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Non-Standard Finance PlcChallenges,
Change and
Progress
Fourth year of our 5 year
strategic plan
FSA Group Limited
Annual Report 2019
Our Plan
Home
Loans
Services
Earnings
Capital
Management
Personal
Loans
Opportunities
1 Cautionary Statements and Disclaimer Regarding
Forward-Looking Information
2 Our Business
3 Chairman’s Letter
4 A 5 Year Strategic Plan
5 Executive Directors’ Review
10 Directors and Secretary
FSA Group Limited ABN 98 093 855 791
FSA Group Limited
Annual Report 2019
1
For over 19 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.
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.
Forward-looking statements are based
on assumptions regarding the Company’s
financial position, business strategies,
plans and objectives of management for
future operations and development and
the environment in which the Company
will operate. Those assumptions may not
be correct or exhaustive.
Because these forward-looking statements
are subject to assumptions and uncertainties,
actual results may differ materially from
those expressed or implied by these
forward-looking statements. You are
cautioned not to place undue reliance
on any forward-looking statements.
Forward-looking statements are based
on current views, expectations and
beliefs as at the date they are expressed.
The Company disclaims any responsibility
to and undertakes no obligation to update
or revise any forward-looking statement
to reflect any change in the Company’s
circumstances or the circumstances on
which a statement is based, except as
required by law.
The Company disclaims any responsibility
for the accuracy or completeness of any
forward-looking statement to the extent
permitted by law. Unless otherwise stated,
the projections or forecasts included in
this Annual Report have not been audited,
examined or otherwise reviewed by the
independent auditors of the Company.
This Annual Report is not an offer or
invitation for subscription or purchase
of, or a recommendation of securities.
2
Our Business
Services
Consumer Lending
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.
FSA Group offers home loans to assist clients
with property who wish to consolidate their debt
and personal loans to assist clients who wish to
purchase a motor vehicle.
FSA Group Limited
Annual Report 2019
3
Chairman’s
Letter
Dear Shareholders,
The 2019 financial year, the fourth year of our five year strategic plan, has been a year of challenges, change
and progress.
As a consequence of the Royal Commission, banks and other financial institutions adopted a softer approach to debt
collection. The personal insolvency statistics released by the Australian Financial Security Authority reported that
bankruptcies for the 2019 financial year were at their lowest level in 24 years. These figures clearly reflect the outcome
of a more benign collection environment. This temporarily slowed demand for our services in the second half of the
financial year. In addition we allocated key management resources during the latter half of the financial year to
prepare for the amendments to the Bankruptcy Act 1966, which took effect from 27 June 2019. This also impacted on
growth within our Consumer Lending segment. Despite these challenges we have successfully navigated this period.
The Services segment offers a range of services to assist clients wishing to enter into a payment arrangement
with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements
and bankruptcy. FSA Group is the largest provider of these services in Australia. During the 2019 financial year new
client numbers for informal arrangements and debt agreements decreased by 21% and for personal insolvency
agreements and bankruptcy increased by 5% compared to the previous corresponding period. During the year
informal arrangement and debt agreement clients under administration decreased to 21,725, down 1% and for
personal insolvency agreements and bankruptcy increased to 1,290, up 3%. FSA Group manages $379 million
of unsecured debt under informal arrangements and debt agreements and during the 2019 financial year paid
$88 million in dividends to creditors.
The Consumer Lending segment offers home loans and personal loans to assist clients wishing to consolidate their
debt or to purchase a motor vehicle. During the 2019 financial year our home loan and personal loan pools continued
to grow, growing from $408 million to $441 million, an 8% increase. We are still aiming to grow our loan pool to
around $500 million over our 5 year plan. During the year Westpac increased and renewed our home loan and
personal loan facilities.
For the 2019 financial year FSA Group generated $69.7 million in operating income, a 5% increase, and a profit after
tax attributable to members of $14.4 million, a 14% increase compared to the results of 2018. Our net cash inflow
from operating activities was $17.1 million, an 18% increase.
I advise that the Directors have declared a fully franked final dividend of 3.00 cents per share for the 2019 financial
year. This brings the full year dividend to 5.00 cents per share.
We are moving into the last year of our 5 year strategic plan. Our focus for the remaining year is outlined in the
Executive Directors’ Review under “Strategy and Outlook”.
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
4
A 5 Year
Strategic Plan
2019 Progress
Services
Informal Arrangements
and Debt Agreements
Personal Insolvency
Agreements and Bankruptcy
• 21% decrease in new clients
• 5% increase in new clients
• 21,725 clients, down 1%
• 1,290 clients, up 3%
• $379m of debt managed
• $88m paid to creditors
Consumer Lending
Home Loans
Personal Loans
• Loan pool $382m, up 6%
• Loan pool $59m, up 25%
• >30 day arrears 1.42%
• >30 day arrears 3.36%
• Losses $278,405
• Losses $564,022
• Westpac facility $375m
• Westpac facility $75m
• Institutional facility $30m
FSA Group Limited
Annual Report 2019
5
Executive Directors’
Review
Dear Shareholders,
The 2019 financial year, the fourth year of our five year strategic plan, has been a year of challenges, change
and progress.
For the 2019 financial year FSA Group generated $69.7 million in operating income, a 5% increase, and a profit after
tax attributable to members of $14.4 million, a 14% increase compared to the results of 2018. Our net cash inflow
from operating activities was $17.1 million, an 18% increase.
We advise that the Directors have declared a fully franked final dividend of 3.00 cents per share for the 2019 financial
year. This brings the full year dividend to 5.00 cents per share.
The Financial Overview below summarises our performance.
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 attributable to members
Return on Equity
FY2018
FY2019
% Change
$66.2m
$69.7m
$19.7m
$12.6m
10.08c
$14.5m
7.00c
$22.2m
$14.4m
11.52c
$17.1m
5.00c
$44.0m
$51.0m
30%
30%
5%
13%
14%
14%
18%
29%
16%
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 Financial Overview above includes the before tax mark to market unrealised gain of $0.2 million in 2018 and the
unrealised loss of $0.6 million in 2019 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.
6
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
Home Loans
Personal Loans
Other/unallocated
operating income
Profit before tax by segment
Services
Consumer Lending
Home Loans
Personal Loans
Other/unallocated1
profit before tax
FY2018
FY2019
% Change
$47.4m
$46.8m
1%
$10.5m
$11.2m
$8.2m
$0.1m
$11.7m
$0.1m
6%
43%
$66.2m
$69.7m
5%
FY2018
FY2019
% Change
$10.2m
$11.6m
13%
$6.0m
$3.5m
$5.9m
$5.3m
1%
51%
($0.1m)
($0.7m)
$19.7m
$22.2m
13%
Note 1: “Other/unallocated” includes the before tax mark to market unrealised gain of $0.2 million in 2018 and the unrealised loss of $0.6 million in
2019 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 segment offers a range of services to assist clients wishing to enter into a payment arrangement
with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements
and bankruptcy. FSA Group is the largest provider of these services in Australia.
As a consequence of the Royal Commission, banks and other financial institutions adopted a softer approach to
debt collection. The personal insolvency statistics released by the Australian Financial Security Authority reported
that bankruptcies for the 2019 financial year were at their lowest level in 24 years. These figures clearly reflect the
outcome of a more benign collection environment. This temporarily slowed demand for our services in the second
half of the financial year. In addition we allocated key management resources during the latter half of the financial
year to prepare for the amendments to the Bankruptcy Act 1966, which took effect from 27 June 2019. This also
impacted on growth within our Consumer Lending segment. Despite these challenges we have successfully
navigated this period.
FSA Group Limited
Annual Report 2019
7
Legislative changes
The amendments to the Bankruptcy Act 1966, which took effect from 27 June 2019, will limit the time to repay
debt under a debt agreement to three years for non-home owners while allowing those who own a home up
to five years.
The amendments have created two classes of debtors: those with a home and those without a home.
Non-home owners may be adversely affected by this change as a three year term may not provide
commercially acceptable rates of return to creditors resulting in these three year debt agreement proposals
being rejected. The likely consequence of this may be an increase in non-home owners exploring other
solutions to resolve their unmanageable debt.
FSA Group is a diversified debt solution provider. We offer a range of solutions to assist clients with
unmanageable debt.
We do not see these amendments as having a material impact on the number of clients we are able
to assist or the long term financial performance of FSA Group.
During the 2019 financial year new client numbers for informal arrangements and debt agreements decreased
by 21% and for personal insolvency agreements and bankruptcy increased by 5% compared to the previous
corresponding period.
During the year informal arrangement and debt agreement clients under administration decreased to 21,725,
down 1% and for personal insolvency agreements and bankruptcy increased to 1,290, up 3%. FSA Group manages
$379 million of unsecured debt under informal arrangements and debt agreements and during the 2019 financial year
paid $88 million in dividends to creditors.
