FSA Group Limited
Annual Report 2011
Steady growth
FSA Group Limited
ABN 98 093 855 791
Contents
2 Business Model
3 Services
4 Home Loans
5 Small Business
6 Financial Results
8 Chairman’s Letter
9 Executive Directors’ Review
13 Directors and Secretary
14 Financial Statements
Australia’s largest provider of debt solutions
Since 2000, FSA Group has helped thousands of Australians
take control of their debt. Our large and experienced team
of 179 professionals offer a range of debt solutions, which we
tailor to suit individual circumstances and to achieve successful
outcomes for our clients. Our vision is to expand our range of
solutions, extending our services and introducing new products
to meet the demand of our growing pool of clients.
FSA GROUP LIMITED ANNUAL REPORT 2011
1
Steady growth delivered
by leveraging a
proven integrated
business model
in growth markets
with high barriers
to entry
Proven integrated business model
FSA Group has grown and evolved with the changing
needs of our clients. We work closely with our clients and
have added products and services in direct response to
their evolving demands and needs. Our client base has
grown through customised marketing and word of mouth.
We support our clients through a sophisticated operating
platform which allows us to process and support large
volumes at low transaction cost and, it underpins and
reinforces our risk management and compliance
capabilities. Our relationship with our clients is of
prime importance and it is based on the principles
of fairness, transparency and honesty.
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.
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.
Small Business
FSA Group offers a range of simple and convenient
products and services to assist small businesses
with cash fl ow management. These solutions include
consulting services and the provision of factoring fi nance.
Services
Client
Home
Loans
Small
Business
2
FSA GROUP LIMITED ANNUAL REPORT 2011
Services
The services market consists of individuals who rely upon
a debt agreement or a personal insolvency agreement
or bankruptcy to address their unmanageable debt. Debt
agreements are an alternative to bankruptcy. They offer a
simple way for an indebted individual to come to a payment
arrangement with their creditors and yield superior returns
to creditors when compared with bankruptcy. In July 2007
the Bankruptcy Act 1966 was amended, changing the way
fees could be charged and collected. The result has been
to further increase the barriers to entry into the market as
debt agreement administrators require a substantial capital
base to operate.
2011 Achievements:
53% market share
for debt agreements
30% increase in clients administered
under debt agreements
$270m of unsecured debt managed
under debt agreements
The Market
Consistent low level of arrears
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Bankruptcies
Personal Insolvency Agreements
Debt Agreements
Source: Insolvency and Trustee Service Australia
$63m paid to creditors under
debt agreements
One of the largest providers
of personal insolvency agreements
and bankruptcy
FSA GROUP LIMITED ANNUAL REPORT 2011
3
Steady growth delivered
through tailored
solutions that assist
more clients to achieve
successful outcomes
2011 Achievements:
One of the few remaining
non-conforming home loan lenders
Loan pool increased to $229m
Consistent low level of arrears
and capital losses
Westpac facility increased to $260m
and renewed to October 2013
Bendigo and Adelaide Bank
approved a 3 year $50m facility
Launched into the prime home
loan market as a manager for
Bendigo and Adelaide Bank
Home Loans
The non-conforming home loan market consists
of lenders who provide loan products to an individual
who is unlikely to conform to the lending criteria of the
banks. Prior to the Global Financial Crisis, the market
was characterised by a high number of competitors.
Today fewer competitors remain with many exiting the
market in 2008. Increased levels of capital are now
required to operate a home loan lending business and
this has increased the barriers to entry into the market.
FSA Group is one of the few remaining non-conforming
home loan lenders operating in the market. During the
year FSA Group announced its launch into the prime
home loan market as a home loan manager for Bendigo
and Adelaide Bank. This move complements its existing
non-conforming home loan lending activities.
The Market
Prime
Home Loan Market
$200b p.a.
Non-Conforming
Home Loan Market
Estimated $2-4b p.a.
Source: Datamonitor
4
FSA GROUP LIMITED ANNUAL REPORT 2011
2011 Achievements:
Loan pool increased to $12m
Consistent low level of arrears
Nil Capital losses
$25m Westpac facility renewed
to July 2012
Good platform in place
for future growth
Small Business
The factoring fi nance market consists of lenders who assist
small to medium businesses with cash fl ow management
by providing fi nance primarily secured against the unpaid
invoices of a business. There are only a few competitors
operating in the market, many having been casualties of the
Global Financial Crisis. Competition is likely to increase over
the next few years, although the level of capital required to
operate a factoring fi nance business presents real barriers
to entry. FSA Group offers a range of simple and convenient
products and services to assist small businesses with cash
fl ow management. These solutions include consulting
services and the provision of factoring fi nance.
The Market
Factoring
Finance Turnover
$4 b p.a.
Invoice Discounting
Turnover
$59b p.a.
Source: Institute for Factors and Discounters
FSA GROUP LIMITED ANNUAL REPORT 2011
5
Steady growth delivering
strong, consistent
and sustainable
financial results
Financial Results
Revenue
Net Assets
54.1
50.1
50.8
60
50
40
30
20
10
0
s
n
o
i
l
l
i
m
$
36.3
33.6
21.8
14.2
54.6
44.8
32.1
22.6
18.9
11.9
60
50
40
30
20
10
s
n
o
i
l
l
i
m
$
4.6
0
2005
2006
2007 2008 2009
2010
2011
2005
2006
2007 2008 2009
2010
2011
Profit After Tax (Attributable to Members)
Basic Earnings Per Share
10
8
6
4
2
0
s
n
o
i
l
l
i
m
$
8.8
9.0
7.5
6.5
2.5
2.7
1.2
10
s
t
n
e
c
¢
8
6
4
2
0
6.24
7.66
6.51
5.82
2.85
2.37
1.38
2005
2006
2007 2008 2009
2010
2011
2005
2006
2007 2008 2009
2010
2011
6
FSA GROUP LIMITED ANNUAL REPORT 2011
…and building a range of solutions that
support our clients throughout their entire
financial lifecycle.
Services
Client
Home
Loans
Small
Business
Today:
Future:
Insurance
Savings &
Investments
Our vision is to
expand our range of
solutions, extending
our services and
introducing new
products to meet
the demand of our
growing pool
of clients
FSA GROUP LIMITED ANNUAL REPORT 2011
7
Chairman’s Letter
Dear Shareholders,
The 2011 financial year has been a year of
steady growth for FSA Group. FSA Group
generated $54.1 million in revenue and
achieved a record profit after tax attributable
to members of $9.0 million, a 20% increase
compared to the results of 2010.
Our Services division, which offers
debt agreements, personal insolvency
agreements and bankruptcy as an option
to indebted individuals, maintained
its position as the market leader for debt
agreements and increased its market
share from 51% to 53% during 2011.
We are also one of the largest providers
of personal insolvency agreements
and bankruptcy in the country.
Our Home Loans division 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.
As a lender we have originated a high
quality loan pool of over $229 million which
is outperforming those of our competitors.
Our non-recourse home loan funding
facility was increased to $260 million and
renewed for a further term by Westpac
Banking Corporation. In addition Bendigo
and Adelaide Bank approved a three year
$50 million non-recourse home loan funding
facility to supplement the Westpac facility.
Our Small Business division provides
a range of solutions to assist small
businesses including consulting services
and the provision of factoring finance.
Through factoring finance, FSA Group
has originated a high quality loan pool
of over $12 million. Our $25 million limited-
recourse factoring finance funding facility
has been renewed until July 2012 by
Westpac Banking Corporation.
I am delighted to advise that the Directors
have declared a maiden fully franked
dividend of one cent per share for the
2011 financial year.
I am confident of growth for FSA Group
in the years ahead. I would like to thank
my fellow Directors, all our executives and
staff for their contribution to the successes
of the current year.
Yours sincerely,
Sam Doumany, Chairman
8
FSA GROUP LIMITED ANNUAL REPORT 2011
Executive Directors’ Review
Dear Shareholders,
The 2011 fi nancial year has been successful for FSA Group.
During the year demand for our solutions underpinned revenues of $54.1 million (2010: $50.8 million)
and helped to deliver a record profi t after tax attributable to members of $9.0 million (2010: $7.5 million).
The Directors have declared a maiden fully franked dividend of one cent per share for the 2011 fi nancial year.
Financial Overview
Revenue and Income
Profi t Before Tax
Profi t After Tax (Attributable to Members)
Net Assets
NTA Backing/share
EPS basic
FY2010
$50.8m
$12.9m
$7.5m
$44.8m
28.4c
5.82c
FY2011
% Change
$54.1m
$15.3m
$9.0m
$54.6m
34.9c
6.51c
▲ 7%
▲ 19%
▲ 20%
▲ 22%
▲ 23%
▲ 12%
During the 2011 fi nancial year, FSA Group achieved a signifi cant uplift in cash fl ow from operations to $8.5 million
driven by the increased number of clients administered under debt agreements. FSA Group expects client numbers
will continue to grow during the 2012 fi nancial year and the costs of administering these additional clients will be
negligible. As a result FSA Group should continue to see a steady and sustained increase in cash fl ow from operations.
Cash Flow from operations
Cash fl ow from operations
Clients administered under debt agreements
FY2009
$1.1m
7,180
FY2010
$5.3m
11,050
FY2011
$8.5m
14,394
After year-end FSA Group secured additional funding and our existing funding facilities were increased and
renewed. In August 2011, FSA Group announced its non-recourse home loan funding facility with Westpac
Banking Corporation had been increased to $260 million and renewed to October 2013. In July 2011 FSA Group
announced Bendigo and Adelaide Bank had approved a three year $50 million non-recourse home loan funding
facility. This facility supplements the Westpac facility.
Funding
Facility Type Amount
Renewal Date
Westpac Banking Corporation
Non-recourse home loan facility
$260m
October 2013
Bendigo & Adelaide Bank
Non-recourse home loan facility
Westpac Banking Corporation
Limited-recourse factoring fi nance facility
$50m
$25m
June 2014
July 2012
Our business operates across the following key segments, Services, Home Loans and Small Business.
We will now provide more detail around the operational performance of each division.
FSA GROUP LIMITED ANNUAL REPORT 2011
9
Executive Directors’ Review cont.
Operational Performance
Services
the Services division offers a range of simple and convenient solutions 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 maintained its position as the market leader for debt agreements and increased its market share
from 51% to 53% during 2011. We are also one of the largest providers of personal insolvency agreements
and bankruptcy in the country.
during 2011 there was a 30% increase in the number of clients administered under debt agreements and
a 32% increase in the number of clients administered under personal insolvency agreements and bankruptcy.
FSA Group’s arrears and risk management capabilities are a competitive advantage. our disciplined operating
practices produced further productivity and efficiency gains in 2011. A testament to this is the dividends paid to
creditors and a continued and sustained reduction in the level of arrears. FSA Group manages over $270 million
of unsecured debt under debt agreements. during 2011 FSA Group paid $63 million in dividends to creditors.
this was an increase of 13% compared to 2010.
10
FSA Group Limited AnnuAl RepoRt 2011
Dividend Distribution to Creditors
62.6
55.6
41.9
29.4
22.5
18.8
15.2
70
60
50
40
30
20
s
n
o
i
l
l
i
m
$
10
10.2
0
2004
2005
2006
2007 2008 2009 2010 2011
What is a Debt Agreement?
A debt agreement, which was introduced
into the Bankruptcy Act in 1996, is a simple
way for an indebted individual to come to
a payment arrangement with their creditors.
It is an alternative to going bankrupt and is
a binding agreement between the individual
and their creditors.
Home Loans
The Home Loans division offers a range of simple and convenient solutions to assist clients with property
wishing to consolidate their debt. FSA Group offers solutions both as a lender and manager of home loans.
The non-conforming home loan market consists of lenders who provide loan products to an individual who
is unlikely to conform to the lending criteria of the banks.
FSA Group has fi rmly established a track record in non-conforming home loan lending. We have originated a high
quality loan pool of over $229 million which is outperforming those of our competitors. Greater than 30 day arrears
fell to 2.38% at June 2011 compared to 3.89% at June 2010. This compares with competitor arrears of 12.67%
as reported by the Standard & Poor’s Index at May 2011. Demand for non-conforming home loan lending continues
to rise due to fewer competitors and the stricter lending criteria imposed by the banks.
During the year FSA Group announced its launch into the prime home loans market as a home loan manager for
Bendigo and Adelaide Bank. This move complements its existing non-conforming home loan lending activities.
Home Loan Lending
Loan Pool Size
Security Type
Average Loan Size
Average Weighted LVR
Full Doc Borrowers
Variable Rate Borrowers
Geographical Spread
> 30 day arrears*
Loss of Capital since inception
$229m
1st Mortgage
$206,000
68%
98%
100%
Australia Wide
2.38%
$149,619
* Competitors > 30 day arrears as reported by Standard & Poor’s Index was 12.67% at May 2011.
FSA GROUP LIMITED ANNUAL REPORT 2011
11
Executive Directors’ Review cont.
Small Business
The Small Business division offer a range of simple and convenient solutions to assist small businesses with
cash fl ow management. These solutions include consulting services and the provision of factoring fi nance.
FSA Group has fi rmly established a track record in factoring fi nance. We have originated a high quality loan pool
of over $12 million. FSA Group is experiencing demand for factoring fi nance because the availability of credit
for small businesses continues to remain tight.
Factoring Finance
Loan Pool Size
Security Type
Average Loan Size
Average Weighted LVR
Variable Rate Borrowers
Geographical Spread
> 90 day arrears
Asset insured
Loss of Capital since inception
Strategy and Outlook
$12m
Assigned Receivables
$225,000
Ranges 55%–65%
100%
Australia Wide
9.30%
Yes
Nil
High levels of consumer debt should continue to drive demand for our products and services.
Home loan lending and factoring fi nance have positioned FSA Group to assist more clients and secure annuity
income. We will continue to source additional funding capacity to support the growth of high quality loan pools
and to achieve our long term targets.
Our longer term vision is to build a range of accessible solutions that support our clients throughout their entire
fi nancial lifecycle. To achieve this we will continue to invest in expanding FSA Group’s products and services.
We believe this will enable us to both leverage our existing client base and grow the pool of clients we can assist
going forward.
Our People
FSA Group employs 179 people. We would like to acknowledge the efforts of all our team during what has been
a very busy period. We would also like to thank our Board for their guidance and support during the year.
Yours sincerely,
Tim Odillo Maher
Executive Director
Deborah Southon
Executive Director
12
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors and Secretary
(Above from left) Tim Odillo Maher, Don Mackenzie (Secretary),
Sam Doumany, Sally Herman, Deborah Southon
and Stan Kalinko
FSA GROUP LIMITED ANNUAL REPORT 2011
13
Financial
Statements
15
25
26
34
35
36
37
38
71
72
74
76
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Information
14
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors’ Report
for the year ended 30 June 2011
Directors
Special responsibilities
The Directors of the Company at any time during or since
the end of the fi nancial year are:
Member of the Audit & Risk Management Committee
and Remuneration Committee.
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
Sally Herman (appointed 24 January 2011)
Hugh Parsons (resigned 31 May 2011)
Sam Doumany (Non-Executive Chairman)
Experience and Expertise
Mr Doumany was appointed as a Non-Executive Director
on 18 December 2002 and was appointed Chairman on
30 June 2003.
Mr Doumany commenced his career in economic
research, agribusiness and marketing before embarking
on a distinguished political career as a member of
parliament in Queensland in 1974.
Between 1974 and 1983 Mr Doumany served on several
parliamentary committees, the Liberal Party’s State and
Federal Rural Policy Committees and the Queensland
Liberal Party State Executive. Elevated to the Cabinet in
1978, Mr Doumany served fi rstly as Minister for Welfare
and Corrective Services before serving as Minister for
Justice, Queensland Attorney-General and the Deputy
Leader of the Liberal Parliamentary Party until late 1983.
Throughout his parliamentary and ministerial career
Mr Doumany worked closely, at a senior level, with a
wide range of key professional, industry and community
organisations.
Since 1983 Mr Doumany has operated a consultancy
practice providing services in government relations, corporate
strategy and market development. Mr Doumany was also
retained by Ernst & Young in an executive consultancy
role between 1991 and 2002. Signifi cant assignments for
Ernst & Young include the Coutts and Bartlett Receiverships
as well as major submissions to the Federal Government.
He has also held numerous executive and Non-Executive
board positions, many as Chairman, for private and
public companies, industry authorities/associations
and review committees.
Mr Doumany holds a Bachelor of Science (Agriculture)
from the University of Sydney and is a member of the
Australian Institute of Company Directors.
Other current (listed company) directorships
Nil
Former (listed company) directorships in last 3 years
Lindsay Australia Limited (resigned 17 November 2010)
Interest in shares and options
Ordinary shares
1,040,541
Tim Odillo Maher (Executive Director)
Experience and Expertise
Mr Odillo Maher was appointed on 30 July 2002.
Mr Odillo Maher’s background has been in banking
and fi nance, before concentrating on insolvency and
corporate fi nance assignments. He has worked at ANZ
Banking Corporation and Star Dean Wilcocks Chartered
Accountants. Mr Odillo Maher holds a Bachelor of
Business Degree (majoring in Accounting and Finance)
from Australian Catholic University and is a Certifi ed
Practising Accountant. His work experience has included
special reviews of companies experiencing fi nancial
diffi culties, the rationalisation and re-organisation of
businesses, and the implementation of turnaround and
exit strategies for businesses, including support plans
and asset disposal programmes.
Other current (listed company) directorships
Nil
Former (listed company) directorships in last 3 years
Nil
Special responsibilities
Nil
Interest in shares and options
Ordinary shares
42,809,231
Deborah Southon (Executive Director)
Experience and Expertise
Ms Southon was appointed on 30 July 2002. Ms Southon
has attained a wealth of experience in the government
and community services sectors having worked for the
Commonwealth Department of Health and Family Services,
the former Department of Community Services, and the
Smith Family. Ms Southon has successfully managed a
programme and administration budget exceeding $150 million
and was part of a management team which oversaw a
signifi cant growth in client numbers and service delivery
which stemmed from the implementation of fresh legislation.
Ms Southon has an Executive Certifi cate in Leadership
& Management (University of Technology, Sydney)
and a Bachelor of Arts Degree (Sydney University).
FSA GROUP LIMITED ANNUAL REPORT 2011
15
Directors’ Report cont.
for the year ended 30 June 2011
Other current (listed company) directorships
Interest in shares and options
Nil
Ordinary shares
15,406
Former (listed company) directorships in last 3 years
Sally Herman (Non-Executive Director)
Nil
Special responsibilities
Nil
Interest in shares and options
Ordinary shares
12,960,047
Stan Kalinko (Non-Executive Director)
Experience and Expertise
Mr Kalinko was appointed on 9 May 2007.
Mr Kalinko commenced his career in South Africa and spent
20 years as a practising solicitor.
In late 1983, he migrated to Australia and spent one year
as an associate at Stephen Jaques Stone James, now
Mallesons Stephen Jaques.
Between 1985 and 1989 he worked as a merchant banker
for Kleinwort Benson Australia (“KBA”), a subsidiary of the
largest merchant bank in the United Kingdom at the time,
until KBA was sold to Security Pacifi c Ltd. Mr Kalinko
continued to work there until 1991.
For 16 years prior to joining the Board of FSA Group,
Mr Kalinko was a partner at Deacons, (now Norton Rose)
a national and international law fi rm. He specialised
primarily in corporate and commercial law, focussing
on mergers and acquisitions, management buy-outs
and joint ventures, and advising company directors
and underwriters on capital raisings.
He spent eight years on the board of Deacons in Sydney,
three years on their national board, 10 years as the
business unit leader of their Banking and Finance Practice
Group and three years as Chairman of the Sydney offi ce.
Mr Kalinko retired from Deacons on 30 June 2007.
Mr Kalinko is a Fellow of the Australian Institute of
Company Directors and has a Bachelor of Commerce,
a Bachelor of Laws and a Higher Diploma in Tax.
He is also an accredited mediator.
Other current (listed company) directorships
Nil
Former (listed company) directorships in last 3 years
Nil
Special responsibilities
Member of the Audit & Risk Management Committee
and Remuneration Committee
Experience and Expertise
Ms Herman was appointed on 24 January 2011.
Ms Herman has more than 25 years’ executive experience
in fi nancial services in both Australia and in the United
States, and has spent the last 16 years with the Westpac
Group running major business units in almost every
operating division of the Group. She also has broad board
experience in the Not For Profi t Sector, currently sitting
on several boards including Urbis Pty Ltd, Endeavour
Foundation and the State Library of NSW Foundation.
She is also a graduate of the Australian Institute of
Company Directors and holds a Bachelor of Arts degree.
