Appendix 4D Half yearly report ABN Half year ended ( current reporting period ) Previous corresponding period 98 093 855 791 31 December 2011 31 December 2010 2.0 Results for announcement to the market $A'000 2.1 Revenue from ordinary activities (net of finance expense) up 4.7% To 28,568 2.2 Profit from ordinary activities after tax attributable to members down 6.4% To 3,719 2.3 Net profit for the period attributable to members down 6.4% To 3,719 2.4 Dividends Interim dividend declared on 24 February 2012 and payable 20 March 2012 of 0.65 cents per share (fully franked) 2.5 Record date for determining entitlements to the interim dividend 6 March 2012 2.6 For an explanation of the figures in 2.1 to 2.4 above, refer to the Results and Review of Operations contained in the Directors Report which forms part of the 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 Noncontrolling interests 36.4 cents 31.3 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 7 6. Dividend reinvestment plans There are no dividend reinvestment plans. 7. Associates and joint ventures See Note 5 8. Foreign entities There are no foreign entities 9. Independent audit report or review See Page 14
FSA GROUP LTD ABN 98 093 855 791 Interim Financial Statements 31 December 2011
FSA GROUP LIMITED DIRECTORS' REPORT 31 DECEMBER 2011 The directors submit their report for the half-year ended 31 December 2011, together with the half year financial statements for ( FSA Group ) consisting of and the entities it controlled for the half year ended 31 December 2011. DIRECTORS The names of the directors of ( FSA Group ) in office during the half-year and until the date of this report are shown below. Sam Doumany Tim Odillo Maher Deborah Southon Stan Kalinko Sally Herman (Non-Executive Chairman) (Executive Director) (Executive Director) (Non-Executive Director) (Non-Executive Director) RESULTS AND REVIEW OF OPERATIONS Principal activities The principal activities of FSA Group are the provision of debt solutions and direct lending services to individuals and businesses. Operating Results FSA Group s profit after tax attributable to members (now termed comprehensive income attributable to owners of the parent ) for the half year ended 31 December 2011 was $3.7m (31 December 2010: $4.0m). The key indicators compared to the previous corresponding period are: Revenue and income (net of finance expense) of $28.6m up 4.7% Profit before income tax expense of $6.6m down 6.8% Profit after income tax expense attributable to members of $3.7m down 6.4% Net tangible asset backing per share of 36.4 cents up 16.3% Basic earnings per share of 2.69 cents down 6.9% Dividends The directors have declared on 24 February 2012 an interim fully franked dividend of 0.65 cents per share, with a record date of 6 March 2012 and payable on 20 March 2012. Overview FSA Group is Australia s largest provider of debt solutions. The business operates across the following key segments, Services, Home Loans and Small Business. The profitability of each segment is as follows: Profitability 31 Dec 10 31 Dec 11 % Services $3.9m $5.0m Up 30% Home loans $2.2m $2.1m Down 4% Small business $1.2m ($0.6m) Down 151% Other ($0.1m) $0.1m - Profit before income tax expense $7.1m $6.6m Down 7% Profit after tax attributable to members $4.0m $3.7m Down 6% 1
FSA GROUP LIMITED DIRECTORS' REPORT 31 DECEMBER 2011 Continued Operational Performance Services FSA Group offers a range of simple and convenient services to assist clients wishing to enter into a payment arrangement with their creditors. These services include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy. FSA Group is the largest provider of debt agreements with around 50% market share and is one of the largest providers of personal insolvency agreements and bankruptcy in the country. New client numbers during the first half of the 2012 financial year were as follows: New Client Numbers 31 Dec 10 vs. 31 Dec 11 Debt agreements Down 2% Personal insolvency agreements and bankruptcy Up 40% FSA Group s arrears and risk management capabilities are a competitive advantage. FSA Group manages over $280m of unsecured debt under debt agreements. During the first half of the 2012 financial year FSA Group paid $34.6m in dividends to creditors which was an increase of 16% when compared to the previous corresponding period. Home Loans FSA Group offers a range of simple and convenient products to assist clients with property wishing to consolidate their debt. FSA Group offers solutions both as a lender and manager of home loans. The nonconforming home loan market consists of lenders who provide loan products to an individual who is unlikely to conform to the lending criteria of the major banks. FSA Group has firmly established a track record in non-conforming home loan lending. We have originated a high quality loan pool of over $235m which is outperforming those of our competitors. Greater than 30 day arrears increased to 2.77% at December 2011 compared to 2.38% at June 2011. This compares with competitor arrears of 10.38% as reported by the Standard & Poors Index at September 2011. In July 2011 FSA Group announced that Bendigo and Adelaide Bank Limited had approved a three year $50m home loan funding facility. This facility supplements the Westpac facility. In August 2011 FSA Group announced that Westpac had increased its non-recourse home loan funding facility from $235m to $260m. The facility was also renewed for a further term until 15 October 2013. Small Business FSA Group offers a range of simple and convenient products and services to assist small business with cash flow management. During the first half of the year, FSA Group reviewed the operations of this division and concluded that the greatest potential for growth and opportunity was in the provision of factoring finance. As a consequence the division was restructured and consulting services will, going forward, have limited application. This restructuring has resulted in a loss as consulting services were wound down. FSA Group has established a track record in factoring finance. We have originated a high quality loan pool of around $16m. In January 2012 FSA Group announced Westpac had renewed its $25m limitedrecourse factoring finance funding facility for a further term until 31 July 2013. 2
FSA GROUP LIMITED DIRECTORS' REPORT 31 DECEMBER 2011 Continued Outlook The market environment remains uncertain and consumer confidence is low. Consumer debt levels are however at a record high and demand for our products and services is steady. We are continuing with our vision to build a range of accessible solutions which support our clients throughout their entire financial lifecycle. To achieve this we will continue to invest in expanding FSA Group s products and services. This will enable us to leverage our existing client base and grow the pool of clients we can assist going forward. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the FSA Group during the half-year ended 31 December 2011. AUDITOR S INDEPENDENCE DECLARATION The auditor s independence declaration under Section 307C is attached to this financial 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. Tim Odillo Maher Director Sydney 24 February 2012 3
4
Condensed consolidated statement of comprehensive income For the six months ended 31 December 2011 CONSOLIDATED 31-Dec-11 31-Dec-10 Note $ $ Revenue and income Fees from services 21,549,193 20,212,932 Finance income 15,669,758 14,909,621 Finance expenses (8,648,984) (7,878,743) Net finance income 7,020,774 7,030,878 Other (losses)/gains (2,197) 32,340 Total revenue and other income net of finance expense 28,567,770 27,276,150 Share of profits of an associate using the equity accounting method 5 2,889 18,827 Marketing expenses (3,167,927) (2,866,943) Administrative expenses (6,296,290) (5,695,837) Operating expenses (12,489,089) (11,633,826) Profit before income tax expense 6,617,353 7,098,371 Income tax expense (1,914,347) (1,999,152) Total comprehensive income for the period 4,703,006 5,099,219 Profit for the period & total comprehensive income for the period attributable to: Non-controlling interest 983,743 1,124,652 Owners of the parent 3,719,263 3,974,567 4,703,006 5,099,219 Basic earnings per share (cents per share) 6 2.69 2.89 Diluted earnings per share (cents per share) 6 2.69 2.89 The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 5
Condensed consolidated statement of financial position As at 31 December 2011 CONSOLIDATED 31-Dec-11 30-Jun-11 Note $ $ Current assets Cash and cash equivalents 11,177,622 9,413,356 Trade and other receivables 40,929,058 36,618,162 Other assets 964,815 891,090 Total current assets 53,071,495 46,922,608 Non-current assets Trade and other receivables 29,406,308 27,856,932 Investment in associates 66,864 63,975 Plant and equipment 368,848 405,003 Investment property 297,018 301,547 Other financial assets 600,420 600,420 Deferred tax assets 332,710 213,760 Intangible assets 3,457,262 3,502,277 Total non-current assets 34,529,430 32,943,914 Assets financed by non-recourse liabilities Cash and cash equivalents 12,087,517 7,394,118 Mortgage finance assets 233,516,931 228,964,764 Total assets financed by non-recourse financial liabilities 245,604,448 236,358,882 Total assets 333,205,373 316,225,404 Current liabilities Trade and other payables 10,320,554 10,519,345 Current tax liabilities 793,844 1,409,212 Borrowings 2,900,580 841,313 Provisions 680,043 812,435 Total current liabilities 14,695,021 13,582,305 Non-current liabilities Borrowings 18,554,028 16,246,220 Provisions 405,654 343,055 Deferred tax liabilities 12,342,238 10,624,047 Total non-current liabilities 31,301,920 27,213,322 Non-recourse financial liabilities Borrowings 230,150,771 220,865,314 Total non-recourse financial liabilities 230,150,771 220,865,314 Total liabilities 276,147,712 261,660,941 Net assets 57,057,661 54,564,463 Equity Share capital 8 11,292,534 11,692,255 Reserves 753,556 745,831 Retained earnings 41,621,837 39,285,112 Non-controlling interest 3,389,734 2,841,265 Total equity 57,057,661 54,564,463 The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes. 6
