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Annual Report 2017
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7
On Track
Second year of our
5 year strategic plan
Our
Plan
Earnings
Consumer
Lending
Capital Management
Services
Easy Debt Management
(previously called
Easy Bill Pay)
Headwinds
Cautionary Statements and Disclaimer
Regarding Forward-Looking Information
This Annual Report may contain forward-looking statements, including
statements about FSA Group Limited’s (Company) financial condition,
results of operations, earnings outlook and prospects. Forward-
looking statements are typically identified by words such as “plan,”
“aim”, “focus”, “target”, “believe,” “expect,” “anticipate,” “intend,”
“outlook,” “estimate,” “forecast,” “project” and other similar words
and expressions.
The forward-looking statements contained in this Annual Report are
predictive in character and not guarantees or assurances of future
performance. These forward-looking statements involve and are
subject to known and unknown risks and uncertainties many of
which are beyond the control of the Company. Our ability to predict
results or the actual effects of our plans and strategies is subject to
inherent uncertainty.
Factors that may cause actual results or earnings to differ materially
from these forward-looking statements include general economic
conditions in Australia, interest rates, competition in the markets in
which the Company does and will operate, and the inherent regulatory
risks in the businesses of the Company, along with the credit, liquidity
and market risks affecting the Company’s financial instruments
described in the Annual Report.
objectives of management for future operations and development
and the environment in which the Company will operate. Those
assumptions may not be correct or exhaustive.
Because these forward-looking statements are subject to
assumptions and uncertainties, actual results may differ materially
from those expressed or implied by these forward-looking statements.
You are cautioned not to place undue reliance on any forward-
looking statements.
Forward-looking statements are based on current views, expectations
and beliefs as at the date they are expressed. The Company disclaims
any responsibility to and undertakes no obligation to update or revise
any forward-looking statement to reflect any change in the Company’s
circumstances or the circumstances on which a statement is based,
except as required by law.
The Company disclaims any responsibility for the accuracy or
completeness of any forward-looking statement to the extent
permitted by law. Unless otherwise stated, the projections or
forecasts included in this Annual Report have not been audited,
examined or otherwise reviewed by the independent auditors
of the Company.
Forward-looking statements are based on assumptions regarding the
Company’s financial position, business strategies, plans and
This Annual Report is not an offer or invitation for subscription or
purchase of, or a recommendation of securities.
FSA Group Limited ABN 98 093 855 791
1
For over 17 years, FSA Group has
helped thousands of Australians
take control of their debt.
Our large and experienced team
of professionals offers a range of
debt solutions and direct lending
services, which we tailor to suit
individual circumstances and to
achieve successful outcomes for
our clients.
IFC Cautionary Statements
and Disclaimer
2 Our Business
4 A 5 year Strategic Plan
6 Chairman’s Letter
7 Executive Directors’
Review
12 Directors and Secretary
13 Financial Statements
FSA Group Limited AnnuAL report 2017 | 2
Our
Business
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.
FSA Group offers a range of services to
assist clients wishing to enter into a payment
arrangement with their creditors. These services
include informal arrangements, debt agreements,
personal insolvency agreements and bankruptcy.
Our new service Easy Debt Management
(previously called Easy Bill Pay) assists our
clients with paying their debts.
The Services Market
40000
35000
30000
25000
20000
15000
10000
5000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Personal Insolvency Agreements
Bankruptcies
Debt Agreements
Source: AFSA
3
Consumer
Lending
The non-conforming home loan and personal
loan markets consist of lenders who provide
loan products to an individual who is unlikely
to conform to the lending criteria of the banks.
FSA Group offers non-conforming home
loans to assist clients with property who wish
to consolidate their debt and non-conforming
personal loans to assist clients who wish to
purchase a motor vehicle.
FSA Group Limited AnnuAL report 2017 | 4
A 5 Year
Strategic Plan
5 Year Strategic Plan 2016 to 2020
Services
Maintain our leading position in a niche market.
Easy Debt
Management
(previously called
Easy Bill Pay)
Aiming to add over 500 new clients per month
over the next few years.
Consumer
Lending
Expand our product offering.
Focus on growing our loan pools.
Aiming to grow to around $500m.
Earnings
Expect average long term earnings growth of around 10% pa.
Growth rate in earnings may be lower in earlier years.
Capital
Management
Dividends around 50% to 60% of earnings.
Balance of earnings to be re-invested to support the
capital requirements of our growing loan pools.
Strategy is self-funding. We do not expect to raise equity capital.
Headwinds
Consumer debt levels are at a record high and demand for
our products and services is growing. However, we may face
a number of headwinds over the next few years, including
historically low interest rates adversely affecting certain areas
of our business.
5
2017 Progress
Debt Agreements
• 40% market share
• 8% increase in new clients
• 20,194 clients, up 4%
• $366m of debt managed
• $81m paid to creditors
Personal Insolvency Agreements and Bankruptcy
• One of the largest trustees
• New clients steady
• 1,404 clients, down 1%
Easy Debt Management
• Still trialling
• 2,575 clients, up 21%
• 318,730 bills paid to date
• $34.1m paid to date
Home Loans
• Loan pool $306m, up 17%
• >30 day arrears 2.21%
• Impairments $259,895
• Westpac facility $300m
• Westpac retention facility $25m
• Institutional facility $25m
Personal Loans
• Loan pool $35m, up 78%
• >30 day arrears 1.56%
• Impairments $294,911
• Westpac facility $40m
• Planning a larger facility
• Refer to Chairman’s Letter
Services
Easy Debt
Management
(previously called
Easy Bill Pay)
Consumer
Lending
Earnings and Capital
Management
FSA Group Limited AnnuAL report 2017 | 6
Chairman’s
Letter
Dear Shareholders,
The 2017 financial year, the second year of our five year strategic plan, has been a year of excellent progress
and growth.
The Services division offers a range of services including informal arrangements, debt agreements, personal
insolvency agreements, bankruptcy and Easy Debt Management (previously called Easy Bill Pay).
FSA Group is the largest provider of debt agreements, personal insolvency agreements and bankruptcy in Australia.
During the 2017 financial year new client numbers for debt agreements increased by 8% and for personal insolvency
agreements and bankruptcy was steady compared to the previous corresponding period. Our debt agreement
market share decreased from 41% to 40% for reasons mentioned in the Executive Directors’ Review. FSA Group
manages $366 million of unsecured debt under debt agreements and during the 2017 financial year paid $81 million
in dividends to creditors. Easy Debt Management (previously called Easy Bill Pay) continues to grow steadily.
To date we have 2,575 clients and have paid 318,730 bills totalling $34.1 million.
The Consumer Lending division offers non-conforming home loans and personal loans to assist clients wishing to
consolidate their debt or to purchase a motor vehicle.
During the 2017 financial year our home loan and personal loan pools continued to grow, growing from $282 million
to $342 million, a 21% growth rate. In order to grow our loan pools to around $500 million over our 5 year plan we
will need to achieve an annual growth rate of around 14%. We are pleased with our home loan pool growth and our
personal loan pool growth continues to exceed our expectations. During the year Westpac Banking Corporation
increased and renewed our home loan and personal loan facilities.
For the 2017 financial year FSA Group generated, from continuing operations, $70.6 million in operating income,
a 14% increase, and a profit after tax attributable to members of $15.4 million, a 44% increase compared to the
results of 2016. Normalised profit after tax attributable to members (excluding swaps) was $14.4 million, a 17%
increase. Our net cash inflow from operating activities was $11.1 million, a 13% increase.
I advise that the Directors have declared a fully franked final dividend of 4.00 cents per share for the 2017 financial
year. This brings the full year dividend to 7.00 cents per share.
We are moving into the third year of our 5 year strategic plan.
Consumer debt levels are at a record high, new enquiries are increasing and demand for our products and services
is growing. This is currently occurring in a historically low interest rate environment. As interest rates normalise
demand for our products and services will accelerate.
Over the 2018 financial year we expect higher new client numbers for our Services division and are targeting
a June 2018 closing loan pool balance of around $385 million, broken down as to $340 million for home loans
and $45 million for personal loans.
For the 2018 financial year, FSA Group expects its normalised profit after tax to members (excluding swaps) to be
up 5% to 15% on the 2017 financial year with EPS in the range of 12.00 cents to 13.20 cents. The full year dividend
is expected to be 7.00 cents per share.
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
7
Executive Directors’
Review
Dear Shareholders,
For the 2017 financial year FSA Group generated, from continuing operations, $70.6 million in operating income,
a 14% increase, and a profit after tax attributable to members of $15.4 million, a 44% increase compared to the
results of 2016. Normalised profit after tax attributable to members (excluding swaps) was $14.4 million, a 17% increase.
Our net cash inflow from operating activities was $11.1 million, a 13% increase.
We advise that the Directors have declared a fully franked final dividend of 4.00 cents per share for the 2017
financial year. This brings the full year dividend to 7.00 cents per share.
The Financial Overview below summarises our performance from continuing operations.
Financial Overview
Operating income
Profit before tax
Profit after tax attributable to members
EPS basic
Net cash inflow from operating activities
Dividend/share
Shareholder Equity
FY2016
FY2017
% Change
$62.1m
$16.8m
$10.7m
8.52c
$9.9m
7.00c
$76.8m
$70.6m
$23.5m
$15.4m
12.27c
$11.1m
7.00c
$83.3m
14%
39%
44%
44%
13%
0%
8%
During 2015, we entered into interest rate swap agreements, locking in $80 million of our funding costs at a fixed
rate for 5 years.
The Normalised Financial Overview below, summarises our performance from continuing operations, specifically
excluding the before tax mark to market unrealised loss of $2.4 million in the 2016 financial year and unrealised gain
of $1.4 million in the 2017 financial year on our 5 year interest rate swap agreements. Reference is to be made to
“unrealised gain or (loss) on fair value movement of derivatives” in the Statement of Profit or Loss and Other
Comprehensive Income.
Normalised Financial Overview
(excluding swaps)
Normalised profit before tax
Normalised profit after tax attributable to members
Normalised EPS basic
FY2016
$19.2m
$12.3m
9.85c
FY2017
% Change
$22.1m
$14.4m
11.48c
15%
17%
17%
FSA Group Limited AnnuAL report 2017 |
8
Executive Directors’ Review (continued)
Operational Performance
Our business operates across the following key segments, Services and Consumer Lending. The operating income
and profitability of each segment is as follows:
Operating income by segment
Services
Consumer Lending
Other/unallocated
Operating income
Profit before tax by segment
Services
Consumer Lending
Other/unallocated1
Profit before tax
FY2016
$49.6m
$12.3m
$0.1m
$62.0m
FY2016
$14.2m
$5.2m
($2.5m)
$16.8m
FY2017
% Change
$54.4m
$15.9m
$0.3m
$70.6m
FY2017
$14.9m
$7.0m
$1.6m
$23.5m
10%
29%
14%
% Change
5%
34%
39%
Note 1: “Other/unallocated” includes the before tax mark to market unrealised loss of $2.4 million in the 2016 financial year and unrealised gain of
$1.4 million in the 2017 financial year on our 5 year interest rate swap agreements. Reference is to be made to “unrealised gain or (loss) on fair value
movement of derivatives” in the Statement of Profit or Loss and Other Comprehensive Income.
Services
The Services division offers a range of services to assist clients wishing to enter into a payment arrangement
with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements and
bankruptcy. Our new service Easy Debt Management (previously called Easy Bill Pay) assists our clients with paying
their debts.
Debt Agreement Market Share
FSA Group’s Market
Share %
Market Size
Total number of new debt agreements p.a.
CAGR = 7.4%
60%
50%
40%
30%
20%
10%
0%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
9
FSA Group is the largest provider of debt agreements, personal insolvency agreements and bankruptcy in Australia.
Our focus is, and will continue to be, on providing a range of options to individuals who come to us for assistance
which are affordable, viable, sustainable and deliver a benefit to the customer. Our market share for debt agreements
remains under pressure. We will never sacrifice quality and customer benefit for volume and market share.
During the 2017 financial year new client numbers for debt agreements increased by 8% and for personal insolvency
agreements and bankruptcy was steady compared to the previous corresponding period. Our debt agreement
market share decreased from 41% to 40%.
During the year debt agreement clients under administration increased to 20,194, up 4% and for personal insolvency
agreements and bankruptcy decreased to 1,404, down 1%. FSA Group manages $366 million of unsecured debt
under debt agreements and during the 2017 financial year paid $81 million in dividends to creditors.
Easy Debt Management (previously called Easy Bill Pay) continues to grow steadily. To date we have 2,575 clients
and have paid 318,730 bills totalling $34.1 million.
