FSA Group
Annual Report 2021

Plain-text annual report

FSA GROUP LIMITED ANNUAL REPORT 2021 R E S H A P I N G OU R F U T U R E F S A G r o u p L i m i t e d | A n n u a l R e p o r t 2 0 2 1 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. For over 20 years, FSA Group has helped thousands of Australians. Our large and experienced team of professionals offer a range of debt solutions and direct lending services, which we tailor to suit individual circumstances and to achieve successful outcomes for our clients. Contents 1 Cautionary Statements 4 Chairman’s Letter and Disclaimer Regarding Forward-Looking Information 2 Our Business Reshaping Our Future 5 Executive Directors’ Review 10 Financial Statements 2 Our Business Services 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. Consumer Lending Home Loans – FSA Group offers home loans to assist clients wishing to purchase a property or consolidate their debt. Personal Loans – FSA Group offers personal loans to assist clients wishing to purchase a motor vehicle. Reshaping Our Future COVID-19 impacted and continues to impact the number of new callers seeking our assistance for our Services segment. We are uncertain when demand will return. Historically our Consumer Lending segment operated as a direct to consumer business. Going forward our focus will be on developing a broker channel and growing our loan pools. The addition of a broker channel will significantly enhance our Consumer Lending segment. During the year upgrades were made to our system and procedures to accommodate brokers. These were successfully tested. Our plan over the next 3 to 5 years: Services • Regrow as demand returns Home Loans • Develop a broker channel • Expand our product offering • Increase new origination from around $10m to $40m per month • Grow our loan pool from $382m to around $1.2b Personal Loans • Develop a broker channel • Expand our product offering to include personal loans to consolidate debt • Increase new origination from around $3m to $7m per month • Grow our loan pool from $65m to around $200m Opportunity • Actively look for other lending businesses to partner with or acquire • Expand our lending offerings to assist small businesses 4 Chairman’s Letter Dear Shareholders, It gives me great pleasure in my first year as Chairman to report to you. The 2021 financial year has been a year of challenges. Despite these challenges we have successfully navigated this period delivering a strong performance. The contribution and commitment of our executives and staff during this period was outstanding. The Services segment offers a range of services to assist clients wishing to enter into a payment arrangement with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy. FSA Group is the largest provider of these services in Australia. COVID-19 impacted and continues to impact the number of new callers seeking our assistance for our Services segment. During the year new client numbers for informal arrangements and debt agreements decreased by 66% and for personal insolvency agreements and bankruptcy decreased by 74% compared to the previous corresponding period. In response to this reduction we restructured parts of our business to materially reduce costs. We are uncertain when demand will return. The Consumer Lending segment offers home loans and personal loans to assist clients wishing to purchase a property or consolidate their debt or to purchase a motor vehicle. During the year our home loan and personal loan pools, also impacted by COVID-19, decreased from $457m to $447m, a 2% decrease. Historically our Consumer Lending segment operated as a direct to consumer business. Going forward our focus will be on developing a broker channel and growing our loan pools. The addition of a broker channel will significantly enhance our Consumer Lending segment. During the year upgrades were made to our system and procedures to accommodate brokers. These were successfully tested. Our plan for our Consumer Lending segment, over the next 3 to 5 years is outlined in the section titled “Reshaping Our Future”. For the 2021 financial year, FSA Group generated $61.4m in operating income, a 10% decrease, and a profit after tax attributable to members of $20.1m, a 23% increase compared to the results of 2020. Our net cash inflow from operating activities was $29.5m, a 52% increase. I advise that the Directors have declared a fully franked final dividend of 3.00 cents per share for the 2021 financial year. This brings the full year dividend to 6.00 cents per share. Our focus for the 2022 financial 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. I am proud of their commitment to our business and look forward to being a part of our continued growth. Yours sincerely, David Bower Chairman FSA GROUP LIMITED Annual Report 2021 5 Executive Directors’ Review Dear Shareholders, The 2021 financial year has been a year of challenges. COVID-19 impacted and continues to impact the number of new callers seeking our assistance for our Services segment. We are uncertain when demand will return. Our focus in on our Consumer Lending segment, developing a broker channel and growing our loan pools. For the 2021 financial year, FSA Group generated $61.4m in operating income, a 