Prior to Westpac, Ms Herman held a senior role at
Macquarie Bank and has worked for Australian and
international fi nancial services fi rms during her career.
Ms Herman retired as an executive of Westpac in
September 2010.
Other current (listed company) directorships
Nil
Former (listed company) directorships in last 3 years
Nil
Special responsibilities
Member of the Audit & Risk Management Committee
and Remuneration Committee
Interest in shares and options
Ordinary shares
Company Secretary
Nil
Mr Don Mackenzie was appointed to the position of
Company Secretary on 19 November 2010.
He is a Chartered Accountant and has had experience
working with Chartered Accounting fi rms and has held
senior positions with public companies involved in the
rural and manufacturing industries.
Since 1993 he has provided corporate support services to
public companies predominately involved in manufacturing,
mining, information technology and rural operations.
Mr Mackenzie is a Non-Executive Director of Forest Place
Group Limited (since March 2004), an alternate Director
of Silver Chef Limited (since March 2005) and was
previously a Director of Occupational and Medical
Innovations Limited (November 2004 to 29 March 2010).
He is also the Secretary to all Board committees.
16
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors’ Report cont.
for the year ended 30 June 2011
Former Company Secretaries
Liquidity and funding
Mr Duncan Cornish and Mr Anthony Carius were joint
secretaries of the Company until their resignations on
19 November 2010.
Principal activities
The Consolidated Entity has suffi cient funds to fi nance
its operations, and also to allow the Consolidated Entity
to take advantage of favourable business opportunities, not
specifi cally budgeted for, or to fund unforeseen expenditure.
The principal activities of the Consolidated Entity during
the year were providing debt solutions and direct lending
services to individuals and businesses.
Signifi cant changes in the state of affairs
There were no signifi cant changes in the state of affairs
of the Consolidated Entity in the fi nancial year.
Operating results
After reporting date events
The consolidated profi t from ordinary activities for the
Consolidated Entity after providing for income tax and
eliminating Non-Controlling interests was $8,995,715
(2010: $7,520,564).
Dividends paid or recommended
There were no dividends paid or recommended to be paid
during the fi nancial year.
Review of operations
Detailed comments on operations are included separately
in the Annual Report in the Executive Directors’ review.
Review of fi nancial condition
Capital structure
There have been no changes to the Company’s capital
structure during or since the end of the fi nancial year
except as follows:
(cid:129) On 2 July 2010, 1,050,000 options exercisable at
$0.50 on or before 2 July 2013 were issued as part
of Executive remuneration.
Financial position
The net assets of the Consolidated Entity have increased
from $44,749,490 at 30 June 2010 to $54,564,463 at
30 June 2011.
The Consolidated Entity’s working capital, being current
assets less current liabilities has improved from $22,875,268
in 2010 to $33,340,303 in 2011.
Treasury policy
The Consolidated Entity does not have a formally established
treasury function. The Board is responsible for managing
the Consolidated Entity’s currency risks and fi nance facilities.
The Consolidated Entity does not currently undertake
hedging of any kind.
There have been no events since the end of the fi nancial
year that impact upon the fi nancial statements as at
30 June 2011 except as follows:
(cid:129) On 4 July 2011, the Company obtained a three year
non-recourse $50m note facility from Bendigo and
Adelaide Bank.
(cid:129) On 25 August 2011, the Company signed an extension
of its existing non-recourse note facility, increasing its
$235m facility limit to $260m for a further term with the
facility now expiring on 15 October 2013.
(cid:129) On 30 August 2011, Directors declared a maiden
one cent fully franked dividend to shareholders to
be paid on 30 September 2011 with a record date
of 13 September 2011.
Future developments
Likely developments in the operations of the Consolidated
Entity and the expected results of those operations
in subsequent fi nancial years have been discussed
where appropriate in the Annual Report in the Executive
Directors’ review.
There are no further developments that the Directors
are aware of which could be expected to affect the results
of the Consolidated Entity’s operations in subsequent
fi nancial years other than the information contained
in the Executive Directors’ review and besides any other
information which the Directors believe comment on
or disclosure of would prejudice the interests of the
Consolidated Entity.
Environmental issues
There are no matters that have arisen in relation to
environmental issues up to the date of this report.
Share options
As at 30 June 2011 there were 1,050,000 (2010: Nil)
unissued ordinary shares under options.
FSA GROUP LIMITED ANNUAL REPORT 2011
17
Directors’ Report cont.
for the year ended 30 June 2011
Indemnifi cation and insurance
of directors and offi cers
Each of the Directors and the Offi cers of the Company
have entered a Deed with the Company whereby the
Company has provided certain contractual rights of
access to books and records of the Company to those
Directors and Offi cers; and indemnifi es those Directors
and Offi cers against liabilities suffered in the discharge
of their duties as Directors or Offi cers of the Company.
The Company has also insured all of the Directors and
Offi cers of FSA Group Ltd. The contract of insurance
prohibits the disclosure of the nature of the liabilities
covered and amount of the premium paid. The Corporations
Act 2001 does not require disclosure of the information in
these circumstances.
Remuneration Report (Audited)
This report outlines the remuneration arrangements
in place for Directors and Executives of FSA Group Ltd
(the Company).
Remuneration policy
The performance of the Company depends upon the
quality of its Directors, Executives and Senior Management.
To prosper, the Company must attract, motivate and retain
highly skilled Directors, Executives and Senior Management.
The Board has introduced a Remuneration Committee but
does not have a Nomination Committee. The Directors
consider that the Company is not of a size, nor are its affairs
of such complexity, as to justify the formation of a Nominations
Committee. All matters which might be dealt with by that
committee are reviewed by the Directors in meeting as a
Board. The Remuneration Committee is responsible for
determining and reviewing compensation arrangements
for the Directors, Executives and Senior Management.
The Remuneration Committee assesses the appropriateness
of the nature and amount of emoluments of such offi cers
on a periodic basis by reference to relevant employment
market conditions with the overall objective of ensuring
maximum shareholder benefi t from the retention of a
high quality board and Executive team. Such offi cers
are given the opportunity to receive their base emolument
in a variety of forms including cash and fringe benefi ts.
It is intended that the manner of payments chosen will
be optimal for the recipient without creating undue cost
for the Company.
The Company aims to reward the Directors, Executives
and Senior Management with a level and mix of remuneration
commensurate with their position and responsibilities within
the Company. The Board’s policy is to align Director, Executive
and Senior Management objectives with shareholder and
business objectives by providing a fi xed remuneration
component and offering short and long-term incentives.
In accordance with best practice corporate governance,
the structure of Non-Executive Director, Executive Director,
Executive and Senior Management remuneration is
separate and distinct.
Non-Executive Director Remuneration
The Board seeks to set aggregate remuneration at a level
which provides the Company with the ability to attract
and retain directors of the highest calibre, whilst incurring
a cost which is acceptable to shareholders.
The Constitution of the Company and the ASX Listing Rules
specify that the Non-Executive Directors are entitled to
remuneration as determined by the Company in General
Meeting. The total aggregate annual remuneration payable
to Non-Executive Directors of the Company was determined
at the Annual General Meeting held on 18 November 2010
at $500,000 (and where applicable, excludes the value
of share options expensed as calculated by the
Black-Scholes method).
If a Non-Executive Director performs extra services, which
in the opinion of the Directors are outside the scope of the
ordinary duties of the Director, the Company may remunerate
that Director by payment of a fi xed sum determined by
the Directors in addition to or instead of the remuneration
referred to above. A Non-Executive Director is entitled to
be paid travel and other expenses properly incurred by
them in attending Directors’ or General Meetings of the
Company or otherwise in connection with the business
of the Company.
The remuneration of Non-Executive Directors for the
year ending 30 June 2011 is detailed in Table 1 of this
Remuneration Report.
Executive Directors and Senior Management
Remuneration
The Company aims to reward the Executive Directors and
Senior Management with a level and mix of remuneration
commensurate with their position and responsibilities
within the Company and so as to:
(cid:129) reward Executives for company and individual
performance against targets set by reference to
appropriate benchmarks;
(cid:129) align the interests of Executives with those of
shareholders;
(cid:129) link reward with the strategic goals and performance
of the Company; and
(cid:129) ensure total remuneration is competitive by market
standards.
18
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors’ Report cont.
for the year ended 30 June 2011
The remuneration of the Executive Directors and Senior
Management may from time to time be fi xed by the Board.
The remuneration will comprise a fi xed remuneration
component and also may include offering specifi c short
and long-term incentives, in the form of:
1. performance based salary increases and/or bonuses;
and/or
2. share-based payments.
Performance based salary increases and bonuses are
assessed on a discretionary basis by the Board. No formal
performance conditions or earnings milestones have been
set for the granting of salary increases and bonuses. This
allows the Board to retain fl exibility around granting of
salary increases and bonuses if the Company is affected
by adverse economic conditions, and the payment of these
salary increases and bonuses is not in the best interests
of shareholders. A review of bonuses paid to the Executive
Directors over the previous fi ve years is consistent with the
operational performance of the Group in those periods.
All executives and employees have the opportunity to
qualify for participation in the FSA Group Ltd Employee
Share Option Plan (“ESOP”).
The remuneration of the Executive Directors and Senior
Management for the year ended 30 June 2011 is detailed
in Table 1 of this Remuneration Report.
An employee share incentive scheme has been established
where executives and certain members of staff of FSA
Group Ltd are issued with options over the ordinary shares
of FSA Group Ltd. The options, issued for nil consideration,
are issued in accordance with performance guidelines
established by the Directors of FSA Group Ltd. The options
cannot be transferred and will not be quoted on the ASX.
The total number of shares in respect of which options
may be granted under the scheme to employees and
which have not been exercised or lapsed shall not at any
time exceed fi ve percent (5%) of the Company’s total
issued share capital. There are no such restrictions
as to the number of shares in respect of which options
may be granted under the scheme to executives.
The exercise price of an option and the exercise period is
determined by the Board in accordance with Listing Rules.
A Securities Trading Policy has been adopted for employees’
and directors’ dealings in the Company’s securities.
Employment contracts
It is the Board’s policy that employment agreements
are entered into with all Executive Directors, Executives
and employees. Employment contracts are for no specifi c
fi xed term unless otherwise stated.
Executive Directors
The Executive Directors, Mr Tim Odillo Maher and
Ms Deborah Southon are employed under Executive
Service Contracts. Under the terms of the contracts:
(cid:129) Both FSA Group Ltd and the Executive Directors are
entitled to terminate the contract upon giving three
months written notice.
(cid:129) FSA Group Ltd is entitled to terminate the agreements
upon the happening of various events or other conduct
or if Mr Odillo Maher or Ms Southon cease to be
Directors of FSA Group Ltd.
(cid:129) The contracts provide for annual reviews of
performance by FSA Group Ltd.
(cid:129) There are no early termination clauses.
Non-Executive Directors
Mr Hugh Parsons
Until his resignation on 31 May 2011, Mr Hugh Parsons
had been engaged under an Employment Agreement
and a Letter of Appointment of Non-Executive Director.
Upon his resignation, the terms of both arrangements
ceased and details of his remuneration for the period
are included in (b) Remuneration of Directors and Key
Management Personnel.
Senior Management
Employment contracts entered into with senior
management contain the following key terms:
Event
Performance based salary
increases and/or bonuses
Short and long-term incentives,
such as options and shares
Resignation/notice period
Serious misconduct
Payouts upon resignation
or termination, outside
industrial regulations
(i.e. ‘golden handshakes’)
Company Policy
Board discretion
Board discretion
One to three months
Company may
terminate at any time
Board discretion
FSA GROUP LIMITED ANNUAL REPORT 2011
19
Directors’ Report cont.
for the year ended 30 June 2011
(a) Details of Directors and Key Management Personnel
(i) Directors
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
Sally Herman
Hugh Parsons
Non-Executive Chairman
Executive Director
Executive Director
Non-Executive Director
Non-Executive Director (appointed 24 January 2011)
Non-Executive Director (resigned 31 May 2011)
(ii) Key Management Personnel
Don Mackenzie
Anthony Carius
Fred El Tahche
Goran Turner
David Camilleri
Company Secretary (appointed 19 November 2010)
Chief Financial Offi cer (resigned 1 July 2011)*
Chief Information Offi cer
Chief Executive – Fox Symes Home Loans
Manager – Debt Agreements
* Anthony Carius resigned as CFO with effect from 1 July 2011. He will remain with the Company until 31 August 2011 to ensure a smooth
transition to the Company’s new CFO Ms Cellina Chen who has been the Company’s Financial Controller since December 2003.
(b) Remuneration of Directors and Key Management Personnel
The Key Management Personnel of the Group include Don Mackenzie, Anthony Carius and Fred El Tahche, being the only
executive offi cers of the Group’s parent company, FSA Group Ltd.
Short-term
Long-term Employment Termination
Post-
Performance
based
Total
Salary
& Fees
$
Cash
Bonus
$
Non-cash
benefi ts
$
Non-cash
benefi ts
$
Super-
annuation
$
98,142
88,879
–
–
258,875
218,000
54,500
125,000
–
–
–
–
4,708
2,946
8,833
7,999
–
–
–
–
241,154
209,230
50,000
123,462
11,638
3,846
28,781
5,247
19,699
14,461
59,258
48,307
25,294
–
65,711
57,937
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,333
6,187
2,277
–
$
–
–
–
–
–
–
–
–
–
–
$
111,683
99,824
313,375
343,000
351,272
356,246
64,591
54,494
27,571
–
%
–
–
17%
36%
14%
35%
–
–
–
–
–
–
10,539
12,299
51,389
–
127,639
70,236
Table 1
Directors
Sam Doumany
2011
2010
Tim Odillo Maher
2011
2010
Deborah Southon
2011
2010
Stan Kalinko
2011
2010
Sally Herman
2011
2010
Hugh Parsons
2011
2010
Total Remuneration
2011
2010
748,434
622,353
104,500
248,462
11,638
3,846
33,489
8,193
46,681
40,946
51,389
–
996,131
923,800
Executive Director bonuses inclusive of statutory payroll entitlements (representing 100% of the total bonuses to be paid)
were paid on 23 August 2010 and were approved by the Board. The Executive Directors abstained from the vote.
20
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors’ Report cont.
for the year ended 30 June 2011
Short-term
Long-term Employment
Post- Share-based
Payment
Performance
based
Total
Salary
& Fees
$
Cash
Bonus
$
Non-cash
benefi ts
$
Non-cash
benefi ts
$
Super-
annuation
$
Key Management Personnel
Don Mackenzie
2011
28,000
–
–
183,608
172,815
*35,000
–
13,399
13,824
17,787
14,292
55,000
7,647
304,794
208,578
182,000
182,000
**25,000
^30,000
1,298
12,839
2,991
–
20,549
17,161
26,457
–
258,295
242,000
–
–
–
$
–
$
28,000
–
–
–
–
434,138
268,168
218,321
40,000
%
–
12%
–
10%
12%
35%
–
–
–
–
–
253,798 ^^150,000
–
246,140
5,312
4,028
7,028
–
18,000
18,000
195,476
–
1,869
3,384
17,592
Anthony Carius
2011
2010
Fred El Tahche
2011
2010
Goran Turner
2011
2010
David Camilleri
2011
Previously designated as Key Management Personnel
Duncan Cornish
2010
40,000
–
–
Nino Eid
2010
149,368
–
–
–
–
13,443
2,832
165,643
33%
Total Remuneration
2011
2010
842,882
790,323
210,000
30,000
21,878
30,691
13,403
–
73,928
62,896
81,457 1,243,548
924,389
10,479
* Bonus (representing 100% of the total bonus to be paid) was paid on 9 November 2010. The bonus was approved by the Board as part
of discretionary performance based remuneration.
** Bonus (representing 100% of the total bonus to be paid) was paid on 26 October 2010. The bonus was approved by the Board as part
of discretionary performance based remuneration.
^ Bonus (representing 100% of the total bonus to be paid) was paid on 11 November 2009. The bonus was approved by the Board as part
of discretionary performance based remuneration.
^^ Bonus (representing 100% of the total bonus to be paid) was paid on 23 August 2010. The bonus was approved by the Board as part
of discretionary performance based remuneration.
Fair value of options granted as part of remuneration are estimates only. The estimates are based on the use of the
Black-Scholes option pricing model. This model takes account of factors such as the option exercise price, the current
level and volatility of the underlying share price and the time to maturity of the options.
Option % of total remuneration
2010
2011
Option % of total remuneration
2010
2011
Directors
Nil
Nil
Nil
Key Management Personnel
Anthony Carius
Fred El-Tahche
18%
10%
4%
Nil
Consolidated Entity’s earnings and movement in shareholders wealth for the last fi ve years is as follows:
30 June 2011 30 June 2010 30 June 2009 30 June 2008 30 June 2007
Revenue and Income (Net)
$54,139,504 $50,780,366 $50,073,622 $36,288,711 $33,655,696
Net profi t before tax
Net profi t after tax
Share price at the start of the year
Share price at the end of the year
Basic EPS (cents)
Diluted EPS (cents)
$15,328,466
$12,868,122 $13,939,337
$4,737,736
$9,695,906
$11,015,591
$9,177,212
$10,021,632
$3,203,924
$6,821,586
$0.36
$0.24
6.51
6.51
$0.38
$0.36
5.82
5.82
$0.16
$0.38
7.66
7.15
$0.88
$0.16
2.37
2.21
$0.24
$0.88
6.24
5.76
A review of discretionary performance bonuses over the previous fi ve years is consistent with growth in Basic and Diluted
Earnings per Share. Salaries and Fees, as determined by the Board are consistent with the levels required to attract and
retain Directors and Key Management Personnel in companies of a comparable size.
FSA GROUP LIMITED ANNUAL REPORT 2011
21
Directors’ Report cont.
for the year ended 30 June 2011
(c) Options issued as part of remuneration for the year ended 30 June 2011
On 2 July 2010, 1,050,000 options exercisable at $0.50 on or before 2 July 2013 were issued as part of executive remuneration.
(d) Shares issued on exercise of remuneration options
There were no shares issued on the exercise of remuneration options during or since the end of the fi nancial year.
(e) Option holdings of Directors and Key Management Personnel
Granted as
Balance at Granted as
1 July 2010 remuneration Exercised
Options Net Change
Other 30 June 2011
Vested at
Balance at 30 June
remuneration/ Balance at
the date of
this report
(lapsed)
2011 after year end
ESOP Options
Directors
Key Management
Personnel
Anthony Carius
Fred El Tahche
Total ESOP Options
n/a
–
–
–
550,000
500,000
1,050,000
–
–
–
–
–
–
550,000 125,000
500,000 100,000
1,050,000 225,000
–
–
–
550,000
500,000
1,050,000
All options due to vest to Directors or other employees under their respective option agreements, will vest if they are employed
with the Group at vesting date. The exercise price refl ects the closing share price of FSA Group Ltd on the trading day
preceding the grant plus a premium specifi c to each grant contract to ensure benefi ts are linked to the future growth
in share price of the Company.
The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods
are as follows:
Terms & Conditions for Each Grant
Grant Date
02-Jul-2010
02-Jul-2010
02-Jul-2010
Grant
Number
225,000
275,000
550,000
Vest Date
30-Apr-2011
30-Apr-2012
30-Apr-2013
Fair Value
per option at
grant date ($)
$0.1000
$0.1000
$0.1000
Exercise
Price
$0.500
$0.500
$0.500
Expected
Volatility
52.96%
52.96%
52.96%
Dividend
Yield
Risk-free
rate
0.00%
0.00%
0.00%
4.69%
4.69%
4.69%
Inputs into the Black-Scholes option pricing model were determined by independent external advisors and were based
on the historical performance of the underlying equities under option. There were no vesting conditions associated with
these options other than the continued employment of the Individual at vesting date.
(f) Shareholdings of Directors and Key Management Personnel
Shares held in FSA Group Ltd
Balance
Granted as
1 July 2010 Remuneration
Options
Exercised
Net
Change
Balance
Other 30 June 2011
Directors
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
Sally Herman
Key Management Personnel
Anthony Carius
David Camilleri
Total
1,040,541
48,809,231
12,960,047
15,406
–
66,699
77,000
62,968,924
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,040,541
(6,000,000)
42,809,231
–
–
–
1,500
–
12,960,047
15,406
–
68,199
77,000
(5,998,500) 56,970,424
22
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors’ Report cont.
for the year ended 30 June 2011
Directors’ Meetings
The number of meetings of Directors held during the year and the number of meetings attended by each Director
are as follows:
Sam Doumany
Tim Odillo Maher
Deborah Southon
Hugh Parsons
Stan Kalinko
Sally Herman
Number of meetings
held while in offi ce
13
13
13
11
13
6
Meetings
attended
13
13
12
8
13
6
Total number of meetings held during the fi nancial year – 13
Audit & Risk Management Committee Meetings
The number of meetings of the Audit & Risk Management Committee held during the year and the number of meetings
attended by each member of the Audit & Risk Management Committee are as follows:
Hugh Parsons
Sam Doumany
Stan Kalinko
Sally Herman
Number of meetings
held while in offi ce
3
4
4
2
Total number of meetings held during the fi nancial year – 4
Remuneration Committee Meetings
Meetings
attended
3
4
4
2
The number of meetings of the Remuneration Committee held during the year and the number of meetings attended
by each member of the Remuneration Committee are as follows:
Sam Doumany
Stan Kalinko
Sally Herman
Number of meetings
held while in offi ce
2
2
2
Total number of meetings held during the fi nancial year – 2
Tax Consolidation
Meetings
attended
2
2
2
FSA Group Ltd and its 100% owned subsidiaries have formed a tax consolidated group and have entered tax sharing
and tax funding arrangements.