Informals and Debt Agreements
FY2017
FY2018
FY2019
% Change
New Clients
Clients under administration
Debt managed
Dividends paid
PIA’s and Bankruptcy
New Clients
Clients under administration
5,395
20,194
$366m
$81m
5,797
21,885
$398m
$82m
4,573
21,725
$379m
$88m
21%
1%
5%
7%
FY2017
FY2018
FY2019
% Change
354
1,404
415
1,253
436
1,290
5%
3%
The Services segment achieved a profit before tax of $11.6 million, a 13% increase.
8
Consumer Lending
The Consumer Lending segment offers home loans and personal loans to assist clients wishing to consolidate
their debt or to purchase a motor vehicle.
During the 2019 financial year our home loan and personal loan pools continued to grow, growing from $408 million
to $441 million, an 8% increase. We are still aiming to grow our loan pool to around $500 million over our 5 year plan.
Loan Pool Data
Weighted average loan size
Security type
Weighted average loan to valuation ratio
Variable or fixed rate
Geographical spread
Loan Pools
Home Loans
Personal Loans
Total
Arrears > 30 day
Home Loans
Personal Loans
Losses
Home Loans
Personal Loans
Home Loans
Personal Loans
$356,370
$22,261
Residential home
Motor vehicle
67%
Variable
All states
91%
Fixed
All states
FY2017
FY2018
FY2019
% Change
$306m
$360m
$382m
$35m
$48m
$59m
$342m
$408m
$441m
6%
25%
8%
FY2017
FY2018
FY2019
2.21%
1.56%
1.40%
1.55%
1.42%
3.36%
FY2017
FY2018
FY2019
$340,465
$501,494
$278,405
$199,594
$263,251
$564,022
As our loan pools grow we expect to increase and renew our facilities as required. During the year, Westpac renewed
our $375 million non-recourse senior home loan facility. The senior facility is supported by a non-recourse mezzanine
facility provided by an institutional fund manager which was increased to $30 million and also renewed.
For our personal loans, Westpac approved a limited recourse senior personal loan facility of $75 million to support
future growth.
Funding
Home Loans
Personal Loans
Facility Type
Provider
Westpac
Limit
$350m
Non-recourse
senior
Non-recourse
senior
Non-recourse
mezzanine
Limited recourse
senior
Westpac
$25m
Institutional
$30m
Westpac
$75m
Availability
End Date
Maturity
Date
July
2021
July
2021
July
2021
April
2021
October
2021
October
2021
October
2021
April
2023
The Consumer Lending segment achieved a profit before tax of $11.2 million, an 18% 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 2020
financial year.
FSA Group Limited
Annual Report 2019
9
Net cash inflow from operating activities
During the 2019 financial year, FSA Group maintained strong net cash inflow driven by long term annuity income from
its clients. Net cash inflow from operating activities was $17.1 million, a 18% increase.
Net cash inflow from operating activities
$11.1m
$14.5m
$17.1m
18%
FY2017
FY2018
FY2019
% change
No of
clients/loan
pool size
Average
client life
in years
Services
Informals/Debt Agreements
21,725
4.5 to 5.5
Consumer Lending
PIA/Bankruptcy
Home Loans
Personal Loans
1,290
$382m
$59m
3
3 to 4
4 to 5
Strategy and Outlook
We are moving into the last year of our 5 year strategic plan. Our focus over the 2020 financial year will be as follows:
Services
Maintain our leading position in a niche market.
Consumer Lending
Aiming to grow our loan pools to around $500 million.
earnings
Expect earnings growth of 5% to 15% per annum.
Capital management
Expect our full year dividend to be between 5 cents to 7 cents per share with the
balance of earnings to be re-invested to support the growing loan pools. We initially
planned to secure mezzanine funding for our personal loan facility when our loan
pool reached $100 million. We now plan to secure mezzanine funding sooner.
preparing our business
for the future
Continuing with the offshoring to our Philippine (31 staff) and Indian (15 staff)
offices a number of administrative tasks and automating others.
Our People
Our work environment fosters diversity, equal employment opportunities, fairness and embraces and supports
personal growth, continuous learning and training opportunities for all our team. We invest in our team to ensure that
they have the skills, competencies, and knowledge they need to deliver excellent and ethical customer service and
support. Our people are our greatest asset and we acknowledge and we thank them for 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
10
Directors
and Secretary
(From L to R, top to bottom)
Tim Odillo Maher
Stan Kalinko
David Bower
Deborah Southon
Sam Doumany
Cellina Chen (Secretary)
FSA Group Limited
Annual Report 2019
11
Financial Statements
for the year ended 30 June 2019
12 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 Comprehensive Income
26 Statement of Financial Position
27 Statement of Changes in Equity
64 Directors’ Declaration
65 Independent Auditor’s Report
68 Shareholder Information
70 Corporate Information
12
Directors’ Report
For the year ended 30 June 2019
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 2019.
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
FSA Group Limited
Annual Report 2019
13
Former (listed company) directorships in last 3 years
Nil
Special responsibilities
Nil
Interest in shares and options
Ordinary shares
42,809,231
Deborah Southon (Executive Director)
experience and expertise
Ms Southon was appointed on 30 July 2002.
Ms Southon has attained a wealth of experience in the government and community services sectors having worked
for the Commonwealth Department of Health and Family Services, the former Department of Community Services,
and the Smith Family.
Ms Southon has 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 Board of Indigenous Community Volunteers Limited. 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
Member of the Audit & Risk Management Committee and Chairperson of the Remuneration Committee
Interest in shares and options
Ordinary shares
120,000
14
Directors’ Report cont.
For the year ended 30 June 2019
Information on Directors cont.
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
Chairperson of the Audit & Risk Management Committee and a Member of the Remuneration Committee
Interest in shares and options
Ordinary shares
90,800
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 $14,411,166 (2018: $12,603,134).
Dividends declared and paid during the year
• On 27 September 2018, a fully franked final dividend relating to the year ended 30 June 2018 of $5,003,704
was paid at 4.00c per share; and
• On 28 March 2019, a fully franked interim dividend of $2,501,853 was paid at 2.00c per share.
Dividends declared after the end of year
On 22 August 2019, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid
on 13 September 2019 with a record date of 29 August 2019.
FSA Group Limited
Annual Report 2019
15
Operating and Financial Review
Detailed comments on operations are included separately in the Executive Directors’ Review, on pages
5 to 9 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 $46,790,463 at 30 June 2018 to $54,112,380 at 30 June 2019.
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 13 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.
Matters subsequent to the end of the financial year
Westpac Banking Corporation renewed its $375m non-recourse senior home loan facility until October 2021.
The Westpac senior facility is supported by a non-recourse mezzanine facility provided by an institutional fund
manager. This facility was increased from $25 million to $30 million and also renewed until October 2021.
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 2019 except as follows:
• On 22 August 2019, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid
on 13 September 2019 with a record date of 29 August 2019.
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 2019 there were no options on issue and no shares were issued during the year following the exercise
of options.
16
Directors’ Report cont.
For the year ended 30 June 2019
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 2019.
Key Management Personnel have the authority and responsibility for planning, directing and controlling the activities
of the Consolidated Entity.
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 the 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 remuneration structure of Non-Executive
Director, Executive Director and Senior Executive 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.
FSA Group Limited
Annual Report 2019
17
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 2019 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.
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 2019 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.
18
Directors’ Report cont.
For the year ended 30 June 2019
Remuneration Report (Audited) cont.
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 2019
19
(b) Remuneration of Directors and Key Management Personnel
Table 1
Short-term
Long-term
Salary
& Fees
Cash
Bonus
Non-cash
benefits
Non-cash
benefits
Post-
Employ-
ment
Super-
annuation
and other
benefits
Perfor-
mance
based
Total
$
$
%
$
–
–
–
–
–
–
$
Non-Executive Directors
Sam Doumany
145,125
135,779
91,375
85,490
75,249
70,404
2019
2018
Stan Kalinko
2019
2018
David Bower
2019
2018
Executive Directors
Tim Odillo Maher
2019
2018
Deborah Southon
547,500
*325,000
547,500
325,000
$
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
13,787
12,899
158,912
148,678
8,680
8,122
100,055
93,612
7,149
6,688
82,398
77,092
–
–
872,500
872,500
2019
2018
522,500
*325,000
**32,264
522,500
325,000
(12,317)
8,732
10,850
25,000
913,496
25,000
871,033
Senior Executive
Cellina Chen
2019
2018
Total Remuneration
227,842 ^130,000
**33,171
194,180
115,000
45,772
4,179
892
20,531
415,723
18,778
374,622
2019
2018
1,609,591
780,000
1,555,853
765,000
65,435
33,455
12,911
11,742
75,147
2,543,084
71,487
2,437,537
* 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 2018. 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 2018. 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.