The Services division achieved a profit before tax of $14.9 million, a 5% increase. Profitability was positively impacted
by higher new client numbers and a decrease in marketing costs. Profitability was also negatively impacted by an
upfront investment in resources with the expectation that this will produce a positive uplift in new client numbers
and profitability in future years.
Consumer Lending
The Consumer Lending division offers non-conforming home loans and personal loans to assist clients wishing
to consolidate their debt or to purchase a motor vehicle.
During the 2017 financial year our home loan and personal loan pools continued to grow, growing from $282 million
to $342 million, a 21% growth rate. In order to grow our loan pools to around $500 million over our 5 year plan we will
need to achieve an annual growth rate of around 14%.
We are pleased with our home loan pool growth and our personal loan pool growth continues to exceed our expectations.
Loan Pools
Home Loans
Personal Loans
Total
FY2016
$262.0m
$19.8m
$281.8m
FY2017
% Change
$306.3m
$35.3m
$341.6m
17%
78%
21%
Arrears > 30 day
FY2015
FY2016
FY2017
Home Loans
Personal Loans
Impairments
Home Loans
Personal Loans
Loan Pool Data
Average loan size
Security type
Average loan to valuation ratio
Variable or fixed rate
Geographical spread
2.87%
Nil
FY2015
$173,288
Nil
2.17%
0.59%
2.21%
1.56%
FY2016
FY2017
$564,867
$20,222
$259,895
$294,911
Home Loans
Personal Loans
$325,718
$25,483
Residential home
Motor vehicle
68%
Variable
All states
100%+
Fixed
All states
FSA Group Limited AnnuAL report 2017 |
10
Executive Directors’ Review (continued)
As our loan pools grow we expect to increase and renew our facilities as required. During the year, Westpac increased
our non-recourse senior home loan facility from $250 million to $275 million and then in July 2017 to $300 million with
a renewal date of October 2019. Our institutional investor increased its non-recourse mezzanine home loan facility
from $20 million to $25 million with a renewal date of October 2019. To support our home loan client retention initiative
Westpac approved an initial $25 million non-recourse senior home loan facility. This facility has been approved until
September 2019 and comes at a lower cost therefore allowing us to offer improved pricing to retain clients long term.
Westpac’s total funding commitment to our home loan division is $325 million.
For our personal loans, Westpac increased our personal loan facility from $20 million to $30 million and then in
June 2017 to $40 million with a renewal date of December 2017. We continue our discussions in relation to securing
a larger facility to support future growth.
Funding
Facility Type
Home Loans
Non-recourse senior
Non-recourse senior
Provider
Westpac
Westpac
Non-recourse mezzanine
Institutional
Personal Loans
Recourse corporate
Westpac
Limit
$300m
$25m
$25m
$40m
Renewal Date
October 2019
September 2019
October 2019
December 2017
The Consumer Lending division achieved a profit before tax of $7.0 million, a 34% increase. As we grow our loan
pools our business will benefit from higher incremental margins due to fixed cost leverage. This will result in profits
growing at a faster rate than revenues. We will continue to see this positive impact to profit growth during the 2018
financial year.
Net cash inflow from operating activities from continuing operations
During the 2017 financial year, FSA Group maintained strong net cash inflow driven by long term annuity income from
its clients. Net cash inflow from operating activities from continuing operations was $11.1 million, a 13% increase.
For our Consumer Lending division, during the 2015 and 2016 financial years we made an upfront investment in the
future growth of our loan pools, negatively impacting both profitability and net cash inflow. This has delivered growth
in our loan pools, profitability and net cash inflow during the 2017 financial year.
We have also applied this strategy to our Services division. During the 2017 financial year we made an upfront
investment in resources with the expectation that this will produce a positive uplift in new client numbers in future
years. This upfront investment negatively impacted both profitability and net cash inflow during the 2017 financial
year. However, ultimately it will deliver growth in both profitability and net cash inflow.
Net cash inflow from operating activities
Services
Debt Agreements
PIA/Bankruptcy
Easy Debt Management
(previously called Easy Bill Pay)
Consumer Lending
Home Loans
Personal Loans
FY2016
$9.9m
FY2017
$11.1m
No of clients/
loan pool size
Average client
life in years
20,194
1,404
2,575
$306m
$35m
4.5 to 5.5
3
Expect > 5
3 to 4
4 to 5
11
Strategy and Outlook
We are moving into the third year of our 5 year strategic plan.
Consumer debt levels are at a record high, new enquiries are increasing and demand for our products and services
is growing. This is currently occurring in a historically low interest rate environment. As interest rates normalise
demand for our products and services will accelerate.
We still expect average long term earnings growth of around 10% per annum over the course of our 5 year strategic
plan. We expect our dividend payout ratio to be around 50% to 60% of earnings with the balance of earnings to be
re-invested to support the capital requirements of our growing loan pools. Our strategy is self-funding so we do not
expect to raise equity capital.
Over the 2018 financial year we expect higher new client numbers for our Services division and loan pool growth for
both home loans and personal loans. For personal loans, our focus until December 2017 is to maintain new monthly
originations at the current level, allow the pool to age and closely monitor arrears and losses, at which point we
accelerate new origination growth. We are targeting a June 2018 closing loan pool balance of around $385 million,
broken down as to $340 million for home loans and $45 million for personal loans.
For the 2018 financial year, FSA Group expects its normalised profit after tax to members (excluding swaps) to be
up 5% to 15% on the 2017 financial year with EPS in the range of 12.00 cents to 13.20 cents. The full year dividend
is expected to be 7.00 cents per share.
Our People
Our people are core to our success and they share our vision for the company. They are committed to working with
and helping our customers in a work environment that fosters diversity, equal employment opportunities, fairness
and embraces and supports personal growth, continuous learning and training opportunities. We acknowledge
their efforts during the year. We also thank the Board for their guidance and support.
Yours sincerely,
Tim Odillo Maher
Executive Director
Deborah Southon
Executive Director
FSA Group Limited AnnuAL report 2017 |
12
Directors
and Secretary
(From L to R, top to bottom)
Tim Odillo Maher
Stan Kalinko
David Bower
Deborah Southon
Sam Doumany
Cellina Chen (Secretary)
13
Financial Statements
for the year ended 30 June 2017
14 Directors’ Report
28 Statement of Cash Flows
24 Auditor’s Independence Declaration
29 Notes to the Financial Statements
25 Statement of Profit or Loss and Other
60 Directors’ Declaration
Comprehensive Income
26 Statement of Financial Position
27 Statement of Changes in Equity
61 Independent Auditor’s Report
64 Shareholder Information
IBC Corporate Information
FSA Group Limited AnnuAL report 2017 | 14
Directors’ Report
For the year ended 30 June 2017
Directors
The Directors present their report, together with the financial statements, on the Consolidated Entity (referred to hereafter as the
“Consolidated Entity”) consisting of FSA Group Limited (referred to hereafter as the “Company” or “parent entity”) and the entities
controlled at the end of, and during, the year ended 30 June 2017.
The Directors of the Company at any time during or since the end of the financial year are:
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
David Bower
Information on Directors
Sam Doumany (Non-Executive Chairman)
Experience and Expertise
Mr Doumany was appointed 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 Queensland Parliament 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 firstly 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. Since 1983 Mr Doumany has operated a consultancy practice providing services in government relations, corporate strategy
and market development. Mr Doumany was retained by Ernst & Young in an executive consultancy role between 1991 and 2002.
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 the last 3 years
Nil
Special responsibilities
Member of the Audit & Risk Management Committee and the Remuneration Committee.
Interest in shares and options
Ordinary shares
1,100,000
Tim Odillo Maher (Executive Director)
Experience and Expertise
Mr Odillo Maher was appointed on 30 July 2002.
Mr Odillo Maher holds a Bachelor of Business Degree (majoring in Accounting and Finance) from Australian Catholic University
and is a Certified Practising Accountant.
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
15
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 an Executive Certificate in Leadership & Management (University of Technology, Sydney) and a Bachelor of Arts
Degree (Sydney University).
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
12,960,047
Stan Kalinko (Non-Executive Director)
Experience and Expertise
Mr Kalinko was appointed on 9 May 2007.
Mr Kalinko has been a professional company director since his retirement from law on 30 June 2007. Mr Kalinko practised law for
more than 30 years and was a merchant banker for six years. He is a fellow of the Australian Institute of Company Directors and
also serves on the Boards of Indigenous Community Volunteers Limited, Seisia Enterprises Pty Ltd and the Central Synagogue.
He has a B.Com, LLB, a Higher Diploma in Tax and is an accredited mediator.
Other current (listed company) directorships
Nil
Former (listed company) directorships in last 3 years
Nil
Special Responsibilities
Chairperson of the Audit & Risk Management Committee and a member of the Remuneration Committee
Interest in shares and options
Ordinary shares
120,000
David Bower (Non-Executive Director)
Experience and Expertise
Mr David Bower was appointed on 23 April 2015.
Mr Bower has over 30 years of executive experience in financial services in Australia. He spent 26 years with Westpac Banking
Corporation running business units in Corporate Banking, Commercial Bank, Retail Bank and Financial Markets. He also
worked with ANZ and St George Bank. He is a graduate of the Australian Institute of Company Directors and holds a Bachelor of
Economics degree.
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 Chairperson of the Remuneration Committee
Interest in shares and options
Ordinary shares
90,800
FSA Group Limited AnnuAL report 2017 | 16
Directors’ Report cont.
For the year ended 30 June 2017
Company Secretary
Cellina Z Chen
Mrs Cellina Z Chen was appointed joint Company Secretary on 23 April 2015 and subsequently appointed as Company Secretary
on 1 July 2015. Mrs Chen holds a Master of Commerce degree (major in accounting and finance) from the University of Sydney
and is a Certified Practising Accountant. Mrs Chen has also completed the Australian Institute of Company Directors courses
and holds a Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia. Mrs Chen joined
the Company in 2001 and is the Chief Financial Officer.
Principal activities
The principal activities of the Consolidated Entity during the year were the provision of debt solutions and direct lending services
to individuals.
Operating results
Total profit for the year and total comprehensive income for the year for the Consolidated Entity after providing for income tax and
eliminating non-controlling interests was $15,116,886 (2016: $13,478,685).
Dividends declared and paid during the year
• On 13 September 2016, a fully franked final dividend relating to the year ended 30 June 2016 of $5,003,705 was paid at
4.00c per share; and
• On 16 March 2017, a fully franked interim dividend of $3,752,778 was paid at 3.00c per share.
Dividends declared after the end of year
On 18 August 2017, the Directors declared a 4.00 cent fully franked final dividend to shareholders to be paid on 8 September 2017
with a record date of 25 August 2017.
Operating and Financial Review
Detailed comments on operations are included separately in the Executive Directors’ review, on pages 7 to 11 of the Annual Report.
Review of financial condition
Capital structure
There have been no changes to the Company’s share structure during or since the end of the financial year.
Financial position
The net assets of the Consolidated Entity, which includes amounts attributable to non-controlling interest, have increased from
$76,759,149 at 30 June 2016 to $83,264,846 at 30 June 2017.
Treasury policy
The Consolidated Entity does not have a formally established treasury function. The Board is responsible for managing the
Consolidated Entity’s finance facilities.
Liquidity and funding
The Consolidated Entity has sufficient funds to finance its operations, and also to allow the Consolidated Entity to take advantage
of favourable business opportunities. Further details of the Consolidated Entities’ access to facilities are included in Note 12 of the
Financial Statements.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Consolidated Entity during the financial year.
17
Matters subsequent to the end of the financial year
Westpac Banking Corporation has increased its non-recourse senior home loan facility from $275 million to $300 million. This
facility has been renewed until October 2019. The Westpac senior facility is supported by a non-recourse mezzanine facility
provided by an institutional fund manager. This facility has been increased from $20 million to $25 million and has also been
renewed until October 2019.
There have been no events since the end of the financial year that impact upon the financial performance or position of the
Consolidated Entity as at 30 June 2017 except as follows:
• On 18 August 2017, the Directors declared a 4.00 cent fully franked final dividend to shareholders to be paid on
8 September 2017 with a record date of 25 August 2017.
Likely developments and expected results of operations
Likely developments in the operations of the Consolidated Entity and the expected results of those operations in subsequent
financial 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 financial years other than the information contained in the Executive
Directors’ review.
Environmental regulations
There are no matters that have arisen in relation to environmental issues up to the date of this report. The operations of the
Consolidated Entity are not subject to any significant environmental regulation under a law of the Commonwealth or of a State
or Territory.