180 Group Pty Ltd (controlled by FSA Group Ltd) and its 100% owned subsidiaries have formed a tax consolidated group
and have entered tax sharing and tax funding arrangements.
Fox Symes Home Loans Pty Ltd (controlled by FSA Group Ltd) and its 100% owned subsidiaries have formed a tax
consolidated group and have entered tax sharing and tax funding arrangements.
FSA GROUP LIMITED ANNUAL REPORT 2011
23
Directors’ Report cont.
for the year ended 30 June 2011
Non-Audit Services
The Board of Directors, in accordance with advice from the Audit & Risk Management Committee, is satisfi ed that the
provision of non-audit services during the year is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfi ed that the services disclosed below did not compromise
the external auditor’s independence for the following reasons:
(cid:129) all non-audit services are reviewed and approved by the Audit & Risk Management Committee prior to commencement
to ensure they do not adversely affect the integrity and objectivity of the auditor;
(cid:129) the nature of the services provided do not compromise the general principles relating to auditor independence as set
out in the Institute of Chartered Accountants in Australia and CPA Australia’s Professional Statement F1: Professional
Independence; and
(cid:129) all non-audit services are performed by persons not involved in the audit.
The following fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2011:
Tax consulting services
$59,460
Auditor’s Independence Declaration
The Auditor’s Independence Declaration forms part of the Directors Report and can be found on page 25.
Auditor Details
PKF continues in offi ce in accordance with section 327(4) of the Corporations Act 2001.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of FSA Group Ltd
support and have adhered to the principles of corporate governance. A Statement of Corporate Governance is separately
contained in the Annual Report.
Signed in accordance with a resolution of the directors.
Tim Odillo Maher
Director
Sydney
30 August 2011
24
FSA GROUP LIMITED ANNUAL REPORT 2011
Auditor’s Independence Declaration
To the Directors of FSA Group Limited
LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF
THE CORPORATIONS ACT 2001
To : The Directors
FSA Group Limited and the entities it controlled during the year
I declare to the best of my knowledge and belief, in relation to the audit for the financial year ended 30
June 2011 there have been:
a) no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit, and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
PKF
Arthur Milner
Partner
30 August 2011
Sydney
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au
PKF | ABN 83 236 985 726
Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia
DX 10173 | Sydney Stock Exchange | New South Wales
The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the
PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast
Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
FSA GROUP LIMITED ANNUAL REPORT 2011
25
Corporate Governance Statement
FSA Group Limited (the Company) and the Board
of Directors (the Board) are committed to achieving
and demonstrating the highest standards of corporate
governance. The Board endorses the 2nd edition of
the Australian Securities Exchange (ASX) Corporate
Governance Council’s Corporate Governance Principles
and Recommendations (ASX Principles) issued in
August 2007, including the 2010 amendments.
The Company’s Corporate Governance Charter is
available on the FSA website www.fsagroup.com.au
The table below summarises how the Company complies
with the ASX Principles, and if not why not.
Principle
Number
1
1.1
1.2
1.3
2
2.1
2.2
2.3
2.4
2.5
2.6
3
3.1
3.2
3.3
3.4
3.5
4
4.1
4.2
4.3
4.4
Best Practice Recommendation
Lay solid foundations for management and oversight
Establish the functions reserved to the Board and those delegated to senior
executives and disclose these functions.
Disclose the process for evaluating the performance of senior executives.
Provide the information in the Guide to reporting on Principle 1.
Structure the Board to add value
A majority of the Board should be independent Directors.
The chair should be an independent Director.
The roles of the Chair and Chief Executive Officer or similar roles should
not be exercised by the same individual.
The Board should establish a nominations committee.
Disclose the process for evaluating the performance of the Board,
its committees and individual Directors.
Provide the information in the Guide to reporting on Principle 2.
Promote ethical and responsible decision making
Establish a code of conduct and disclose the code or summary of the code
as to:
• the practices necessary to maintain confidence in the Company’s integrity;
• the practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders; and
• the responsibility and accountability of individuals for reporting and
investigating reports of unethical practices.
Establish a policy concerning diversity and disclose the policy or summary of
that policy. The policy should include requirements for the Board to establish
measurable objectives for achieving gender diversity for the Board to assess
annually both the objectives and progress in achieving them.
Disclose in each annual report the measurable objectives for achieving
gender diversity set by the Board in accordance with the diversity policy
and progress towards achieving them.
Disclose in each annual report the proportion of women employees
in the whole organisation, women in senior executive positions and
women on the Board.
Provide the information in the Guide to reporting on Principle 3.
Safeguard integrity in financial reporting
The Board should establish an audit committee.
The audit committee should be structured so that it:
• consists only of Non-Executive Directors;
• consists of a majority of independent Directors;
• is not chaired by the Chair of the Board; and
• has at least three members.
The audit committee should have a formal Charter.
Provide the information in the Guide to reporting on Principle 4.
Compliance
(Yes/No)
Comments
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
–
–
–
–
–
–
Page 29
–
–
–
–
–
–
–
Yes
Page 33
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
–
–
–
–
Page 31
–
–
–
26
FSA GROuP LimiTED AnnuAl RepoRt 2011
Corporate Governance Statement cont.
Principle
Number
5
5.1
5.2
6
6.1
6.2
7
7.1
7.2
7.3
7.4
8
8.1
8.2
8.3
8.4
Best Practice Recommendation
Make timely and balanced disclosures
Establish written policies designed to ensure compliance with ASX Listing
Rule disclosure requirements and to ensure accountability at a senior
executive level for that compliance and disclose those policies or a summary
of those policies.
Provide the information in the Guide to reporting on Principle 6.
Respect the rights of shareholders
Design a communication policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and
disclose their policy or a summary of that policy.
Provide the information in the Guide to reporting on Principle 6.
Recognise and manage risk
Establish policies for the oversight and management of material business
risks and disclose a summary of those policies.
The Board should require management to design and implement the risk
management and internal control system to manage the Company’s material
business risks and report to it on whether those risks are being managed
effectively. The Board should disclose that management has reported to it as
to the effectiveness of the Company’s management of its material
business risks.
The Board should disclose whether it has received assurance from the Chief
Executive offi cer (or equivalent) and the Chief Financial Offi cer (or equivalent)
that the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management and
internal control and that the system is operating effectively in all material
respects in relation to fi nancial reporting risks.
Provide the information in the Guide to reporting on Principle 7.
Remunerate fairly and responsibly
The Board should establish a remuneration committee.
The remuneration committee should be structured so that it:
(cid:129) consists of a majority of independent Directors;
(cid:129) is chaired by an independent Chair; and
(cid:129) has at least three members
Clearly distinguish the structure of Non-Executive Directors’ remuneration
from that of executive Directors and senior executives.
Provide the information in the Guide to reporting on Principle 8.
Compliance
(Yes/No)
Comments
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Set out overleaf is commentary on the practical application of each of the ASX Principles noted above.
FSA GROUP LIMITED ANNUAL REPORT 2011
27
Corporate Governance Statement cont.
Principle 1: Lay solid foundations
for management and oversight
The Directors are responsible to the shareholders for
promoting and managing the performance of the Company
in both the short and longer term. Their focus is to enhance
the interests of shareholders and other key stakeholders
and to ensure the Company is properly managed. The
functions, powers and responsibilities of the Board are
governed by the Corporations Act and general law.
The Board has established the functions reserved for
the Board and those delegated to senior executives and
disclosure of those functions are included in the Corporate
Governance Charter which can be found on the
Company’s website.
Principle 2: Structure the Board
to add value
The Board operates in accordance with the broad
principles set out in the Corporate Governance Charter
which includes:
(cid:129) to aim for, so far as is practicable given the size
of the Company, a majority of the Board being
independent directors;
(cid:129) to aim for, so far as is practicable given the size
of the Company, the appointment of a chairperson
who is an independent director;
(cid:129) to aim for, so far as is practicable given the size
of the Company, a chairperson who is not the chief
executive offi cer;
(cid:129) to aim for, so far as is practicable given the size
of the Company, a board comprising of members
with diverse backgrounds; and
(cid:129) to have at least three directors.
The Non-Executive Directors meet from time to time
without the Executive Directors present.
Directors’ independence
In assessing the independence of directors, the Company
has regard to Principle 2 of the Corporate Governance
Principles and Recommendations and regards an
independent director as a Non-Executive director
(that is, not a member of management) who:
(cid:129) is not a substantial shareholder of the Company
or an offi cer of, or otherwise associated directly
with, a substantial shareholder of the Company;
(cid:129) within the last three years has not been employed
in an executive capacity by the Company or another
Company member, or been a director after ceasing
to hold any such employment;
(cid:129) within the last three years has not been a principal of
a material professional advisor or a material consultant
to the Company or another Company member, or an
employee materially associated with the service provided;
(cid:129) is not a material supplier or customer of the Company
or other group member, or an offi cer of or otherwise
associated directly or indirectly with a material supplier
or customer;
(cid:129) has no material contractual relationship with the Company
or another group member other than as a director of
the Company;
(cid:129) has not served on the Board for a period which could,
or could reasonably be perceived to, materially interfere
with the directors’ ability to act in the best interests of
the Company;
(cid:129) is free from any interest and any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with the directors’
ability to act in the best interests of the Company.
The Board regularly assesses whether each Non-Executive
Director is independent.
Board members
The names, skills and experience of the Directors in offi ce
at the date of this Statement, and the period of offi ce of
each Director, are set out in the Directors’ Report. At the
date of signing the Directors’ Report, the Board comprised
two Executive Directors and three Non-Executive Directors
(including the Chairman). The three Non-Executive Directors
have no relationships adversely affecting independence
and so are deemed independent under the principles
set out above.
Mr Timothy Odillo Maher, an Executive Director, is a
substantial shareholder of the Company and accordingly
he is not considered to be independent of the Company
based on the ASX Principles. Mr Odillo Maher has a long
association with FSA Group and the Board considers that
it is in the best interests of all shareholders to have a
Director with Mr Odillo Maher’s industry and business
expertise and Company history as a member of the Board.
Ms Deborah Southon, an Executive Director, is a substantial
shareholder of the Company and accordingly she is not
considered to be independent of the Company based on
the ASX Principles. Ms Southon has a long association
with FSA Group Limited and the Board considers that it
is in the best interests of all shareholders to have a Director
with Ms Southon’s industry and business expertise and
Company history as a member of the Board.
28
FSA GROUP LIMITED ANNUAL REPORT 2011
Corporate Governance Statement cont.
Term of offi ce
The Company’s Constitution requires that one third
(or the nearest number thereto but not less than one
third) of the Directors, other than the Managing Director,
must retire from offi ce at each Annual General Meeting.
Director/s retiring by rotation are eligible for re-election.
The Company’s Constitution does not provide exclusions
from re-election by rotation for the Executive Directors.
The Chairperson
The Chairperson is responsible for leadership of the
Board, for effi cient organisation and conduct of the
Board’s function and the briefi ng of all Directors in relation
to issues arising at Board meetings. The Chairperson is
also responsible for shareholder communication and
arranging Board performance evaluation.
Chief Executive Offi cer
The Chief Executive Offi cer and/or Joint Executive
Directors are responsible for running the affairs of the
Company under delegated authority from the Board and
to implement the policies and strategies set by the Board.
In carrying out these responsibilities, the Chief Executive
Offi cer and/or Joint Executive Directors must report to the
Board in a timely manner and ensure all reports to the
Board present a true and fair view of the Company’s
fi nancial position and operating results.
The Chief Executive Offi cer and/or Joint Executive Directors
together with the Chief Financial Offi cer shall be required
to state in writing to the Board that in accordance with
section 295A of the Corporations Act 2001 and the relevant
assurances required under recommendation 7.3 of the
ASX Principles that to the best of their knowledge and belief:
(cid:129) the statements made in relation to the fi nancial integrity
of the fi nancial reports are founded on a sound system
of risk management and internal compliance and control;
(cid:129) the system of risk management in operation at
30 June 2011 implements the policies adopted and
delegated by the Board and was operating effectively; and
(cid:129) the systems relating to fi nancial reporting were
operating effectively in all material respects.
Nomination Committee
a separate Nominations Committee concluded that the
Company was not of a size nor are its affairs of such
complexity as to justify the formation of this Committee.
Board selection process
The Board, acting in the capacity of the Nominations
Committee, and observing the Nominations Committee
Charter contained in the Corporate Governance Charter
properly assesses prospective Directors. In doing so it
ensures there are complementary board skills and
experience in place, and where necessary, engages
consultants to assist in this process.
The Board seeks to have a balanced diversity in Board
members and currently has two female Board members
out of a Board comprising fi ve members.
Induction and education
The induction provided to new Directors enables them
to actively participate in Board decision-making as
soon as possible. It also ensures that they have a full
understanding of the Company’s fi nancial position,
strategies, operations and risk management policies.
It also explains the respective rights, duties,
responsibilities and roles of the Board.
Directors are encouraged to participate in continuing
education so as to maintain and update their skills.
Company Secretary
The Company Secretary’s appointment is determined
by the Board, and is accountable to the Board, through
the Chairman, on all governance matters.
Commitment
Details of the attendance of Directors at Board and committees
of the Board in the year ended 30 June 2011 are disclosed
on page 23 of the annual report. Non-Executive Directors
are expected to spend at least 20 days a year preparing
for and attending Board and Committee meetings and
associated Board activities.
The commitments of Non-Executive Directors are
considered by the Board prior to the Director’s appointment
and are reviewed each year as part of the annual
performance assessment.
The Company has not established a Nominations Committee
and the Board currently performs the functions of this
Committee, and in doing so, observes the Nominations
Committee Charter which is incorporated into the Corporate
Governance Charter. The Directors in deciding not to have
Prior to appointment or being submitted for re-election,
each Non-Executive Director is required to specifi cally
acknowledge that they have and will continue to have
the time available to discharge their responsibilities to
the Company.
FSA GROUP LIMITED ANNUAL REPORT 2011
29
Corporate Governance Statement cont.
Independent professional advice
Directors have the right, in connection with their duties and
responsibilities, to seek independent professional advice
at the Company’s expense. Prior approval of the Chairman
is required, but this will not be unreasonably withheld.
The advice obtained must be made available to all
Board members.
Board performance
The Board undertakes an annual self-assessment of
the performance of the Board as a whole (including its
Committees and governance processes) and as part
of this process considers Board renewal as and
when appropriate.
Performance of individual Directors is assessed against a
range of criteria. This review includes assessing the ability
of the Director to consistently create shareholder value,
contribute to the development of strategies, participate in
risk identifi cation, mentoring senior management, consider
the views of other Directors and members of management
and key third party stakeholders. The performance
assessment also considers the ability for the Director
to discharge his duties and obligations to the Company.
Board Committees
The Board has established an Audit & Risk Management
Committee and a Remuneration Committee to assist in the
execution of its duties and to allow detailed consideration
of complex issues. Both committees comprise a majority
of Non-Executive Directors.
Each Committee has its own charter which sets out its role
and responsibilities, composition, structure, membership
requirements and the manner in which the committee is
to operate. Charters are reviewed on an annual basis. All
matters determined by the committees are submitted to
the Board as recommendations for Board consideration.
Minutes of committee meetings are tabled at the
subsequent Board meeting.
Principle 3: Promote ethical and
responsible decision-making
Code of Conduct
A Code of Conduct has been determined and is set out in
the Corporate Governance Charter. The Board, management
and employees of the Company are encouraged to comply
when dealing with each other, shareholders, and the
broader community, and covers the following areas:
(cid:129) Compliance required with legal obligations,
responsibilities to shareholders and the fi nancial
community generally
(cid:129) Responsibilities to clients, customers and consumers
(cid:129) Employment practices which ensures that the Company
will employ the best available staff, both male and
female, from a diverse background, with skills required
to carry out their roles
(cid:129) The Company will ensure that diversity objectives are
adopted at all levels of the Company
(cid:129) The Company will ensure a safe work place and
maintain proper occupational health and safety
practices commensurate with the nature of the
Company’s business and activities
(cid:129) Responsibility to the community
(cid:129) Responsibility to the individual
(cid:129) Obligations relative to fair trading and dealing.
Gender diversity
A gender diversity policy has also been adopted and
is included as a separate policy together with the
Corporate Governance Charter on the Company’s website.
The Board is currently considering suitable diversity
targets to work towards achieving greater diversity at all
levels of the workforce. The objectives will be adopted by
the Board and will then be assessed by the Board on an
annual basis.
Data which details the proportion of women employees
in the Company, women in senior executive positions
and women on the Board is contained at page 33
of the annual report.
Confl icts of interest
The Board, management and employees must not involve
themselves in situations where there is a real or apparent
confl ict of interest between them as individuals and the
interest of the Company (excluding those matters which
may be subject to legal professional privilege). Where a
real or apparent confl ict of interest arises the matter should
be brought to the attention of the Chairperson in the case
of a board member or the Managing Director (if any), the
Managing Director or Chief Executive Offi cer in the case of
a member of Management and a supervisor in the case of
an employee, so that it may be considered and dealt with
in an appropriate manner for all concerned.
Compliance with the code
Any breach of compliance with this code is to be reported
directly to the Chief Executive Offi cer, Managing Director
or Chairperson, as appropriate.
30
FSA GROUP LIMITED ANNUAL REPORT 2011
Corporate Governance Statement cont.
Periodic review of code
The Company will monitor compliance with the code
periodically by liaising with the Board, Management and
staff especially in relation to any areas of diffi culty which
arise from the code and any other ideas or suggestions for
improvement of the code. Suggestions for improvements
or amendments to the code can be made at any time.
Code of conduct for employees (including
contractors)
Ms Sally Herman, was appointed a Director on
24 January 2011, and a member of the Audit & Risk
Management Committee from that date.
Mr Hugh Parsons, who had been a Director and a
member of the Audit & Risk Management Committee,
resigned from both positions on 31 May 2011.
Details of members’ qualifi cations and their attendance at
Audit & Risk Management Committee meetings are set out
in the Directors’ Report on pages 15, 16 and 23, respectively.
The Company shall ensure that the above principles are
implemented and adopted by employees and contractors
of the Company.
The Committee’s primary audit function is set out in the
Corporate Governance Charter, and which is included
on the Company’s website.
Trading in company securities by directors, senior
management and employees
The Company issued a Securities Trading Policy with
effect from 1 January 2011 which regulates dealings by
Directors, senior management and employees in shares,
options and other securities issued by the Company.
The Securities Trading Policy provides that trading is
prohibited in the period from 1 January and 1 July each
year until the fi nancial results are released to the Australian
Securities Exchange in or around the third week of
February and August respectively with such periods
coinciding with the release of the half year and full year
fi nancial results. A copy of this policy is available on the
Company’s website.
Principle 4: Safeguard integrity in
fi nancial reporting
Audit & Risk Management Committee
The Board has an Audit & Risk Management Committee to
advise on the establishment and maintenance of a framework
of internal control and appropriate ethical standards for the
management of the Company. The Committee consists
of the following independent Non-Executive Directors:
(cid:129) Mr Sam Doumany (Committee Chairman);
(cid:129) Ms Sally Herman; and
(cid:129) Mr Stan Kalinko.
When Mr Doumany was appointed as Chairman of the
Audit & Risk Management Committee (upon the resignation
of Mr Parsons) the Board acknowledged that this appointment
was contrary to the ASX Principles which provides that the
Chairman of the Company should not also be the Chairman
of the Audit & Risk Management Committee. However
they noted that the appointment was transitionary in nature
and situation would be remedied when a suitable person
became available.
External Auditor
The Company and Audit & Risk Management Committee
policy is to appoint an external auditor who clearly
demonstrates quality and independence. The performance
of the external auditor is reviewed annually. PKF was
appointed as the external auditor in 2003 and it is PKF’s
policy to rotate audit engagement partners on listed
companies at least every fi ve years.