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:
$250,000 – $350,000
Deborah Southon: $250,000 – $350,000
Senior Executive:
Cellina Chen:
$75,000 – $150,000
–
–
–
–
–
–
37%
37%
36%
37%
31%
31%
20
Directors’ Report cont.
For the year ended 30 June 2019
Remuneration Report (Audited) cont.
Consolidated Entity’s earnings and movement in shareholder’s wealth for the last five years is as follows:
30 June 2019
30 June 2018
30 June 2017
30 June 2016
30 June 2015
Operating income for
financial years prior to the
adoption of AASB 15
Operating income for
financial years which
reflect the adoption of
AASB 15
Net profit before tax for
financial years prior to the
adoption of AASB 15
Net profit before tax for
financial years which
reflect the adoption of
AASB 15
Net profit and other
comprehensive income
after tax attributable to
members for financial
years prior to the
adoption of AASB 15
Net profit and other
comprehensive income
after tax attributable to
members for financial
years which reflect the
adoption of AASB 15
Share price at the start of
the year
Share price at the end
of the year
Dividends declared for
the year
Basic EPS (cents) for
financial years prior to the
adoption of AASB 15
Basic EPS (cents) for
financial years which
reflect the adoption of
AASB 15
Diluted EPS (cents)
Diluted EPS (cents)
–
–
$70,630,226
$62,078,752
$69,619,295
$69,742,110
$66,155,145
–
–
–
–
–
$23,492,625
$16,842,459
$22,443,940
$22,164,979
$19,670,917
–
–
–
–
–
$15,116,886
$13,478,685
$14,688,253
$14,411,166
$12,606,598
$1.40
$1.02
6.00c
$1.36
$1.40
7.00c
–
$1.01
$1.36
7.00c
–
$1.27
$1.01
7.00c
–
$1.23
$1.27
6.50c
–
–
12.08
10.78
11.74
11.52
–
11.52
10.08
–
10.08
–
12.08
–
–
10.78
–
–
11.74
–
AASB 15 was adopted from 1 July 2018. 30 June 2018 comparative have been restated. As permitted by AASB,
comparatives prior to this have not been restated.
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.
FSA Group Limited
Annual Report 2019
21
(c) Options issued as part of remuneration for the year ended 30 June 2019
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 2018
Purchased
on market
Other
Changes
Balance
30 June 2019
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
120,000
90,800
–
57,080,078
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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 $7,320 (2018: $23,889). The supplies were
purchased on normal commercial terms.
(i) Voting and comments made at the Company’s 2018 Annual General Meeting (“AGM”)
At the 2018 AGM, 99.54% of the votes received supported the adoption of the Remuneration Report for the year ended
30 June 2018. 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
Number of meetings
held while in office
Meetings
attended
8
8
8
8
8
8
8
8
8
8
8
22
Directors’ Report cont.
For the year ended 30 June 2019
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
Number of meetings
held while in office
Meetings
attended
2
2
2
2
2
2
2
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
2
2
2
2
2
2
2
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.
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 2019:
Tax compliance services
Taxation advice and consulting
Other training and consulting
$69,975
$43,955
$8,960
FSA Group Limited
Annual Report 2019
23
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
22 August 2019
24
Auditor’s Independence Declaration
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 2019, 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, 22 August 2019
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 2019
25
Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2019
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
Notes
Consolidated Entity
2019
$
2018
$
6
6
6
6
47,489,297
48,202,802
39,466,776
33,220,328
(17,213,963)
(15,190,637)
22,252,813
18,029,691
–
(77,348)
69,742,110
66,155,145
(9,466,078)
(8,402,986)
(6,204,682)
(6,720,917)
(31,279,886)
(31,596,241)
Unrealised (loss) or gains on fair value movement of derivatives
(626,485)
235,916
expenses from continuing operations
profit before income tax
Income tax expense
profit after income tax
other comprehensive income, net of tax
total comprehensive income for the year
total profit for the year and total comprehensive income
for the year attributable to:
Non-controlling interests
Members of the parent
Net profit for the year
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(47,577,131)
(46,484,228)
22,164,979
19,670,917
10a
(6,707,505)
(6,017,678)
15,457,474
13,653,239
–
–
15,457,474
13,653,239
1,046,308
1,046,642
14,411,166
12,606,597
15,457,474
13,653,239
11
11
11.52
11.52
10.08
10.08
The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to
the Financial Statements.
The results for the year ended 30 June 2018 have been restated as outlined in Note 3.
26
Statement of Financial Position
as at 30 June 2019
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
Contract liabilities
Current tax liabilities
Borrowings
Provisions
Derivatives
Total Current Liabilities
Non-Current Liabilities
Contract 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
Retained earnings
Total equity attributable to members of the parent
Non-controlling interest
Total Equity
Consolidated Entity
Notes
2019
$
2018
$
16
4
4
10c
20
16
16
5
5
12
23
10
13
22
19
23
22
10d
19
13
13
24
3,303,166
22,077,714
665,635
26,046,515
8,771,602
385
529,440
958,720
2,689,888
12,950,035
2,414,087
6,356,612
59,402,449
381,636,117
449,809,265
488,805,815
6,504,759
490,481
2,129,633
1,024,869
2,293,985
630,827
13,074,554
790,427
443,859
2,676,565
716,326
4,627,177
45,919,619
371,072,085
416,991,704
434,693,435
54,112,380
6,707,233
44,247,880
50,955,113
3,157,267
54,112,380
2,567,378
18,540,392
511,498
21,619,268
9,572,304
385
737,699
2,402
2,208,659
12,521,449
281,803
6,950,134
47,614,307
360,263,910
415,110,154
449,250,871
4,919,814
304,470
1,618,343
954,775
2,242,084
–
10,039,486
1,545,479
510,147
1,278,506
681,011
4,015,143
37,321,732
351,084,047
388,405,779
402,460,408
46,790,463
6,707,233
37,342,271
44,049,504
2,740,959
46,790,463
The Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.
Balances as at 30 June 2018 have been restated as outlined in Note 3.
FSA Group Limited
Annual Report 2019
27
Statement of Changes in Equity
For the year ended 30 June 2019
Share
capital
$
Retained
earnings
$
Non-
controlling
interest
$
Total
$
Balance at 30 June 2017
6,707,233
33,492,157
2,394,317
42,593,707
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
–
–
–
–
–
12,606,597
1,046,642
13,653,239
–
–
–
12,606,597
1,046,642
13,653,239
(8,756,483)
–
(8,756,483)
–
(700,000)
(700,000)
Balance at 30 June 2018
6,707,233
37,342,271
2,740,959
46,790,463
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
–
–
–
–
–
14,411,166
1,046,308
15,457,474
–
–
–
14,411,166
1,046,308
15,457,474
(7,505,557)
–
(7,505,557)
–
(630,000)
(630,000)
Balance at 30 June 2019
6,707,233
44,247,880
3,157,267
54,112,380
The Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.
Opening retained earnings as at 30 June 2017 and profit after income tax for the year ended 30 June 2018 have been
restated as outlined in Note 3.
28
Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Finance income received
Finance cost paid
Income tax paid
Consolidated Entity
2019
$
2018
$
Notes
Inflows/
(Outflows)
Inflows/
(Outflows)
46,556,452
45,136,635
(46,090,053)
(44,019,241)
39,322,444
33,032,387
(17,204,093)
(14,545,345)
(5,504,295)
(5,093,005)
Net cash inflow from operating activities
16
17,080,455
14,511,431
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangibles
Net increase in home loan assets
Net increase in personal loan assets
Net decrease/(increase) 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
(89,008)
(570,534)
(461,126)
(638,783)
(21,748,188)
(54,135,802)
(12,916,270)
(13,144,401)
7,500
(7,501)
(35,316,500)
(68,387,613)
28,646,152
64,063,386
(630,000)
(700,000)
(7,505,557)
(8,756,483)
20,510,595
54,606,903
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
2,274,550
9,799,315
Cash and cash equivalents at the end of the financial year
17
12,073,865
730,721
9,068,594
9,799,315
The Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.
FSA Group Limited
Annual Report 2019
29
Notes to the Financial Statements
For the year ended 30 June 2019
Note 1. Summary of significant accounting policies
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 22 August 2019.
New or amended Accounting Standards and Interpretations adopted
The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period – refer
to Note 3.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
The financial statements are presented in Australian dollars and rounded to the nearest dollar.
Reporting basis and conventions
FSA Group Limited and its controlled entities 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 financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, certain classes of property, plant and equipment and derivative financial instruments.
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 2019 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.
30
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 1. Summary of significant accounting policies cont.
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 4
• Impairment of loans – refer to Note 5
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 2019.
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.