Share options
As at 30 June 2017 there were no options on issue and no shares were issued during the year following the exercise of options.
Indemnification and insurance of directors and officers
Each of the Directors and the Officers of the Company has entered into an agreement with the Company whereby the Company
has provided certain contractual rights of access to books and records of the Company to those Directors and Officers; and
indemnifies those Directors and Officers against liabilities suffered in the discharge of their duties as Directors or Officers of
the Company.
The Company has also insured all of the Directors and Officers of FSA Group Limited. 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.
Indemnity and insurance of auditor
The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Company or any
related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or
any related entity.
Remuneration Report (Audited)
This Remuneration Report sets out the remuneration information, pertaining to the Directors and the Senior Executive. The
Executive Directors and the Senior Executive comprise the Key Management Personnel of the Consolidated Entity for the
purposes of the Corporations Act 2001 for the year ended 30 June 2017.
Key Management Personnel have the authority and responsibility for planning, directing and controlling the activities of the
Consolidated Entity.
FSA Group Limited AnnuAL report 2017 | 18
Directors’ Report cont.
For the year ended 30 June 2017
Remuneration Report (Audited) cont.
Remuneration policy
The performance of the Consolidated Entity depends upon the quality of its personnel. To prosper, the Consolidated Entity must
attract, motivate and retain highly skilled people.
The Company has a Remuneration Committee but does not have a Nominations 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 and Senior Executive. The
Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic
basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit
from the retention of highly skilled people. Such officers are given the opportunity to receive their base emolument in a variety of
forms including cash and fringe benefits. The Board’s policy is to align Executive Directors and Senior Executive objectives with
shareholder and business objectives by providing a fixed remuneration component and offering short and long-term incentives.
In accordance with best practice corporate governance, the structure of Non-Executive Director, Executive Director and Senior
Executive remuneration is separate and distinct.
In consultation with external remuneration consultants in prior years, the Remuneration Committee has structured an executive
remuneration framework that is market competitive and complementary to the reward strategy of the Consolidated Entity. The key
tenets of this framework are:
Alignment to shareholders’ interests:
• has profit before income tax as a core component of plan design;
• focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant
or increasing return on assets as well as focusing on key non-financial drivers of value; and
• attracts and retains high calibre executives.
Alignment to program participants’ interests:
• rewards capability and experience;
• reflects competitive reward for contribution to growth in shareholder wealth; and
• provides a clear structure for earning rewards.
Non-Executive Director Remuneration
The Board seeks to set aggregate remuneration at a level which provides the Consolidated Entity 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 to be no more than $500,000.
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 Non-Executive Director, the Company may remunerate that Non-Executive Director by payment of a fixed sum
determined by the Directors in addition to 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 Consolidated Entity.
The remuneration of Non-Executive Directors for the year ended 30 June 2017 is detailed in Table 1 of this Remuneration Report.
Executive Directors and Senior Executive Remuneration
The Company aims to reward the Executive Directors and Senior Executive with a level and mix of remuneration commensurate
with their position and responsibilities within the Consolidated Entity and so as to:
• reward Executives for company and individual performance against targets set by reference to appropriate benchmarks;
• align the interests of Executives with those of shareholders;
• link reward with the strategic goals and performance of the Consolidated Entity; and
• ensure total remuneration is competitive by market standards.
19
The remuneration of the Executive Directors and Senior Executive is agreed by the Remuneration Committee. The remuneration
will comprise a fixed remuneration component and also may include offering specific short and long-term incentives, in the
form of:
• base pay and non-monetary benefits;
• short-term performance incentives;
• long-term performance incentives; and
• other remuneration such as superannuation and long service leave.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits are reviewed annually by the
Remuneration Committee, based on individual and business unit performance, the overall performance of the Consolidated Entity
and comparable market remunerations. Executives may receive their fixed remuneration in the form of cash or other fringe benefits
where it does not create any additional costs to the Consolidated Entity and provides additional value to the executive.
The short-term incentives program (“STI”) has been set to align the targets of the operating segments with the targets of
the responsible executives. STI payments are granted to Executives based on specific annual targets and key performance
indicators (‘KPI’s’) being achieved. KPI’s include profit contribution, customer satisfaction, leadership contribution and
portfolio management.
The long-term incentives programme (“LTI”) has been set to align the targets of the Consolidated Entity’s five year plan with the
targets of the responsible executives. LTI payments will be granted to the Senior Executives based on specific 5 year targets being
achieved. Those targets include earnings growth rate; the services division market share, arrears and termination rates; home
loan and personal loan portfolio growth, arrears and bad debts; client complaint levels and employee satisfaction levels. Subject
to the Board being reasonably satisfied that the above indicators have been achieved, the Senior Executives will be eligible for a
payment of up to $500,000.
The remuneration of the Executive Directors and Senior Executive for the year ended 30 June 2017 is detailed in Table 1 of this
Remuneration Report.
A Securities Trading Policy has been adopted for Directors’ and employees’ dealings in the Company’s securities.
Employment contracts
It is the Board’s policy that employment agreements are entered into with the Executive Directors, Senior Executive and
employees. Employment contracts are for no specific fixed term unless otherwise stated.
Executive Directors and Senior Executive
The employment contracts entered into with the Executive Directors and Senior Executive contain the following key terms:
Event
Company Policy
Performance based salary increases and/or bonuses
Board assessment based on KPI achievement
Short-term incentives
Long-term incentives
Resignation/notice period
Serious misconduct
Board assessment based on KPI achievement
Board assessment based on 5 year plan achievement
Three months
Company may terminate at any time
Payouts upon resignation or termination, outside industrial regulations
(i.e. ‘golden handshakes’)
Board discretion
(a) Details of Directors and Key Management Personnel
(i) Non-Executive Directors
Sam Doumany
Non-Executive Chairman
David Bower
Non-Executive Director
Stan Kalinko
Non-Executive Director
(ii) Executive Directors
Tim Odillo Maher Executive Director
Deborah Southon Executive Director
(iii) Senior Executive
Cellina Chen
Chief Financial Officer/Company Secretary
The Executive Directors and the Senior Executive comprise the Key Management Personnel of the Consolidated Entity.
FSA Group Limited AnnuAL report 2017 | 20
Directors’ Report cont.
For the year ended 30 June 2017
Remuneration Report (Audited) cont.
(b) Remuneration of Directors and Key Management Personnel
Table 1
Short-term
Long-term
Post-
Employment
Performance
based
Total
Salary &
Fees
$
Cash Bonus
$
Non-cash
benefits
$
Non-cash
benefits
$
Super-
annuation
and other
benefits
$
$
%
135,000
136,923
85,000
85,000
70,000
72,692
–
–
–
–
–
–
546,250
546,250
*150,000
310,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,825
13,008
147,825
149,931
8,075
8,075
6,650
6,906
93,075
93,075
76,650
79,598
–
–
696,250
856,250
512,500
533,257
*150,000
**17,633
310,000
20,857
**8,542
(30,858)
35,000
36,346
723,675
869,602
211,790
211,625
^110,000
**32,970
**(16,356)
75,000
30,296
5,704
19,615
20,286
358,019
342,911
1,560,540
1,585,747
410,000
695,000
50,603
51,153
(7,814)
(25,154)
82,165
84,621
2,095,494
2,391,367
–
–
–
–
–
–
22%
36%
21%
36%
31%
22%
Non-Executive
Directors
Sam Doumany
2017
2016
Stan Kalinko
2017
2016
David Bower
2017
2016
Executive
Directors
Tim Odillo Maher
2017
2016
Deborah Southon
2017
2016
Senior
Executive
Cellina Chen
2017
2016
Total
Remuneration
2017
2016
* Bonus (representing 100% of the total bonus to be paid) was paid to Tim Odillo Maher and Deborah Southon in relation to the performance during
financial year 2016. The bonus was approved by the Board as part of discretionary performance based remuneration. The Executive Directors
abstained from the vote.
^ Bonus (representing 100% of the total bonus to be paid) was in relation to the performance during financial year 2016. The bonus was approved
by the Board as part of discretionary performance based remuneration.
** Annual leave and long service leave accrual movement has been included in the non-cash benefits above.
Post-employment benefit of $14,412 paid to ex-Non-Executive Director Sally Herman in financial year 2016 is excluded from
table above.
Bonus in relation to current financial year performance will be paid in the subsequent financial year with an estimated range of:
Executive Directors:
Tim Odillo Maher: $200,000 – $400,000
Deborah Southon: $200,000 – $400,000
Senior Executive:
Cellina Chen:
$50,000 – $100,000
21
Consolidated Entity’s earnings and movement in shareholders wealth for the last five years is as follows:
Operating income
Net profit before tax
Net profit and other comprehensive income after
tax attributable to members
Share price at the start of the year
Share price at the end of the year
Dividends declared for the year
Basic EPS (cents)
Diluted EPS (cents)
30 June
2017
30 June
2016
30 June
2015
30 June
2014
30 June
2013
$70,630,226
$62,078,752
$69,619,295
$65,465,843
$64,419,490
$23,492,625
$16,842,459
$22,443,940
$20,817,543
$17,763,474
$15,116,886
$13,478,685
$14,688,253
$13,482,241
$10,759,096
$1.01
$1.36
7.00c
12.08
12.08
$1.27
$1.01
7.00c
10.78
10.78
$1.23
$1.27
6.50c
11.74
11.74
$0.70
$1.23
6.00c
10.78
10.78
$0.32
$0.70
5.00c
8.51
8.51
A review of bonuses paid to the Executive Directors and Senior Executive over the previous five years is consistent with the
operational performance of the Consolidated Entity in those periods.
(c) Options issued as part of remuneration for the year ended 30 June 2017
There were no options issued as part of remuneration during or since the end of the financial year.
(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 financial year.
(e) Option holdings of Directors and Key Management Personnel
There were no options held by Directors or Key Management Personnel.
(f) Shareholdings of Directors and Key Management Personnel
Shares held in FSA Group Ltd
Balance
1 July 2016
Purchased
on market
Other
Changes
Balance
30 June 2017
Directors
Sam Doumany
Tim Odillo Maher
Deborah Southon
Stan Kalinko
David Bower
Senior Executive
Cellina Chen
Total
1,100,000
42,809,231
12,960,047
100,000
30,000
–
–
–
20,000
60,800
–
–
56,999,278
80,800
–
–
–
–
–
–
–
1,100,000
42,809,231
12,960,047
120,000
90,800
–
57,080,078
(g) Loans to Directors and Key Management Personnel
There were no loans to Directors or Key Management Personnel during the year.
(h) Other transactions with Directors and Key Management Personnel and related parties
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 $27,443 (2016: $9,290). The supplies were purchased on normal
commercial terms.
FSA Group Limited AnnuAL report 2017 | 22
Directors’ Report cont.
For the year ended 30 June 2017
Remuneration Report (Audited) cont.
(i) Voting and comments made at the Company’s 2016 Annual General Meeting (“AGM”)
At the 2016 AGM, 98.82% of the votes received supported the adoption of the Remuneration Report for the year ended
30 June 2016. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
This concludes the Remuneration Report which has been audited.
Directors’ Meetings
The number of meetings held and attended by each Director during the year is as follows:
Sam Doumany*
Tim Odillo Maher
Deborah Southon
Stan Kalinko
David Bower
Total number of meetings held during the financial year
* Mr. Sam Doumany was unable to attend the board meeting on 24 October 2016.
Audit & Risk Management Committee Meetings
The number of meetings held and attended by each member during the year is as follows:
Sam Doumany
Stan Kalinko
David Bower
Total number of meetings held during the financial year
Remuneration Committee Meetings
The number of meetings held and attended by each member during the year is as follows:
Sam Doumany
Stan Kalinko
David Bower
Total number of meetings held during the financial year
Number of
meetings held
while in office
Meetings
attended
10
10
10
10
10
10
Number of
meetings held
while in office
4
4
4
4
Number of
meetings held
while in office
3
3
3
3
9
10
10
10
10
Meetings
attended
4
4
4
Meetings
attended
3
3
3
Proceedings on behalf of the Company
No proceedings have been brought, or intervened in, on behalf of FSA Group Limited, nor has any application for leave been
made in respect of FSA Group Limited under section 237 of the Corporations Act 2001.
23
Non-Audit Services
The Board of Directors, in accordance with advice from the Audit & Risk Management Committee, is satisfied 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 satisfied that the services disclosed below did not compromise the external auditor’s
independence for the following reasons:
• 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; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or
auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for
the Company or jointly sharing economic risks and rewards.