An analysis of fees paid to the external auditor, including
a break-down of fees for non-audit services, is provided
in the Directors’ Report and in the notes to the fi nancial
statements. The external auditor provides a declaration
of their independence to the Audit & Risk Management
Committee each time they report to the Company.
The external auditor is requested to attend the Annual
General Meeting and be available to answer shareholder
questions about the conduct of the audit and the
preparation and content of the audit report.
Principle 5: Make timely and balanced
disclosures
The Company has an established policy and procedure
for timely disclosure of material information concerning
the Company. This includes internal reporting procedures
to ensure that any required market announcements are
reported to the Company Secretary in a timely manner.
The Company Secretary has been nominated as the
person responsible for communication with the ASX.
All information disclosed to the ASX is posted on the
Company’s corporate website as soon as it is disclosed
to the ASX. When analysts are briefed following half year
and full year results announcements, the material used
in the presentations is released to the ASX prior to the
commencement of the briefi ng. This information is also
posted on the Company’s corporate website.
FSA GROUP LIMITED ANNUAL REPORT 2011
31
Corporate Governance Statement cont.
The Company is committed to ensuring that all stakeholders
and the market are provided with relevant and accurate
information regarding its activities in a timely manner.
A copy of the disclosure policy is incorporated in the
Company’s corporate website.
Principle 6: Respect the rights
of shareholders
The Company aims to keep shareholders informed of
the Company’s performance and all major developments
in an ongoing manner. Information is communicated to
shareholders through:
(cid:129) fi nancial reports (including the full year fi nancial report,
the preliminary fi nal report, and the half-year fi nancial
report) all of which are published on the Company’s
corporate website and distributed to shareholders
where nominated;
(cid:129) the Annual General Meeting, and any other formally
convened Company meetings; and
(cid:129) all other information released to the ASX is posted
to the Company’s corporate website.
The Company’s corporate website maintains, at
a minimum, information about the last three years’
press releases or announcements.
A copy of the Shareholder Communications Policy
is contained in the Corporate Governance Charter
and is available on the Company’s corporate website.
Principle 7: Recognise and manage risk
The Board, through the Audit & Risk Management Committee,
is responsible for ensuring the adequacy of the Company’s
risk management and compliance framework and system of
internal controls and for regularly reviewing its effectiveness.
Considerable importance is placed on maintaining
a strong control environment. There is an organisation
structure with clearly drawn lines of accountability and
delegation of authority. The Board actively promotes
a culture of quality and integrity.
The Company has implemented a risk management system
based on ASX Principles and the Audit & Risk Management
Committee’s additional function is to assist the Board
in discharging its responsibility to exercise due care,
diligence and skill in relation to the Company by:
(cid:129) ensuring the development of an appropriate risk
management policy framework that will provide guidance
to Management in implementing appropriate risk
management practices throughout the Company’s
operations, practices and systems;
(cid:129) defi ning and periodically reviewing risk management
as it applies to the Company and clearly identify
all stakeholders;
(cid:129) ensuring the Committee clearly communicates the
Company’s risk management philosophy, policies
and strategies to Directors, Management, employees,
contractors and appropriate stakeholders;
(cid:129) ensuring that Directors and Management establish
a risk aware culture which refl ects the Company’s
risk policies and philosophies;
(cid:129) reviewing methods of identifying broad areas of risk and
setting parameters or guidelines for business risk reviews;
(cid:129) making informed decisions regarding business risk
management, internal control systems, business policies
and practices and disclosures; and
(cid:129) considering capital raising, treasury and market trading
activities with particular emphasis on risk treatment
strategies, products and levels of authorities.
The Executive Directors are responsible for identifying,
evaluating and monitoring risk in accordance with the
risk management framework and are responsible for
the accuracy and validity of risk information reported
to the Board and also for ensuring clear communication
to the Board on risk throughout the Company.
In particular, at the Board and Executive Directors’ strategy
planning sessions held throughout the year an evaluation
is undertaken to identify key business and fi nancial
risks which could prevent the Company from achieving
its objectives.
Additionally, a formal risk assessment process is part of
any major business acquisitions, major capital expenditures
or signifi cant business initiatives.
Certifi cation of fi nancial reports
The Chief Executive Offi cer and/or Joint Executive Directors
together with the Chief Financial Offi cer shall be required
to state in writing to the Board that in accordance with
section 295A of the Corporations Act 2001 and the relevant
assurances required under recommendation 7.3 of the ASX
Principles that to the best of their knowledge and belief:
(cid:129) the statements made in relation to the fi nancial
integrity of the fi nancial reports are founded on a sound
system of risk management and internal compliance
and control;
(cid:129) the system of risk management in operation at 30 June
2011 implements the policies adopted and delegated
by the Board and was operating effectively; and
(cid:129) the systems relating to fi nancial reporting were
operating effectively in all material respects.
32
FSA GROUP LIMITED ANNUAL REPORT 2011
Corporate Governance Statement cont.
Principle 8: Remunerate fairly
and responsibly
Remuneration Committee
In February 2011, the Board established a Remuneration
Committee which operates in accordance with the Corporate
Governance Charter. The Committee is responsible for
the review and recommendation to the Board on the
following matters –
(cid:129) the Company’s remuneration, recruitment,
retention and termination policies and procedures
for senior executives
Diversity
The Board is committed to having an appropriate blend of
diversity on the Board and in the Group’s senior executive
positions. The Board has established a policy regarding
gender, age, ethnic and cultural diversity, details of the
policy are available on the Company’s website.
The key elements of the diversity policy are to
work towards:
(cid:129) increased gender diversity in the Board and senior
executive positions
(cid:129) an annual assessment by the Board of performance
(cid:129) senior executives’ remuneration and incentives
against the objectives.
(cid:129) superannuation arrangements
(cid:129) remuneration framework for Directors (in consultation
with external consultants when appropriate)
(cid:129) remuneration by gender
The initial Committee comprises the following independent
Non-Executive Directors:
(cid:129) Mr Sam Doumany (Committee Chairman);
The Group’s current gender representation is
detailed below:
30 June 2011
30 June 2010
Female
(%)
Male
(%)
Female
(%)
Male
(%)
Board
Senior Executive
Group
40
22
43
60
78
57
20
22
45
80
78
55
(cid:129) Ms Sally Herman and
(cid:129) Mr Stan Kalinko.
The performance of senior executives are reviewed by the
Executive Directors, and in accordance with guidelines
issued by the Remuneration Committee with the review
having taken place in June 2011.
Details of these Directors’ qualifi cations and their attendance
at Remuneration Committee meetings are set out in the
Directors’ Report on pages 15, 16 and 23 respectively.
Structure of remuneration
Details of the nature and amount of each element of
remuneration for Executive Directors and senior management
of the Company are set out in the “Remuneration Report”
section of the Directors’ Report.
Fees and payments to Non-Executive Directors refl ect
the demands which are made on, and the responsibilities
of, the Directors. Fees and payments are reviewed
annually by the Chairman, and Non-Executive Director
remuneration takes the form of a set fee plus superannuation
entitlements and where applicable includes an allowance
for Board Committees.
The maximum aggregate amount of fees that can be
paid to Non-Executive Directors is subject to approval
by shareholders at the Annual General Meeting. The
maximum amount which has been approved by the
Company’s shareholders for payment to Non-Executive
Directors is $500,000. Fees for Non-Executive Directors
are not linked to the performance of the Company.
FSA GROUP LIMITED ANNUAL REPORT 2011
33
Statement of Comprehensive Income
for the year ended 30 June 2011
Revenue and other income
Fees from services
Finance income
Finance expense
Net fi nance income
Other gains/(losses)
Total revenue and other income net of fi nance expense
Consolidated Entity
2011
$
2010
$
Notes
2
2
2
2
2
40,425,188
38,473,602
30,134,445
22,250,254
(16,120,165)
(10,848,977)
14,014,280
11,401,277
(299,964)
905,487
54,139,504
50,780,366
Share of profi ts of an associate using the equity accounting method
28
23,981
18,528
Expenses from continuing activities
Profi t before income tax
Income tax expense
Profi t after income tax
Other Comprehensive Income
Share of Other Comprehensive income of Associates
3
(38,835,019)
(37,930,772)
15,328,466
12,868,122
4(a)
(4,312,875)
(3,690,910)
11,015,591
9,177,212
–
–
–
–
Total Comprehensive income for the year
11,015,591
9,177,212
Total Comprehensive income for the year attributable to:
Non-Controlling Interests
Owners of the parent
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2,019,876
1,656,648
8,995,715
7,520,564
11,015,591
9,177,212
6
6
6.51
6.51
5.82
5.82
The Statement of Comprehensive Income should be read in conjunction with the Notes to the Financial Statements.
34
FSA GROUP LIMITED ANNUAL REPORT 2011
Statement of Financial Position
as at 30 June 2011
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Investments in associates
Plant and equipment
Investment property
Other fi nancial assets
Deferred tax assets
Intangible assets
Total Non-Current Assets
Assets fi nanced by non-recourse fi nancial liabilities
Cash and cash equivalents
Mortgage fi nance assets
Total assets fi nanced by non-recourse fi nancial liabilities
Total Assets
Current Liabilities
Trade and other payables
Current tax liabilities
Borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Borrowings
Provisions
Deferred tax liabilities
Total Non-Current Liabilities
Non-Recourse Financial Liabilities
Borrowings
Total Non-Recourse Financial Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Non-Controlling Interest
Total Equity
Consolidated Entity
2011
$
2010
$
Notes
7
8
9
8
28
13
14
10
4c
15
9,413,356
7,394,759
36,618,162
32,564,893
891,090
245,697
46,922,608
40,205,349
27,856,932
24,508,906
63,975
405,003
301,547
600,420
213,760
47,188
450,003
313,051
898,050
40,788
3,502,277
3,413,633
32,943,914
29,671,619
7
7,394,118
6,605,211
11 228,964,764 200,434,621
236,358,882 207,039,832
316,225,404 276,916,800
16
10,519,345
12,750,551
17
18
17
18
4d
1,409,212
629,453
841,313
3,361,542
812,435
588,535
13,582,305
17,330,081
16,246,220
11,893,779
343,055
251,012
10,624,047
8,150,799
27,213,322
20,295,590
17 220,865,314 194,541,639
220,865,314 194,541,639
261,660,941 232,167,310
54,564,463
44,749,490
19
20
11,692,255
11,692,255
745,831
664,374
39,285,112
30,289,397
2,841,265
2,103,464
54,564,463
44,749,490
The Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.
FSA GROUP LIMITED ANNUAL REPORT 2011
35
Statement of Changes in Equity
for the year ended 30 June 2011
Consolidated Entity
Share
Capital
$
Reserves
$
Retained Non-Controlling
Interest
Earnings
$
$
Total
$
Balance at 1 July 2009
7,137,472
611,570
22,768,833
1,550,591
32,068,466
Total Comprehensive Income for the year
attributable to members of the parent
Total Comprehensive Income for the year
attributable to Non-Controlling Interests
Shares issued
Issues costs
Redemption of Convertible Redeemable
Preference Shares
Share-based payment expense
Distributions to Non-Controlling Interests
–
–
5,422,000
(247,905)
(619,312)
–
–
–
–
–
–
–
52,804
–
7,520,564
–
7,520,564
–
–
–
–
–
–
1,656,648
1,656,648
–
–
–
–
5,422,000
(247,905)
(619,312)
52,804
(1,103,775)
(1,103,775)
Balance at 30 June 2010/1 July 2010
11,692,255
664,374
30,289,397
2,103,464
44,749,490
Total Comprehensive Income for the year
attributable to members of the parent
Total Comprehensive Income for the year
attributable to Non-Controlling Interests
Share-based payment expense
Distributions to Non-Controlling Interests
–
–
–
–
–
–
81,457
–
8,995,715
–
8,995,715
–
–
–
2,019,876
2,019,876
–
81,457
(1,282,075)
(1,282,075)
Balance at 30 June 2011
11,692,255
745,831
39,285,112
2,841,265
54,564,463
The Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.
36
FSA GROUP LIMITED ANNUAL REPORT 2011
Statement of Cash Flows
for the year ended 30 June 2011
Cash fl ows from operating activities
Receipts from customers and debtors
Payments to suppliers and employees
Finance income received
Finance cost paid
Cash fl ows from operations
Net cash payments for institutional creditor distributions
Income tax paid
Notes
Consolidated Entity
2011
$
2010
$
Infl ows/
(Outfl ows)
Infl ows/
(Outfl ows)
36,971,898
19,021,929
(42,115,321)
(27,418,416)
29,088,744
22,178,148
(15,450,044)
(8,520,112)
8,495,277
5,261,549
(1,653,810)
(2,128,935)
(1,200,840)
(674,804)
Net cash infl ow from operating activities
21
5,640,627
2,457,810
Cash fl ows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangibles
Proceeds from disposal of property, plant and equipment
Net increase in mortgage fi nance assets
Net decrease in bridging fi nance assets
Net increase in factoring fi nance assets
Net increase in other loans
Net cash outfl ow from investing activities
Cash fl ows from fi nancing activities
Net proceeds from borrowings
Payment of distributions to Non-Controlling interests – Warehouse Trust
Share issue expenses
Proceeds from share issues
Net cash infl ow from fi nancing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the fi nancial year
(261,248)
(207,814)
(220,862)
(279,394)
–
25,502
(27,606,481)
(53,971,177)
373,458
1,557,558
(1,528,144)
(6,707,823)
(476,000)
–
(29,719,277)
(59,583,148)
27,666,107
47,122,882
(779,953)
(863,639)
–
–
(47,905)
5,222,000
26,886,154
51,433,338
2,807,504
(5,692,000)
13,999,970
19,691,970
Cash and cash equivalents at the end of the fi nancial year
7
16,807,474
13,999,970
The Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.
FSA GROUP LIMITED ANNUAL REPORT 2011
37
Notes to the Financial Statements
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies
The fi nancial statements include the fi nancial statements
of FSA Group Ltd (“the Parent Entity” or “the Company”)
and the Consolidated Entity (or “the Group”) consisting of
FSA Group Ltd and its controlled entities. FSA Group Ltd
is a listed public company, incorporated and domiciled
in Australia.
The fi nancial statements are general purpose fi nancial
statements that have been prepared in accordance with
Australian Accounting Standards, including Australian
Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001. The consolidated
fi nancial statements of the Group and the fi nancial
statements of the Company comply with International
Financial Reporting Standards (IFRSs) and interpretations
adopted by the International Accounting Standards
Board (IASB).
The following is a summary of the material accounting
policies adopted in the preparation of the fi nancial
statements. The accounting policies have been
consistently applied, unless otherwise stated.
The fi nancial statements were authorised for issue
by the directors on 30 August 2011.
Basis of preparation
The fi nancial statements are presented in
Australian dollars.
Reporting basis and conventions
The fi nancial statements are based on historical costs
modifi ed by the revaluation of selected non-current assets,
and fi nancial assets and fi nancial liabilities for which the
fair value basis of accounting has been applied. These
items in the Statement of Financial Position are:
(cid:129) Loans and receivables at amortised cost; and
(cid:129) Other fi nancial assets at fair value through profi t
or loss (“FVTPL”)
Accounting Policies
(a) Principles of Consolidation
A controlled entity is any entity FSA Group Ltd has the
power to control the fi nancial and operating policies so
as to obtain benefi ts from its activities. A list of controlled
entities is contained in Note 12 to the fi nancial statements.
All inter-company balances and transactions between entities
in the Group, including any unrealised profi ts or losses,
have been eliminated on consolidation. Accounting policies
of subsidiaries have been changed where necessary
to ensure consistency with those policies applied by the
Parent Entity. Where controlled entities have entered or
left the Group during the year, their operating results have
been included from the date control was obtained or until
the date control ceased.
Non-Controlling interests in equity and results of the entities
controlled are shown as separate items in the consolidated
fi nancial statements.
(b) Income Tax
The charge for current income tax expense is based
on the profi t for the year adjusted for any non-assessable
or disallowed items. It is calculated using the tax rates
that have been enacted or are substantially enacted
by the reporting date.
Deferred tax is accounted for using the “balance sheet”
liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their
carrying amounts in the fi nancial statements. No deferred
income tax is recognised from the initial recognition of an
asset or liability, excluding a business combination, where
there is no effect on accounting or taxable profi t or loss.
Deferred tax is calculated at the tax rates expected to
apply to the period when the asset is realised or liability
is settled. Deferred tax is credited in the Statement of
Comprehensive Income except where it relates to items
that may be credited directly to equity, in which case the
deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent
that it is probable that future tax profi ts will be available
against which deductible temporary differences and
unused tax losses can be utilised.
The amount of benefi ts brought to account or which may
be realised in the future is based on the assumption that
no adverse change will occur in income taxation legislation
and the anticipation that the Group will derive suffi cient
future assessable income to enable the benefi t to be
realised and comply with the conditions of deductibility
imposed by the law.
Tax consolidation
FSA Group Ltd and its wholly-owned Australian subsidiaries
have formed an income tax consolidated group under the
Tax Consolidation Regime. Additionally, 180 Group Pty Ltd
and its wholly-owned Australian subsidiaries and Fox Symes
Home Loans Pty Ltd and its wholly-owned Australian
subsidiaries have also formed income tax consolidated
groups under the Tax Consolidation Regime.
38
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies cont.
FSA Group Ltd, 180 Group Pty Ltd and Fox Symes Home
Loans Pty Ltd as head entities of their respective tax
consolidated groups and the controlled entities in each
group continue to account for their own current and
deferred tax amounts. These tax amounts are measured
as if each entity in the tax consolidated group continues
to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts,
the head entity of each tax consolidated group also
recognises the current tax liabilities (or assets) and
the deferred tax assets arising from unused tax losses
and unused tax credits assumed from controlled entities
in the tax consolidated group.
The respective tax consolidated groups have entered
into tax sharing agreements whereby each company
in the group contributes to the income tax payable of
the consolidated group.
(c) Financial instruments
Non-derivative fi nancial instruments
Non-derivative fi nancial instruments comprise investments
in equity and debt securities, trade and other receivables,
cash and cash equivalents, loans and borrowings and
trade and other payables.
Non-derivative fi nancial instruments are recognised initially
at fair value plus, for instruments not at fair value through
profi t and loss, any directly attributable transaction costs,
except as described below. Subsequent to initial recognition,
non-derivative fi nancial instruments are measured as
described below.
A fi nancial instrument is recognised if the Group becomes
a party to the contractual provisions of the instrument.
Financial assets are de-recognised if the Group’s contractual
rights to cashfl ows from the fi nancial assets expire or the
Group transfers the fi nancial asset to another party without
retaining control or substantially all the risks and rewards
of the asset. Regular way purchases and sales of fi nancial
assets are accounted for at trade date i.e. the date the Group
commits itself to purchase or sell an asset. Financial liabilities
are de-recognised if the Group’s obligations specifi ed in
the contract expire, are discharged or cancelled.
Cash and cash equivalents comprise cash balances
and call deposits. Bank overdrafts that are repayable
on demand and form an integral part of the Group’s cash
management are included as a component of cash and
cash equivalents for the purposes of the Statement of
Cash Flows.
Ordinary share capital
Incremental costs directly attributable to the issue
of ordinary shares and share options are recognised
as a deduction from equity net of any related income
tax benefi t.
Held-to-maturity investments
If the Group has the positive intent and ability to hold debt
securities to maturity, then they are classifi ed as held-to-
maturity. Held-to-maturity investments are measured at
amortised cost using the effective interest method, less
any impairment losses.
Available-for-sale fi nancial assets
The Group’s investments in equity securities and certain
debt securities are classifi ed as available-for-sale fi nancial
assets. Subsequent to initial recognition, they are measured
at fair value and changes therein, other than impairment
losses and foreign exchange gains and losses on available-
for-sale monetary items are recognised as a separate
component of equity. When an investment is derecognised,
the cumulative gain or loss in equity is transferred to
profi t or loss.
Investments at fair value through profi t or loss
An instrument is classifi ed as at fair value through profi t
or loss if it is held for trading or is designated as such upon
initial recognition. Financial instruments are designated
at fair value through profi t or loss if the Group manages
such investments and makes purchase and sale decisions
based on their fair value in accordance with the Group’s
documented risk management or investment strategy.
Upon initial recognition, attributable transaction costs
are recognised in profi t or loss when incurred. Financial
instruments at fair value through profi t or loss are measured
at fair value, and changes therein are recognised in profi t
or loss.
Loans and Receivables
Loans and receivables are held at amortised cost. Loan
assets held at amortised cost are non-derivative fi nancial
instruments with fi xed or determinable payments that are
not quoted in an active market. They arise when a mortgage
loan is originated in the Statement of Financial Position.