AASB 16 Leases
This Standard is applicable to annual reporting periods beginning on or after 1 January 2019. The Standard replaces
AASB 117 ‘Leases’ and for lessees will eliminate the classifications of operating leases and finance leases. Subject to
exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial position, measured at the present value
of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases
of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a ‘right-of-use’ asset is recognised or lease payments are expensed to
profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for
the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher
when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in
profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated
into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the Standard does not substantially change how a lessor accounts for leases
The Consolidated Entity has commenced its assessment of the implication of adopting this Standard will not
be significant.
FSA Group Limited
Annual Report 2019
31
Note 2. Critical accounting judgements, estimates
and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases
its judgements, estimates and assumptions on historical experience and on other various factors, including
expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Revenue from contracts with customers
The key performance obligation of the Consolidated Entity in relation to the contract with the customer is considered
to be transferring the value of services to that customer and their related stakeholders. These services are a series of
distinct services that are substantially the same; therefore, the revenue is recognised using an output method based
on the number of months’ services to be provided over the term of the contract.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience and historical collection rates,
adjusted for current conditions and forward looking information that is available without undue cost or effort.
Provision for impairment of trade receivables
The provision for impairment of trade receivables assessment requires a degree of estimation and judgement.
The level of the provision 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 Services segment.
Fair value measurement hierarchy
The Consolidated Entity is required to classify all assets and liabilities, measured at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable
judgement is required to determine what is significant to fair value and therefore which category the asset or liability
is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models.
These include discounted cash flow analysis or the use of observable inputs that require significant adjustments
based on unobservable inputs.
Income tax
The Consolidated Entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement
is required in determining the provision for income tax. There are many transactions and calculations undertaken
during the ordinary course of business for which the ultimate tax determination is uncertain. The Consolidated Entity
recognises liabilities for anticipated tax audit issues based on the Consolidated Entity’s current understanding of the
tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will
impact the current and deferred tax provisions in the period in which such determination is made.
Employee benefits provision
As discussed in Note 1, the liability for employee benefits expected to be settled more than 12 months from the
reporting date are recognised and measured at the present value of the estimated future cash flows to be made in
respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition
rates and pay increases through promotion and inflation have been taken into account.
32
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 3. Restatement of comparatives – adoption of new
Accounting Standards
Adoption of AASB 9 Financial Instruments
The Consolidated Entity adopted this Standard from 1 July 2018 and the impact on the financial performance or
position of the Consolidated Entity is immaterial.
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’).
The Consolidated Entity’s financial assets continue to be recognised and measured under a policy of amortised
cost. New impairment requirements use an ‘expected credit loss’ (‘ECL’) model to recognise an allowance against
these financial assets. Impairment is measured by the Consolidated Entity using the full lifetime ECL method.
Adoption of AASB 15 ‘Revenue from Contracts with Customers’
The Consolidated Entity adopted this Standard on 1 July 2018.
The Standard provides a single model for revenue recognition. 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.
Debt agreement treatment in previous years
Previously, revenue from debt agreements was recognised in accordance with the proportion of services provided
throughout the administration period, using a cost plus margin method.
The asset recognised in previous years was recognised and measured as a financial asset, together with a deferred
tax liability arising from taxable temporary differences.
Debt agreement contract analysis under AASB 15
A summary of the Consolidated Entity’s findings is as follows:
a) Under the Bankruptcy Act 1966, the administrator has the legal obligation to act on behalf of the debtor and
creditors. The debt agreement meets the definition of a contract and the debtor is the Consolidated Entity’s
customer.
b) The administrators’ obligations are owed to both the debtor and creditors. As an administrator, the service activities
include setting up the debt agreement, managing and collecting debtor payments and agreement variations,
calculating and distributing dividends to creditors and periodic reporting to creditors and the Australian Financial
Security Authority.
c) These service represent a series of distinct services that are substantially the same and the revenue is recognised
using an output method based on the numbers of months’ service to be provided over the term of the contract.
This method is a better representation of the value transfer to the debtor and does not skew the recognition of
revenue based on the Consolidated Entity’s set up costs at the commencement of the arrangement.
d) The treatment of the debt arrangement as a series of services that are substantially the same brings the
recognition of revenue for these arrangements substantially in line with the pattern of collection of cash from
the debtor’s monthly payments at a pro-rata agreed percentage. The recognition of the large debt agreement
administration fee receivable is materially reduced.
FSA Group Limited
Annual Report 2019
33
Application of new approach under AASB 15:
In applying the new revenue recognition approach under AASB 15, the following apply:
a) When a debtor pays in advance of their monthly payment, the Consolidated Entity recognises a Contract Liability
in the Statement of Financial Position to recognise the collection of an amount that represents the obligation to
provide the future monthly services associated with the advance collection.
b) When a debtor is behind on their monthly payment, and the administrator has satisfied its performance obligations
for the month and therefore is entitled to recognise its fee as revenue but is unable to recover it. The Consolidated
Entity recognises a Trade Receivable in the Statement of Financial Position.
Comparative information:
The Consolidated Entity is of the opinion that the consolidated financial statements can only be comparable
if adjustments arising from the first time application of AASB 15 are retrospectively presented in the financial
statements.
Therefore, the Consolidated Entity has adjusted comparative information in these financial statements and has
reconciled the amounts with those presented previously below:
Continuing operations
Services Revenue
Finance Revenue
Less Finance Costs
Net revenue
Other gains/(losses)
expenses
Marketing expenses
Administrative expenses
Under
previous
accounting
policies
30 June 2018
Adjustment on
adoption of
AASB 15
Restated
30 June 2018
56,575,098
(8,372,296)
48,202,802
33,220,328
(15,190,637)
–
–
33,220,328
(15,190,637)
74,604,789
(8,372,296)
66,232,493
(77,348)
(8,402,986)
(2,768,639)
–
–
–
(77,348)
(8,402,986)
(2,768,639)
Net bad and doubtful debts expense
(7,445,317)
3,493,039
(3,952,278)
Operating expenses
Employee benefits expense
(4,592,905)
(27,003,336)
Unrealised loss or (gains) on fair value movement of derivatives
235,916
–
–
–
(4,592,905)
(27,003,336)
235,916
total expenses
(49,977,267)
3,493,039
(46,484,228)
profit before income tax expense
24,550,175
(4,879,257)
19,670,917
Income tax expense
profit after tax
(7,384,550)
1,366,872
(6,017,678)
17,165,624
(3,512,385)
13,653,239
Gain on disposal of financial assets, net of tax
–
–
–
total comprehensive income for the year
17,165,624
(3,512,385)
13,653,239
Profit attributable to minority Interests
1,046,642
–
1,046,642
Profit attributable to members of the parent
16,118,982
(3,512,385)
12,606,597
earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
12.89
12.89
(2.81)
(2.81)
10.08
10.08
34
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 3. Restatement of comparatives cont.
CurreNt ASSetS
Cash assets
Receivables
Other
totAL CurreNt ASSetS
NoN-CurreNt ASSetS
Receivables
Investment in associate
Plant and equipment
Deferred tax asset
Intangibles
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
Payables
Contract liability – Current
Tax Liability
Borrowings
Provisions
totAL CurreNt LiABiLitieS
NoN-CurreNt LiABiLitieS
Contract Liability – non current
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
Retained earnings
Minority Interests
totAL eQuitY
Under previous
accounting
polices
1 July 2017
Adjustment
on adoption of
AASB 15
Restated
1 July 2017
4,193,401
36,527,421
806,778
41,527,600
45,004,628
385
527,824
5,889
2,018,008
47,556,734
129,701
4,745,492
35,257,582
–
(19,749,524)
–
(19,749,524)
(36,445,384)
–
–
–
–
(36,445,384)
–
–
–
4,193,401
16,777,897
806,778
21,778,076
8,559,244
385
527,824
5,889
2,018,008
11,111,350
129,701
4,745,492
35,257,582
306,329,792
346,462,567
435,546,901
–
–
(56,194,908)
306,329,792
346,462,567
379,351,993
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
6,707,233
74,163,296
2,394,317
83,264,846
(24,860)
307,306
–
–
–
282,446
1,052,258
–
(16,858,472)
–
(15,806,214)
–
–
–
(15,523,768)
(40,671,140)
–
(40,671,140)
–
(40,671,140)
5,067,397
307,306
755,720
681,389
2,117,272
8,929,084
1,052,258
669,588
1,219,944
916,927
3,858,717
27,028,411
296,942,075
323,970,486
336,758,287
42,593,706
6,707,233
33,492,156
2,394,317
42,593,706
FSA Group Limited
Annual Report 2019
35
CurreNt ASSetS
Cash assets
Receivables
Other
totAL CurreNt ASSetS
NoN-CurreNt ASSetS
Receivables
Investment in associate
Plant and equipment
Deferred tax asset
Intangibles
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
Payables
Contract liability – Current
Tax Liability
Borrowings
Provisions
totAL CurreNt LiABiLitieS
NoN-CurreNt LiABiLitieS
Contract Liability – non current
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
Retained earnings
Minority Interests
totAL eQuitY
Under previous
accounting
policies
30 June 2018
Adjustment on
adoption of
AASB 15
Restated
30 June 2018
2,567,378
39,549,682
511,499
42,628,559
49,159,429
385
737,699
2,402
2,208,659
52,108,574
281,803
6,950,134
47,614,307
–
(21,009,291)
–
(21,009,291)
(39,587,124)
–
–
–
–
(39,587,124)
–
–
–
2,567,378
18,540,392
511,498
21,619,268
9,572,304
385
737,699
2,402
2,208,659
12,521,449
281,803
6,950,134
47,614,307
360,263,910
415,110,154
509,847,287
–
–
(60,596,415)
360,263,910
415,110,154
449,250,871
4,957,555
–
1,618,343
954,775
2,242,084
9,772,758
510,147
19,503,852
681,011
20,695,010
37,321,732
351,084,046
388,405,778
418,873,545
90,973,742
6,707,233
81,525,550
2,740,959
90,973,742
(37,741)
304,470
–
–
–
266,729
1,545,480
–
(18,225,345)
–
(16,679,865)
–
–
–
(16,413,136)
(44,183,279)
–
(44,183,279)
(44,183,279)
4,919,814
304,470
1,618,343
954,775
2,242,084
10,039,486
1,545,479
510,147
1,278,506
681,011
4,015,143
37,321,732
351,084,047
388,405,779
402,460,408
46,790,463
6,707,233
37,342,271
2,740,959
46,790,463
36
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 4. Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment using the expected credit loss method.
