25 Nov

AGM Presentation 2021

FSA Group AGM Presentation 25 November 2021 Agenda • Overview • 2021 Financial Year • Segments • Services • Lending • Financials • Our plan over the next 3 to 5 years • 2022 Earnings and Capital Management FSA Group Ltd AGM presentation 2021 2 Overview What we do What we do For over 20 years, FSA has helped thousands of Australians. Our large and experienced team of professionals offer a range of debt solutions and direct lending services, which we tailor to suit individual circumstances and to achieve successful outcomes for our clients. Segments Operates across 2 segments: - Services - Lending FSA Group Ltd AGM presentation 2021 4 Australia’s largest provider of debt solutions; direct lender to individuals Services Informal Arrangements and Debt Agreements FSA offers a range of 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. PIAs and Bankruptcy FSA Group Ltd AGM presentation 2021 5 6 Lending Home Loans FSA offers home loans to assist clients wishing to purchase a property or consolidate their debt. Personal Loans FSA offers personal loans to assist clients wishing to purchase a motor vehicle. FSA Group Ltd AGM presentation 2021 6 History 2000 Founded with director loans of $50,000. Initial offering debt agreements then PIA’s and bankruptcy, then home loan brokering 2002 Back door listing raised $600,000 for shareholder spread 2006 Commenced home loan lending 2009 Raised $5.2m to underpin home loan pools 2015 Commenced personal loan lending 2021 PAT $20.1m, Shareholder equity $72m, ROE 31% 2011 to 2021 $81m returned to shareholders in buybacks and dividends 2002 to 2021 Shareholder return of 13% pa assuming dividends are re-invested FSA Group Ltd AGM presentation 2021 7 2021 Financial Year Summary Services • COVID impacted and continues to impact the number of new callers seeking our assistance. • In response we restructured parts of our business to materially reduce costs. • We expect demand will start to return during 2H FY2022. Lending • During the year we focused on arrears and hardship management. • 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. • During the year upgrades were made to our system and procedures to accommodate brokers. These were successfully tested. FSA Group Ltd AGM presentation 2021 9 Services - Clients Informals and Debt Agreements FY2019 FY2020 FY2021 % Change New clients 4,573 4,327 1,463 -66% Clients under administration 21,725 19,736 15,780 -20% Debt managed $379m $353m $209m -41% Dividends paid $88m $89m $85m -5% PIA's and Bankruptcy FY2019 FY2020 FY2021 % Change New clients 436 347 89 -74% C lients under administration 1,290 1,304 1,025 -21% FSA Group Ltd AGM presentation 2021 10 New clients impacted by COVID Lending - Loan Pools Loan Pool Data Home Loans Personal Loans Weighted average loan size $360,528 $21,462 Security type Residential home Motor vehicle Weighted average loan to valuation ratio 67% 83% Variable or fixed rate Variable Fixed Geographical spread All states All states FSA Group Ltd AGM presentation 2021 11 Lending - Loan Pools Loan Pools FY2019 FY2020 FY2021 % Change Home loans $ 382m $ 394m $ 382m -3% Personal loans $59m $63m $65m +3% Total $ 441m $ 457m $ 447m -2% Arrears > 30 day FY2019 FY2020 FY2021 Home loans 1.42% 2.55% 1.04% Personal loans 3.36% 2.41% 1.82% Losses FY2019 FY2020 FY2021 Home loans $278,405 $171,265 $384,098 Personal loans $564,022 $1,155,536* $679,495 FSA Group Ltd AGM presentation 2021 12 * The loss of $1,155,536 is distorted by a loss of $371,350 from the discontinued pilot product offering which we ran during the 2018 calendar year . Arrears and hardships back at Pre-COVID levels Lending - Funding FSA Group Ltd AGM presentation 2021 Funding Facility Type Provider Limit Maturity Date Drawn Home Loans Non-recourse warehouse Westpac $350m Oct-23 $230m Non-recourse warehouse Institutional $20m Oct-23 $18m Securitised Institutional Mar-51 $130m Personal Loans Limited recourse warehouse Westpac $75m Apr-26 $42m Corporate Westpac $15m Mar-24 - 13 Funding facilities renewed PBT by segment FY2020 FY2021 % Change Services $11.7m $12.1m +3% Lending Home Loans $7.4m $9.7m +30% Personal Loans $5.2m $7.5m +45% Other/unallocated $0.4m $0.4m Profit before tax $24.8m $29.7m +20% FSA Group Ltd AGM presentation 2021 14 Positively impacted by long term annuity income from clients, a material reduction in costs and in the cost of funding Group financials FY2020 FY2021 % Change Operating income $68.2m $61.4m -10% Profit before tax $24.8m $29.7m +20% Profit after tax attributable to members $16.3m $20.1m +23% EPS basic 13.05c 16.12c +23% Net cash inflow from operating activities $19.4m $29.5m +52% Dividend/share 6c 6c Shareholder equity attributable to members $59.4m $72.0m +21% Return on equity 30% 31% FSA Group Ltd AGM presentation 2021 15 Operating cash flow No of clients / loan pool size Average client life in years Services 16,805 3 to 5 Lending $447m 3 to 5 FY2019 FY2020 FY2021 % Change Net cash inflow from operating activities $17.1m $19.4m $29.5m +52% FSA Group Ltd AGM presentation 2021 16 Positively impacted by long term annuity income from clients, a material reduction in costs and in the cost of funding Balance Sheet 17 FSA Group Ltd AGM presentation 2021 FY2020 FY2021 Assets Cash and equivalents $8.0m $18.9m Restricted Cash $31.9m $16.2m Personal loan assets $63.2m $64.9m Home loan assets $393.8m $382.5m Trade and other receivables $27.0m $22.7m Right of use assets $11.5m $10.3m Other assets $3.6m $4.3m Intangible assets $2.7m $2.2m Total Assets $541.5m $521.9m Liabilities Payables, provisions and contract liabilities $9.9m $8.3m Lease liability $11.4m $10.6m Other liabilities $4.7m $7.1m Borrowings $5.5m - Warehouse