These are accounted for at amortised cost using the
effective interest method.
FSA GROUP LIMITED ANNUAL REPORT 2011
39
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies cont.
(d) Property, plant and equipment
Property, plant and equipment
Property, plant and equipment are measured on the cost
basis less accumulated depreciation and accumulated
impairment losses.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefi ts
associated with the item will fl ow to the Group and the cost
of the item can be measured reliably. All other repairs and
maintenance are charged to the Statement of Comprehensive
Income during the fi nancial year in which they are incurred.
Depreciation
Property, plant and equipment are depreciated over their
useful lives to the Group commencing from the time the
asset is held ready for use.
(f) Leases
Leases of property plant and equipment where the Group,
as lessee, has substantially all the risks and benefi ts
incidental to the ownership of the asset are classifi ed
as fi nance leases.
Finance leases are capitalised by recording an asset and
a liability at the lower of the amounts equal to the fair value
of the leased property or the present value of the minimum
lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of
the lease liability and the lease interest expense for
the year.
Leased assets are depreciated on a straight-line basis
over the shorter of their estimated useful lives or the
lease term.
Lease payments for operating leases, where substantially
all the risks and benefi ts remain with the lessor are
charged to the Statement of Comprehensive Income
on a straight line basis over the period of the lease.
The useful lives used for each class of asset are:
(g) Impairment of assets
Class of Asset
Plant and equipment
Computers and Offi ce Equipment
Furniture and Fittings
Motor Vehicles
Useful life
2 to 5 years
2 to 5 years
2 to 5 years
5 years
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately
to its recoverable amount if the assets carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing
proceeds with the carrying amount. These gains or losses
are included in the Statement of Comprehensive Income.
(e) Investment property
Investment property is property held either to earn rental
income or for capital appreciation or both. Investment
properties are measured at cost less accumulated
depreciation. The carrying amount of an asset in this class
is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated
recoverable amount.
Investment properties have a useful life of 40 years.
At each reporting date, the Group reviews the carrying
values of its assets to determine whether there is any
indication that those assets have been impaired. If such
an indication exists, the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell
and value in use, is compared to the asset’s carrying
value. Any excess of the asset’s carrying value over its
recoverable amount is expensed to the Statement of
Comprehensive Income.
Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit
to which the asset belongs.
(h) Employee benefi ts
Provision is made for the Group’s liability for employee
benefi ts arising from services rendered by employees
to reporting date. Employee benefi ts that are expected
to be settled within one year have been measured at the
amounts expected to be paid when the liability is settled,
plus related on-costs. Employee benefi ts payable later
than one year have been measured at the present value
of the estimated future cash outfl ows to be made for
those benefi ts.
40
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
(i) Provisions
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events, for
which it is probable that an outfl ow of economic benefi ts
will result and that outfl ow can be reliably measured.
(j) Revenue recognition
Revenue is recognised when it is probable that the
economic benefi ts will fl ow to the entity and the revenue
can be reliably measured. The following specifi c recognition
criteria must also be met before revenue is recognised:
Rendering of Services – Personal Insolvency
When the outcome of a contract to provide services under
the Bankruptcy Act can be estimated reliably, revenue is
recognised by reference to the right to be compensated for
services and where the stage of completion of the service
can be reliably estimated, specifi cally:
Debt agreement application fees
Debt agreement application fees
Upon the completion of preparing the debt agreement
proposal for consideration by the creditors and the
Insolvency and Trustee Service of Australia (ITSA).
Debt agreement administration fees
Debt agreement administration fees
At the date of approval of the debt agreement proposal
by a majority of the vote value of creditors.
Trustee fees bankruptcy and personal
Trustee fees bankruptcy and personal
insolvency agreements
insolvency agreements
Trustee fees are recognised as work in progress and time
billed. Fee income is only recognised to the extent fees
have been approved by creditors.
Refi nance fees
When the outcome of a contract to provide services
can be estimated reliably, either upon receipt of upfront
fees and subsequent trail commission, in the case
of non-conforming lending, or in the case of conforming
lending, trail commission revenue and receivables are
recognised at fair-value being the future trail commission
receivable discounted to their net present value.
Note 1. Summary of signifi cant
accounting policies cont.
Equity settled compensation
Share based compensation benefi ts are provided to
employees via the FSA Group Ltd Employee Share Option
Plan (“ESOP”). Information relating to the ESOP is set
out in the Remuneration Report, contained within the
Directors’ report.
The fair value of options granted under the ESOP
is recognised as an employee benefi t expense with
a corresponding increase in equity. The fair value is
measured at grant date and recognised over the period
during which the employees become unconditionally
entitled to the options.
The fair value at grant date is independently determined
using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate
for the term of the option.
The fair value of the options granted is adjusted to refl ect
market vesting conditions, but excludes the impact of any
non-market vesting conditions (for example, profi tability
and sales growth targets). Non-market vesting conditions
are included in assumptions about the number of options
that are expected to become exercisable. At each reporting
date, the Group revises its estimate of the number of
options that are expected to become exercisable. The
employee benefi t expense recognised each period takes
into account the most recent estimate.
Upon the exercise of options, the balance of the share-
based payments reserve relating to those options is
transferred to share capital and the proceeds received,
net of any directly attributable transaction costs, are
credited to share capital.
Under the employee share scheme, shares issued to
employees for no cash consideration vest immediately
on grant date. On this date, the market value of the shares
issued is recognised as an employee benefi ts expense
with a corresponding increase in equity.
Bonuses and profi t sharing arrangements
A provision is recognised for the amount expected to be paid
under short term cash bonus or profi t-sharing plans if the
Group has a present legal or constructive obligation to
pay this amount as a result of past service provided by
the employee and the obligation can be estimated reliably.
FSA GROUP LIMITED ANNUAL REPORT 2011
41
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies cont.
(j) Revenue recognition cont.
Interest
Interest income is recognised in the Statement of
Comprehensive Income using the effective interest method.
The effective interest method is the method of calculating
the amortised cost of a fi nancial asset or fi nancial liability
and allocating the interest income or expense over the
relevant period. The effective interest rate is the rate that
exactly discounts the estimated future cash receipts or
payments over the expected life of the fi nancial instrument
to the net carrying amount of the fi nancial asset or fi nancial
liability (which includes, where applicable, the unamortised
balance of transaction costs).
Finance fee income
Finance fee income is recognised in either of two ways,
either upfront where the fee represents a recovery of
costs or a charge for services provided to customers
(e.g. application fees and risk assessment fees) or, where
income relates to loan origination, income is deferred
and amortised over the effective life of the loan using the
effective interest method. Deferred establishment fees are
establishment fees which the borrower is contracted to
pay but payment is deferred until such time as they repay
the outstanding loan balance. These fees are waived if
the loan is repaid after the qualifying period. These fees
are recognised over the current average life of the loan.
(m) Investments in subsidiaries
Investments are brought to account on the cost basis
in the Parent Entity’s fi nancial statements and using
the acquisition method, after initially being recognised
at cost in the Consolidated Entity’s fi nancial statements.
The carrying amount of investments is reviewed annually
by Directors to ensure it is not in excess of the recoverable
amount of these investments. The recoverable amount
is assessed from the shares’ current market value or the
underlying net assets in the particular entities. The expected
net cash fl ow from investments has not been discounted
to their present value in determining the recoverable
amounts, except where stated.
(n) Intangibles
Goodwill on consolidation is initially recorded at the amount
by which the purchase price for a business or for an
ownership interest in a controlled entity exceeds the fair
value attributed to its net assets at date of acquisition.
Goodwill on acquisition of subsidiaries is included in
intangible assets. Goodwill on acquisition of associates
is included in investments in associates. Goodwill is
tested annually for impairment and carried at cost less
accumulated impairment losses. Gains and losses on
the disposal of a subsidiary include the carrying amount
of goodwill relating to the subsidiary sold.
Software is measured on the cost basis less accumulated
amortisation and accumulated impairment losses.
Software is amortised over its useful life of 2 years.
(k) Goods & Services Tax (GST)
(o) Trade and other payables
Revenue, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Taxation Offi ce.
Where not recoverable, GST is recognised as part of
the acquisition of the asset or as part of the expense.
Receivables and payables in the Statement of Financial
Position are shown inclusive of GST.
Cash fl ows are presented in the Statement of Cash Flows
on a gross basis, except for the GST component of fi nancing
and investing activities, which are disclosed as operating
cash fl ows.
(l) Comparative fi gures
Where required by Australian Accounting Standards,
comparative fi gures have been adjusted to conform to
changes in presentation for the current fi nancial year.
Trade payables and other amounts are carried at amortised
cost which is the fair value of the consideration to be paid
in the future for goods and services received, whether or
not billed to the Group.
Monies received (and not yet distributed pursuant to
the debt agreements under the pre 1 July 2007 regime)
on behalf of institutional creditors are recorded as
current liabilities.
(p) Signifi cant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are
often determined based on estimates and assumptions
about future events. The key estimates and assumptions
that have a signifi cant risk of causing a material adjustment
to the carrying amounts of certain assets and liabilities
in the next annual reporting period are:
42
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies cont.
Impairment of goodwill
The Group determines whether goodwill is impaired
at least on an annual basis. This requires an estimation
of the recoverable amount of the cash generating units
to which the goodwill is allocated (refer to Note 15 in the
fi nancial statements).
Impairment of receivables
Debt agreement receivables
Impairment of debt agreement receivables is assessed
on a collective basis based on historical collections data.
Considering the length of time it takes to collect debts
in administration and the inherent uncertainty over the
collection of these amounts this method represents
management’s best estimate of the recoverability
of debtors in the debt agreement business. Impairment
is provided for and recorded in a separate Allowance
account. Amounts are written off against this account
as bad when there is no practical likelihood of recovery
(e.g. when debt agreements are terminated by creditors).
The evaluation process is subject to a series of estimates
and judgments. The frequency of default, loss history,
and current economic conditions are considered.
Changes in these estimates could have a direct impact
on the level of provision determined (refer to Note 8 in
the fi nancial statements).
Other loans and advances
For other loans and advances individually assessed
provisions are raised where there is objective evidence of
impairment and full recovery of the principal is considered
doubtful. Provisions are established after considering the
estimates of the fair value of the collateral taken and
recorded in a separate Allowance account. Amounts are
written off against the account as bad after management
establishes amounts which will not be recovered from
available evidence.
(q) Associates
Associates are those entities in which the Group has
signifi cant infl uence, but not control, over the fi nancial
and operating policies. Associates are accounted for
using the equity method (equity accounted investees).
The consolidated fi nancial statements include the Group’s
share of the income and expenses of the equity accounted
investees, after adjustments to align the accounting policies
with those of the Group, from that date the signifi cant
infl uence commences until the date where signifi cant
infl uence ceases. When the Group’s share of the loss
extends its interest in the equity accounted investee, the
carrying amount of that interest (including any long term
investments) is reduced to nil and the recognition of further
losses is discontinued except to the extent that the Group
has an obligation or has made payments on behalf of
the investee.
(r) Finance income and costs
Finance income is measured and recognised as per
(j) Revenue recognition above.
Finance costs comprise interest expense on borrowings,
unwinding of discount on provisions, dividends on
preference shares classifi ed as liabilities, foreign currency
losses, changes in fair value of fi nancial assets at fair value
through profi t or loss, impairment losses recognised on
fi nancial assets and losses on hedging instruments
that are recognised in profi t or loss. All fi nance costs
are recognised in profi t or loss using the effective
interest method.
(s) Earnings per share
The Group presents basic and diluted earnings per share
(EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profi t or loss attributable to ordinary
shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting profi t or loss
attributable to the ordinary shareholders and the weighted
average number of ordinary shares outstanding for the
effects of all dilutive potential ordinary shares.
(t) Operating segments
An operating segment is a component of an entity that
engages in business activities from which it may earn
revenue and incur expenses (including revenues and
expenses relating to transactions with other components
of the same entity); whose operating results are regularly
reviewed by the entity’s chief operating decision maker
to make decisions about resources to be allocated to
the segment and assess its performance; and for which
discrete fi nancial information is available.
Operating segments are distinguished and presented
based on the differences in providing services and
providing fi nance products.
(u) Financial guarantee contracts
Financial guarantee contracts are recognised as a fi nancial
liability at the time the guarantee is issued. The liability
is initially measured at fair value and subsequently at the
higher of the amount determined in accordance with
AASB 137 Provisions, Contingent Liabilities and Contingent
Assets and the amount initially recognised less cumulative
amortisation, where appropriate.
FSA GROUP LIMITED ANNUAL REPORT 2011
43
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies cont.
(v) Removal of parent entity fi nancial statements
The Group has applied amendments to the Corporations
Act (2001) that remove the requirement for the Group to
lodge parent entity fi nancial statements. Parent entity
fi nancial statements have been replaced by the specifi c
parent entity disclosures in Note 30.
(w) New standards and interpretations issued not yet
effective or adopted
Certain new accounting standards, amendments to
standards and interpretations have been published that
are not mandatory for the 30 June 2011 reporting period.
The Consolidated Entity’s assessment of the impact of
these new standards, amendments to standards and
interpretations in the period of initial application is set
out below.
(i) AASB 2009-12 Amendments to Australian Accounting
Standards
These amendments are applicable to annual reporting
periods beginning on or after 1 January 2011. These
amendments make numerous editorial amendments to a
range of Australian Accounting Standards and Interpretations,
which have no major impact on the requirements of the
amended pronouncements. The main amendment is to
AASB 8 ‘Operating Segments’ and requires an entity to
exercise judgement in assessing whether a government
and entities known to be under the control of that government
are considered a single customer for the purposes of
certain operating segment disclosures. The adoption
of these amendments from 1 July 2011 will not have
a material impact on the Consolidated Entity.
(ii) AASB 9 Financial Instruments, 2009-11 Amendments
to Australian Accounting Standards arising from AASB
9 and 2010-7 Amendments to Australian Accounting
Standards arising from AASB 9
This standard and its consequential amendments are
applicable to annual reporting periods beginning on or
after 1 January 2013 and completes phase I of the IASB’s
project to replace IAS 39 (being the international equivalent
to AASB 139 ‘Financial Instruments: Recognition and
Measurement’). This standard introduces new classifi cation
and measurement models for fi nancial assets, using a
single approach to determine whether a fi nancial asset is
measured at amortised cost or fair value. To be classifi ed
and measured at amortised cost, assets must satisfy the
business model test for managing the fi nancial assets
and have certain contractual cash fl ow characteristics.
All other fi nancial instrument assets are to be classifi ed
and measured at fair value. This standard allows an
irrevocable election on initial recognition to present gains
and losses on equity instruments (that are not held-for-
trading) in other comprehensive income, with dividends
as a return on these investments being recognised in profi t
or loss. In addition, those equity instruments measured
at fair value through other comprehensive income would
no longer have to apply any impairment requirements nor
would there be any ‘recycling’ of gains or losses through
profi t or loss on disposal. The accounting for fi nancial
liabilities continues to be classifi ed and measured in
accordance with AASB 139, with one exception, being that
the portion of a change of fair value relating to the entity’s
own credit risk is to be presented in other comprehensive
income unless it would create an accounting mismatch.
The Consolidated Entity will adopt this standard from
1 July 2013 but the impact of its adoption is yet to be
assessed by the Consolidated Entity.
(iii) AASB 2010-4 Further Amendments to Australian
Accounting Standards arising from the Annual
Improvements Project
These amendments are applicable to annual reporting
periods beginning on or after 1 January 2011. These
amendments are a consequence of the annual improvements
project and make numerous non-urgent but necessary
amendments to a range of Australian Accounting Standards
and Interpretations. The amendments provide clarifi cation
of disclosures in AASB 7 ‘Financial Instruments: Disclosures’,
in particular emphasis of the interaction between quantitative
and qualitative disclosures and the nature and extent of
risks associated with fi nancial instrument; clarifi es that
an entity can present an analysis of other comprehensive
income for each component of equity, either in the statement
of changes in equity or in the notes in accordance with
AASB 101 ‘Presentation of Financial Instruments’; and
provides guidance on the disclosure of signifi cant events
and transactions in AASB 134 ‘Interim Financial Reporting’.
The adoption of these amendments from 1 July 2011 will
not have a material impact on the Consolidated Entity.
(iv) AASB 2010-5 Amendments to Australian Accounting
Standards
These amendments are applicable to annual reporting
periods beginning on or after 1 January 2011. These
amendments makes numerous editorial amendments
to a range of Australian Accounting Standards and
Interpretations, including amendments to refl ect changes
made to the text of International Financial Reporting
Standards by the International Accounting Standards
Board. The adoption of these amendments from
1 July 2011 will not have a material impact on the
Consolidated Entity.
44
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 1. Summary of signifi cant
accounting policies cont.
(x) New, revised or amending Standards and
Interpretations
The Consolidated Entity has adopted all of the new,
revised or amending Standards and Interpretations issued
by the Australian Accounting Standards Board that are
relevant in the current period. Any signifi cant impact on the
accounting policies of the Consolidated Entity on adoption
of these accounting standards and interpretations is
disclosed in the relevant accounting policy. The adoption
of these standards did not have any impact on the fi nancial
performance or position of the Consolidated Entity. The
following standards and interpretations are most relevant
to the Consolidated Entity:
(i) AASB 2 Share-based Payment Transactions –
amendments for Group Cash-settled Share-based
Payment Transactions
The Consolidated Entity has applied the amendments to
AASB 2 from 1 July 2010. The amendments clarifi ed the
scope of AASB 2 by requiring an entity that receives goods
or services in a share-based payment arrangement to
account for those goods or services no matter which entity
in the Consolidated Entity settles the transaction, and no
matter whether the transaction is settled in shares or cash.
(ii)
Interpretation 19 Extinguishing Financial Liabilities with
Equity Instruments
The Consolidated Entity has applied Interpretation 19
from 1 July 2010. The interpretation clarifi ed that equity
instruments issued to a creditor to extinguish a fi nancial
liability qualifi es as consideration paid. The equity
instruments issued are measured at their fair value,
or if not reliably measured, at the fair value of the liability
extinguished, with any gain or loss recognised in profi t
or loss.
(iii) AASB 2009-5 Amendments to Australian Accounting
Standards arising from the Annual Improvements
Project
The Consolidated Entity has applied AASB 2009-5
amendments from 1 July 2010. The amendments result
in some accounting changes for presentation, recognition
or measurement purposes, while some amendments that
relate to terminology and editorial changes had no or
minimal effect on accounting. The main changes were:
AASB 101 ‘Presentation of Financial Statements’ –
classifi cation is not affected by the terms of a liability that
could be settled by the issuance of equity instruments
at the option of the counterparty;
AASB 107 ‘Statement of Cash Flows’ – only expenditure
that results in a recognised asset can be classifi ed as
a cash fl ow from investing activities;
AASB 117 ‘Leases’ – removal of specifi c guidance on
classifying land as a lease;
AASB 118 ‘Revenue’ – provides additional guidance
to determine whether an entity is acting as a principal
or agent; and
AASB 136 ‘Impairment of Assets’ – clarifi es that the
largest unit permitted for allocating goodwill, acquired
in a business combination, is the operating segment
as defi ned in AASB 8 ‘Operating Segments’ before
aggregation for reporting purposes.
(iv) AASB 2009-10 Amendments to AASB 132 –
Classifi cation of Rights Issues
The Consolidated Entity has applied AASB 2009-10 from
1 July 2010. The amendments clarifi ed that rights, options
or warrants to acquire a fi xed number of an entity’s own
equity instruments for a fi xed amount in any currency are
equity instruments if the entity offers the rights, options
or warrants pro-rata to all existing owners of the same
class of its own non-derivative equity instruments. The
amendment therefore provides relief to entities that issue
rights in a currency other than their functional currency
from treating the rights as derivatives with fair value
changes recorded in profi t or loss.
(v) AASB 2010-3 Amendments to Australian
Accounting Standards arising from the Annual
Improvements Project
The Consolidated Entity has applied AASB 2010-3
amendments from 1 July 2010. The amendments result
in some accounting changes for presentation, recognition
or measurement purposes, while some amendments that
relate to terminology and editorial changes had no or minimal
effect on accounting. The main changes were:
AASB 127 ‘Consolidated and Separate Financial
Statements’ and AASB 3 Business Combinations – clarifi es
that contingent consideration from a business combination
that occurred before the effective date of revised AASB 3
is not restated; the scope of the measurement choices
of non-controlling interest is limited to when the rights
acquired include entitlement to a proportionate share of
net assets in the event of liquidation; requires an entity in
a business combination to account for the replacement of
acquiree’s share-based payment transactions, unreplaced
and voluntarily replaced, by splitting between consideration
and post combination expenses.