Collectability of trade receivables is reviewed on an ongoing basis. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments
are considered indicators that a trade receivable may be impaired. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly. Receivables that are not individually impaired are included in
a portfolio for the purpose of applying the expected credit loss model. The amount of 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 receivables are not discounted if the effect of discounting
is immaterial.
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.
Impairment of debt agreement receivables is assessed on a collective (portfolio) basis based on historical collections
data and loss incurred. 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).
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 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.
FSA Group Limited
Annual Report 2019
37
Consolidated Entity
2019
$
2018
$
23,681,950
20,358,085
(1,901,952)
(2,112,325)
21,779,998
18,245,760
297,716
294,632
22,077,714
18,540,392
8,958,179
(186,577)
9,724,110
(151,806)
8,771,602
9,572,304
30,849,316
28,112,696
2,264,131
1,172,532
(77,347)
(1,270,787)
1,743,230
1,562,107
(100,463)
(940,743)
2,088,529
2,264,131
Current
Trade receivables
Allowance for expected credit losses
Sundry receivables
Non-current
Trade receivables
Allowance for expected credit losses
total
the movement in the allowance for expected credit losses
Opening balance
Provision for impairment recognised
Unused provision reversed
Bad debts
Closing balance
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 7 of the Financial Statements.
Ageing analysis
trade and other
receivables
Consolidated Entity
2019
2018
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
Net
$
Not past due
25,864,506
(933,466)
24,931,040
25,240,175
(1,580,026)
23,660,149
Past due 0-30 Days
Past due 31-60 Days
Past due 61-90 Days
350,750
87,608
152,958
(5,089)
(5,760)
(8,632)
345,661
81,848
144,326
170,668
131,587
72,235
(32,735)
(4,776)
(3,398)
137,933
126,811
68,837
Past 90 Days
6,482,023
(1,135,582)
5,346,441
4,762,162
(643,196)
4,118,966
total
32,937,845
(2,088,529)
30,849,316
30,376,827
(2,264,131)
28,112,696
38
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 5. Financing assets
Loans at amortised cost
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,
less a provision for impairment using the expected credit loss method.
Impairment
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
2019
$
2018
$
381,953,238
360,433,372
(317,121)
(169,462)
381,636,117
360,263,910
7,022,503
6,580,682
374,930,735
353,852,690
381,953,238
360,433,372
169,462
426,130
(278,471)
317,121
365,536
290,680
(486,754)
169,462
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 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. 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.
To apply the expected credit loss method impairment has been assessed on a collective portfolio basis with primary
regard to the underlying equity in the home loan security for the loans receivable and also with regard to the credit
quality of the debtor, payment history and any other information available, such as forward looking information that
is available without undue cost of effort. Portfolios are determined based on geographical factors and the date of
origination of the receivables.
FSA Group Limited
Annual Report 2019
39
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 66.89% (2018: 67.07%). 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.
Ageing analysis – Home loan assets
Consolidated Entity
2019
2018
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
Net
$
Not past due
345,852,009
(287,147) 345,564,862
331,109,893
Past due 0-30 Days
30,687,965
(25,479)
30,662,486
24,432,422
Past due 31-60 Days
2,734,709
(2,271)
2,732,438
3,116,061
–
–
–
331,109,893
24,432,422
3,116,061
Past due 61-90 Days
1,327,997
(1,103)
1,326,894
402,608
(38,967)
363,641
Past 90 Days
1,350,558
(1,121)
1,349,437
1,372,388
(130,495)
1,241,893
total
381,953,238
(317,121) 381,636,117
360,433,372
(169,462) 360,263,910
(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 – Personal loan assets
2019
$
2018
$
60,808,327
48,347,044
(1,405,878)
(732,737)
59,402,449
47,614,307
12,386,996
7,899,362
48,421,331
40,447,682
60,808,327
48,347,044
732,737
1,220,288
(547,147)
1,405,878
126,907
854,845
(249,015)
732,737
Impairment has been assessed on a collective portfolio 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, such as forward looking information that is available without
undue cost or effort. Portfolios are determined on risk grade bands.
40
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 5. Financing assets cont.
Ageing analysis – Personal loan assets
Consolidated Entity
2019
2018
Gross
$
Allowance
$
Net
$
Gross
$
Allowance
$
Net
$
Not past due
55,892,504
(293,954) 55,598,550
45,842,942
(193,065)
45,649,877
Past due 0-30 Days
2,875,080
(15,127)
2,859,953
1,752,731
(7,382)
1,745,349
Past due 31-60 Days
945,791
(267,944)
677,847
342,403
(199,520)
142,883
Past due 61-90 Days
363,207
(218,536)
144,671
134,057
(93,865)
Past 90 Days
total
731,745
(610,317)
121,428
274,911
(238,905)
60,808,327
(1,405,878) 59,402,449
48,347,044
(732,737)
47,614,307
40,192
36,006
Note 6. Revenue and other comprehensive income net
of finance expense
Revenue recognition
The Consolidated Entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Consolidated Entity: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time value of
money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone
selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. The
Consolidated Entity recognises amounts collected from customers in advance of delivery of the goods or performance
of the services as a contract liability.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement
of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent
that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
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.
FSA Group Limited
Annual Report 2019
41
Debt agreement administration fees
The debt agreement service activities include setting up the debt agreement, managing and collecting debtor
payments and agreement variations, calculating and distributing dividends to creditors and periodic reporting
to creditors and the Australian Financial Security Authority. These service represent a series of distinct services
that are substantially the same and the revenue is recognised using an output method based on the numbers
of months’ service to be provided over the term of the contract.
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.
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.
42
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 6. Revenue and other comprehensive income net
of finance expense cont.
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Fees from services
– Personal insolvency
– Refinance broking
– 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
Consolidated Entity
2019
$
2018
$
46,213,759
46,523,717
661,841
613,697
774,689
904,396
47,489,297
48,202,802
9,069,352
6,567,685
23,745,594
21,482,404
3,805,210
2,740,053
106,567
2,626,652
2,446,777
96,810
39,466,776
33,220,328
(1,058,487)
(1,019,211)
(16,155,143)
(14,171,180)
(333)
(246)
(17,213,963)
(15,190,637)
22,252,813
18,029,691
Fees from services from personal insolvency contracts with customers for the financial year 2018 have been restated
as outlined in Note 3.
Note 7. 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
Computers and office equipment
Furniture and fittings
Useful life
2 to 5 years
2 to 5 years
2 to 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
FSA Group Limited
Annual Report 2019
43
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.
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 has been arrived at after charging:
Depreciation on plant and equipment
Amortisation of software
Consolidated Entity
2019
$
2018
$
297,267
89,305
386,572
251,251
333,306
584,557
Impairment in value – trade receivables and financing assets
3,405,148
3,665,878
Reversal of impairment in value – trade receivables and financing assets
(75,511)
(77,347)
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
3,329,637
3,588,531
626,485
(235,916)
1,614,757
1,485,302
24,827,543
25,117,658
1,707,545
1,885,678
Note 8. Segment information
Operating segments
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 informal arrangements, debt agreements, personal insolvency agreements and bankruptcy;
• 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.