The following fees for non-audit services were paid/payable to the external auditors, BDO East Coast Partnership, during the year
ended 30 June 2017:
Tax compliance services
Taxation advice and consulting
$44,417
$65,973
Auditor’s Independence Declaration
The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 forms part of the Directors
Report and can be found on page 24.
Auditor Details
BDO East Coast Partnership continues in office 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 Limited
are committed to achieving and demonstrating the highest standards of corporate governance. The Board endorses the 3rd
edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles).
The Company’s Corporate Governance Charter and a statement of Corporate Governance are available on the Company
website www.fsagroup.com.au.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors.
Tim Odillo Maher
Executive Director
Sydney
18 August 2017
FSA Group Limited AnnuAL report 2017 |
24
Auditor’s Independence Declaration
for the year ended 30 June 2017
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY ARTHUR MILNER TO THE DIRECTORS OF FSA GROUP LIMITED
As lead auditor of FSA Group Limited for the year ended 30 June 2017, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of FSA Group Limited and the entities it controlled during the period.
Arthur Milner
Partner
BDO East Coast Partnership
Sydney, 18 August 2017
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2017
25
Continuing operations
Revenue and other income
Fees from services
Finance income
Finance expense
Net finance income
Other losses
Total operating income
Marketing expenses
Administrative expenses
Operating expenses
Unrealised gain or (loss) on fair value movement of derivatives
Expenses from continuing operations
Profit before income tax from continuing operations
Income tax expense
Net profit from continuing operations
Total profit for the year from continuing operations for the year
attributable to:
Non-controlling interests
Members of the parent
Discontinued operations
(Loss) or profit from disposed and discontinued operations after tax
Net profit for the year
Other comprehensive income
Notes
Consolidated Entity
2017
$
2016
$
4
4
4
4
13
9(a)
55,366,233
27,203,193
(11,922,369)
15,280,824
(16,831)
70,630,226
(8,571,916)
(9,821,088)
(30,155,949)
1,411,352
(47,137,601)
23,492,625
(6,992,722)
16,499,903
1,145,294
15,354,609
16,499,903
(237,723)
16,262,180
–
50,684,812
22,431,003
(11,033,475)
11,397,528
(3,588)
62,078,752
(8,447,350)
(7,984,477)
(26,436,479)
(2,367,987)
(45,236,293)
16,842,459
(5,093,288)
11,749,171
1,090,679
10,658,492
11,749,171
2,820,193
14,569,364
–
Total comprehensive income for the year
16,262,180
14,569,364
Total profit for the year and total comprehensive income for the year
attributable to:
Non-controlling interests
Members of the parent
Earnings per share
Earnings per share from continuing operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Earnings per share from disposed and discontinued operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Total earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
10
10
10
10
10
10
1,145,294
15,116,886
16,262,180
1,090,679
13,478,685
14,569,364
12.27
12.27
(0.19)
(0.19)
12.08
12.08
8.52
8.52
2.26
2.26
10.78
10.78
The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the
Financial Statements.
FSA Group Limited AnnuAL report 2017 | 26
Statement of Financial Position
as at 30 June 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Investments
Plant and equipment
Deferred tax assets
Intangible assets
Total Non-Current Assets
Financing Assets
Personal loan cash and cash equivalents
Home loan cash and cash equivalents
Personal loan assets
Home loan assets financed by non-recourse financing liabilities
Total Financing Assets
Total Assets
Current Liabilities
Trade and other payables
Current tax liabilities
Borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Deferred tax liabilities
Derivatives
Total Non-Current Liabilities
Financing Liabilities
Borrowings to finance personal loan assets
Non-recourse borrowings to finance home loan assets
Total Financing Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to members of the parent
Non-controlling interest
Total Equity
Consolidated
Entity
Notes
16
2
2017
$
2016
$
4,193,401
36,527,421
806,778
41,527,600
12,560,188
33,007,376
405,652
45,973,216
2
45,004,628
41,955,310
9(c)
19
16
16
3(b)
3(a)
11
12
21
21
9(d)
18
12
12
385
527,824
5,890
2,018,007
47,556,734
129,701
4,745,492
35,257,582
306,329,792
346,462,567
435,546,901
5,092,257
755,720
681,389
2,117,272
8,646,638
669,588
18,078,416
916,927
19,664,931
27,028,411
296,942,075
323,970,486
352,282,055
83,264,846
22
6,707,233
–
74,163,296
80,870,529
2,394,317
83,264,846
385
334,684
13,666
1,182,741
43,486,786
83,113
4,732,579
19,816,669
261,978,305
286,610,666
376,070,668
5,432,428
695,897
389,733
1,826,342
8,344,400
660,701
15,706,850
2,328,279
18,695,830
16,545,520
255,725,769
272,271,289
299,311,519
76,759,149
6,707,233
(3,278,761)
71,081,654
74,510,126
2,249,023
76,759,149
The Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.
Statement of Changes in Equity
For the year ended 30 June 2017
27
Balance at 30 June 2015
Profit after income tax for the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Dividends paid
Distributions to non-controlling interests
Balance at 30 June 2016
Profit after income tax for the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Reclassification of other reserve
Dividends paid
Distributions to non-controlling interests
Share capital
$
Other
reserve
$
Retained
earnings
$
Non-
controlling
interest
$
Total
$
6,707,233
(3,278,761)
65,733,990
2,208,344
71,370,806
–
–
–
–
–
–
–
–
–
–
13,478,685
1,090,679
14,569,364
–
–
–
13,478,685
1,090,679
14,569,364
(8,131,021)
–
(8,131,021)
–
(1,050,000)
(1,050,000)
6,707,233
(3,278,761)
71,081,654
2,249,023
76,759,149
–
–
–
–
–
–
–
–
–
15,116,886
1,145,294
16,262,180
–
–
–
15,116,886
1,145,294
16,262,180
3,278,761
(3,278,761)
(8,756,483)
–
–
–
(8,756,483)
–
(1,000,000)
(1,000,000)
74,163,296
2,394,317
83,264,846
–
–
–
Balance at 30 June 2017
6,707,233
The Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.
FSA Group Limited AnnuAL report 2017 | 28
Statement of Cash Flows
For the year ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Finance income received
Finance cost paid
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangibles
Notes
15
19
Subsequent consideration for acquisition of non-controlling interest
Net increase in home loan finance assets
Net increase in personal loan assets
Net decrease in bridging finance assets
Consideration received for disposal of subsidiary net of cash disposed
Net decrease in other loans
Net cash outflow from investing activities
Cash flows from financing activities
Net receipt of borrowings
Payment of distributions to non-controlling Interests
Dividends paid to company’s shareholders
Net cash inflow from financing activities
Cash flow from disposed and discontinued operations, net of cash
movement with parent entities
Net cash (outflow)/inflow from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net cash (outflow)/inflow from disposed and discontinued operations
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
16
Consolidated Entity
2017
$
Inflows/
(Outflows)
46,799,541
(46,421,992)
27,264,873
(11,908,173)
(4,606,543)
11,127,706
(378,820)
(1,171,229)
–
(44,206,978)
(15,660,940)
5,000
–
245,000
2016
$
Inflows/
(Outflows)
41,362,425
(37,806,489)
22,669,361
(11,000,327)
(5,347,205)
9,877,765
(246,686)
(568,832)
(2,100,000)
(29,848,135)
(13,881,678)
95,936
6,260,961
105,000
(61,167,967)
(40,183,434)
51,976,656
(1,000,000)
(8,756,483)
42,220,173
(487,198)
–
–
(487,198)
(8,307,286)
17,375,880
9,068,594
36,073,262
(1,050,000)
(8,131,021)
26,892,241
1,345,393
5,130,788
(5,501,991)
974,190
(2,439,238)
19,815,118
17,375,880
The Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.
29
Notes to the Financial Statements
For the year ended 30 June 2017
Note 1. Summary of significant accounting policies
Note 2. Trade and other receivables
Note 3. Financing assets
Note 4. Revenue and other comprehensive income net of finance expense
Note 5. Profit for the year
Note 6. Segment information
Note 7. Restatement of comparatives
Note 8. Equity – Dividends
Note 9. Income tax
Note 10. Earnings per share
Note 11. Trade and other payables
Note 12. Borrowings
Note 13. Financial instruments
Note 14. Commitments
Note 15. Cash flow information
Note 16. Cash and cash equivalents
Note 17. Auditor’s remuneration
Note 18. Derivatives
Note 19. Intangible assets
Note 20. Fair value measurement
Note 21. Provisions
Note 22. Share capital
Note 23. Interests in subsidiaries
Note 24. Key Management Personnel disclosures
Note 25. Related party disclosures
Note 26. Contingent liabilities
Note 27. Events occurring after reporting date
Note 28. Parent entity information
Note 29. Deed of cross guarantee
Note 1. Summary of significant accounting policies
FSA Group Limited and its controlled entities (the “Consolidated Entity”) is a for-profit listed public company (ASX: FSA),
incorporated and domiciled in Australia.
The financial statements are general purpose financial 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, as appropriate for for-profit oriented entities. The consolidated
financial statements of the Consolidated Entity 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 financial statements.
The accounting policies have been consistently applied, unless otherwise stated.
The financial statements were authorised for issue by the Directors on 18 August 2017.
Basis of preparation
The financial statements are presented in Australian dollars and rounded to the nearest dollar.
Reporting basis and conventions
The financial statements are based on historical costs modified by the revaluation of certain financial assets and financial liabilities
for which the fair value basis of accounting has been applied.
FSA Group Limited AnnuAL report 2017 | 30
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 1. Summary of significant accounting policies cont.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of FSA Group Limited (“Company”
or “parent entity”) as at 30 June 2017 and the results of all subsidiaries for the year then ended. FSA Group Limited and its
subsidiaries together are referred to in these financial statements as the “Consolidated Entity”.
Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated Entity controls an entity when
the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Consolidated Entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated Entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred
and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the Statement of Profit or Loss and Other
Comprehensive Income, Statement of Financial Position and Statement of Changes in Equity of the Consolidated Entity.
Goods & Services Tax (GST)
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 Office.
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, except receivables on debt agreement administration
fees are exclusive of GST. The Consolidated Entity is liable for GST when the consideration for the debt agreement administration
service provided is received, and recognises the GST liability at this point.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of financing and
investing activities, which are disclosed as operating cash flows.
Comparative figures
Where required by Australian Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Significant 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 significant risk of causing a material adjustment to the carrying amounts
of certain assets and liabilities in the next annual reporting period are:
• Impairment of debt agreement receivables – refer to Note 2
• Impairment of loans – refer to Note 3
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have
not been early adopted by the Consolidated Entity for the annual reporting period ended 30 June 2017. The Consolidated Entity’s
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Consolidated
Entity, are set out below.
31
AASB 9: Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous
versions of AASB 9 and completes the project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. AASB 9
introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised
cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise
on specified dates and solely payments of principal and interest. All other financial instrument assets are to be classified and
measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains
and losses on equity instruments (that are not held-for-trading) in other comprehensive income (‘OCI’). For financial liabilities, the
standard requires the portion of the change in fair value that relates to the entity’s own credit risk to be presented in OCI (unless
it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. New impairment requirements will use an ‘expected credit
loss’ (‘ECL’) model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk
on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted.
The standard introduces additional new disclosures. The Consolidated Entity will adopt this standard from 1 July 2018. The
Consolidated Entity has assessed that the impact of adopting this standard and expect changes to be minor.
AASB 15: Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single
standard for revenue recognition.
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-
based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all
contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to
customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or
services. To achieve this objective, AASB 15 provides the following five-step process:
• identify the contract(s) with a customer;
• identify the performance obligations in the contract(s);
• determine the transaction price;
• allocate the transaction price to the performance obligations in the contract(s); and
• recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period
presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical
expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of
initial application. There are also enhanced disclosure requirements regarding revenue.
The Consolidated Entity has commenced its assessment of the implication of adopting this standard and expects changes to
be minor.
AASB 16: Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this Standard will
replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16
introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or
finance leases. The main impact of the adopting of the new standard is that operating leases of 12 months or longer will
be brought on balance sheet.
The main changes introduced by the new Standard include:
• recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and
leases relating to low-value assets);
• depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the
liability in principal and interest components;
• variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the
index or rate at the commencement date;
• by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for
all components as a lease; and additional disclosure requirements.
FSA Group Limited AnnuAL report 2017 | 32
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 1. Summary of significant accounting policies cont.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with
AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of
initial application.
The Consolidated Entity has commenced its assessment of the implication of adopting this standard and expects changes to
be minor.
Note 2. Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment.
Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment
of trade receivables is raised when there is objective evidence that the Consolidated Entity will not be able to collect all amounts
due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered
indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Collectability of trade receivables is reviewed on an ongoing basis.
Debt agreement receivables
Debt agreement receivables are receipted on a pro rata basis, in parity with other parties to the debt agreement throughout the
debt agreement administration period which is generally 2 to 5 years.
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 payment have not been re-negotiated and approved by creditors to the debt agreement.
This is monitored continuously by the Consolidated Entity’s internal debt agreement administration department.
Impairment of debt agreement receivables is assessed on a collective (portfolio) basis based on historical collections data
and loss incurred. 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, current and future
economic conditions are considered. Changes in these estimates could have a direct impact on the level of provision determined.
Bankruptcy receivables
Bankruptcy receivables are receipted on a pro rata basis, in accordance with statutory approval of trustee remuneration,
throughout the administration period which is approximately 3 years.
The recoverability of bankruptcy receivables is assessed on both collective (portfolio) basis based on historical loss incurred
and also adjusted by individual matter assessment on an ongoing basis. Amounts are written off against this account, when the
Consolidated Entity has no realistic possibility of recovery.
Other trade and sundry receivables
Other receivables are recognised at amortised cost, less any provision for impairment. 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.
33
Consolidated Entity
2017
$
2016 (Restated)
$
40,645,929
^38,202,602
(4,429,141)
(5,562,098)
36,216,788
^32,640,504
310,633
366,872
36,527,421
^33,007,376
53,178,232
(8,173,604)
45,004,628
81,532,049
12,559,166
7,313,090
(1,139,721)
(6,129,790)
12,602,745
^48,952,378
(6,997,068)
^41,955,310
^74,962,686
11,499,491
6,581,575
(1,025,595)
(4,496,305)
12,559,166
Current
Trade receivables
Provision for impairment
Sundry receivables
Non-current
Trade receivables
Provision for impairment
Total
The movement in the provision for impairment
Opening balance
Provision for impairment recognised
Unused provision reversed
Bad debts
Closing balance
^ 2016 comparatives have been restated, refer to note 7.
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 Profit or Loss and Other Comprehensive Income. The additional provision amount in this reconciliation will
therefore not agree to the Impairment in value amount disclosed in Note 5 of the Financial Statements.
Ageing analysis
Consolidated Entity
2017
2016 (Restated)
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
90,069,633
(10,448,150)
79,621,483
84,016,381
(10,633,238)
73,383,143
266,848
115,397
82,804
(63,544)
(41,646)
(48,800)
203,304
73,751
34,004
116,390
121,581
94,017
(36,829)
(49,330)
(53,812)
79,561
72,251
40,205
3,600,112
(2,000,605)
1,599,507
3,173,483
(1,785,957)
1,387,526
94,134,794
(12,602,745)
81,532,049
87,521,852
(12,559,166)
74,962,686
FSA Group Limited AnnuAL report 2017 |
34
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 3. Financing assets
Loans and receivables
Loans and receivables are held at amortised cost. Loan assets held at amortised cost are non-derivative financial instruments with
fixed or determinable payments that are not quoted in an active market.
Loans comprise personal loan and home loan assets. Loans arise when a personal loan or home loan is originated in the
Statement of Financial Position. These are accounted for at amortised cost using the effective interest method.
Impairment
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.
(a) Home loan assets
Non-securitised home loan assets
Provision for impairment
Maturity analysis
Amounts to be received in less than 1 year
Amounts to be received in greater than 1 year
The movement in the provision for impairment
Opening balance
Increase in provision
Bad debts
Closing balance
Impairment – Home loan assets
Consolidated Entity
2017
$
2016
$
306,695,328
262,428,803
(365,536)
(450,498)
306,329,792
261,978,305
5,428,197
301,267,131
306,695,328
3,647,040
258,781,763
262,428,803
450,498
283,311
(368,273)
365,536
314,442
573,321
(437,265)
450,498
An impairment loss is recognised if the total expected recoveries in regard to an individual loan do not exceed the home loan
balance. In the event that actual or expected sales proceeds do not exceed the home 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 the home loan security
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 home loan is classified 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
classified 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 Consolidated Entity had registered mortgages over real property (comprising of residential land and
buildings) for each of the home loan receivables. The weighted average loan to valuation ratio (at the fair values of the underlying
real property securities) at reporting date was 67.7% (2016: 67.4%). The valuations of the underlying property securities have been
obtained at the later of the original loan application or subsequent loan variation date and do not take into account any other
realisation costs.
35
Ageing analysis – home loan assets
Consolidated Entity
2017
2016
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
Net
$
279,431,268
20,497,329
3,476,958
1,829,774
–
–
–
279,431,268
241,228,814
20,497,329
15,512,954
3,476,958
1,930,396
(121,870)
1,707,904
734,826
–
–
–
–
241,228,814
15,512,954
1,930,396
734,826
1,459,999
(243,666)
1,216,333
3,021,813
(450,498)
2,571,315
306,695,328
(365,536) 306,329,792
262,428,803
(450,498)
261,978,305
Not past due
Past due 0-30 Days
Past due 31-60 Days
Past due 61-90 Days
Past 90 Days
Total
(b) Personal loan assets
Personal loan assets
Provision for impairment
Maturity analysis
Amounts to be received in less than 1 year
Amounts to be received in greater than 1 year
The movement in the provision for impairment
Opening balance
Provision for impairment recognised
Bad debts
Closing balance
Impairment
Consolidated Entity
2017
$
2016
$
35,384,489
(126,907)
35,257,582
4,789,199
30,595,290
35,384,489
20,222
306,279
(199,594)
126,907
19,836,891
(20,222)
19,816,669
2,418,633
17,418,258
19,836,891
–
20,222
–
20,222
Impairment has been assessed on an individual basis with primary regard to the underlying equity in the personal loan
security for each of the loans receivable and also with regard to the credit quality of the debtor, payment history and any other
information available.
Ageing analysis – personal loan assets
Consolidated Entity
2017
2016
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
33,792,465
19,436,076
33,792,465
1,075,928
210,531
219,846
85,719
–
–
–
(46,046)
(80,861)
1,075,928
210,531
173,800
4,858
283,183
90,258
–
27,374
(20,222)
Net
$
19,436,076
283,183
90,258
–
7,152
–
–
–
–
35,384,489
(126,907)
35,257,582
19,836,891
(20,222)
19,816,669
Not past due
Past due 0-30 Days
Past due 31-60 Days
Past due 61-90 Days
Past 90 Days
Total
FSA Group Limited AnnuAL report 2017 | 36
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 4. Revenue and other comprehensive income net of finance expense
Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the entity and the revenue can be
reliably measured.
The following specific recognition criteria must also be met before revenue is recognised:
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, specifically:
Debt agreement application fees
Revenue is recognised upon the completion of preparing the debt agreement proposal for consideration by the creditors and the
Australia Financial Security Authority.
Debt agreement administration fees
Revenue from rendering of debt agreement administration services is recognised in profit or loss in accordance with the
proportion of services provided throughout the administration period.
Trustee fees – bankruptcy and personal insolvency agreements
Trustee fees are recognised as work in progress and time billed. Fee income is recognised when services are provided throughout
the administration period and fees are expected to be recovered.
Refinance fees
When the outcome of a contract to provide services can be estimated reliably, either upon receipt of upfront fees and subsequent
trail commission.
Easy Debt Management (previously called Easy Bill Pay) fees
Revenue from rendering bill payment services is recognised when services are provided throughout the administration period and
fees are expected to be recovered.
Finance income and costs
Interest
Interest income is recognised in the Statement of Profit or Loss and Other Comprehensive Income using the effective interest
method. The effective interest method is the method of calculating the amortised cost of a financial asset or financial 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 financial instrument to the net carrying amount of the
financial asset or financial 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. loan 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.
Finance costs
Finance costs comprise interest expense on borrowings, changes in fair value of financial assets at fair value through profit or
loss and impairment losses recognised on financial assets. All finance costs are recognised in profit or loss using the effective
interest method.
37
Consolidated Entity
2017
$
2016
$
53,492,275
904,110
780,746
189,102
48,979,038
1,074,830
476,541
154,403
55,366,233
50,684,812
4,382,230
18,949,764
1,360,178
2,374,057
136,964
1,766,183
18,101,029
920,274
1,473,210
170,307
27,203,193
22,431,003
(745,100)
(355,578)
(11,176,842)
(10,675,050)
(427)
(11,922,369)
15,280,824
(2,847)
(11,033,475)
11,397,528
Continuing operations
Fees from services
– Personal insolvency
– Refinance fees
– Easy Debt Management (previously called Easy Bill Pay)
– Other services
Total revenue
Finance income
– Interest income – personal loan assets
– Interest income – home loan assets
– Finance fee income – personal loan assets
– Finance fee income – home loan assets
– Other interest income
Finance expense
– Interest expense – personal loan facilities
– Interest expense – home loan facilities
– Interest expense – other lending facilities
Net finance income
Note 5. Profit for the year
Depreciation
Property, plant and equipment are depreciated on a straight-line basis over their useful lives to the Consolidated Entity
commencing from the time the asset is held ready for use.
The useful lives used for each class of asset are:
Class of Asset
Plant and equipment
Useful life
2 to 5 years
Computers and office equipment
2 to 5 years
Furniture and fittings
2 to 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Leases
Leases of property plant and equipment where the Consolidated Entity, as lessee, has substantially all the risks and benefits
incidental to the ownership of the asset are classified as finance leases.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor are charged to
The Statement of Profit or Loss and Other Comprehensive Income on a straight line basis over the period of the lease.
Impairment of assets
At each reporting date, the Consolidated Entity 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 Profit or Loss and other Comprehensive Income.
FSA Group Limited AnnuAL report 2017 | 38
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 5. Profit for the year cont.
Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Expenses
Profit for the year from continuing operations has been arrived at after charging:
Depreciation on plant and equipment
Amortisation of software
Impairment in value – trade receivables and financing assets
Reversal of impairment in value – trade receivables and financing assets
Net impairment
Unrealised loss or (gains) on fair value movement in derivatives
Rental expense on operating lease
Employee and contractor expenses
Defined contribution superannuation expense
Legal consulting – client services
Note 6. Segment information
Operating segments
Consolidated Entity
2017
$
2016
$
165,849
322,041
487,890
7,830,414
(1,138,128)
6,692,286
(1,411,352)
1,461,276
23,967,646
1,842,029
350,864
192,421
450,735
643,156
6,818,783
(1,025,594)
5,793,189
2,367,987
1,098,931
20,805,150
1,659,356
294,478
An operating segment is a component of the Consolidated 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
Consolidated Entity); whose operating results are regularly reviewed by the entity’s chief operating decision makers to make
decisions about resources to be allocated to the segment and assess its performance; and for which discrete financial information
is available. Operating segments are distinguished and presented based on the differences in providing services and providing
finance products.
Identification and information about reportable segments
The Consolidated Entity’s chief operating decision makers have identified three reportable segments based on the differences
in providing services and providing lending products. These segments are subject to different regulatory environments
and legislation.
The identified reportable segments are:
• Services; including debt agreements, personal insolvency agreements, bankruptcy and Easy Debt Management (previously
called Easy Bill Pay);
• Consumer lending; including home loan lending, home loan broking and personal loan lending;
• Other/unallocated; including unrealised gain or loss on fair value movement of derivatives, parent entity services and
intercompany investments, balances and transactions, which are eliminated upon consolidation.
The Consolidated Entity operates in one geographic region – Australia.
Measurement
Each identified reportable segment accounts for transactions consistently with the Accounting policies mentioned above.
Inter-segment transactions are highlighted as eliminated to reconcile to the profit, 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.