FSA GROUP LIMITED ANNUAL REPORT 2011
45
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 2. Revenue and other income net of fi nance expense
Fees from services
– Personal insolvency
– Refi nance broking and mortgage management
– Corporate
– Other services
Total revenue
Finance Income
– Interest income – bridging fi nance
– Interest income – mortgage fi nance assets
– Upfront fee income – bridging fi nance
– Upfront fee income – mortgage fi nance assets
– Factoring income
– Other interest income
Finance Expense
– Interest expense – Warehouse facilities
– Interest expense – other lending facilities
Net Finance income
Other gains/(losses)
Gain/(loss) on option valuation – fair value through profi t or loss
Gain/(loss) on disposal of plant and equipment
Consolidated Entity
2011
$
2010
$
36,054,935
33,331,572
1,224,284
1,978,488
2,962,017
2,927,259
183,952
236,283
40,425,188
38,473,602
133,009
232,696
23,274,307
16,644,392
–
158,883
1,393,637
1,930,346
4,757,959
2,794,919
575,533
489,018
30,134,445
22,250,254
(14,948,891)
(9,950,609)
(1,171,274)
(898,368)
(16,120,165)
(10,848,977)
14,014,280
11,401,277
(297,630)
898,050
(2,334)
7,437
(299,964)
905,487
46
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 3. Profi t for the year
Expenses
Expenses from continuing activities excluding fi nance costs, classifi ed by function:
Marketing expenses
Administrative expenses
Operating expenses
Profi t for the year from continuing operations has been arrived at after charging (crediting):
Depreciation on plant and equipment
Depreciation on investment properties
Amortisation of software
Impairment in value – goodwill
Impairment in value – trade receivables
Reversal of impairment in value – trade receivables (a)
Net impairment
Rental expense on operating lease – minimum lease payment
Employee and contractor expenses
Share-based payments expense
Legal consulting – client services
(a) change in estimates previously reported
Consolidated Entity
2011
$
2010
$
5,440,401
6,546,096
9,754,301
9,919,351
23,640,317
21,465,325
38,835,019
37,930,772
303,914
11,504
132,218
447,636
–
459,053
8,635
302,134
769,822
49,263
7,660,760
8,729,201
(1,276,365)
(1,469,504)
6,384,395
7,259,697
974,947
1,210,894
18,242,573
15,641,548
81,457
1,066,327
52,804
705,920
As stated in Note 1(p) the impairment of trade receivables is based on a method which evaluates the frequency of default,
loss history, and current economic conditions. During the period, management received updated information on the loss
history and recoverability percentages of debt agreement administration fees over their collection periods. Accordingly
management has revised its best-estimate based on assumptions consistent with the updated information. This has
resulted in the reduction in the provision for impairment in trade receivables previously recognised of $1,260,943.
Note 4. Income Tax
(a) Income tax expense
Current tax expense
Deferred tax expense
(Over)/under provision in a prior period
Deferred income tax expense included in income tax expense comprises:
Decrease/(Increase) in deferred tax assets
Increase in deferred tax liabilities
2,035,707
943,964
2,300,276
2,722,269
(23,108)
24,677
4,312,875
3,690,910
959,841
(582,134)
1,340,435
3,304,903
2,300,276
2,722,769
FSA GROUP LIMITED ANNUAL REPORT 2011
47
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 4. Income Tax cont.
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profi t before income tax
Tax at the Australian tax rate of 30% (2010: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income
Entertainment
Non-assessable income
Other
Non-deductible employee costs
(Over)/under provision in the prior year
Income tax expense
(c) Deferred tax assets
Provisions
Capital legal expenses
Accrued expenditure
Tax losses carried forward
Other
Deferred tax liability offset on tax consolidation
Total deferred tax assets
(d) Deferred tax liabilities
Temporary difference on assessable income
Deferred tax liability offset on tax consolidation
Total deferred tax liabilities
Note 5. Auditors’ Remuneration
Amounts received or due and receivable by PKF (East Coast Practice):
Audit and review of fi nancial statements
Other services – taxation
Note 6. Earnings Per Share
Consolidated Entity
2011
$
2010
$
15,328,466
12,868,122
4,598,540
3,860,437
8,876
17,810
(295,897)
(242,716)
–
24,464
14,861
15,841
4,335,983
3,666,233
(23,108)
24,677
4,312,875
3,690,910
826,711
1,439,782
32,113
55,974
381,425
197,004
156,461
130,931
453,714
272,180
1,493,227
2,453,068
(1,279,467)
(2,412,280)
213,760
40,788
11,903,514
10,563,079
(1,279,467)
(2,412,280)
10,624,047
8,150,799
191,000
59,460
250,460
191,750
55,897
247,647
(a) Reconciliation of earnings used to calculated basic and dilutive earnings per share
Total Comprehensive income attributable to members of the parent for the year ($)
8,995,715
7,520,564
Basic earnings per share (cents)
Diluted earnings per share (cents)
6.51
6.51
5.82
5.82
(b) Weighted average number of ordinary shares outstanding during the year
Weighted average number of ordinary shares outstanding during the year
used in calculating basic and dilutive EPS
138,253,785 129,141,305
48
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 7. Cash and Cash Equivalents
Current
Cash on hand and at bank
Assets fi nanced by Non-Recourse Financial Liabilities
Cash on hand and at bank
Note 8. Trade and Other Receivables
Current
Trade receivables
Provision for impairment
Sundry receivables
Non-current
Trade receivables
Provision for impairment
Ageing Analysis
Consolidated Entity
2011
$
2010
$
9,413,356
7,394,759
7,394,118
6,605,211
16,807,474
13,999,970
42,587,174
40,324,302
(6,556,234)
(7,867,793)
36,030,940
32,456,509
587,222
108,384
36,618,162
32,564,893
33,947,853
30,636,133
(6,090,921)
(6,127,227)
27,856,932
24,508,906
Consolidated Entity
2011
2010
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
Net
$
Trade and other Receivables
Not past due
Past due 0-30 Days
Past due 31-60 Days
Past due 61-90 Days
Past 90 Days
Total
67,782,961
(10,341,436) 57,441,525
61,011,953
(12,193,181)
48,818,772
3,276,620
(118,416)
3,158,204
2,901,117
(28,935)
2,872,182
904,773
74,510
(52,445)
(35,454)
852,328
1,928,708
(32,196)
1,896,512
39,056
352,569
(33,609)
318,960
5,083,385
(2,099,404)
2,983,981
4,874,472
(1,707,099)
3,167,373
77,122,249
(12,647,155) 64,475,094
71,068,819
(13,995,020)
57,073,799
The movement in the provision for impairment
Opening balance
Provision for impairment recognised
Unused provision reversed
Bad debts
Closing balance
Consolidated Entity
2011
$
2010
$
13,995,020
10,360,428
6,002,213
7,919,422
(1,276,365)
(1,469,504)
(6,073,713)
(2,815,326)
12,647,155
13,995,020
Some amounts have been written off as Bad debts during the year, as incurred and were not provided for. These are included
in the Statement of Comprehensive Income. The provision for impairment recognised in this reconciliation will therefore not
agree to the Impairment in value amount disclosed in Note 3.
FSA GROUP LIMITED ANNUAL REPORT 2011
49
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 8. Trade and Other Receivables cont.
Debt Agreement receivables
Debt agreement receivables are receipted on a pro rata basis, in parity with other parties to the debt agreement.
These debtors are assessed as being in arrears where they do not make their periodic payments as required by their
debt agreements and where the terms of this payment have not been re-negotiated and approved by creditors
to the debt agreement. This is monitored continuously by the Company’s internal collection department.
Impairment of debt agreement receivables is assessed on a collective (portfolio) basis based on historical collections
data. Considering the length of time it takes to collect debts in administration and the inherent uncertainty over the
collection of these amounts this method represents management’s best estimate of the recoverability of debtors in the
debt agreement business. Amounts are written off against this account, when the company has no realistic possibility
of recovery.
Bridging and factoring fi nance receivables
The Company does not currently offer bridging fi nance products and is only active in pursuing recovery of this portfolio.
Factoring fi nance receivables are generally on 14 to 60 day terms.
Impairment of bridging fi nance receivables and factoring fi nance receivables is assessed primarily by the equity in their
underlying mortgage security (collateral), any fi xed and fl oating charges over the borrower’s business assets, assigned
receivables in the case of factoring fi nance operations, credit quality of the debtor, payment history and any other
information available. Factoring fi nance receivables are credit insured up to 90c in every dollar of approved receivables.
These debtors are assessed as being in arrears where they do not make their payment obligations as required by
their fi nance contracts and where the terms of this payment have not been re-negotiated. This is monitored monthly
by management.
At reporting date there are certain bridging fi nance receivables that were past due and are not impaired. Management
has reviewed these receivables, their underlying mortgage security (collateral) and other information available, and have
considered these to be recoverable.
Of the $5,083,385 of receivables which are past 90 days in arrears, $947,826 represents bridging fi nance receivables
which have underlying collateral and security as mentioned above and are not impaired.
Other trade and sundry receivables
Other trade and sundry receivables are generally on 14 to 30 day terms.
Impairment of other trade and sundry receivables is assessed on an individual basis with regard to the credit quality
of the debtor, payment history and any other information available.
These debtors are assessed as being in arrears where they do not pay on their invoice terms and where the terms
of this payment have not been re-negotiated. This is monitored monthly by management.
At reporting date there are certain other trade and sundry receivables that were past due and are not impaired.
Management has reviewed these receivables, their payment history and other information available, and have considered
these to be recoverable.
50
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 9. Other Assets
Current
Prepayments
Other
Note 10. Other Financial Assets
Investments – fair value though profi t or loss
Movements during year (Investments)
Beginning of the year
Additions
Impairment in value
Note 11. Mortgage Finance Assets
Non-securitised mortgage assets
Provision for impairment
Maturity Analysis
Amounts to be received in less than 1 year
Amounts to be received in greater than 1 year
Impairment
Consolidated Entity
2011
$
2010
$
887,138
242,122
3,952
3,575
891,090
245,697
600,420
898,050
898,050
–
–
898,050
(297,630)
–
600,420
898,050
229,428,987 200,654,826
(464,223)
(220,205)
228,964,764 200,434,621
2,629,888
2,199,038
226,799,099 198,455,788
229,428,987 200,654,826
An impairment loss is recognised if the total expected recoveries in regard to an individual loan do not exceed the mortgage
balance. In the event that actual or expected sales proceeds do not exceed the mortgage loan balance, this difference
and any realisation costs would equal the impairment loss. Total recoveries include expected or actual net sales proceeds
resulting from enforced sale of property security.
Impairment has been assessed on an individual basis with primary regard to the underlying equity in mortgage security
(collateral) for each of the loans receivable and also with regard to the credit quality of the debtor, payment history and
any other information available.
A mortgage loan is classifi ed as being in arrears at the reporting date on the basis of “past due” amounts. Any loan with
an amount that is past due (either instalment arrears or total arrears comprising of any instalments arrears plus any other
charges) is classifi ed as being in arrears and the total amount of the loan is recorded as in arrears. Ageing of arrears is
determined by dividing total arrears over instalment amount and multiplying this by the instalment frequency (i.e. weekly,
fortnightly, and monthly).
At reporting date, the Group had registered mortgages over real property (comprising of residential land and buildings) for
each of the mortgage loan receivables. The weighted average loan to valuation ratio (at the fair values of the underlying real
property securities) at reporting date was 67.53% (2010: 67.39%). The valuations of the underlying property securities have
been performed at the later of the original loan application or subsequent loan variation date and do not take into account
any other realisation costs.
FSA GROUP LIMITED ANNUAL REPORT 2011
51
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 11. Mortgage Finance Assets cont.
Ageing Analysis
Consolidated Entity
2011
2010
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
Net
$
200,163,987
20,181,949
3,083,280
1,664,891
– 200,163,987 172,434,715
– 172,434,715
–
–
–
20,181,949
18,242,207
3,083,280
2,586,980
1,664,891
2,057,086
–
–
–
18,242,207
2,586,980
2,057,086
4,334,880
(464,223)
3,870,657
5,333,838
(220,205)
5,113,633
229,428,987
(464,223) 228,964,764 200,654,826
(220,205) 200,434,621
Not past due
Past due 0-30 Days
Past due 31-60 Days
Past due 61-90 Days
Past 90 Days
Total
The movement in the provision for impairment
Consolidated Entity
2011
$
220,205
644,236
2010
$
175,331
400,932
(400,218)
(356,058)
464,223
220,205
Country of Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Percentage of equity
interest held by the
Consolidated Entity
2011
%
100
100
100
100
100
90
100
65
75
70
2010
%
100
100
100
100
100
90
100
65
75
70
Opening balance
Provision for impairment recognised
Bad debts
Closing balance
Note 12. Controlled Entities
Name
Prospex Profi le Pty Ltd (2)
FSA Australia Pty Ltd (2)
Fox Symes Financial Pty Ltd (1)
Fox Symes & Associates Pty Ltd (1)
Fox Symes Debt Relief Services Pty Ltd (1)
Fox Symes Home Loans Pty Ltd (2)
180 Group Holdings Pty Ltd (2)
Aravanis Insolvency Pty Ltd (1)
Fox Symes Business Services Pty Ltd (1)
180 Group Pty Ltd (3)
(1) Investment held by FSA Australia Pty Ltd
(2) Investment held by FSA Group Ltd
(3) Investment held by 180 Group Holdings Pty Ltd
52
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 12. Controlled Entities cont.
The following entities are subsidiaries of 180 Group Pty Ltd
Name
Country of Incorporation
180 Capital Finance Pty Ltd
180 Corporate Pty Ltd
180 Property Holdings Pty Ltd
180 Equity Partners Pty Ltd
180 Capital Funding Pty Ltd
One Financial Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
The following entities are subsidiaries of Fox Symes Home Loans Pty Ltd
Name
Country of Incorporation
Fox Symes Home Loans (Services) Pty Ltd
Fox Symes Home Loans (Management) Pty Ltd
Fox Symes Home Loans (Mortgage Management) Pty Ltd
Fox Symes Home Loans (Special Services) Pty Ltd
Fox Symes Home Loans Warehouse Trust No.1
Australia
Australia
Australia
Australia
Australia
Ultimate Parent Entity
FSA Group Ltd is the Ultimate Parent Entity.
Note 13. Plant and Equipment
Computer equipment at cost
Accumulated depreciation
Net carrying amount
Offi ce equipment at cost
Accumulated depreciation
Net carrying amount
Furniture and fi ttings at cost
Accumulated depreciation
Net carrying amount
Motor vehicles at cost
Accumulated depreciation
Net carrying amount
Total plant and equipment at cost
Accumulated depreciation
Net carrying amount
Percentage of equity
interest held by the
Consolidated Entity
2011
%
100
100
100
100
100
100
2010
%
100
100
100
100
100
100
Percentage of equity
interest held by the
Consolidated Entity
2011
%
100
100
100
100
85
2010
%
100
100
–
–
85
Consolidated Entity
2011
$
2010
$
1,820,410
1,718,175
(1,639,186)
(1,446,325)
181,224
447,040
271,850
331,817
(302,684)
(259,242)
144,356
266,044
72,575
246,350
(220,284)
(184,812)
45,760
47,372
(13,709)
33,663
61,538
47,372
(3,332)
44,040
2,580,866
2,343,714
(2,175,863)
(1,893,711)
405,003
450,003
FSA GROUP LIMITED ANNUAL REPORT 2011
53
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 13. Plant and Equipment cont.
Movements
Balance at 1 July 2009
Additions
Disposals
Depreciation
Balance at 30 June 2010/1 July 2010
Additions
Disposals
Depreciation
Computer
Equipment
$
Offi ce
Equipment
$
Furniture
& Fittings
$
Motor
Vehicles
$
479,757
136,933
(497)
118,403
15,518
(1,840)
94,975
11,485
–
(344,343)
(59,506)
(44,922)
271,850
115,819
72,575
120,111
61,538
25,318
(477)
(374)
(1,483)
26,173
43,878
(15,729)
(10,282)
44,040
–
–
Total
$
719,308
207,814
(18,066)
(459,053)
450,003
261,248
(2,334)
(205,968)
(47,956)
(39,613)
(10,377)
(303,914)
Balance at 30 June 2011
181,224
144,356
45,760
33,663
405,003
Note 14. Investment Property
Investment property
At cost
Accumulated depreciation
Movements during year:
Beginning of the year
Depreciation
Consolidated Entity
2011
$
2010
$
362,339
(60,792)
301,547
362,339
(49,288)
313,051
313,051
321,686
(11,504)
(8,635)
301,547
313,051
There is a fi rst mortgage registered over the Investment Property (refer Note 17(a)), and is leased on a “month to month” basis.
The fair value of the Investment Property at 30 June 2011 was $364,439 (independently valued at using current market data).
54
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 15. Intangible Assets
Goodwill
Recognised on consolidation
Accumulated impairment
Software at cost
Accumulated amortisation
Movements during year (Goodwill):
Beginning of the year
Impairment
Reduction in value*
Movements during year (Software):
Beginning of the year
Additions
Amortisation
Consolidated Entity
2011
$
2010
$
3,222,136
3,222,136
(49,263)
(49,263)
3,172,873
3,172,873
929,630
708,768
(600,226)
(468,008)
329,404
240,760
3,502,277
3,413,633
3,172,873
3,841,448
–
–
(49,263)
(619,312)
3,172,873
3,172,873
240,760
220,862
263,500
279,394
(132,218)
(302,134)
329,404
240,760
* (2010) Reduction in value relates to the redemption of 8 Convertible Redeemable Preference Shares (“CRPS”) which have been credited
against Goodwill. On 1 February 2010, pursuant to the terms of the purchase agreement of 180 Group acquired on 21 April 2006, the remaining
8 CRPS were redeemed due to 180 Group not meeting its profi t target for 30 June 2009.
Included in the carrying amount of Goodwill is an amount of $2,827,749 which relates to the Goodwill acquired on
acquisition of 180 Group Holdings Pty Ltd and its controlled entities, and $345,124 which relates to the original investment
by the parent company in FSA Australia Pty Ltd and its controlled entities. The 180 Group represents a separate cash
generating unit (CGU).
Impairment
The recoverable amount of goodwill attributable to the 180 Group CGU, is determined based on “value in use”
calculations, by estimating the future cash infl ows and outfl ows to be derived by the CGU and applying an appropriate
discount rate to those future cashfl ows. The major key assumption relating to the forecast information is the continued
growth of the factoring fi nance division and the utilisation of its funding lines. The cashfl ows have been projected over a
two year period using average historical earnings margins and then adjusted for non-cash items. The cashfl ows beyond
the two year period are extrapolated using a constant growth rate of 3%, which does not exceed the long-term average
growth rate for the industry. An average pre-tax discount rate of 18.5% has been applied to the net cashfl ows.
Note 16. Trade and Other Payables
Current
Unsecured trade payables
Factoring client payables
Institutional creditors
Sundry payables and accruals
Consolidated Entity
2011
$
2010
$
1,234,243
965,940
359,161
2,396,313
1,558,767
3,212,578
7,367,174
6,175,720
10,519,345
12,750,551
FSA GROUP LIMITED ANNUAL REPORT 2011
55
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 17. Borrowings
Current
Unsecured
Other loans
Secured
Mortgage
Bank loan – other lending facilities
Non-current
Secured
Mortgage
Bank loan – other lending facilities
Non-Recourse Financial Liabilities
Secured
Warehouse facilities
(a) Total Current, Non-Current and Non-Recourse secured liabilities:
Mortgage
Bank loans – other lending facilities
Warehouse facilities
(b) The carrying amounts of Non-Current Assets pledged as security are:
Fixed charge over assets
Investment properties
Loan and other assets in the Fox Symes
Home Loans Warehouse Trust No. 1
Consolidated Entity
2011
$
2010
$
837,279
527,151
4,034
3,728
–
2,830,663
4,034
2,834,391
841,313
3,361,542
263,862
268,272
15,982,358
11,625,507
16,246,220
11,893,779
220,865,314 194,541,639
267,896
272,000
15,982,358
14,456,170
220,865,314 194,541,639
237,115,568 209,269,809
301,547
313,051
236,358,882 207,039,832
236,660,429 207,352,883
Bank loans – other lending facilities consist of two funding facilities:
i) A full recourse lending facility to support bridging fi nance operations, amounting to $1,624,974 (2010: $2,830,664)
which is secured by a fl oating charge over the remaining assets of the 180 Group Pty Ltd and controlled entities
and the other wholly-owned subsidiaries of FSA Group Ltd. Excluded from this charge are cash assets held on
behalf of institutional and other creditors to debt agreements administered by the Group. This facility expires on
31 December 2012; and
ii) A limited recourse factoring fi nance facility, amounting to $14,357,384 (2010: $11,625,506) where the funder may
at its election, enforce a”fi rst-loss” liability on factored receivables of 10% of the outstanding facility balance, up to
a maximum of $2 million, unless there has been an event of default or breach of borrowing covenants. This facility
expires on 31 July 2012. The Company has started to renegotiate and extend the current term of the facility. The Board
believes this renegotiation will be completed prior to the current expiry date on similar terms.