44
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 8. Segment information cont.
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.
Services
Consumer Lending
Other/Unallocated
Consolidated Total
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
Revenue and Income:
External sales
Finance Income
Finance expense
Net Finance Income
Other gains/(losses)
11,064
(333)
10,731
–
Internal sales and income
900,639
Eliminations
–
46,821,496
˚47,426,619
620,059
728,600
11,734
39,437,525
33,141,124
(246)
(17,213,630)
(15,190,391)
47,742
18,187
–
47,583
47,489,297
48,202,802
67,470
39,466,776
33,220,328
–
(17,213,963)
(15,190,637)
11,488
22,223,895
17,950,733
18,187
67,470
22,252,813
18,029,691
(77,348)
913,680
–
–
–
–
–
–
–
–
–
–
(77,348)
10,000,000
10,000,000
10,900,639
10,913,680
–
–
(10,900,639)
(10,913,680)
Total Revenue and Income
47,732,866
˚48,274,439
22,843,954
18,679,333
10,065,929
10,115,053
69,742,110
˚66,155,145
Results:
Segment profit before tax
11,616,192
˚10,247,100
11,233,659
9,528,262 ^(684,872) ^(104,445)
22,164,979
˚19,670,917
Income tax (expense)/benefit
(3,508,230)
˚(3,148,452)
(3,243,187)
(2,857,773)
^43,912
^(11,453)
(6,707,505)
˚(6,017,678)
Profit for the year
8,107,962
˚7,098,648
7,990,472
6,670,489 ^(640,960) ^(115,898)
15,457,474
˚13,653,239
Items included in Profit
for the year
Depreciation and
amortisation
Impairment in value –
trade receivables and
financing assets
Employee and contractor
expenses
Rental expense on operating
lease – minimum payment
Assets:
Segment assets
Eliminations **
total assets
Included in Segment assets
384,260
564,185
2,312
20,372
1,765,790
˚2,526,353
1,639,358
1,145,525
20,825,742
22,129,020
5,709,346
4,874,316
1,553,622
1,475,719
61,135
9,583
–
–
–
–
–
386,572
584,557
(6,000)
3,405,148
˚3,665,878
–
–
26,535,088
27,003,336
1,614,757
1,485,302
139,085,965 ˚125,348,346 468,829,790
430,400,430
57,852,405
59,795,678
665,768,160 ˚615,544,454
(176,962,345) (166,293,583)
488,805,815
449,250,871
Investment in associate
–
–
–
–
385
385
385
385
Liabilities:
Segment liabilities
133,119,394
125,690,030 436,865,689
396,450,777
33,144,705
34,709,605
603,129,788
556,850,412
Eliminations**
total liabilities
(168,436,353) (154,390,004)
434,693,435
402,460,408
^ includes unrealised gain or loss on fair value movement of derivatives.
** Eliminations are related to intercompany balances.
˚ Balances as at 30 June 2018 and results for financial year 2018 have been restated as outlined in Note 3.
FSA Group Limited
Annual Report 2019
45
Note 9. Equity – Dividends
Dividends
Dividends are recognised when declared during the financial year and at the discretion of the Company.
Fully franked final dividend for the year ended 30 June 2018 of 4.00 cents
(2017: 4.00 cents) per ordinary share
Fully franked interim dividend for the year ended 30 June 2019 of 2.00 cents
(2018: 3.00 cents) per ordinary share
On 22 August 2019, the directors declared a fully franked final dividend for the
year ended 30 June 2019 of 3.00 cents per ordinary share. This brings the full
year dividend to 5.00 cents per year.
Franking credits
Consolidated Entity
2019
$
2018
$
5,003,704
5,003,704
2,501,853
7,505,557
3,752,779
8,756,483
Franking credits available at the reporting date based on a tax rate of 30%
16,020,026
14,411,912
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%
2,129,633
1,618,343
18,149,659
16,030,255
Note 10. 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.
46
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 10. 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/(benefit)
(Over)/under provision for current tax payable in a prior period
Deferred income tax expense included in income tax expense comprises:
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% (2018: 30%)
Tax effect of amounts which are not deductible/(taxable)
in calculating taxable income
Non-deductible expenses
Adjustment for overseas tax rates
(Over)/under provision in the prior year
Tax Offsets
Income tax expense
(c) Deferred tax assets
Provisions
Capital legal expenses
Accrued expenditure
Tax losses carried forward
Other
Deferred tax liability offset on tax consolidation
Total deferred tax assets
(d) Deferred tax liabilities
Temporary difference on assessable income
Deferred tax liability offset on tax consolidation
Total deferred tax liabilities
Consolidated Entity
2019
$
2018
$
6,274,363
5,973,751
460,137
(26,995)
(96,314)
140,241
6,707,505
6,017,678
(699,158)
1,140,898
441,740
(371,312)
274,998
(96,314)
22,164,979
19,670,917
6,649,494
5,901,275
44,882
(2,779)
32,206
–
6,691,597
5,933,481
166,763
(150,855)
140,241
(56,044)
6,707,505
6,017,678
1,838,376
1,617,342
23,563
1,596,581
227
106,598
4,213
912,878
1,138
330,616
3,565,345
2,866,187
(2,606,625)
(2,863,785)
958,720
2,402
5,283,190
3,848,739
(2,606,625)
(2,570,233)
2,676,565
1,278,506
FSA Group Limited
Annual Report 2019
47
Note 11. 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.
Consolidated Entity
2019
$
2018
$
Total Earnings per share for profit
Total profit attributable to the members of the parent for the year ($)
14,411,166
12,606,598
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
11.52
11.52
10.08
10.08
Note 12. 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
Note 13. Borrowings
Personal loan facilities
Consolidated Entity
2019
$
2018
$
1,840,130
4,292,150
372,479
6,504,759
822,867
3,542,686
554,261
4,919,814
A full recourse corporate facility is used to fund personal loans. At the reporting date, the drawdown limit under the
corporate facility was $15 million (2018: $45 million). As at 30 June 2019, $8,057,675 (2018: $37,321,732) had been
drawn down. The corporate facility is due to expire on 31 March 2021. The corporate facility 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. All borrowing covenants were met during the financial year.
A limited recourse note facility comprising of Senior Notes through a special purpose entity, Fox Symes Personal Loans
Warehouse Trust 1 is used to fund personal loans. At the reporting date, the drawdown limit under the Senior Note
facility was $75 million (2018: NIL). As at 30 June 2019, $37,800,000 (2018: NIL) had been drawn down. The facility
is due to expire on 1 April 2021 with a maturity date of 1 April 2023. The facility is secured against current and future
personal loan assets (refer Note 5 of the Financial Statements). All borrowing covenants were met during the year.
48
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 13. Borrowings cont.
Home loan facilities
Non-recourse note facilities comprising of Senior and Mezzanine Notes through two special purpose entities, the Fox
Symes Home Loans Warehouse Trust 1 and the FSHL Prime Warehouse Trust 1 are used to fund home loans. At the
reporting date, the drawdown limit under the Senior and Mezzanine Note facilities was $375 million (2018: $375 million)
and $30 million (2018: $25 million) respectively. As at 30 June 2019, $368,346,756 (2018: $323,851,990) and $25,290,052
(2018: $24,426,266) respectively had been drawn down. Also included in the year end liability is accrued interest of
$2,725,329 (2018: $2,805,790).
The facilities are due to expire on 15 July 2021 with a maturity date of 15 October 2021. The facilities are secured
against current and future home loan assets (refer Note 5 of the Financial Statements). All borrowing covenants
were met during the year.
On the 9 July 2019, the facilities were renewed and are due to expire on 15 July 2021 with a maturity date of
15 October 2021.
Current
Unsecured
Credit cards
Financing Liabilities
Secured
Borrowings to finance personal loan assets
Limited recourse borrowings to finance personal loan assets
Non-recourse borrowings to finance home loan assets
(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:
Fixed charge over assets
Personal loan assets
Home loan assets
Consolidated Entity
2019
$
2018
$
1,024,869
954,775
8,057,675
37,321,732
37,861,944
–
371,072,085
351,084,047
416,991,704
388,405,779
1,024,869
954,775
45,919,619
37,321,732
371,072,085
351,084,047
418,016,573
389,360,554
61,816,536
47,896,110
387,992,729
367,214,044
449,809,265
415,110,154
FSA Group Limited
Annual Report 2019
49
Note 14. 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.
These financial instruments represented in the Statement of Financial Position are categorised under AASB 9
Financial Instruments as follows:
Financial Assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Financing assets
Assets and receivables at amortised cost
Financial Liabilities at amortised cost
Payables at amortised cost
Current tax liabilities
Financing liabilities
Payables at amortised cost
Consolidated Entity
2019
$
2018
$
3,303,166
2,567,378
30,849,316
28,112,696
449,809,265
415,110,154
483,961,747
445,790,228
7,529,628
2,129,633
5,874,589
1,618,343
416,991,704
388,405,779
426,650,965
395,898,711
Assets and liabilities measured at fair value through profit and loss:
Derivatives – Interest rate swap contracts
(1,347,153)
(681,011)
50
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 14. Financial instruments cont.
