controlled, selective, low cost No third party referral channels Assess client needs Tailor solutions - affordable, sustainable and viable Proactively manage for debt repayment and rehabilitation 7

8 Overview of products and services Debt Agreements Personal Insolvency Agreements Bankruptcy Other solutions 8

9 Services Debt Agreements Largest provider FY2010 market share 51% Micro manages over $240m of unsecured debt on behalf of creditors under debt agreements Fee for service income with recurring income Personal Insolvency Agreements and Bankruptcy Debt Agreements Personal Insolvency Agreements Bankruptcy Other solutions One of the largest registered trustees in Australia Fee for service income with recurring income 9

10 Home loan broking, lending & management 2003 Largest non-conforming broker in Australia Up-front and trail commission No balance sheet or funding risk 2007 Current $235m non-recourse facility from Westpac for non-conforming lending Lenders margin and annuity income Balance sheet risk limited to equity invested 2010 Home Loan Broking Home Loan Lending Home Loan Management Launched into the larger prime home loan market as a home loan manager for Bendigo and Adelaide Bank Up-front and trail commission No balance sheet or funding risk 10

11 Operating Performance July to October 11

12 Services Services client numbers Jul Oct 2010 vs. Jul Oct 2009 Debt Agreements Up 12% Personal Insolvency Agreements and Bankruptcy Up 19% Services impacted by: Continuing high levels of consumer debt Government stimulus package ended Higher interest rate environment 12

13 Home loan lending FSA is one of the few remaining non conforming lenders operating in the market Funding $235m from Westpac Recently renewed to October 2012 Balance sheet risk limited to equity invested High quality demand due to fewer competitors Currently lending to around 50% of potential clients settling $8m p.m. Planning to increase to $15m to $20m p.m. by expanding product range At $15m to $20m p.m. will grow loan pool to >$600m by 2013 Currently exploring funding options Home Loan Lending (Oct 2010) Loan Pool Size $214m Security Type 1 st Mortgage Average Loan Size $205,086 Average Weighted LVR 68% % Full Doc Borrowers 98% % Variable Rate Borrowers 100% Geographical Spread Australia Wide >30 day arrears 2.43% Loss of Capital $79,000 Target 2013 $600m Competitors >30 day arrears as reported by the Standard & Poors Index was 12.15% at June

14 Factoring finance to small businesses FSA also provides a range of debt solutions to small businesses, including factoring finance Funding $25m from Westpac Renewed to June 2012 High quality demand due to difficulties with small businesses obtaining credit Assigned receivables are credit insured Growing loan pool at > $1m p.m. Aiming to grow pool to $20m 25m by 2011 and to $45m by 2013 Factoring Finance (Oct 2010) Loan Pool Size $15m Security Type Assigned Receivables Average Loan Size $151,086 Average Weighted LVR Ranges 55%-65% % Variable Rate Borrowers 100% > 90 day arrears 4.76% Asset Insured Loss of Capital Target 2011 Yes NIL $20m - 25m Target 2013 $45m 14

15 Outlook and FY2011 Profit Guidance 15

16 Outlook: growth across all divisions Growth in: Driven by: Services Continuing high levels of consumer debt Home Loan Lending Fewer competitors, stricter bank lending criteria Factoring Finance Home Loan Management Difficulties for small businesses obtaining credit Expansion into the larger prime home loan market 16

17 FY2011 Profit guidance FY2010 Actual FY2011 Guidance % Change Loan Pool Average (Closing) Services $8.6m $8.5 $10.5m Home Loan Lending $3.4m $4.0m $225m ($240m) Business Services and Lending 1 $0.9m $2.5m $16.5m ($20m) Profit Before Tax $12.9m $15 $17m Profit After Tax 2 $7.5m $8.6 $10m 15% 33% NTA per share 29.9c c EPS basic 5.82c c 7% 24% Unaudited Profit After Tax for July to October FY2011 up 30% 1. Business Services and Lending = Predominantly Factoring Finance 2. Profit After Tax = Profit After Tax Attributable to Members 17

18 PBT : Annuity contribution growing Fee for service Lending PBT CAGR = 50% Guidance Profit before Tax 18

19 2013 Targets 19

20 2013 Targets Services PBT anticipated to grow at > 10% each year Home Loan Lending Aiming to grow loan pool from $214m to $600m Factoring Finance Aiming to grow loan pool from $15m to $45m Home Loan Management New product launch tremendous opportunity to capture market share in the larger prime home loan market 20

21 Investor relations contacts Mr. Tim Odillo Maher Executive Director Ms. Jeannene O Day Consultant FSA Group Limited Lyon Group Pty Limited Level 3, 70 Phillip Street Level 1, 175 Macquarie Street Sydney NSW 2000 Sydney NSW 2000 T: T: F: F: E: tmaher@fsagroup.com.au E: joday@lyongrp.com Further information can be accessed from fsagroup.com.au 21

22 Disclaimer This presentation is designed to provide a general overview of the activities and financial position of FSA Group Limited. The material set out in the presentation is current as at the date of this presentation. It is information in summary form and does not purport to be complete. This presentation includes forward looking statements about estimates and outcomes which may be affected by internal and external factors and involve known and unknown risks which may cause actual results and business performance to differ from those expressed or implied in such statements. No assurance or guarantee is, or should be taken to be, given in relation to the future business performance or the likelihood that the assumptions, estimates or outcomes will be achieved. Whilst management has taken every effort to ensure the accuracy of the material in this presentation, it is provided for information only. FSA Group Limited, its officers and management exclude and disclaim any liability in respect of anything done in reliance on this presentation. It is not intended that the material in this presentation be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered with or without professional advice, when deciding if an investment is appropriate. 22

23 FSA Group AGM Presentation 18 November 2010