Condensed consolidated statement of cash flows For the six months ended 31 December 2011 CONSOLIDATED 31-Dec-11 31-Dec-10 Note $ $ Cash flows from operating activities Receipts from customers and debtors 20,849,681 19,244,310 Payments to suppliers and employees (20,284,739) (19,504,779) Interest received 12,462,217 11,040,670 Interest and other costs of finance paid (8,465,025) (7,311,714) Cashflow from operations 4,562,134 3,468,487 Net cash payments for institutional creditor distributions (477,495) (311,066) Income taxes paid (932,044) (373,414) Net cash flows provided by operating activities 3,152,595 2,784,007 Cash flows from investing activities Acquisition of property, plant and equipment (71,443) (94,952) Acquisition of intangible assets (21,322) (94,694) Net Increase in specialty finance assets (7,411,407) (19,147,366) Net Decrease in bridging finance assets 285,516 7,000 Net Increase in factoring finance assets (330,481) (3,634,776) Net Increase in other loans (409,500) - Net cash flows used in investing activities (7,958,637) (22,964,788) Cash flows from financing activities Distributions paid to minority interests (444,894) (375,072) Dividends to shareholders 7 (1,382,538) - Share buy-back 8 (399,721) - Net Proceeds from borrowings 13,490,860 23,250,409 Net cash flows provided by financing activities 11,263,707 22,875,337 Net increase in cash and cash equivalents 6,457,665 2,694,556 Cash and cash equivalents at the beginning of the half-year 16,807,474 13,999,970 Cash and cash equivalents at the end of half-year 23,265,139 16,694,526 Cash and cash equivalents at the end of the half year is represented by: Current assets Cash and cash equivalents 11,177,622 8,369,546 Assets financed by non-recourse financial liabilities Cash and cash equivalents 12,087,517 8,324,980 Total cash and cash equivalents at the end of the half year 23,265,139 16,694,526 The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes. 7
Condensed consolidated statement of changes in equity For the six months ended 31 December 2011 Share capital Reserves Retained earnings Noncontrolling interest $ $ $ $ $ Total At 1 July 2010 11,692,255 664,374 30,289,397 2,103,464 44,749,490 Total comprehensive income for the period - - 3,974,567 1,124,652 5,099,219 Transactions with owners in their capacity as owners Share based payments expense - 28,386 - - 28,386 Distributions to non-controlling interests - - - (509,743) (509,743) At 31 December 2010 11,692,255 692,760 34,263,964 2,718,373 49,367,352 At 1 January 2011 11,692,255 692,760 34,263,964 2,718,373 49,367,352 Total comprehensive income for the period - - 5,021,148 895,224 5,916,372 Transactions with owners in their capacity as owners Share based payments expense - 53,071 - - 53,071 Distributions to non-controlling interests - - - (772,332) (772,332) At 30 June 2011 11,692,255 745,831 39,285,112 2,841,265 54,564,463 At 1 July 2011 11,692,255 745,831 39,285,112 2,841,265 54,564,463 Total comprehensive income for the period - - 3,719,263 983,743 4,703,006 Transactions with owners in their capacity as owners Share buy-back (399,721) - - - (399,721) Share based payments expense - 7,725 - - 7,725 Dividends to shareholders - - (1,382,538) - (1,382,538) Distributions to non-controlling interests - - - (435,274) (435,274) At 31 December 2011 11,292,534 753,556 41,621,837 3,389,734 57,057,661 The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 8
Notes to the condensed consolidated interim financial statements 31 December 2011 1. REPORTING ENTITY (the Company ) is a company domiciled in Australia. The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 December 2011 comprise the Company and its subsidiaries (together referred to as the Group ) and the Group s interests in the associates and jointly controlled entities. The principal activities of FSA Group are the provision of debt solutions and direct lending services to individuals and businesses. 2. BASIS OF PREPARATION Statement of compliance These condensed consolidated interim financial statements have been prepared in accordance with Australia Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 and do 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 2011 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 condensed consolidated interim financial statements were approved by the Board of Directors on 24 February 2012. 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Group in these condensed 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 2011. 4. SEGMENT INFORMATION is an Australian entity whose principal activities are: - Services include debt agreement proposal preparation and administration, trustee services and other related services. - Home Loans includes the provision of mortgage finance, home loan broking and mortgage management. - Small Business includes corporate consultancy services and the provision of bridging finance and factoring finance and other related services. The Consolidated Entity operates in one geographic region Australia. 9