The Consolidated Entity has exposure to the following risks from these financial instruments:
• Credit risk
• Liquidity risk
• Market (interest) risk
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework through the work of the Audit & Risk Management Committee. The Audit & Risk Management Committee
is responsible for developing and monitoring risk management policies. The Chairman of the Audit & Risk
Management Committee reports to the Board of Directors on its activities.
Risk management procedures are established by the Audit & Risk Management Committee and carried out by
management to identify and analyse the risks faced by the Consolidated Entity and to set controls and monitor risks.
These are discussed individually below.
Capital management
The Consolidated Entity’s objectives in managing its capital is the safeguard of the Consolidated Entity’s ability to
continue as a going concern, maintain the support of its investors and other business partners, support the future
growth initiatives of the Consolidated Entity and maintain an optimal capital structure to reduce the costs of capital.
These objectives are reviewed periodically by the Board.
The Consolidated Entity assesses the adequacy of its capital requirements, cost of capital and gearing 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 2019, excluding the Consolidated Entity’s special purpose entities Fox Symes Home
Loans Warehouse Trust 1 and FSHL Prime Warehouse Trust 1, whose liabilities are non-recourse to the Consolidated
Entity and the Consolidated Entity’s special purpose entity Fox Symes Personal Loans Warehouse Trust 1 whose
liabilities are limited recourse to the Consolidated Entity, was 19.95% (2018: 25.97%).
It was the policy of the Consolidated Entity during the 2019 financial year to maintain a gearing ratio, excluding the
Consolidated Entity’s special purpose entities of less than 50% (2018: 50%).
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.
FSA Group Limited
Annual Report 2019
51
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 4 and 5 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 facilities (refer Note 13 of the Financial Statements).
The Consolidated Entity is reliant on the renewal of existing facilities, the negotiation of new facilities, or the issuance
of residential mortgage backed securities. Each facility is structured so that if it is not renewed or otherwise defaults
there is only limited recourse to the Consolidated Entity.
The Directors are satisfied that an event of default in relation to the Consolidated Entity’s home loan or personal loan
facilities will not affect the Consolidated Entity’s ability to continue as a going concern.
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.
Consolidated Entity
30 June 2019
Carrying
amount
$
Contractual
Cash flows
$
6 months
or less
$
6-12
months
$
1 to 2
years
$
2 to 5
years
$
Trade and
other payables
1,840,130
1,840,129
1,840,129
Other payables
4,664,629
4,664,629
4,664,629
–
–
–
–
–
–
1,024,869
1,024,870
1,024,870
8,057,675
8,698,330
167,412
208,885
8,322,033
408,934,029
447,906,189
7,073,195
7,677,792
15,313,630
417,841,572
424,521,332
464,134,147
14,770,235
7,886,677
23,635,663
417,841,572
Consolidated Entity
30 June 2018
Carrying
amount
$
Contractual
Cash flows
$
6 months
or less
$
6-12
months
$
1 to 2
years
$
2 to 5
years
$
Trade and
other payables
822,867
822,867
822,867
Other payables
4,096,947
4,096,947
4,096,947
954,775
954,775
954,775
37,321,732
37,722,843
37,722,843
–
–
–
–
–
–
–
–
351,084,047
369,777,812
6,935,358
7,216,071
355,626,383
394,280,368
413,375,244
50,532,790
7,216,071
355,626,383
Other short
term loans
Bank loans
Warehouse
facilities
Total
Other short
term loans
Bank loans
Warehouse
facilities
Total
–
–
–
–
–
–
–
–
–
–
52
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 14. Financial instruments cont.
Market risk
Market risk is the risk that changes in market prices will affect the Consolidated Entity’s income or the value of holdings in
its 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 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 long term variable rate borrowings.
Under current historically low interest rates, the Board and Management have adopted the policy to keep
approximate $80 – $100 million of home loan 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.
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 (2018: 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 (2018: 50bps)
If interest rates decreased by 50bps (2018: 50bps)
Note 15. 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
2019
$
2018
$
450,238
840,178
(455,458)
(835,456)
Consolidated Entity
Profit after tax
2019
$
2018
$
1,323,042
74,203
1,397,245
1,560,891
2,432,040
3,992,931
Operating leases relate to the lease of the Consolidated Entity’s business premises and printing equipment rental.
Note 16. 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
Unrealised (gain)/loss on derivatives
Loss on disposal of intangibles
Loss on write off investments
Changes in assets and liabilities:
Increase in trade and other receivables
(Increase)/decrease in other current assets
Decrease /(Increase) in trade and other payables
Increase in employee entitlements
(Increase)/decrease in other liabilities
Cash flows from operating activities
FSA Group Limited
Annual Report 2019
53
Consolidated Entity
2019
$
2018
$
15,457,474
13,649,776
386,572
626,485
–
816,109
584,557
(235,916)
114,825
1,131,294
(1,911,788)
(2,231,661)
(154,136)
1,889,792
(14,388)
(15,665)
295,279
(70,396)
(34,628)
1,308,301
17,080,455
14,511,431
Note 17. 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.
Cash on hand and at bank
Assets financed by financial liabilities
Personal loan cash and cash equivalents
Home loan cash and cash equivalents
Note 18. 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
Other training and consulting
Consolidated Entity
2019
$
2018
$
3,303,166
2,567,378
2,414,087
6,356,612
12,073,865
281,803
6,950,134
9,799,315
Consolidated Entity
2019
$
2018
$
234,006
69,975
43,955
8,960
356,896
200,625
64,451
36,226
6,200
307,502
54
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 19. 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 14 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 1.42%.
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 $1,347,153.
interest rate swap contracts
Current liability
Non current liability
Total derivative financial liabilities
Consolidated Entity
2019
$
2018
$
630,827
716,326
1,347,153
–
681,011
681,011
Note 20. Intangible assets
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.
FSA Group Limited
Annual Report 2019
55
Consolidated Entity
2019
$
2018
$
345,124
345,124
–
–
345,124
345,124
4,633,654
4,063,121
(2,288,890)
(2,199,586)
2,344,764
2,689,888
1,863,535
2,208,659
345,124
345,124
–
–
345,124
345,124
1,863,535
1,672,883
570,534
–
(89,305)
638,783
(114,825)
(333,306)
2,344,764
1,863,535
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
The Directors have assessed that, the carrying value of $345,124 of goodwill attributable to the original investment
by the parent company in FSA Australia Pty Ltd and its controlled entities does not exceed the recoverable amount
of this balance at reporting date.
The Directors have determined that there are no reasonable changes in the key assumptions on which the
recoverable amounts of goodwill are based, for FSA Australia Pty Ltd, which would cause the carrying amount to
exceed the recoverable amount.
Note 21. Fair value measurement
(a) The Consolidated Entity measures and recognises the interest rate swap financial instrument at fair value on a
recurring basis after initial recognition. Derivative financial instruments have been valued using quoted market
rates. This valuation technique maximises the use of observable market data where it is available and relies as
little as possible on entity specific estimates.
Valuation Techniques and Inputs Used to Measure Level 2 Fair Values:
Description
Financial liability:
Fair Value at
30 June 2019 ($)
Interest rate swap
1,347,153
Valuation Technique(s)
Inputs Used
Income approach using discounted cash
flow methodology and the funding valuation
adjustment framework
Overnight Index
Swap rate
(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.
56
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 21. Fair value measurement cont.
Financial assets
Current receivables net of deferred tax*
Non-current receivables net of deferred tax*
Personal loan assets
Jun-19
Book value
$
Jun-19
Fair value
$
7,944,133
7,944,133
8,710,468
7,964,647
59,402,449
65,363,371
Home loan assets financed by non-recourse financing liabilities
381,636,117
392,106,950
Note 22. 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 and long 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 2019, the Consolidated Entity employed 164 full-time equivalent employees (2018: 192) plus a further
4 independent contractors (2018: 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.
Current
Employee benefits
Non-current
Employee benefits
FSA Group Limited
Annual Report 2019
57
Consolidated Entity
2019
$
2018
$
2,293,985
2,242,084
443,859
510,147
Note 23. Contract liability
When a debtor pays in advance of their periodic payment, the Consolidated Entity recognises a Contract Liability in
the Statement of Financial Position to recognise the collection of an amount that represents the obligation to provide
the future services associated with the advance collection.
