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Appendix 4D
Preliminary financial statements for the half-year ended 31 December 2021
Name of Entity | FSA Group Limited | |
ABN | 98 093 855 791 | |
Details of the reporting period | ||
Half-year Ended | 31 December 2021 | |
Previous corresponding reporting period | 31 December 2020 |
Results for announcement to the market | $A'000 | up/down | Movement % |
Total operating income | 30,534 | down | 4.6% |
Net profit before tax | 15,730 | down | 4.2% |
Profit after tax from ordinary activities attributable to the | |||
members of the parent | 9,915 | down | 11.5% |
Net profit for the period attributable to members of the parent | 9,915 | down | 11.5% |
Amount per Franked amount | Tax rate for | ||||
Dividend information | share (cents) per share (cents) | franking credit | |||
Final 2021 dividend per share (paid 31 August 2021) | 3.00 | 3.00 | 30% | ||
Interim 2022 dividend per share determined | 3.50 | 3.50 | 30% | ||
Interim dividend dates: | |||||
Ex-dividend date | 23 February 2022 | ||||
Record date | 24 February 2022 | ||||
Payment date | 10 March 2022 | ||||
There is no dividend reinvestment plan | |||||
31-Dec-21 | 31-Dec-20 | ||||
Net tangible assets per security | 49.7 cents | 42.9 cents |
Details of the entities over which control has been gained or lost | Note |
during the period | Page 13 |
Associates and joint ventures | Page 13 |
Foreign entities | Not applicable |
Independent audit report or review | Page 16 |
This information should be read in conjunction with the 2021 Annual Report.
Additional information supporting the Appendix 4D disclosure requirement can be found in the Directors' Report and the consolidated financial statements for the half-year ended 31 December 2021.
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DIRECTORS' REPORT
The Directors submit their report for the half-year ended 31 December 2021.
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. All Directors were in office from the start of the half-year, unless otherwise stated.
David Bower | Non-Executive Chairman |
Tim Odillo Maher | Executive Director |
Deborah Southon | Executive Director |
PRINCIPAL ACTIVITIES
FSA Group provides debt solutions and direct lending services to individuals and businesses.
EXECUTIVE DIRECTORS' REVIEW
COVID-19 impacted and continues to impact the number of new callers seeking our assistance for our Services segment. We expect demand will start to return during the 2023 financial year.
Our focus in on our Lending segment, developing a broker channel and growing our loan pools. During the first half, FSA Group acquired an asset finance lending business which lends to SMEs for vehicles and business-criticalequipment.
FINANCIAL OVERVIEW
For the half-year ended 31 December 2021, FSA Group generated $30.5m in operating income, a 5% decrease, and a profit after tax attributable to members of $9.9m, an 11% decrease compared to the half-year ended 31 December 2020. Our net cash inflow from operating activities was $14.6m, a 2% increase.
We advise that the Directors have declared a fully franked interim dividend of 3.50 cents per share, with a record date of 24 February 2022 and payable on 10 March 2022.
The Financial Overview below summarises our performance.
Financial Overview | 1HFY 2021 | 1HFY 2022 | % Change |
Operating income | $32.0m | $30.5m | -5% |
Profit before tax | $16.4m | $15.7m | -4% |
Profit after tax attributable to members of the parent | $11.2m | $9.9m | -11% |
EPS basic | 8.96c | 7.93c | -11% |
Net cash inflow from operating activities | $14.3m | $14.6m | +2% |
Dividend/share | 3.00c | 3.50c | +17% |
Shareholder equity attributable to members | $66.9m | $86.2m | +29% |
Return on equity | 35% | 25% |
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DIRECTORS' REPORT continued
Operational Performance
Our business operates across the following key segments, Services and Lending. The operating income and profitability of each segment is as follows:
Operating income by segment | 1HFY 2021 | 1HFY 2022 | % Change | |
Services | $16.8m | $12.8m | -24% | |
Lending | ||||
Home loans and Asset finance | $8.1m | $9.7m | +20% | |
Personal loans | $7.1m | $8.2m | +16% | |
Other/unallocated | $0.0m | $0.1m | ||
Operating income | $32.0m | $30.5m | -5% |
Profit before tax by segment | 1HFY 2021 | 1HFY 2022 | % Change | |
Services | $6.9m | $5.1m | -26% | |
Lending | ||||
Home loans and Asset finance | $5.0m | $5.7m | +14% | |
Personal loans | $4.1m | $5.2m | +27% | |
Other/unallocated | $0.4m | -$0.2m | ||
Profit before tax | $16.4m | $15.7m | -4% |
Services
The Services segment 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. FSA Group is the largest provider of these services in Australia.
COVID-19 impacted and continues to impact the number of new callers seeking our assistance for our Services segment. We expect demand will start to return during the 2023 financial year.
During the first half, new client numbers for informal arrangements and debt agreements decreased by 52% and for personal insolvency agreements and bankruptcy increased by 39% compared to the previous corresponding period.
During the first half, informal arrangement and debt agreement clients under administration decreased to 13,485, down 23% and for personal insolvency agreements and bankruptcy decreased to 969, down 16%. FSA Group manages $153m of unsecured debt under informal arrangements and debt agreements and during the first half paid $35m in dividends to creditors.