Notes to the Consolidated Condensed Half-Year Financial Statements 31 DECEMBER 2011 4. SEGMENT INFORMATION continued Business segment Revenue and Results Half-year ended 31 December Services Home Loans Small Business Other/Unallocated Consolidated Total 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 Revenue and Income $ $ $ $ $ $ $ $ $ $ External sales 20,256,780 17,566,983 570,937 595,044 721,476 2,050,905 - - 21,549,193 20,212,932 Finance Income 36,179 76,068 13,120,043 12,305,151 2,469,712 2,514,340 43,824 14,062 15,669,758 14,909,621 Finance expense (3,179) (1,644) (8,091,869) (7,286,938) (553,936) (590,161) - - (8,648,984) (7,878,743) Net Finance Income 33,000 74,424 5,028,174 5,018,213 1,915,776 1,924,179 43,824 14,062 7,020,774 7,030,878 Other Income (2,197) - - - - 32,340 - - (2,197) 32,340 Internal sales and income 283,200 257,338 - - - 1,299 156,250-439,450 258,637 Eliminations - - - - - - - - (439,450) (258,637) Total Revenue and Income 20,570,783 17,898,745 5,599,111 5,611,957 2,637,252 4,010,023 200,074 14,062 28,567,770 27,276,150 Results Segment profit before tax 5,015,801 3,861,966 2,115,644 2,197,535 (597,253) 1,165,541 83,161 (126,671) 6,617,353 7,098,371 Income tax (expense)/benefit (1,521,114) (1,165,291) (536,926) (510,596) 184,150 (352,751) (40,457) 29,486 (1,914,347) (1,999,152) Profit for the year 3,494,687 2,696,675 1,578,718 1,686,939 (413,103) 812,790 42,704 (97,185) 4,703,006 5,099,219 Assets Segment assets Eliminations Total assets Services Home Loans Small Business Other/Unallocated Consolidated Total 31/12/2011 30/06/2011 31/12/2011 30/06/2011 31/12/2011 30/06/2011 31/12/2011 30/06/2011 31/12/2011 30/06/2011 85,660,324 78,448,069 260,870,153 247,427,248 23,188,323 24,004,362 17,001,105 17,751,840 386,719,905 367,631,519 (53,514,532) (51,406,115) 333,205,373 316,225,404 10
Notes to the Consolidated Condensed Half-Year Financial Statements 31 DECEMBER 2011 5. DETAILS OF ASSOCIATES The consolidated entity has 50% shareholding in its associate, Huntingdale Smythe Lawyers Pty Limited. There was no change to this percentage shareholding in the current or the comparative period. 6. EARNINGS PER SHARE 31 December 2011 31 December 2010 Value Value (a) Reconciliation of earnings used to calculated basic $ $ and dilutive earnings per share Comprehensive income for the period - Owners ($) 3,719,263 3,974,567 Basic earning per share (cents) 2.69 2.89 Diluted earning per share (cents) 2.69 2.89 Number Number (b) Weighted average number of ordinary shares outstanding during the year 138,030,070 137,536,752 Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS 138,030,070 137,536,752 7. DIVIDENDS Dividends recognised in the current financial period by are: Value per share Total Amount Franked Date of Payment $ Final - ordinary 0.01 $1,382,538 100% 30 September 2011 Franked dividends declared or paid during the financial year were franked at a tax rate of 30%. There were no dividends paid during 2010. On 24 February 2012, the directors declared a fully franked dividend of 0.65 cents to be paid on 20 March 2012, a total estimated distribution of $889,637 based on ordinary shares on issue as at 24 February 2012. 8. SHARE CAPITAL The following movements in share capital are material to the understanding of the interim period: Six months to 31 December 2011 Numbers Value $ Shares on issue at 1 July 2011 138,253,785 11,692,255 Shares buy back (1,386,566) (399,721) Shares on issue at 31 December 2011 136,867,219 11,292,534 Six months to 31 December 2010 Numbers Value $ Shares on issue at 1 July 2010 138,253,785 11,692,255 Shares on issue at 31 December 2010 138,253,785 11,692,255 11
Notes to the Consolidated Condensed Half-Year Financial Statements 31 DECEMBER 2011 9. COMMITMENTS At the reporting date loan applications accepted by the Group, but not yet settled amounted to $6,458,800 (2010: $6,010,000). 10. SUBSEQUENT EVENTS There have been no events since 31 December 2011 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 7. 12
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 Corporate 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 2011 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. Tim Odillo Maher Director Sydney 24 February 2012 13
14
15