39
Operating Segments
Revenue and Income:
External sales
Finance Income
Finance expense
Net Finance Income
Other gains/(losses)
Internal sales and income
Eliminations
Services
Consumer Lending
Other/Unallocated
Consolidated Total
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
54,460,873
49,601,611
841,413
1,002,643
11,586
15,498
26,978,502
22,360,357
63,947
213,105
80,558
55,366,233
50,684,812
55,148
27,203,193
22,431,003
–
(1,067)
(11,921,942)
(11,030,628)
(427)
(1,780)
(11,922,369)
(11,033,475)
11,586
(19,831)
809,780
–
14,431
15,056,560
11,329,729
212,678
53,368
15,280,824
11,397,528
(3,588)
887,512
–
–
–
–
–
–
–
3,000
–
(16,831)
(3,588)
10,000,000
9,431,402
10,809,780
10,318,914
–
–
(10,809,780)
(10,318,914)
Total Revenue and Income
55,262,408
50,499,966
15,897,973
12,332,372
10,279,625
9,565,328
70,630,226
62,078,752
Results:
Segment profit before tax
14,923,989
14,161,714
6,992,773
5,220,111 ^1,575,863 ^(2,539,366)
23,492,625
16,842,459
Income tax (expense)/benefit
(4,366,304)
(4,284,949)
(2,097,811)
(1,567,956) ^(528,607)
^759,617
(6,992,722)
(5,093,288)
Profit/(loss) for the year
10,557,685
9,876,765
4,894,962
3,652,155 ^1,047,256 ^(1,779,749)
16,499,903
11,749,171
Items included in Profit for the year
Depreciation and amortisation
453,466
608,728
34,424
34,428
–
–
487,890
643,156
Impairment in value – trade
receivables and financing assets
Reversal of impairment in value –
trade receivables and financing assets
7,327,605
6,130,241
559,148
611,475
(56,339)
77,067
7,830,414
6,818,783
Employee and contractor expenses
21,004,612
18,558,727
4,805,063
3,905,779
(1,138,128)
(1,025,594)
–
–
–
–
–
–
(1,138,128)
(1,025,594)
25,809,675
22,464,506
Legal & consultancy
38,121
58,485
Rental expense on operating lease
1,442,256
1,079,911
215,667
19,020
89,047
19,020
97,076
146,946
350,864
294,478
–
–
1,461,276
1,098,931
Assets:
Segment assets
Eliminations **
Total assets
Included in Segment assets
Investment in associate
Liabilities:
Segment liabilities
Eliminations**
Total liabilities
160,023,200
158,877,195 362,996,700
302,415,236
51,815,762
58,570,970 574,835,662
513,209,221
(139,288,761)
(137,138,553)
435,546,901
376,070,668
–
–
–
–
385
385
385
385
124,792,393
121,324,072 325,659,058
269,552,534
29,228,081
40,339,745 479,679,532
424,562,171
(127,397,477)
(125,250,652)
352,282,055
299,311,519
^ includes unrealised gain or loss on fair value movement of derivatives.
** Eliminations are related to intercompany balances.
FSA Group Limited AnnuAL report 2017 | 40
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 7. Restatement of comparatives
Change of accounting treatment for GST liability
Debt agreement administration fees are recognised in accordance with the proportion of services provided throughout the
administration period but receipted on pro-rata basis over the life of the agreement (average 4.5 – 5.5 years).
In the Consolidated Entity’s prior year financials, GST liabilities were recognised when debt agreement administration fee revenue
was raised upon providing debt agreement administration services. The Consolidated Entity has been advised that it is liable for
GST when the debt agreement administration fees are receipted not when revenue is recognised. Therefore, both debt agreement
receivables and GST liabilities were overstated by 10% of the debt agreement administration revenue recognised and yet to be
received. This resulted in the debt agreement receivable being overstated and the other payables liability (being GST) being
overstated by the same amount, therefore net assets and total equity remain unchanged. Extracts (being only those line items
affected) are disclosed below.
1 July 2015
Reported
Adjustment
1 July 2015
Restated
30 June 2016
Reported
Adjustment
30 June 2016
Restated
Assets
Current Assets
Trade and other receivables
33,618,443
(2,302,802)
31,315,641
35,501,826
(2,494,450)
33,007,376
Total Current Assets
Non-Current Assets
42,235,796
(2,302,802)
39,932,994
48,467,666
(2,494,450)
45,973,216
Trade and other receivables
41,048,433
(3,817,025)
37,231,408
46,115,040
(4,159,730)
41,955,310
Total Non-Current Assets
44,955,154
(3,817,025)
41,138,129
47,646,516
(4,159,730)
43,486,786
Total Assets
369,276,322
(6,119,827) 363,156,495
382,724,848
(6,654,180) 376,070,668
Liabilities
Current Liabilities
Trade and other payables
12,096,371
(6,119,827)
5,976,544
12,086,608
(6,654,180)
5,432,428
Total Current Liabilities
17,105,650
(6,119,827)
10,985,823
14,998,580
(6,654,180)
8,344,400
Total Liabilities
Net Assets
Equity
Retained earnings
Total Equity
297,905,516
(6,119,827) 291,785,689
305,965,699
(6,654,180)
299,311,519
71,370,806
65,733,990
71,370,806
–
–
–
71,370,806
76,759,149
65,733,990
71,081,654
71,370,806
76,759,149
–
–
–
76,759,149
71,081,654
76,759,149
41
Note 8. Equity – Dividends
Dividends
Dividends are recognised when declared during the financial year and at the discretion of the Company.
Consolidated Entity
2017
$
2016
$
Fully franked final dividend for the year ended 30 June 2016 of 4.00 cents
5,003,705
4,378,243
(2015: 3.50 cents) per ordinary share
Fully franked interim dividend for the year ended 30 June 2017 of 3.00 cents
3,752,778
3,752,778
(2016: 3.00 cents) per ordinary share
8,756,483
8,131,021
On 18 August 2017, the directors declared a fully franked final dividend for the year
ended 30 June 2017 of 4.00 cents per ordinary share. This brings the full year dividend
to 7.00 cents per year.
Franking credits
Franking credits available at the reporting date based on a tax rate of 30%
13,775,704
14,211,717
Franking credits that will arise from the payment of the amount of the provision for
income tax at the reporting date based on a tax rate of 30%
Franking credits available for subsequent financial years based on a tax rate of 30%
755,720
14,531,424
695,897
14,907,614
Note 9. Income tax
Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or non-deductible
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 financial 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 profit 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 Profit or Loss and Other 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 taxable profits will be available against which
deductible temporary differences and unused tax losses can be utilised.
The amount of tax benefits 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 Consolidated Entity will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Tax consolidation
FSA Group Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax
Consolidation Regime. As the head entity of the consolidated group and the controlled entities, FSA Group Limited continues to
account for their own current and deferred tax amounts. The tax consolidated group has applied the ‘separate taxpayer within
group’ approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities and the deferred
tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.
The tax consolidated group has entered into a tax sharing agreement whereby each company in the group contributes to the
income tax payable of the consolidated group.
FSA Group Limited AnnuAL report 2017 | 42
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 9. Income tax cont.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable
from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge
equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head
entity to the subsidiaries, nor a distribution by the subsidiaries to the head entity.
(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:
Increase/(decrease) in deferred tax assets
Increase in deferred tax liabilities
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax
Tax at the Australian tax rate of 30% (2016: 30%)
Tax effect of amounts which are not deductible/(taxable)
in calculating taxable income
Non-deductible expenses
Non-assessable income
(Over)/under provision in the prior year
Tax Offsets
Income tax expense
(c) Deferred tax assets
Provisions
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
Consolidated Entity
2017
$
2016
$
4,712,397
2,379,343
(99,018)
6,992,722
164,194
2,215,149
2,379,343
4,576,136
211,960
305,192
5,093,288
(1,076,494)
1,288,454
211,960
23,492,625
7,047,788
16,842,459
5,052,738
151,002
–
7,198,790
(99,018)
(107,050)
6,992,722
1,402,778
653,823
4,691
433,584
2,494,876
(2,488,986)
5,890
43,121
(307,763)
4,788,096
305,192
–
5,093,288
1,178,704
501,999
12,220
966,147
2,659,070
(2,645,404)
13,666
20,567,403
(2,488,987)
18,078,416
18,352,254
(2,645,404)
15,706,850
43
Note 10. Earnings per share
The Consolidated Entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit 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 profit 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.
Earnings per share for profit from continuing operations:
Profit from continuing operations attributable to the members of the parent
for the year ($)
Weighted average number of ordinary shares used in calculating basic earnings
per share
Weighted average number of ordinary shares used in calculating diluted earnings
per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Earnings per share for profit from discontinued operations:
(Loss) or profit from disposed and discontinued operations attributable to the
members of the parent for the year ($)
Weighted average number of ordinary shares used in calculating basic earnings
per share
Weighted average number of ordinary shares used in calculating diluted earnings
per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Consolidated Entity
2017
$
2016
$
15,354,609
10,658,492
Number
Number
125,092,610
125,092,610
125,092,610
125,092,610
12.27
12.27
Consolidated Entity
2017
$
8.52
8.52
2016
$
(237,723)
2,820,193
Number
Number
125,092,610
125,092,610
125,092,610
125,092,610
(0.19)
(0.19)
Consolidated Entity
2017
$
2.25
2.25
2016
$
Total Earnings per share for profit
Total profit attributable to the members of the parent for the year ($)
15,116,886
13,478,685
Weighted average number of ordinary shares used in calculating basic earnings
per share
Weighted average number of ordinary shares used in calculating diluted earnings
per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Number
Number
125,092,610
125,092,610
125,092,610
125,092,610
12.08
12.08
10.77
10.77
FSA Group Limited AnnuAL report 2017 | 44
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 11. Trade and other payables
Trade and other payables
Trade payables and other payables 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 Consolidated Entity.
Current
Unsecured trade payables
Employee benefits payables and accruals
Sundry payables and accruals
^ 2016 comparatives have been restated, refer to note 7.
Note 12. Borrowings
Personal loan facilities
Consolidated Entity
2017
$
2016 (Restated)
$
1,400,460
2,595,467
1,096,330
5,092,257
1,998,992
2,084,899
^1,348,537
^5,432,428
A full recourse personal loan facility, which is secured by a floating charge over the assets of Fox Symes Home Loans Pty Ltd and
its controlled entities, and the other wholly-owned subsidiaries of FSA Group Limited, with a facility limit of $40 million and balance
owing of $27,028,411 (2016: $16,545,520). This facility expires on 31 December 2017. We continue our discussions in relation
to securing a larger facility to support future growth. Interest is payable on this facility at reporting date at 2.82%. All borrowing
covenants were met during the year.
Home loan facilities
Non-recourse home loan facilities are used to fund home loans and include revolving Senior and Mezzanine Note facilities.
At the reporting date, the drawdown limit under the Senior and Mezzanine Note facilities was $300 million (2016: $250 million)
and $25 million (2016: $20 million) respectively. As at 30 June 2017, $274,631,989 (2016: $235,301,990) and $20,156,266 (2016:
$18,301,266) respectively had been drawn down. Also included in the year end liability is accrued interest amounting to $2,161,324
(2016: $2,128,874).
The home loan facilities are 2 years rolling facilities, due to expire on 15 October 2019. Interest is payable at the applicable BBSW
rate plus a margin. The interest rate at 30 June 2017 for the Senior and Mezzanine Notes was 3.61% and 7.51% respectively.
The facilities are secured against current and future home loan assets (refer Note 3 of the Financial Statements). All borrowing
covenants were met during the year.
Current
Unsecured
Credit cards
Financing Liabilities
Secured
Borrowings to finance personal loan assets
Non-recourse borrowings to finance home loan assets
Consolidated Entity
2017
$
2016
$
681,389
389,733
27,028,411
296,942,075
323,970,486
16,545,520
255,725,769
272,271,289
45
Consolidated Entity
2017
$
2016
$
681,389
27,028,411
296,942,075
324,651,875
389,733
16,545,520
255,725,769
272,661,022
35,387,283
311,075,284
346,462,567
19,899,782
266,710,884
286,610,666
(a) Total Current, Non-Current and Financing liabilities:
Credit cards
Borrowings to finance personal loan assets
Non-recourse borrowings to finance home loan assets
(b) The carrying amounts of assets pledged as security are:
Personal loan assets
Home loan assets
Note 13. Financial instruments
Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash
equivalents, loans and borrowings and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit and
loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition, non-derivative
financial instruments are measured as described below.
A financial instrument is recognised if the Consolidated Entity becomes a party to the contractual provisions of the instrument.
Financial assets are de-recognised if the Consolidated Entity’s contractual rights to cash flows from the financial assets expire
or the Consolidated Entity transfers the financial asset to another party without retaining control or substantially all the risks
and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date i.e. the date the
Consolidated Entity commits itself to purchase or sell an asset. Financial liabilities are de-recognised if the Consolidated Entity’s
obligations specified in the contract expire, are discharged or cancelled.
Financial and capital risk management
The Consolidated Entity undertakes transactions in a range of financial instruments including:
• Cash and cash equivalents
• Trade and other receivables
• Personal loan assets
• Home loan assets
• Other financial assets
• Payables
Interest bearing liabilities include bank loans and secured note facilities.
FSA Group Limited AnnuAL report 2017 |
46
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 13. Financial instruments cont.