56
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 17. Borrowings cont.
(c) Warehouse facility
Warehouse facilities are used to fund mortgages prior to securitisation and include revolving Senior and Mezzanine Note
facilities. As at 30 June 2011, the drawdown limit under the Senior and Mezzanine Note facilities was $225 million and
$10 million respectively and $208,428,000 and $9,080,000 respectively had been drawn down at reporting date.
Subsequent to year end the drawdown limit under the Senior Note facility increased to $250 million.
The Warehouse facilities are 2 year rolling facilities. As at 30 June 2011, the facility was due to expire on 15 October 2012.
Subsequent to year end the term of the facility was extended until 15 October 2013. Interest is payable at the applicable
BBSW rate plus a margin of 2% for the Senior Notes and a margin of 9% for the Mezzanine Notes. The interest rate at
30 June 2011 for the Senior and Mezzanine Notes was 6.90% and 13.90% respectively. The facilities are secured against
current and future mortgage fi nance assets (refer Note 11). All borrowing covenants were met during the year.
Note 18. Provisions
Current
Employee benefi ts
Non-current
Employee benefi ts
Provision for employee benefi ts
Consolidated Entity
2011
$
2010
$
812,435
588,535
343,055
251,012
A provision has been recognised for employee benefi ts relating to annual leave and long service leave. The measurement
and recognition criteria relating to employee benefi ts have been included in Note 1 to this report.
As at 30 June 2011, the Consolidated Entity employed 171 full-time equivalent employees (2010: 162) plus a further
5 independent contractors (2010: 5).
Note 19. Share Capital
138,253,785 (2010: 138,253,785) Fully paid ordinary shares
11,692,255
11,692,255
(a) Ordinary shares
Balance 1 July
– 7 October 2009
– 6 November 2009
– 27 January 2010
– 1 February 2010
Balance 30 June
2011
2011
Number
2010
Number
138,253,785 115,437,513
–
–
–
–
11,351,340
2,964,932
500,000
8,000,000
138,253,785 138,253,785
There were no movements in share capital during the year ended 30 June 2011.
2010
On 7 October 2009, a placement to Institutional and Sophisticated Investors for 11.35 million ordinary shares at 37 cents
per share was undertaken. The shares were fully paid and have no par value.
On 6 November 2009, a Share Purchase Plan to Shareholders at 37 cents per share was undertaken which issued
2,964,932 ordinary shares. The shares were fully paid and have no par value.
On 27 January 2010, 500,000 ordinary shares were issued on exercise of 500,000 $0.25 options.
On 1 February 2010, 8 convertible redeemable preference shares (“CRPS”) were converted pursuant to the terms of the purchase
agreement of 180 Group, acquired on 21 April 2006, upon 180 Group meeting its cumulative profi t target to 30 June 2008.
The remaining 8 CRPS were redeemed at this time due to 180 Group not meeting its profi t target for 30 June 2009.
FSA GROUP LIMITED ANNUAL REPORT 2011
57
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 19. Share Capital cont.
(b) Options
On 2 July 2010, 1,050,000 options exercisable at $0.50 on or before 2 July 2013 were issued as part of executive
remuneration.
Note 20. Reserves
Share based payments reserve
The share based payments reserve records items recognised as expenses on valuation of employee share options.
Note 21. Cash Flow Information
Reconciliation of cash fl ows from
operations to profi t after tax
Profi t after tax
Non-cash fl ows in profi t/(loss):
Depreciation
Amortisation – intangibles
Impairment – intangibles
(Gain)/Loss on fi nancial asset at FVTPL
Loss on disposal of intangibles
Gain on disposal of plant & equipment
Changes in assets and liabilities:
Increase in trade and other receivables
(Increase)/decrease in other current assets
(Decrease)/increase in trade and other payables
Increase in employee entitlements
Increase in other liabilities
Cash fl ows from operating activities
Note 22. Commitments
(i) Operating leases (non-cancellable):
Minimum lease payments
– not later than one year
– later than one year and not later than fi ve years
Consolidated Entity
2011
$
2010
$
11,015,591
9,177,212
315,418
132,218
–
467,688
302,134
49,263
297,630
(898,050)
2,334
–
(7,437)
(9,027,173)
(17,887,059)
(645,390)
499,593
(984,800)
6,155,280
315,943
203,329
4,218,856
4,395,857
5,640,627
2,457,810
948,912
899,075
3,142,998
4,091,910
4,091,910
4,990,985
Operating leases relate to the lease of the Consolidated Entity’s business premises, and printing equipment rental.
Note 23. Key Management Personnel Disclosures
(a) Details of Directors and Key Management Personnel
(i) Directors
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
Sally Herman
Hugh Parsons
Non-Executive Chairman
Executive Director
Executive Director
Non-Executive Director
Non-Executive Director (appointed 24 January 2011)
Non-Executive Director (resigned 31 May 2011)
58
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 23. Key Management Personnel Disclosures cont.
(a) Details of Directors and Key Management Personnel cont.
(ii) Key Management Personnel of the Consolidated Entity
Don Mackenzie
Anthony Carius
Fred El Tahche
Goran Turner
David Camilleri
Company Secretary (appointed 19 November 2010)
Chief Financial Offi cer (resigned 1 July 2011)*
Chief Information Offi cer
Chief Executive – Fox Symes Home Loans
Manager – Debt Agreements
(b) Remuneration of Directors and Key Management Personnel
Short-term employee benefi ts
Long-term employee benefi ts
Post-employment benefi ts
Termination benefi ts
Share-based payments
Consolidated Entity
2011
$
2010
$
1,939,332
1,725,675
46,892
120,609
51,389
81,457
8,193
103,842
–
10,479
2,239,679
1,848,189
* Anthony Carius resigned as CFO with effect from 1 July 2011. He will remain with the Company until 31 August 2011 to ensure a smooth
transition to the Company’s new CFO Ms Cellina Chen who has been the Company’s Financial Controller since December 2003.
Fair value of options granted as part of remuneration are estimates only. The estimates are based on the use of the
Black-Scholes option pricing model. This model takes account of factors such as the option exercise price, the current
level and volatility of the underlying share price and the time to maturity of the options.
Information about the remuneration of Directors and Key Management Personnel which is currently required under
Section 300A of the Corporations Act and under Accounting Standard AASB 124 “Related Party Disclosures” is included
in the Remuneration Report within the Directors’ Report on pages 18 to 22.
(c) Options issued as part of remuneration for the year ended 30 June 2011
On 2 July 2010, 1,050,000 options exercisable at $0.50 on or before 2 July 2013 were issued as part of executive remuneration.
(d) Shares issued on exercise of remuneration options
There were no shares issued on the exercise of remuneration options during or since the end of the fi nancial year.
(e) Option holdings of Directors and Key Management Personnel
Balance at
1 July 2010 remuneration Exercised
Granted as
Balance at
Other 30 June 2011
Net
Options Change
Vested at 30 June 2011
Not
Total Exercisable Exercisable
ESOP Options
Directors
Key Management Personnel
Anthony Carius
Fred El Tahche
Total ESOP Options
n/a
–
–
–
550,000
500,000
1,050,000
–
–
–
–
–
–
550,000 125,000
500,000 100,000
1,050,000 225,000
–
–
–
125,000
100,000
225,000
FSA GROUP LIMITED ANNUAL REPORT 2011
59
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 23. Key Management Personnel Disclosures cont.
(f) Shareholdings of Directors and Key Management Personnel
Shares held in FSA Group Ltd
Balance
Granted as
1 July 2010 Remuneration
Options
Exercised
Net Change
Balance
Other 30 June 2011
Directors
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
Sally Herman
Key Management Personnel
Anthony Carius
David Camilleri
Total
1,040,541
48,809,231
12,960,047
15,406
–
66,699
77,000
62,968,924
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,040,541
(6,000,000)
42,809,231
–
–
–
1,500
–
12,960,047
15,406
–
68,199
77,000
(5,998,500) 56,970,424
(g) Loans to Directors and Key Management Personnel
There were no loans to Directors or Key Management Personnel during the year.
(h) Other transactions to Directors and Key Management Personnel
Other transactions with Directors and Key Management Personnel and related parties
During the year, the Consolidated Entity provided factoring fi nance to Skin Patrol Pty Ltd, a company which is associated
with Mr Tim Odillo Maher. The total of all factoring fees received was $42,296 for the year ended 30 June 2011 (2010: $24,036).
The fi nance facility and factoring fees charged were provided on normal commercial terms.
During the year the Consolidated Entity purchased supplies from the Ethan Group Pty Ltd, a company which is associated
with Mr Tim Odillo Maher. The total amount purchased was $39,079 (2010: $20,276). The supplies were purchased on
normal commercial terms.
Note 24. Events Occurring After Reporting date
There have been no events since the end of the fi nancial year that impact upon the fi nancial statements as at 30 June 2011
except as follows:
(cid:129) On 4 July 2011, the Company obtained a three year non-recourse $50m note facility from Bendigo and Adelaide Bank
(cid:129) On 25 August 2011, the Company signed an extension of its existing non-recourse note facility, increasing
its $235m facility limit to $260m for a further term with the facility now expiring on 15 October 2013
(cid:129) On 30 August 2011, Directors declared a maiden one cent fully franked dividend to shareholders to be paid
on 30 September 2011 with a record date of 13 September 2011.
Note 25. Related Party Disclosures
(a) Key management personnel
Disclosures relating to key management personnel are set out in Note 23.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 12.
(c) Transactions with related parties
Transactions with related parties of Directors or Key Management Personnel are as disclosed in Note 23 (h).
(d) Outstanding related party balances arising from sales/purchase of goods or services
Current factoring receivables – other related parties
60
FSA GROUP LIMITED ANNUAL REPORT 2011
Consolidated Entity
2011
$
2010
$
31,775
81,361
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 26. Segment Information
Operating Segments
Services
Home Loans
Small Business
Other/
Unallocated
Consolidated
Total
2011
$
2010
$
2011
$
2010
$
2011
$
2010
$
2011
$
2010
$
2011
$
2010
$
Revenue and Income
External sales
Finance Income
Finance expense
36,054,936 33,331,572
1,224,284
1,978,488
2,962,017
2,927,259
183,951
236,283 40,425,188 38,473,602
89,665
94,928 25,023,810 18,838,593
4,974,092
3,228,220
46,878
88,513 30,134,445 22,250,254
(8,841)
(2,817) (14,959,134) (10,055,162)
(1,129,694)
(768,874)
(22,496)
(22,124) (16,120,165) (10,848,977)
Net Finance Income
80,824
92,111 10,064,676
8,783,431
3,844,398
2,459,346
24,382
66,389 14,014,280 11,401,277
Other gains/(losses)
(2,334)
–
Internal sales and income
569,664
331,462
–
–
–
–
–
–
–
–
(297,630)
898,050
–
–
–
–
–
–
–
7,437
(299,964)
905,487
–
–
569,664
331,462
(569,664)
(331,462)
36,703,090 33,755,145 11,288,960 10,761,919
6,508,785
6,284,655
208,333
310,109 54,139,504 50,780,366
Eliminations
Total Revenue
and Income
Results
Segment profi t before tax
10,585,117
7,417,209
4,249,885
4,600,204
624,704
865,005
(131,240)
(14,296) 15,328,466 12,868,122
Income tax
(expense)/benefi t
(3,180,044)
(2,230,618)
(1,000,299)
(1,167,632)
(191,958)
(263,518)
59,426
(29,142)
(4,312,875)
(3,690,910)
Profi t for the year
7,405,073
5,186,591
3,249,586
3,432,572
432,746
601,487
(71,814)
(43,438) 11,015,591
9,177,212
Items included in
Profi t for the year
Share of the profi ts of
an associate using the
Equity Accounting Method
Depreciation and
amortisation
Impairment in value
– Goodwill
Impairment in value
– trade receivables
Reversal of impairment in
value – trade receivables
Employee and
contractor expenses
–
–
–
–
–
–
23,981
18,528
23,981
18,528
394,935
717,090
33,193
30,894
7,791
12,835
11,717
9,003
447,636
769,822
–
–
–
–
–
–
–
49,263
–
49,263
5,754,532
6,426,423
701,364
400,932
1,201,888
1,892,662
2,976
9,184
7,660,760
8,729,201
(1,276,365)
(1,469,504)
–
–
–
–
–
–
(1,276,365)
(1,469,504)
12,709,766 11,033,124
3,085,528
2,790,532
2,312,585
1,681,716
134,694
136,176 18,242,573 15,641,548
Share based payments expense
–
–
–
–
–
–
81,457
52,804
81,457
52,804
Legal and consultancy
25,274
93,381
662,093
351,857
369,960
260,083
9,000
599
1,066,327
705,920
Rental expense on
operating lease – minimum
lease payment
941,876
1,210,894
–
–
33,071
–
–
–
974,947
1,210,894
Segment assets
78,340,498 63,487,167 247,786,529 219,538,543 23,595,862 22,884,380 17,972,825 15,938,868 367,695,714 321,848,958
Eliminations
Total assets
Included in Segment assets
(51,470,310) (44,932,158)
316,225,404 276,916,800
Investment in associate
–
–
–
–
–
–
63,975
47,188
63,975
47,188
Segment liabilities
51,439,660 41,308,856 230,415,580 204,430,854 20,280,841 20,002,106
2,405,026
1,524,206 304,541,107 267,266,022
Eliminations
Total liabilities
(42,880,166) (35,098,712)
261,660,941 232,167,310
FSA GROUP LIMITED ANNUAL REPORT 2011
61
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 26. Segment Information cont.
Information about operating segments
Identifi cation of reportable segments
The Consolidated Entity’s Chief Operating Decision Maker has identifi ed three reportable segments based on the
differences in providing services and providing fi nance products. These three segments are subject to different regulatory
environments and legislation.
The three identifi ed reportable segments are:
Services;
Home Loans; and
Small Business.
Services include debt agreement proposal preparation and administration, trustee services and other related services.
Home Loans includes the provision of mortgage fi nance, home loan broking and mortgage management.
Small Business includes corporate consultancy services and the provision of bridging fi nance and factoring fi nance.
The Consolidated Entity operates in one geographic region – Australia.
Measurement
Each identifi ed reportable segment accounts for transactions consistently with the Accounting policies mentioned in Note 1
to these fi nancial statements. Inter-segment transactions are highlighted as eliminated to reconcile to the profi t, total assets
and liabilities amounts of the Consolidated Entity.
Centrally incurred costs for shared services are allocated between segments based employee numbers as a percentage of
the total head count.
Restatement of segment information
In the prior fi nancial report the following were identifi ed as reportable segments:
Services;
Home Loan Lending; and
Business Services and Lending.
Services include debt agreement proposal preparation and administration, home loan broking, trustee services and other
related services.
Home Loan Lending includes the provision of mortgage fi nance.
Business Services and Lending includes corporate consultancy services and the provision of bridging fi nance and
factoring fi nance.
During the period, the Consolidated Entity’s Chief Operating Decision Maker has decided that the Home Loan Lending
segment be expanded to include home loan broking (previously included in the “Services” segment). Given the anticipated
increasing contribution to profi t of home loan broking with its new mortgage management business, the Consolidated
Entity’s Chief Operating Decision Maker now analyses these results with those of Home Loan Lending under the umbrella
of “Home Loans” related products and services. As such these are now combined to form the “Home Loans” segment.
The “Business Services and Lending” segment has been renamed “Small Business” but contains all the same fi nancial
segment information as it did in the prior period.
If the previous segmentation methodology had been used to report for the year ended 30 June 2010, the information would
have been presented as follows:
62
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 26. Segment Information cont.
Services
Home Loan
Lending
Business Services
and Lending
Other/
Unallocated
Consolidated
Total
2011
$
2010
$
2011
$
2010
$
2011
$
2010
$
2011
$
2010
$
2011
$
2010
$
37,235,348 35,310,060
43,871
–
2,962,017
2,927,259
183,952
236,283 40,425,188 38,473,602
91,723
96,936 25,021,752 18,836,585
4,974,092
3,228,220
46,878
88,513 30,134,445 22,250,254
(8,840)
(2,817) (14,959,135) (10,055,162)
(1,129,694)
(768,874)
(22,496)
(22,124) (16,120,165) (10,848,977)
82,883
94,119 10,062,617
8,781,423
3,844,398
2,459,346
24,382
66,389 14,014,280 11,401,277
Revenue and Income
External sales
Finance Income
Finance expense
Net Finance Income
Other gains/(losses)
(2,334)
–
–
–
(297,630)
898,050
Internal sales and income
2,281,736
2,083,968
20,455
192,799
–
–
Eliminations
–
–
7,437
(299,964)
905,487
–
2,302,191
2,276,767
(2,302,191)
(2,276,767)
Total Revenue and Income
39,597,633 37,488,147 10,126,943
8,974,222
6,508,785
6,284,655
208,334
310,109 54,139,504 50,780,366
Results
Segment profi t before tax
11,363,890
8,585,062
3,471,112
3,432,350
624,704
865,005
(131,240)
(14,295) 15,328,466 12,868,122
Income tax (expense)/benefi t
(3,413,676)
(2,583,557)
(766,667)
(814,693)
(191,958)
(263,518)
59,426
(29,142)
(4,312,875)
(3,690,910)
Profi t for the year
7,950,214
6,001,505
2,704,445
2,617,657
432,746
601,487
(71,814)
(43,437) 11,015,591
9,177,212
Items included in
Profi t for the year
Share of the profi ts of
an associate using the
Equity Accounting Method
Depreciation and
amortisation
Impairment in value
– Goodwill
Impairment in value
– trade receivables
Reversal of impairment
in value – trade receivables
Employee and
contractor expenses
Share based
payments expense
–
–
–
–
–
–
23,981
18,528
23,981
18,528
394,935
717,090
33,193
30,894
7,791
12,835
11,717
9,003
447,636
769,822
–
–
–
–
–
–
–
49,263
–
49,263
5,824,914
6,426,423
630,983
400,932
1,201,888
1,892,662
2,975
9,184
7,660,760
8,729,201
(1,276,365)
(1,469,504)
–
–
–
–
–
–
(1,276,365)
(1,469,504)
14,445,314 12,940,696
1,349,980
882,960
2,312,585
1,681,716
134,694
136,176 18,242,573 15,641,548
–
–
–
–
–
–
81,457
52,804
81,457
52,804
Legal and consultancy
25,866
93,381
661,501
351,857
369,960
260,083
9,000
599
1,066,327
705,920
Rental expense on
operating lease –
minimum lease payment
941,876
1,210,894
–
–
33,071
–
–
–
974,947
1,210,894
Segment assets
81,731,018 66,599,281 236,847,768 207,459,549 23,595,862 22,884,380 17,972,827 15,938,870 360,147,475 312,882,080
Eliminations
Total assets
Included in Segment assets
(43,922,071) (35,965,280)
316,225,404 276,916,800
Investment in associate
–
–
–
–
–
–
63,975
47,188
63,975
47,188
Segment liabilities
42,943,818 34,743,152 229,699,778 202,029,679 20,280,841 20,002,106
2,230,886
1,524,207 295,155,323 258,299,144
Eliminations
Total liabilities
(33,494,382) (26,131,834)
261,660,941 232,167,310
FSA GROUP LIMITED ANNUAL REPORT 2011
63
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 27. Financial Instruments
Financial and Capital Risk Management
The Group undertakes transactions in a range of fi nancial instruments including:
(cid:129) Cash and cash equivalents
(cid:129) Trade and other receivables
(cid:129) Mortgage fi nance assets (mortgage receivables)
(cid:129) Other fi nancial assets
(cid:129) Payables (including Institutional creditor liabilities)
(cid:129) Interest bearing liabilities including note facility funding, bank loans and mortgage loans.
These fi nancial instruments represented in the Statement of Financial Position are categorised under AASB 139 Financial
Instruments: Recognition and Measurement as follows:
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profi t or loss
Loans and receivables at amortised cost
Financial Liabilities
Payables at amortised cost
Consolidated Entity
2011
$
2010
$
16,807,474
13,999,970
600,420
898,050
293,439,858 257,508,420
249,881,404 223,176,964
The Consolidated Entity has exposure to the following risks from these fi nancial instruments:
(cid:129) credit risk
(cid:129) liquidity risk
(cid:129) market (interest) risk
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework
through the work of the Audit & Risk Management Committee. The Audit & Risk Management Committee is responsible for
developing and monitoring risk management policies. The Chairman of the Audit & Risk Management Committee reports
to the Board of Directors on its activities.