Current contract liability
Non-current contract liability
Consolidated Entity
2019
$
490,481
790,427
1,280,908
2018
$
304,470
1,545,479
1,849,949
Reconciliation of the written down values at the beginning and end of the current and previous financial year are set
out below:
Opening balance
Payments received in advance
Transfer to revenue – included in the opening balance
Transfer to revenue – other balances
Consolidated Entity
2019
$
2018
$
1,849,949
1,359,564
366,354
(940,033)
4,638
615,550
(128,826)
3,661
1,280,908
1,849,949
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the
end of the reporting period was $78,625,610 as at 30 June 2019 ($86,489,533 as at 30 June 2018) and is expected
to be recognised as revenue in future periods as follows:
Within 12 months
12 to 24 months
24 to 36 months
36 to 60 months
Consolidated Entity
2019
$
2018
$
27,973,338
28,457,519
22,343,432
24,001,900
15,940,148
17,933,236
12,368,692
16,096,878
78,625,610
86,489,533
58
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 24. Share capital
Ordinary share capital
Ordinary shares are classified as equity.
125,092,610 (2018: 125,092,610) Fully paid ordinary shares
ordinary shares
Balance 1 July
Movement
Balance 30 June
2019
Number
2018
Number
6,707,233
6,707,233
125,092,610
125,092,610
–
–
125,092,610
125,092,610
Note 25. Interests in subsidiaries
Investments in subsidiaries
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
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
Percentage of equity interest
held by the Consolidated Entity
Country of
Incorporation
2019
%
2018
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
65
75
100
100
100
100
100
100
100
65
75
FSA Group Limited
Annual Report 2019
59
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
Country of
Incorporation
Australia
Australia
Fox Symes Home Loans (Mortgage Management) Pty Ltd
Australia
Fox Symes Personal Loans Pty Ltd
Fox Symes Home Loans Warehouse Trust 1
FSHL Prime Warehouse Trust 1
Fox Symes Personal Loans Warehouse Trust 1
Australia
Australia
Australia
Australia
Percentage of equity interest
held by the Consolidated Entity
2019
%
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
the following entities are subsidiaries of 104 880 088 Group Holdings pty Limited
Name
110 294 767 Capital Finance Pty Limited
102 333 111 Corporate Pty Limited
111 044 510 Equity Partners Pty Limited
One Financial Corporation Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
Australia
Percentage of equity interest
held by the Consolidated Entity
2019
%
100
100
100
100
2018
%
100
100
100
100
the following entities are subsidiary of Aravanis insolvency pty Limited
Name
Aravanis Advisory Limited
Percentage of equity interest
held by the Consolidated Entity
Country of
Incorporation
India
2019
%
99.99
2018
%
–
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
Australia
Australia
Principal
activities
Personal
insolvency
agreements and
Bankruptcies
Accounting and
taxation
Name
Aravanis
Insolvency Pty
Limited
Fox Symes
Business
Services Pty
Limited
Parent
Ownership interest
Non-controlling interest
Ownership interest
2019
65%
2019
65%
2018
35%
2018
35%
75%
75%
25%
25%
60
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 25. Interests in subsidiaries cont.
Summarised Statement of Financial position
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
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/(decrease) 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
2019
$
2018
$
12,662,482
11,834,373
1,130,514
597,643
11,531,968
11,236,730
440,631
59,699
3,059,857
3,571,380
(2,619,226)
(3,511,681)
8,912,742
7,725,049
10,535,724
10,825,766
(6,264,141)
(6,550,027)
4,271,583
4,275,739
(1,283,891)
(1,291,144)
2,987,692
2,984,595
–
–
2,987,692
2,984,595
1,279,556
2,351,323
94,295
(271,401)
(1,795,839)
(2,000,000)
(421,988)
79,922
1,045,692
3,149,317
1,044,608
2,703,767
The non-controlling interest of Fox Symes Business Services Pty Limited was insignificant and therefore information
has not been provided.
FSA Group Limited
Annual Report 2019
61
Note 26. Key Management Personnel disclosures
remuneration of directors and Key management personnel
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Consolidated Entity
2019
$
2018
$
2,455,026
2,354,308
12,911
75,147
11,742
71,487
2,543,084
2,437,537
Note 27. 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 25 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 28. 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 $6,397,932 (2018: $8,615,865). Home loans are usually settled within 4 weeks of acceptance.
Personal loans
At reporting date, all personal loan application that had been accepted by the Consolidated Entity was settled.
Personal loans are usually settled within one week of acceptance.
Note 29. Events occurring after reporting date
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 2019 except as follows:
• On 22 August 2019, Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on
13 September 2019 with a record date of 29 August 2019. This brings the full year dividend to 5.00 cents
per share.
62
Notes to the Financial Statements cont.
For the year ended 30 June 2019
Note 30. 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
Consolidated Entity.
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
total equity
Financial performance
Profit/(loss)after income tax
Other comprehensive Income
total Comprehensive income for the year
2019
$
2018
$
12,911,310
8,465,084
8,975,710
8,465,014
21,376,394
17,440,724
2,230,050
2,230,050
749,909
749,909
19,146,344
16,690,815
6,707,233
6,707,233
(7,505,557)
(8,756,483)
19,944,668
18,740,065
19,146,344
16,690,815
9,961,016
9,956,344
–
–
9,961,016
9,956,344
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 31 for further details.
There are no contingent liabilities or commitments in the parent entity (2018: Nil).
Note 31. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts
of the others: FSA Group Limited, FSA Australia Pty 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 2017/785 (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
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
total Comprehensive income for the year
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
Contract liabilities
Tax Liabilities
total Current Liabilities
Non-Current Liabilities
Contract liabilities
Deferred tax liabilities
total Non-Current Liabilities
total Liabilities
Net Assets
equity
Share capital
Retained earnings
total equity
FSA Group Limited
Annual Report 2019
63
2019
$
2018
$
29,364,105
35,255,092
19,269
(293)
18,976
67,398
(245)
67,153
29,383,081
35,322,245
(557,919)
(3,911,330)
28,825,162
31,410,915
(8,639,638)
(9,466,020)
20,185,524
21,944,895
–
–
20,185,524
21,944,895
580,675
3,603,743
2
1,647,964
2,305,313
2
4,184,420
3,953,279
190,674,945
165,267,725
8,465,084
8,465,084
199,140,029
173,732,809
203,324,449
177,686,088
1,466,207
490,481
2,343,500
4,300,188
458,651
304,470
1,311,981
2,075,102
790,428
1,545,480
1,142,257
1,932,685
6,232,873
807,919
2,353,399
4,428,501
197,091,576
173,257,587
6,707,237
6,707,237
190,384,339
166,550,350
197,091,576
173,257,587
64
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 2019 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 30 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 31.
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
22 August 2019
deborah Southon
Executive Director
Sydney
22 August 2019
FSA Group Limited
Annual Report 2019
65
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
Level 11, 1 Margaret St
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 2019, 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 2019 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.
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.
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.
66
Independent Auditor’s Report cont.
To the members of FSA Group Limited
Adoption of Accounting Standard AASB 15
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 3. Restatement of
Our audit procedures included;
comparatives – adoption of new Accounting
standards on 1 July 2018 the company adopted
accounting standard AASB 15 Revenue from
Contracts with Customers.
The adoption of the new standard resulted in a
change in the accounting policy in relation to the
recognition of revenue from debt agreements. The
change was applied retrospectively to all prior
periods presented.
The assessment of the impact of the application of
AASB 15 was complex and required considerable
management analysis. The resultant change in
accounting policy significantly impacted the
financial report and for this reason was considered
a key audit matter.
•
Critically assessing management’s analysis of the
impact of the adoption of the new standard on
the revenue recognition policies of the company;
•
Engaging with our IFRS technical specialists to
review the conclusions drawn by management on
the changes required to the revenue recognition
policy;
•
•
Testing the calculations of the restated
comparative information; and
Reviewing and assessing the adequacy of the
disclosures in Note 3 of the financial report.
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 2019, 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
FSA Group Limited
Annual Report 2019
67
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.
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 16 to 21 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of FSA Group Limited, for the year ended 30 June 2019,
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, 22 August 2019
68
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 7 August 2019.
(a) Distribution of equity securities
The number of holders, by size of holding, in each class of security are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
total
Quoted Ordinary shares
Number of
holders
Number of
shares
301
507
301
356
80
119,164
1,618,073
2,567,092
10,365,570
110,422,711
1,545
125,092,610
The number of security investors holding less than a marketable parcel of 491 securities ($1.020 on 07/08/2019)
is 175 and they hold 16,182 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
10
11
12
13
14
15
16
17
18
19
20
Capital Management Corporation Pty Ltd
Mazamand Group Pty Ltd (investor group)
ADST Pty Ltd (investor group)
BJR Investment Holdings Pty Ltd
J P Morgan Nominees Australia Limited
UBS Nominees Pty Ltd
Ruminator Pty Limited
Contemplator Pty Limited
Aust Executor Trustees Ltd
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