facilities $268.6m $290.2m Securitised facilities $178.7m $130.2m Total Liabilities $478.6m $446.3m Net Assets $62.9m $75.7m Strong financial position Our plan over the next 3 to 5 years Reshaping Our Future Expand lending offering to assist SMEs FSA Group Ltd AGM presentation 2021 • FSA’s subsidiary Azora Finance Group P/L (Azora) operates our home loan lending business. • In September 2021, Azora acquired an asset finance lending business owned by Tuttle, Holmes and Sullivan (PDP). Lends to SMEs for vehicles and business-critical equipment. Average loan size around $27k. • Azora now operates our home loan lending and asset finance businesses. • Azora will: • Focus on lending to Australia’s underserved SMEs. • Specialise in home loans to self-employed borrowers and asset finance for vehicles and business-critical equipment. • Distribute products through direct, broker and other third-party intermediary channels. Expand lending offering to assist SMEs FSA Group Ltd AGM presentation 2021 • Azora is managed by PDP. • Azora is owned 76% by FSA and 24% by PDP. • PDP have been issued Performance Shares (PS) which will progressively convert into ordinary shares if Azora achieves annual PBT of up to and greater than $30m on or before 2026. If all PS convert PDP will own 32% (from 24%). • Azora expects PBT of around $12.5m for 2022, broken down as $9.2m for home loans and $3.3m for asset finance. Digitisation and unsecured personal loans FSA Group Ltd AGM presentation 2021 • Focus on a digital future - Building a new technology platform which will automate the customer application process, the underwriting decisions with digital loan contracts and same day funding. • Expand our lending offering into unsecured personal loans. Develop broker channel, grow loan pools FSA Group Ltd AGM presentation 2021 Services Regrow as demand returns Home Loans Increase origination from around $10m to $40m per month Grow loan pool from $382m to around $1.2b Personal Loans Increase origination from around $3m to $7m per month Grow loan pool from $65m to around $200m Asset Finance Increase origination from around $4m to $12m per month Grow loan pool from $40m to around $300m 2022 Earnings and Capital Management 2022 Earnings and Capital Management FSA Group Ltd AGM presentation 2021 Earnings We expect FY2022 earnings to be in line with FY2021. The impact of COVID will start to negatively impact our Services earnings during FY2023. We expect this to be offset by increased Lending earnings. Capital Management Due to our strong net cash inflow driven by long term annuity income from clients, we expect FY2022 full year dividend to be between 6 cents to 7 cents per share with the balance of earnings to be re-invested to support the growing loan pools. We plan to continue with our on market share buy-back as opportunities arise. 24 Investor Relations Contacts Further information can be accessed from fsagroup.com.au Mr. Tim Odillo Maher Ms. Deborah Southon Executive Director Executive Director FSA Group Limited FSA Group Limited Level 13, 1 Oxford Street Level 13, 1 Oxford Street Darlinghurst NSW 2010 Darlinghurst NSW 2010 T: 02 8985 5090 T: 02 8985 5091 F: 02 8985 5310 F: 02 8985 5333 E: tmaher@fsagroup.com.au E: dsouthon@fsagroup.com.au 25 FSA Group Ltd AGM presentation 2021 Cautionary Statements and Disclaimer Regarding Forward-Looking Information This release may contain forward-looking statements, including statements about FSA Group Limited’s ( Company ) financial condition, results of operations, earnings outlook and prospects. Forward-looking statements are typically identified by words such as “plan,” “aim”, “focus”, “target”, “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. The forward-looking statements contained in this release are predictive in character and not guarantees or assurances of future performance. These forward-looking statements involve and are subject to known and unknown risks and uncertainties many of which are beyond the control of the Company. Our ability to predict results or the actual effects of our plans and strategies is subject to inherent uncertainty. Factors that may cause actual results or earnings to differ materially from these forward-looking statements include general economic conditions in Australia, interest rates, competition in the markets in which the Company does and will operate, and the inherent regulatory risks in the businesses of the Company, along with the credit, liquidity and market risks affecting the Company’s financial instruments described in the Company’s latest Annual Report. Forward-looking statements are based on assumptions regarding the Company’s financial position, business strategies, plans and objectives of management for future operations and development and the environment in which the Company will operate. Those assumptions may not be correct or exhaustive. Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed. The Company disclaims any responsibility to and undertakes no obligation to update or revise any forward-looking statement to reflect any change in the Company’s circumstances or the circumstances on which a statement is based, except as required by law. The Company disclaims any responsibility for the accuracy or completeness of any forward-looking statement to the extent permitted by law. Unless otherwise stated, the projections or forecasts included in this release have not been audited, examined or otherwise reviewed by the independent auditors of the Company. This release is not an offer or invitation for subscription or purchase of, or a recommendation of securities. FSA Group Ltd AGM presentation 2021 26
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