Risk management procedures are established by the Audit & Risk Management Committee and carried out by
management to identify and analyse the risks faced by the Consolidated Entity and to set controls and monitor risks.
These are discussed individually below.
Capital Management
The Consolidated Entity’s objectives in managing its capital is the safeguard of the Consolidated Entity’s ability to continue
as a going concern, maintain the support of its Investors and other business partners, support the future growth initiatives
of the Consolidated Entity and maintain an optimal capital structure to reduce the costs of capital. These objectives are
reviewed periodically by the Board.
The Consolidated Entity assesses the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity
mix) in line with these objectives.
Gearing is used to monitor levels of debt capital used by the Consolidated Entity to fund its operations. The ratio is
calculated as Net Interest Bearing Liabilities divided by Tangible Assets (less Cash Assets).
The gearing ratio at 30 June 2011, excluding the Consolidated Entity’s special purpose entity Fox Symes Home Loans
Warehouse Trust #1 whose liabilities are non-recourse to the Consolidated Entity, was 25.6% (2010: 25.8%).
64
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 27. Financial Instruments cont.
It was the policy of the Consolidated Entity during the 2011 fi nancial year to maintain a gearing ratio, excluding the
Consolidated Entity’s special purpose entity Fox Symes Home Loans Warehouse Trust #1 of less than 50% (2010: 50%)
The Consolidated Entity defi nes capital as total equity reported in the Statement of Financial Position.
Fair values of fi nancial instruments
The carrying values of the Consolidated Entity’s fi nancial assets and liabilities approximate their fair values.
Fair value measurements recognised in the Statements of Financial Position
The Consolidated Entity has only one fi nancial asset measured at fair value through profi t or loss, being an option
to acquire shares in an unlisted proprietary company. The value has been determined by independent external experts
using inputs which have been derived from observable market data. The fair value of this option as at 30 June 2011
was $600,420 (2010: $898,050). This represents a “tier 2” fair value measurement as per AASB 7 Financial Instruments.
Credit Risk
Credit risk is the risk of fi nancial loss to the Consolidated Entity if a customer or counterparty to a fi nancial instrument fails
to meet its contractual obligations. The Consolidated Entity does not have any material credit risk exposure to any single
debtor or group of debtors under fi nancial instruments entered into by the Consolidated Entity. Credit risk is concentrated
in two categories of fi nancial instruments:
(cid:129) Trade and other receivables, including bridging fi nance receivables and factoring fi nance receivables; and
(cid:129) Mortgage fi nance assets (mortgage receivables).
Credit and lending policies have been established for all lending operations whereby each new borrower is analysed
individually for creditworthiness and serviceability prior to the Consolidated Entity doing business with them. This includes
where applicable credit history checks and affordability assessment and, in the case of lending activities, confi rming the
existence and title of the property security, and assessing the value of the security provided. These are monitored by the
Audit & Risk Management Committee though the management of the Consolidated Entity.
Mortgage fi nance assets are secured by fi rst mortgage security over real property. Bridging fi nance and factoring fi nance
receivables are secured by fi rst or second mortgage security, and where applicable, fi xed and fl oating charges over
business assets.
The Consolidated Entity retains the mortgages over the secured real property (consisting of land and buildings) until the
loans are repaid. The Consolidated Entity is entitled to take possession of and enforce the sale of the secured real property
in the event that the borrower defaults under the terms of their mortgage.
Personal insolvency (debt agreement and personal insolvency agreements under the Bankruptcy Act) receivables are
unsecured, though debtors are assessed for serviceability and affordability prior to inception of each agreement.
The above minimises the Consolidated Entity’s credit risk exposure to acceptable levels.
The Audit & Risk Management Committee also establishes the Consolidated Entity’s allowance for impairment policy
which is discussed in Notes 8 and 11.
Liquidity Risk
Liquidity risk is the risk that Consolidated Entity will not be able to meet its fi nancial obligations as they fall due.
The Consolidated Entity’s approach in managing liquidity is to ensure that it will always have suffi cient liquidity to meet
its liabilities when due without incurring unacceptable losses or risking damage to the Consolidated Entity’s reputation.
The Consolidated Entity’s liquidity risk management policies include cashfl ow forecasting, which is reviewed and
monitored monthly by management as part of the Consolidated Entity’s master budget and having access to funding
through credit facilities.
The contractual maturity of the Consolidated Entity’s fi xed and fl oating rate fi nancial liabilities are as follows. The amounts
represent the future undiscounted principal and interest cashfl ows.
FSA GROUP LIMITED ANNUAL REPORT 2011
65
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 27. Financial Instruments cont.
Consolidated Entity
30 June 2011
Carrying Contractual
Cashfl ows
amount
$
$
6 months
or less
$
6-12
months
$
1 to 2
years
$
2 to 5
years
$
5-25
years
$
Trade and other payables
1,593,404
1,593,404
1,593,404
Institutional creditors
1,558,767
1,558,767
1,558,767
Other payables
7,367,174
7,367,174
7,367,174
Other short term loans
837,279
837,279
837,279
–
–
–
–
–
–
–
–
15,982,358 17,228,521
577,510
568,095 16,082,916
–
–
–
–
–
–
–
–
–
–
267,896
607,697
13,405
13,405
26,810
82,664
471,413
Bank loans
Mortgage loans
Warehouse facilities
220,865,314 237,724,412
7,880,974
7,752,480 222,090,958
–
–
Consolidated Entity
30 June 2010
Carrying Contractual
Cashfl ows
amount
$
$
6 months
or less
$
6-12
months
$
1 to 2
years
$
2 to 5
years
$
5-25
years
$
Trade and other payables
3,362,253
3,362,253
3,362,253
Institutional creditors
3,212,578
3,212,578
3,212,578
Other payables
6,175,720
6,175,720
6,175,720
Other short term loans
527,151
527,151
527,151
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Bank loans
Mortgage loans
14,456,170 16,267,646
3,377,166
405,045 12,485,435
272,000
608,062
13,029
13,029
26,059
78,179
477,766
Warehouse facilities
194,541,639 203,783,550
5,988,595
5,890,955 191,904,000
–
–
FSA Group Ltd has a secured note facility comprising of senior and mezzanine debt through a special purpose entity, the Fox
Symes Home Loans Warehouse Trust No.1. As at 30 June 2011, the facility has a combined drawdown limit of $235,000,000.
This facility is secured against the book of loan assets created by the trust. As at 30 June 2011 the Consolidated Entity had
withdrawn $217,508,000 from this facility. It had unused credit at the end of the year of $17,492,000. The term and limit of this
facility was increased post year end. Please refer to Note 24 “Events occuring after reporting date”.
FSA Group Ltd’s subsidiary 180 Group Pty Ltd has two secured loan facilities supporting its lending activities. The bridging
fi nance and factoring fi nance facilities have drawdown limits of $2,500,000 and $25,000,000 respectively. As at 30 June 2011,
the Company had withdrawn $1,650,000 from the bridging fi nance facility and it had unused credit at the end of the year
of $850,000 on this facility. As at 30 June 2011, the Company had withdrawn $14,362,215 from the factoring fi nance facility
and it had unused credit at the end of the year of $10,637,785 on this facility.
Warehouse facilities
The Consolidated Entity is reliant on the renewal of existing warehouse facilities, the negotiation of new warehouse facilities,
or the issuance of residential mortgage backed securities.
Each warehouse facility is structured so that if it is not renewed or otherwise defaults there is only limited recourse to the
Consolidated Entity. If a warehouse facility is not renewed or otherwise defaults and its assets are liquidated, the primary
impact to the Consolidated Entity would be the loss of future income streams from excess spread, being the difference
between our mortgage rate and the cost of funds, fee income and the write off of any unamortised balance of deferred
transaction costs.
The Directors are satisfi ed that any sale of mortgages in repayment of warehouse facilities or an event of default in
relation to the Consolidated Entity’s warehouse facilities will not affect the Consolidated Entity’s ability to continue
as a going concern.
66
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 27. Financial Instruments cont.
Market risk
Market risk is the risk that changes in market prices will affect the Consolidated Entity’s income or the value of holdings
in its fi nancial instruments. The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return. Market risk of the Consolidated Entity is concentrated in
interest rate risk.
Mortgage fi nance assets are lent on variable interest rates and are fi nanced by variable rate borrowings, which mitigate
the Consolidated Entity’s exposure to interest rate risk on these borrowings to an acceptable level. These borrowings are
provided to the Consolidated Entity on a two year rolling facility and are non-recourse to the Consolidated Entity unless
there is material event of default or breach of borrowing covenants.
Bridging fi nance assets and factoring fi nance assets are provided to borrowers on fi xed and variable rate terms. These are
fi nanced by variable rate borrowings. The returns on the products are suffi cient to mitigate adverse interest rate movements
on the borrowings. As such the risk does not warrant the cost of purchasing derivative fi nancial instruments to mitigate this
risk completely. The Board and Management are satisfi ed that this policy is appropriate for the Consolidated Entity at this
time. These assets are fi nanced by long term debt facilities.
All other sources of fi nance are immaterial to the Consolidated Entity in amount and exposure.
Interest rate sensitivity analysis
The tables below show the effect on fi nance costs and profi t after tax if interest rates had been 50 basis points (bps) higher
or lower at reporting date on the Consolidated Entity’s fl oating rate fi nancial instruments (2010:25 bps). A 50 bps sensitivity
is considered reasonable given the current level of both short-term and long-term Australian interest rates. This would
represent approximately two rate increases/decreases. In the current economic environment, where uncertainty remains
about a second serious worldwide economic recession, it is the Company’s view that it is unlikely there will be a sharp
upwards movement in the interest rate cycle over the next 12 months. The analysis is based on interest rate risk exposures
at reporting date on both fi nancial assets and liabilities.
If interest rates increased by 50bps (2010: 25bps)
If interest rates decreased by 50bps (2010: 25bps)
Note 28. Investments in Associates
Equity accounted investments in associates
Purchase consideration
Inter-entity loan
Share of associates retained earnings
Consolidated Entity
Profi t after tax
2011
$
28,928
(28,928)
2010
$
8,778
(8,778)
7,963
7,963
(366,322)
(366,322)
422,334
63,975
405,547
47,188
The Consolidated Entity has one investment in an associate which it accounts for using the equity accounting method.
The associate, Huntingdale Smythe Lawyers Pty Ltd is a company incorporated in Australia and provides legal services.
The Consolidated Entity has 50% ownership and 50% of the voting power in the entity.
FSA GROUP LIMITED ANNUAL REPORT 2011
67
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 28. Investments in Associates cont.
Information about the Associate is as follows:
Consolidated Entity’s share of:
Revenue
Profi t before tax
Income tax expense
Profi t for the year
Net assets
2011
$
34,990
23,981
(7,194)
16,787
2010
$
107,811
18,528
(5,558)
12,970
122,951
106,164
Note 29. Contingent Liabilities
There were no contingent liabilities relating to the Group at reporting date except the following:
2011
Mortgage loans
At reporting date loan applications that had been accepted by the Group but not yet settled amount to $1,809,500.
Mortgages are usually settled within 4 weeks of acceptance.
Bank Guarantees
The Company has obtained a bank guarantee for it business premises as at 30 June 2011 amounting to $685,278.
2010
Mortgage loans
At reporting date loan applications that had been accepted by the Group but not yet settled amount to $9,537,900.
Mortgages are usually settled within 4 weeks of acceptance.
Note 30. Parent Entity Information
The accounting policies of the parent entity, which have been applied in determining the fi nancial information shown below,
are the same as those applied in the consolidated fi nancial statements. Refer to Note 3 for a summary of the signifi cant
accounting policies relating to the Group.
Financial position
Total Current Assets
Total Non-Current Assets
Total Assets
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Total Equity
2011
$
2010
$
3,314,319
1,784,184
10,426,990
10,426,990
13,741,309
12,211,174
2,265,452
2,265,452
745,186
745,186
11,475,857
11,465,988
11,692,255
11,692,255
745,831
664,374
(962,229)
(890,641)
11,475,857
11,465,988
68
FSA GROUP LIMITED ANNUAL REPORT 2011
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 30. Parent Entity Information cont.
Financial performance
Profi t/(loss)after income tax
Other Comprehensive Income
Total Comprehensive income/(loss)for the year
2011
$
(71,588)
–
(71,588)
2010
$
6,278
–
6,278
Guarantees entered into by the parent entity relation to the debts of its subsidiaries
FSA Group Limited has entered into a deed of cross guarantee with two of its wholly owned subsidiaries,
FSA Australia Pty Limited and Fox Symes Debt Relief Services Pty Limited. Refer to Note 31 for further details.
There are no contingent liabilities or commitments in the parent entity.
Note 31. Deed of Cross Guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts
of the others:
FSA Group Limited
FSA Australia Pty Limited
Fox Symes Debt Relief Services Pty Limited
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a fi nancial report
and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments
Commission (‘ASIC’).
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to
the Deed of Cross Guarantee that are controlled by FSA Group Limited, they also represent the ‘Extended Closed Group’.
Set out below is a consolidated statement of comprehensive income and statement of fi nancial position of the
‘Closed Group’.
Statement of Comprehensive Income
Revenue and other income
Fees from services
Finance income
Finance expense
Net fi nance income
Total revenue and other income net of fi nance expense
Expenses from continuing activities
Profi t/(loss) before income tax
Income tax (expense)/benefi t
Profi t after income tax
Other Comprehensive Income
Share of Other Comprehensive income of Associates
Total Comprehensive income for the year
2011
$
2010
$
23,696,281
23,012,747
668,299
398,375
(26,783)
(6,056)
641,516
392,319
24,337,797
23,405,066
(3,533,706)
(3,812,464)
20,804,091
19,592,602
(6,058,509)
(5,827,390)
14,745,582
13,765,212
–
–
–
–
14,745,582
13,765,212
FSA GROUP LIMITED ANNUAL REPORT 2011
69
Notes to the Financial Statements cont.
for the year ended 30 June 2011
Note 31. Deed of Cross Guarantee cont.
Statement of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Other assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Investments
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total Equity
2011
$
2010
$
4,751,906
4,938,247
13,212,307
10,439,295
290,703
13,905
112,756
8,998
18,268,821
15,499,296
25,793,101
21,898,540
77,265,279
67,752,080
103,058,380
89,650,620
121,327,201 105,149,916
6,193,781
6,559,488
6,193,781
6,559,488
10,401,612
8,685,659
10,401,612
8,685,659
16,595,393
15,245,147
104,731,808
89,904,769
11,692,256
11,692,256
745,831
664,374
92,293,721
77,548,139
104,731,808
89,904,769
70
FSA GROUP LIMITED ANNUAL REPORT 2011
Directors’ Declaration
The Directors of FSA Group Ltd declare that:
(a) in the Directors’ opinion the fi nancial statements and notes, set out on pages 15 to 70, and the Remuneration report
in the Directors’ report, set out on pages 18 to 22 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the Consolidated Entity’s fi nancial position as at 30 June 2011
and of their performance, for the fi nancial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001.
(b) the fi nancial statements also comply with International Financial Reporting Standards as disclosed in Note 1;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
(d) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the
deed of cross guarantee described in Note 31 to the fi nancial statements.
The Directors have been given the declarations for the fi nancial year ended 30 June 2011, required by Section 295A
of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors
Tim Odillo Maher
Director
Sydney
30 August 2011
FSA GROUP LIMITED ANNUAL REPORT 2011
71
Independent Auditor’s Report
To the members of FSA Group Ltd
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FSA GROUP LIMITED
Report on the Financial Report
We have audited the accompanying financial report of FSA Group Limited, which comprises the
statement of financial position as at 30 June 2011, the statement of comprehensive income, the
statement of changes in equity and the statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies, other explanatory information, and the directors’ declaration
of FSA Group Limited ("the company") and the consolidated entity. The consolidated entity comprises the
company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the 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 financial
report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au
PKF | ABN 83 236 985 726
Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia
DX 10173 | Sydney Stock Exchange | New South Wales
The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the
PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast
Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
72
FSA GROUP LIMITED ANNUAL REPORT 2011
Independent Auditor’s Report cont.
To the members of FSA Group Ltd
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Opinion
In our opinion:
(a)
the financial report of the consolidated entity is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(b)
the financial report complies with International Financial Reporting Standards as disclosed in Note
1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 22 of the directors’ report for the year
ended 30 June 2011. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of FSA Group Limited for the year ended 30 June 2011 complies
with section 300A of the Corporations Act 2001.
PKF
Arthur Milner
Partner
30 August 2011
Sydney
FSA GROUP LIMITED ANNUAL REPORT 2011
73
Shareholder Information
for the year ended 30 June 2011
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current as at 17 August 2011.
(a) Distribution of equity securities
The number of holders, by size of holding, in each class of security are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Quoted Ordinary shares
Number of holders
Number of shares
118
267
211
362
124
1,082
19,400
859,549
1,855,639
13,551,026
121,968,171
138,253,785
The number of shareholders holding less than a marketable parcel of shares (1,852) are 161 (holding a total of 59,613
ordinary shares).
Unquoted $0.50 options exercisable on or before 2 July 2013
Number of holders
Number of options
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
–
–
–
–
2
2
(b) Twenty largest holders
The names of the twenty largest holders, in each class of quoted security are (ordinary shares):
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Capital Management Corporation
Mazamand Group Pty Ltd
ADST Pty Ltd
BJR Investment Holding Pty Ltd
Investment Custodial Services Ltd
ABN AMRO Clearing Sydney
Ms Danita Rae Lowes
Ruminator Pty Ltd
Berne Nominees No 132 Pty Ltd
Atkone Pty Ltd
Harness Capital Pty Ltd
Toga Enterprises Pty Ltd
J P Morgan Nominees Australia
Sareena Enterprises Pty Ltd
Contemplator Pty Ltd
Mr Costa Emil Vrisakis and Mrs Despina Vrisakis
Bulwarra Holdings Pty Ltd
Mr Peter Carr
Maramindi Pty Ltd
James Dundas Ritchie
Top 20
Total
26,000,000
16,809,231
12,960,047
11,000,000
3,693,566
2,574,376
2,541,953
2,385,174
2,274,193
2,256,506
2,155,000
1,604,431
1,400,000
1,356,667
1,285,223
1,256,000
1,113,150
1,058,505
1,040,541
1,000,000
74
FSA GROUP LIMITED ANNUAL REPORT 2011
95,764,563
138,253,785
69.27%
100.00%
–
–
–
–
1,050,000
1,050,000
18.81%
12.16%
9.37%
7.96%
2.67%
1.86%
1.84%
1.73%
1.64%
1.63%
1.56%
1.16%
1.01%
0.98%
0.93%
0.91%
0.81%
0.77%
0.75%
0.72%
Shareholder Information cont.
for the year ended 30 June 2011
(c) Substantial shareholders
The names of substantial shareholders who have notifi ed the Company in accordance with section 671B of the
Corporations Act 2001 are:
Number of shares
Mazamand Group Pty Ltd
ADST Pty Ltd
BJR Investment Holdings Pty Ltd
(d) Voting rights
All ordinary shares carry one vote per share without restriction.
(e) Restricted securities
16,809,231
12,960,047
11,000,000
As at the date of this report there were no ordinary shares subject to voluntary restriction agreements.
(f) Business objectives
The entity has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives.
FSA GROUP LIMITED ANNUAL REPORT 2011
75
Corporate Information
Directors
Sam Doumany – Non-Executive Chairman
Tim Odillo Maher – Executive Director
Deborah Southon – Executive Director
Stan Kalinko – Non-Executive Director
Sally Herman – Non-Executive Directoror
Company Secretary
Don Mackenzie
Registered Offi ce and Corporate Offi ce
Level 3
70 Phillip Street
Sydney NSW 2000
Phone: +61 (02) 8985 5565
Fax: +61 (02) 8985 5290
Solicitors
Hopgood Ganim
Level 8, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Share Register
Link Market Services Ltd
Locked Bag A14
Sydney South, NSW 1235
Phone: +61 (02) 8280 7454
Auditors
PKF
Level 10
1 Margaret Street
Sydney New South Wales 2000
Country of Incorporation
Australia
Securities Exchange Listing
Australian Securities Exchange Ltd
ASX Code: FSA
Internet Address
www.fsagroup.com.au
Australian Business Number
ABN 98 093 855 791
76
FSA GROUP LIMITED ANNUAL REPORT 2011
DESIGN: COLLIER & ASSOCIATES THE STRATEGIC DESIGN COMPANY #15903
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www.fsagroup.com.au