These financial 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
Trade and other receivables
Financing assets
Assets and receivables at amortised cost
Financial Liabilities
Payables at amortised cost
Current tax liabilities
Financing liabilities
Payables at amortised cost
Assets and liabilities measured at fair value through profit and loss:
Derivatives – Interest rate swap contracts
^ 2016 comparatives have been restated, refer to note 7.
The Consolidated Entity has exposure to the following risks from these financial instruments:
• credit risk
• liquidity risk
• market (interest) risk
Consolidated Entity
2017
$
2016 (Restated)
$
4,193,401
81,532,049
346,462,567
12,560,188
^74,962,686
286,610,666
432,188,017
^374,133,540
5,773,646
755,720
^5,822,161
695,897
323,970,486
272,271,289
330,499,852
^278,789,347
(916,927)
(2,328,279)
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 2017, 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 21.78% (2016: 14.16%).
It was the policy of the Consolidated Entity during the 2017 financial 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% (2016: 50%).
47
Credit risk
Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial 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 financial instruments entered into by the Consolidated Entity. Credit risk is concentrated in the following
categories of financial instruments:
• Trade and other receivables;
• Personal loan assets; and
• Home loan assets.
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, confirming 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 through the management of the Consolidated Entity.
Personal loan assets are secured by registered security interest over a motor vehicle. Home loan assets are secured by first
mortgage security over property.
The Consolidated Entity retains its security 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 loan.
Personal insolvency (debt agreements and personal insolvency agreements and bankruptcy) 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 2 and 3 of the Financial Statements.
Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due.
The Consolidated Entity’s approach in managing liquidity is to ensure that it will always have sufficient 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 cash flow 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.
FSA Group Limited has a secured non-recourse note facility comprising of Senior and Mezzanine Notes through a special
purpose entity, the Fox Symes Home Loans Warehouse Trust 1. As at the reporting date, the facility has a combined drawdown
limit of $325,000,000. This facility is secured against the book of loan assets created by the trust. As at 30 June 2017 the
Consolidated Entity had drawn $294,788,255 from this facility.
The Consolidated Entity is reliant on the renewal of existing home loan facilities, the negotiation of new home loan facilities, or the
issuance of residential mortgage backed securities. Each home loan facility is structured so that if it is not renewed or otherwise
defaults there is only limited recourse to the Consolidated Entity. If a home loan 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 home loan rate and the cost of funds, fee income and the write off of any unamortised
balance of deferred transaction costs.
The Directors are satisfied that any sale of home loans in repayment of home loan facilities or an event of default in relation to the
Consolidated Entity’s home loan facilities will not affect the Consolidated Entity’s ability to continue as a going concern.
FSA Group Limited’s subsidiary Fox Symes Home Loans Pty Ltd has a secured loan facility supporting its personal loan lending
activities. The personal loan facility has drawdown limits of $40,000,000. As at 30 June 2017, the Company had drawn $27,000,000
from this facility.
FSA Group Limited AnnuAL report 2017 | 48
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 13. Financial instruments cont.
The contractual maturity of the Consolidated Entity’s fixed and floating rate financial liabilities are as follows. The amounts
represent the future undiscounted principal and interest cash flows.
30 June 2017
Carrying
amount
$
Contractual
Cashflows
$
6 months or
less
$
6-12 months
$
1 to 2 years
$
2 to 5 years
$
Trade and other payables
1,400,460
1,400,460
1,400,460
Other payables
3,691,797
3,691,797
3,691,797
Other short term loans
681,389
681,389
681,389
Bank loans
27,028,411
27,640,107
27,640,107
–
–
–
–
–
–
–
–
–
–
–
–
Warehouse facilities
296,942,075
319,763,815
5,346,776
5,573,227
11,177,076
297,666,736
Total
329,744,132
353,177,568
38,760,529
5,573,227
11,177,076
297,666,736
Consolidated Entity
30 June 2016 (Restated)
Carrying
amount
$
Contractual
Cashflows
$
6 months or
less
$
6-12 months
$
1 to 2 years
$
2 to 5 years
$
Trade and other payables
1,998,992
1,998,992
1,998,992
Other payables
^3,433,436 ^3,433,436 ^3,433,436
Other short term loans
389,733
435,253
Bank loans
16,545,520
17,276,715
435,253
394,633
–
–
–
–
–
–
382,082
16,500,000
Warehouse facilities
255,725,769
267,042,752
5,247,041
5,461,637
256,334,074
Total
^278,093,450 ^290,187,148 ^11,509,355
5,843,719
272,834,074
–
–
–
–
–
–
^ 2016 comparatives has been restated, refer to note 7.
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
financial 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.
Home loan assets are lent on variable interest rates and are financed 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 under a two year rolling facility and are non-recourse to the Consolidated Entity except for loss suffered from
misrepresentations in relation to the origination of loans and breaches of its loan servicing or management obligations.
Personal loan assets are lent on fixed interest rates and are financed by variable rate borrowings from Westpac.
Under current historically low interest rates, the Board and Management have adopted the policy to keep approximate $80 million
of borrowings at fixed rates to mitigate the risk of future interest rate movements. On 12 June 2015 the Consolidated Entity entered
into an interest rate swap agreement, locking in $40 million of its funding cost at a fixed rate for 5 years. On 12 November 2015,
the Consolidated Entity entered into its second interest rate swap agreement, locking in a further $40 million of its funding cost
at a fixed rate for 5 years.
The Board and Management are satisfied that this policy is appropriate for the Consolidated Entity at this time.
All other sources of finance are immaterial to the Consolidated Entity in amount and exposure.
49
Interest rate sensitivity analysis
The tables below show the effect on profit after tax if interest rates had been 50 basis points (bps) higher or lower at reporting
date on the Consolidated Entity’s floating rate financial instruments (2016: 50 bps) and interest rate swap agreement. 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, 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 financial assets and liabilities.
If interest rates increased by 50bps (2016: 50bps)
If interest rates decreased by 50bps (2016: 50bps)
Note 14. Commitments
Operating leases (non-cancellable):
Minimum lease payments
– not later than one year
– later than one year and not later than five years
Consolidated Entity
Profit after tax
2017
$
2016
$
1,207,621
(1,228,470)
1,231,511
(1,028,386)
Consolidated Entity
2017
$
2016
$
1,560,231
2,882,672
4,442,903
1,061,779
3,430,341
4,492,120
Operating leases relate to the lease of the Consolidated Entity’s business premises and printing equipment rental.
FSA Group Limited AnnuAL report 2017 | 50
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 15. Cash flow information
Reconciliation of cash flows from operations to profit after tax
Profit after tax
Non-cash flows in profit/(loss):
Depreciation and amortisation
Reclassification – intangibles
Net gain on disposal of controlled entity
Unrealised (gain)/loss on derivatives
Loss on disposal of intangibles
Loss on disposal of plant & equipment
Loss on write off investments
Changes in assets and liabilities:
Increase in trade and other receivables
Decrease in other current assets
Decrease in trade and other payables
Increase in employee entitlements
Increase in other liabilities
Cash flows from operating activities
Cash flows from operating activities – discontinued operations
Cash flows from operating activities – continuing operations
Consolidated Entity
2017
$
2016
$
16,262,180
14,569,364
487,890
–
–
(1,411,352)
13,922
19,831
324,223
643,156
(373,384)
(2,347,220)
2,367,987
77,818
17,545
2,356,873
(7,580,120)
(7,284,086)
34,865
(184,874)
299,816
2,374,127
10,640,508
(487,198)
11,127,706
73,890
(3,508)
121,182
1,003,541
11,223,158
1,345,393
9,877,765
Note 16. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, which include cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Current
Cash on hand and at bank
Assets financed by financial liabilities
Personal loan cash and cash equivalents
Home loan cash and cash equivalents
Consolidated Entity
2017
$
2016
$
4,193,401
12,560,188
129,701
4,745,492
9,068,594
83,113
4,732,579
17,375,880
Note 17. Auditor’s remuneration
Amounts received or due and receivable by BDO East Coast Partnership:
Audit and review of financial statements
Taxation compliance services
Taxation advice and consulting
51
Consolidated Entity
2017
$
242,225
44,417
65,973
352,615
2016
$
251,597
44,187
69,164
364,948
Note 18. Derivatives
Derivative instruments used by the Consolidated Entity – interest rate swap contracts.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured
to their fair value at each reporting date.
On 12 June 2015 and 12 November 2015, the Consolidated Entity entered into interest rate swap contract to hedge exposure to
fluctuations in interest rates in accordance with the Consolidated Entity’s financial risk management policies (refer Note 13 of the
Financial Statements).
It is the Consolidated Entity’s policy to keep approximately $80 million of its borrowings at fixed rates of interest by entering into
interest rate swap contracts under which the Consolidated Entity is obliged to receive interest at variable rates and to pay interest
at fixed rates. On the 12 June 2015 the Consolidated Entity entered into an interest rate swap agreement, locking in $40 million
of its funding cost at a fixed rate for 5 years. On the 12 November 2015, the Consolidated Entity entered into another interest rate
swap agreement, locking in further $40 million of its funding cost at a fixed rate for 5 years. At the end of the reporting period, the
fixed rate was 2.56% and 2.30% respectively and variable rates were 1.67%.
The contracts require settlement of net interest receivable or payable each 30 days. Settlement dates coincide with the dates on
which interest is payable on the underlying debt. The contracts are settled on a net basis.
At the end of the reporting period for the Consolidated Entity, these contracts were liabilities with a fair value of $916,927.
Non-current liabilities
Interest rate swap contracts
Total derivative financial liabilities
Consolidated Entity
2017
$
916,927
916,927
2016
$
2,328,279
2,328,279
FSA Group Limited AnnuAL report 2017 | 52
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 19. Intangible assets
Intangibles
Goodwill on consolidation has an indefinite life, and 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 is tested annually for impairment and carried at cost less
accumulated impairment losses. Goodwill of $345,124 relates to the original investment by the parent company in FSA Australia
Pty Ltd and its controlled entities.
Software is measured on the cost basis less accumulated amortisation and accumulated impairment losses. Software is
amortised on a straight-line basis over its useful life of 2 to 3 years.
Consolidated Entity
Goodwill
Recognised on consolidation
Accumulated impairment
Software at cost
Accumulated amortisation
Movements during year (Goodwill):
Beginning of the year
Disposal
Movements during year (Software):
Beginning of the year
Additions
Disposal/write off
Amortisation
Impairment
2017
$
345,124
–
345,124
3,588,643
(1,915,760)
1,672,883
2,018,007
345,124
–
345,124
837,617
1,171,229
(13,922)
(322,041)
1,672,883
2016
$
345,124
–
345,124
2,613,713
(1,776,096)
837,617
1,182,741
3,172,873
(2,827,749)
345,124
423,954
942,216
(77,818)
(450,735)
837,617
The Directors have assessed that, the carrying value of $345,124 of goodwill attributable to the original investment by the
parent company in FSA Australia Pty Ltd and its controlled entities does not exceed the recoverable amount of this balance at
reporting date.
The Directors have determined that there are no reasonable changes in the key assumptions on which the recoverable amounts
of goodwill are based, for FSA Australia Pty Ltd, which would cause the carrying amount to exceed the recoverable amount.
Note 20. Fair value measurement
(a) The Group measures and recognises the interest rate swap financial instrument at fair value on a recurring basis after initial
recognition. Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises
the use of observable market data where it is available and relies as little as possible on entity specific estimates.
Valuation Techniques and Inputs Used to Measure Level 2 Fair Values:
Description
Financial liability:
Fair Value at
30 June 2017 ($)
Valuation Technique(s)
Inputs Used
Interest rate swap
916,927
Income approach using discounted cash flow methodology
and the funding valuation adjustment framework
Overnight Index
Swap rate
53
(b) Except as detailed in the following table, the Directors consider that due to their short-term nature the carrying amounts of
financial assets and financial liabilities, which include cash, current trade receivables, current payables and current borrowings,
are assumed to approximate their fair values. For the majority of the borrowings, the fair values are not materially different to
their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings
are of a short-term nature.
Financial assets
Current receivables net of deferred tax*
Non-current receivables net of deferred tax*
Personal loan assets
Home loan assets financed by non-recourse financing liabilities
Jun-17
Book value
$
Jun-17
Fair value
$
19,081,692
19,081,692
33,813,607
32,951,104
35,257,582
37,178,995
306,329,792
318,182,300
*
Included in current and non-current receivables is an amount of $58,839,655 relating to debt agreement receivables. These assets are taxed on a cash
basis, and consequently to present the book value on a consistent basis with the computation of fair value, current and non-current receivables have
been presented net of associated deferred tax liabilities amounting to $17,651,403.