Informal and Debt Agreements | 1HFY 2020 | 1HFY 2021 | 1HFY 2022 | % Change | |
New clients | 2,175 | 724 | 351 | -52% | |
Clients under administration | 20,512 | 17,520 | 13,485 | -23% | |
Debt managed | $359m | $261m | $153m | -41% | |
Dividends paid | $42m | $43m | $35m | -19% | |
PIA's and Bankruptcy | 1HFY 2020 | 1HFY 2021 | 1HFY 2022 | % Change | |
New clients | 225 | 38 | 53 | +39% | |
Clients under administration | 1,352 | 1,151 | 969 | -16% | |
The Services segment achieved a profit before tax of $5.1m, a 26% decrease. COVID-19 will start to negatively impact our Services earnings during the 2023 financial year. We expect this to be offset by increased Lending earnings.
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DIRECTORS' REPORT continued
Lending
The Lending segment offers home loans and personal loans to assist clients wishing to purchase a property or consolidate their debt or to purchase a motor vehicle. During the first half, FSA Group acquired an asset finance lending business which lends to SMEs for vehicles and business-criticalequipment. During the first half our loan pools increased from $443m to $507m, a 14% increase.
Loan Pool Data | Home loans | Personal loans | Asset finance |
Weighted average loan size | $374,714 | $21,996 | $21,917 |
Security type | Residential home | Motor vehicle | Equipment |
Weighted average loan to valuation ratio | 67% | 100%+ on settlement | 100%+ on settlement |
Variable or fixed rate | Variable | Fixed | Fixed |
Geographical spread | All states | All states | All states |
Loan Pools | 1HFY 2020 | 1HFY 2021 | 1HFY 2022 | % Change | |
Home loans | $386m | $380m | $383m | +1% | |
Personal loans | $63m | $63m | $70m | +11% | |
Asset finance* | $54m | ||||
Total | $449m | $443m | $507m | +14% | |
*Asset Finance was acquired on 1 September 2021 with a loan pool of $43m. Asset Finance's loan pool at 30 June 2021 was $37m. | |||||
Arrears > 30 day | 1HFY 2020 | 1HFY 2021 | 1HFY 2022 | ||
Home loans | 2.47% | 1.70% | 1.39% | ||
Personal loans | 4.04% | 2.83% | 2.11% | ||
Asset finance | 1.93% | ||||
Losses | 1HFY 2020 | 1HFY 2021 | 1HFY 2022 | ||
Home loans | $107,440 | $152,902 | $111,134 | ||
Personal loans * | $687,262 | $305,762 | $308,996 | ||
Asset finance ** | $166,233 |
- The loss of $687,262 was distorted by a loss of $371,350 from the discontinued pilot product offering which we ran during the 2018 calendar year. ** Asset finance losses are for the entire 6 month period.
Borrowings | Facility type | Provider | Limit | Maturity date | Drawn |
Non-recourse warehouse | Westpac | $350m | Oct-23 | $251m | |
Home loans | Non-recourse warehouse | Institutional | $20m | Oct-23 | $19m |
Securitised | Institutional | Mar-51 | $107m | ||
Personal loans | Limited recourse warehouse | Westpac | $75m | Apr-26 | $44m |
Corporate | Westpac | $15m | Mar-24 | - | |
Non-recourse warehouse | Bendigo | $50m | Jul-22 | $43.0m | |
Asset finance | Non-recourse warehouse | Institutional | $3.5m | Jan-23 | $3.5m |
Non-recourse warehouse | Institutional | $6.0m | Jun-23 | $4.3m |
The Lending segment achieved a profit before tax of $10.9m, a 20% increase.
Historically our Lending segment operated as a direct-to-consumer business. Going forward our focus will be on developing a broker channel and growing our loan pools. The addition of a broker channel will significantly enhance our Lending segment.
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DIRECTORS' REPORT continued
Our plan for our Lending segment, over the next 3 to 5 years is as follows:
Home loans - Increase origination from around $10m to $40m per month. Grow loan pool from $383m to around $1.2b.
Personal loans - Increase origination from around $3m to $7m per month. Grow loan pool from $70m to around $200m.
Asset finance - Increase origination from around $4m to $12m per month. Grow loan pool from $54m to around $300m.
Net cash inflow from operating activities
During the first half, FSA Group maintained strong cash inflow driven by long term annuity income from clients. Net cash inflow from operating activities for the first half was $14.6m, a 2% increase.
1HFY 2020 | 1HFY 2021 | 1HFY 2022 | % Change | |
Net cash inflow from operating activities | $7.9m | $14.3m | $14.6m | +2% |
Strategy and Outlook
Our focus over the 2022 financial year will be as follows:
Services - Regrow as demand returns.
Lending - Develop a broker channel and grow our loan pools.
Earnings - Expect earnings for the 2022 financial year to be in line with the 2021 financial year. Capital Management - Expect our full year dividend to be 7.00 cents per share.
AUDITOR'S INDEPENDENCE DECLARATION
The auditor's independence declaration under Section 307C of the Corporations Act 2001 is attached to this Directors' report on page 6.
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
17 February 2022
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FSA Group Limited published this content on 17 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 February 2022 04:33:01 UTC.