Note 21. Provisions
Provisions
Provisions are recognised when the Consolidated Entity has a legal or constructive obligation, as a result of past events, for which
it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Bonuses
A provision is recognised for the amount expected to be paid under short term cash bonus arrangements if the Consolidated
Entity 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.
Employee benefits
A provision has been recognised for employee benefits relating to annual leave and long service leave.
As at 30 June 2017, the Consolidated Entity employed 194 full-time equivalent employees (2016: 182) plus a further 4 independent
contractors (2016: 4).
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.
Long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on high quality Australian corporate bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
FSA Group Limited AnnuAL report 2017 | 54
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 21. Provisions cont.
Current
Employee benefits
Non-current
Employee benefits
Note 22. Share capital
Ordinary share capital
Ordinary shares are classified as equity.
125,092,610 (2016: 125,092,610) Fully paid ordinary shares
Ordinary shares
Balance 1 July
Movement
Balance 30 June
Note 23. Interests in subsidiaries
Investments in subsidiaries
Consolidated Entity
2017
$
2016
$
2,117,272
1,826,342
669,588
660,701
2017
Number
6,707,233
2016
Number
6,707,233
125,092,610
125,092,610
–
–
125,092,610
125,092,610
Investments are brought to account on the cost basis in the parent entity’s financial 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 flow from investments has not been discounted to their present value in determining the recoverable amounts,
except where stated.
Name
Prospex Profile 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)
Easy Bill Pay Pty Ltd (1)
104 880 088 Group Holdings Pty Ltd (2)
Aravanis Insolvency Pty Ltd (1)
Fox Symes Business Services Pty Ltd (1)
(1) Investment held by FSA Australia Pty Ltd
(2) Investment held by FSA Group Limited
^ Prospex Profile Pty Ltd was deregistered on 14th December 2016
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Percentage of equity interest held
by the Consolidated Entity
2017
%
N/A
100
100
100
100
100
100
100
65
75
2016
%
100
100
100
100
100
100
100
100
65
75
55
The following entities are subsidiaries of Fox Symes Home Loans Pty Ltd
Name
Fox Symes Home Loans (Services) Pty Ltd
Fox Symes Home Loans (Management) Pty Ltd
Fox Symes Home Loans (Mortgage Management) Pty Ltd
Fox Symes Personal Loans Pty Ltd
Fox Symes Home Loans Warehouse Trust 1
FSHL Prime Warehouse Trust 1 (3)
(3) Established on 20th April 2017
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
The following entities are subsidiaries of 104 880 088 Group Holdings Pty Limited
Percentage of equity interest held
by the Consolidated Entity
2017
%
100
100
100
100
100
100
2016
%
100
100
100
100
100
N/A
Name
110 294 767 Capital Finance Pty Limited
102 333 111 Corporate Pty Limited
110 906 306 Property Holdings Pty Ltd *
111 044 510 Equity Partners Pty Limited
One Financial Corporation Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Percentage of equity interest held
by the Consolidated Entity
2017
%
100
100
N/A
100
100
2016
%
100
100
100
100
100
* 110 906 306 Property Holdings Pty Ltd was deregistered on 17th August 2016.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with
non-controlling interests in accordance with the accounting policy described in Note 1 of the Financial Statements:
Principal place
of business/
Country of
incorporation
Principal activities
Parent
Non-controlling interest
Ownership
interest
2017
Ownership
interest
2016
Ownership
interest
2017
Ownership
interest
2016
Name
Aravanis Insolvency
Pty Limited
Australia
Personal insolvency agreements
and Bankruptcies
Fox Symes Business
Services Pty Limited
Australia
Accounting and taxation
65%
75%
65%
75%
35%
25%
35%
25%
Summarised Statement of Financial Position
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Aravanis Insolvency Pty Limited
2017
$
2016
$
10,831,899
681,167
10,150,732
65,647
3,475,925
(3,410,278)
6,740,454
9,878,219
446,448
9,431,771
13,763
3,164,387
(3,150,624)
6,281,147
FSA Group Limited AnnuAL report 2017 | 56
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 23. Interests in subsidiaries cont.
Summarised Statement of Profit or Loss and Other Comprehensive Income
Revenue
Expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Total comprehensive income
Summarised Statement of Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase in cash and cash equivalents
Other financial information
Profit attributable to non-controlling interests
Accumulated non-controlling interests at the end of reporting period
Aravanis Insolvency Pty Limited
2017
$
2016
$
10,788,021
(6,115,461)
4,672,560
(1,413,253)
3,259,307
–
10,034,679
(5,582,203)
4,452,476
(1,344,309)
3,108,167
–
3,259,307
3,108,167
2,383,197
636,895
2,762,239
297,529
(2,800,000)
(3,000,000)
220,092
59,768
1,140,757
2,359,159
1,087,858
2,198,401
The non-controlling interest of Fox Symes Business Services Pty Limited was insignificant and therefore information has not
been provided.
Note 24. Key Management Personnel disclosures
Remuneration of Directors and Key Management Personnel
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Consolidated Entity
2017
$
2016
$
2,021,143
2,331,900
(7,814)
82,165
(25,154)
99,033
2,095,494
2,405,779
57
Note 25. Related party disclosures
(a) Key Management Personnel
Disclosures relating to Key Management Personnel are set out in the Remuneration Report.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 23 of the Financial Statements.
(c) Transactions with related parties
Transactions with related parties of Directors or Key Management Personnel are as disclosed in the Remuneration Report.
Note 26. Contingent liabilities
There were no contingent liabilities relating to the Consolidated Entity at reporting date except the following:
Home loans
At reporting date, loan applications that had been accepted by the Consolidated Entity but not yet settled amount to $9,679,431
(2016: $9,873,258). Home loans are usually settled within 4 weeks of acceptance.
Personal loans
At reporting date, loan application that had been accepted by the Consolidated Entity but not yet settled amount to $78,200
(2016: $326,833). Personal loans are usually settled within one week of acceptance.
Note 27. Events occurring after reporting date
Westpac Banking Corporation has increased its non-recourse senior home loan facility from $275 million to $300 million.
This facility has been renewed until October 2019. The Westpac senior facility is supported by a non-recourse mezzanine facility
provided by an institutional fund manager. This facility has been increased from $20 million to $25 million and has also been
renewed until October 2019.
There have been no events since the end of the financial year that impact upon the financial performance or position of the
Consolidated Entity as at 30 June 2017 except as follows:
• On 18 August 2017, Directors declared a 4.00 cent fully franked final dividend to shareholders to be paid on 8 September 2017
with a record date of 25 August 2017. This brings the full year dividend to 7.00 cents per share.
Note 28. Parent entity information
The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are
the same as those applied in the consolidated financial statements. Refer to Note 1 and other relevant notes within these financial
statements for a summary of the significant 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
Dividends to shareholders
Accumulated profit/(loss)
Total equity
2017
$
9,873,129
11,826,990
21,700,119
2,847,189
2,847,189
18,852,930
6,707,233
(8,756,483)
20,902,180
18,852,930
2016
$
18,127,064
11,826,990
29,954,054
12,394,940
12,394,940
17,559,114
6,707,233
(8,131,021)
18,982,902
17,559,114
FSA Group Limited AnnuAL report 2017 | 58
Notes to the Financial Statements cont.
For the year ended 30 June 2017
Note 28. Parent entity information cont.
Financial performance
Profit after income tax
Other comprehensive Income
Total Comprehensive income for the year
2017
$
2016
$
10,050,298
9,419,701
–
–
10,050,298
9,419,701
During the financial year, the parent entity received distribution income from its subsidiaries.
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 Ltd
and Fox Symes Debt Relief Services Pty Ltd. Refer to Note 29 for further details.
There are no contingent liabilities or commitments in the parent entity (2016: Nil).
Note 29. 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 Ltd and Fox Symes Debt Relief Services Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and
directors’ report under ASIC Corporation (Wholly owned companies) Instrument 2016/785 (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 Profit or Loss and Other Comprehensive Income and Statement of Financial Position
of the ‘Closed Group’.
Statement of Profit or Loss and Other Comprehensive Income
2017
$
2016
$
Revenue and other income
Fees from services
Finance income
Finance expense
Net finance income
Total revenue and other income net of finance expense
Expenses from continuing activities
Profit before income tax
Income tax expense
Profit after income tax
Other Comprehensive Income
34,613,146
213,265
(427)
212,838
34,825,984
(4,061,676)
30,764,308
(9,285,140)
21,479,168
–
31,935,273
56,048
(2,830)
53,218
31,988,491
(3,919,204)
28,069,287
(8,424,151)
19,645,136
–
Total Comprehensive income for the year
21,479,168
19,645,136
59
2017
$
2016 (Restated)
$
3,297,129
13,847,865
2
11,978,374
^11,734,248
2
17,144,996
^23,712,624
185,961,370
^163,354,454
11,826,990
11,826,990
197,788,360
^175,181,444
214,933,356
^198,894,068
776,737
484,407
1,261,144
17,651,403
17,651,403
18,912,547
196,020,809
6,707,237
189,313,572
196,020,809
^963,021
406,055
^1,369,076
16,106,867
16,106,867
^17,475,943
181,418,125
6,707,237
174,710,888
181,418,125
Statement of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
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
Tax Liabilities
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Retained earnings
Total Equity
^ 2016 comparatives have been restated, refer to note 7.
FSA Group Limited AnnuAL report 2017 | 60
Directors’ Declaration
In the Directors’ opinion:
• The financial statements, comprising the statement of profit or loss and other comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity, accompanying notes, are in accordance with the
Corporations Act 2001 and:
a. comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
b. give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2017 and of its performance for the year
ended on that date.
• The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards.
• In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
• The Directors have been given the declarations by the Executive Directors and Chief Financial Officer required by Section 295A
of the Corporations Act 2001.
FSA Group Limited, FSA Australia Pty Ltd and Fox Symes Debt Relief Services Pty Ltd identified in note 29 are parties to the
deed of cross guarantee under which each company guarantees the debts of the others. At the date of this declaration there are
reasonable grounds to believe that the companies which are parties to this deed of cross guarantee will as a Consolidated Entity
be able to meet any obligations or liabilities to which they are, or may become, subject to, by virtue of the deed of cross guarantee
described in note 29.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
Tim Odillo Maher
Executive Director
Sydney
18 August 2017
Deborah Southon
Executive Director
Sydney
18 August 2017
61
Independent Auditor’s Report
To the members of FSA Group Limited
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
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Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of FSA Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of FSA Group Limited (the Company) and its subsidiaries (the
Group), which comprises the statement of financial position as at 30 June 2017, the statement of profit
or loss and other comprehensive income, the statement of changes in equity and the statement of cash
flows for the year then ended, and notes to the financial report, including a summary of significant
accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
FSA Group Limited AnnuAL report 2017 |
62
Independent Auditor’s Report cont.
To the members of FSA Group Limited
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Recoverability of trade receivable balances
Key audit matter
How the matter was addressed in our audit
The Group summarises the trade receivable balances
Our audit procedures included, among others;
and the provision applied in note 2 of the financial
statements.
As at 30 June 2017 the Group had gross trade
receivables of $93.8m, a provision of $12.6m and net
trade receivables of $81.2m. These balances are
considered significant to the Group due to their size
• Testing of controls surrounding recognition of
receivable balances and their recovery;
• Testing of the discounting of non-current
receivables and assessment of whether the discount
rate applied is reasonable; and
and the judgements involved in determining the
• Analysing the data supporting the provisioning rate
provision for impairment and the consequent revenue
including historical cash collections data.
recognition.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
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Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 22 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of FSA Group Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
BDO East Coast Partnership
Arthur Milner
Partner
Sydney, 18 August 2017
FSA Group Limited AnnuAL report 2017 |
64
Shareholder Information
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 28 July 2017.
(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
294
446
240
278
84
1,342
Number
of shares
128,741
1,379,389
2,056,367
8,946,243
112,581,870
125,092,610
The number of security investors holding less than a marketable parcel of 368 securities ($1.360 on 28/07/2017) is 138 and they
hold 3,532 securities.
(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
Capital Management Corporation Pty Ltd
Mazamand Group Pty Ltd
ADST Pty Ltd
BJR Investment Holdings Pty Ltd
UBS Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Ruminator Pty Limited
Contemplator Pty Limited
Bulwarra Pty Ltd
10
Investment Custodial Services Limited
11 Dundas Ritchie Investments Pty Ltd
12 Mr David Matthew Fite
13
14
15
16
17
Aust Executor Trustees Ltd
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