10% decrease, and a profit after tax attributable to members of $20.1m, a 23% increase compared to the results of 2020. Our net cash inflow from operating activities was $29.5m, a 52% increase. We advise that the Directors have declared a fully franked final dividend of 3.00 cents per share for the 2021 financial year. This brings the full year dividend to 6.00 cents per share. Financial Overview 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: Financial Overview FY2020 FY2021 % Change Operating income Profit before tax Profit after tax attributable to members EPS basic Net cash inflow from operating activities Dividend/share $68.2m $24.8m $16.3m 13.05c $19.4m 6.00c $61.4m $29.7m $20.1m 16.12c $29.5m 6.00c 10% 20% 23% 23% 52% Shareholder equity attributable to members $59.4m $72.0m 21% Return on equity 30% 31% Operating income by segment FY2020 FY2021 % Change Services Consumer lending Home loans Personal loans Other/unallocated Operating income $41.1m $30.9m 25% $13.7m $13.3m $0.1m $68.2m $16.1m $14.4m $0.1m 18% 9% $61.4m 10% Profit before tax by segment FY2020 FY2021 % Change Services Consumer lending Home loans Personal loans Other/unallocated Operating income $11.7m $12.1m 3% $7.4m $5.2m $0.4m $9.7m $7.5m $0.4m 30% 45% $24.8m $29.7m 20% 6 Executive Directors’ Review Continued 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. During the 2021 financial year we experienced a number of challenges. COVID-19 impacted and continues to impact the number of new callers seeking our assistance for our Services segment. In response to this reduction we restructured parts of our business to materially reduce costs. We are uncertain when demand will return. During the year new client numbers for informal arrangements and debt agreements decreased by 66% and for personal insolvency agreements and bankruptcy decreased by 74% compared to the previous corresponding period. During the year informal arrangement and debt agreement clients under administration decreased to 15,780, down 20% and for personal insolvency agreements and bankruptcy decreased to 1,025, down 21%. FSA Group manages $209m of unsecured debt under informal arrangements and debt agreements and during the 2021 financial year paid $85m in dividends to creditors. Informals and Debt Agreements FY2019 FY2020 FY2021 % Change New clients Clients under administration Debt managed Dividends paid PIA’s and Bankruptcy New clients Clients under administration 4,573 21,725 $379m $88m 4,327 19,736 $353m $89m 1,463 15,780 $209m $85m 66% 20% 41% 5% FY2019 FY2020 FY2021 % Change 436 1,290 347 1,304 89 1,025 74% 21% The Services segment achieved a profit before tax of $12.1m, a 3% increase. Profitability was positively impacted by long term annuity income from clients under administration and a material reduction in costs. Consumer Lending The Consumer Lending segment offers home loans and personal loans to assist clients wishing to purchase a property or consolidate their debt or to purchase a motor vehicle. During the year our home loan and personal loan pools, also impacted by COVID-19, decreased from $457m to $447m, a 2% decrease. Loan Pool Data Weighted average loan size Security type Weighted average loan to valuation ratio Variable or fixed rate Geographical spread Home Loans Personal Loans $360,528 $21,462 Residential home Motor vehicle 67% Variable All states 83% Fixed All states FSA GROUP LIMITED Annual Report 2021 7 FY2019 FY2020 FY2021 % Change $382m $59m $394m $63m $382m $65m $441m $457m $447m 3% 3% 2% FY2019 FY2020 FY2021 1.42% 3.36% 2.55% 2.41% 1.04% 1.82% FY2019 FY2020 FY2021 $278,405 $171,265 $384,098 $564,022 *$1,155,536 $679,495 Loan Pools Home loans Personal loans Total Arrears > 30 day Home loans Personal loans Losses Home loans Personal loans * The loss of $1,155,536 is distorted by a loss of $371,350 from the discontinued pilot product offering which we ran during the 2018 calendar year. As our loan pools grow we expect to increase and renew our facilities as required and periodically utilise the debt capital markets. In 2019, we announced our inaugural $200m issue of non-conforming residential mortgage backed securities via sole arranger and manager Westpac. Accessing the debt capital markets is a key step in our strategy of diversifying our funding and de-risking the business. More importantly, it provides us with fresh funding capacity to pursue our home loan growth strategy. Borrowings Facility type Home loans Non-recourse warehouse Non-recourse warehouse Securitised Personal loans Limited recourse warehouse Corporate Provider Westpac Institutional Institutional Westpac Westpac Limit $350m Maturity date Oct 2023 $20m Oct 2023 Mar 2051 Apr 2026 Mar 2024 $75m $15m Drawn $230m $18m $130m $42m – Historically our Consumer Lending segment operated as a direct to consumer business. Going forward our focus will be on developing a broker channel and growing our loan pools. The addition of a broker channel will significantly enhance our Consumer Lending segment. During the year upgrades were made to our system and procedures to accommodate brokers. These were successfully tested. Our plan for our Consumer Lending segment, over the next 3 to 5 years is outlined in the section titled “Reshaping Our Future”. During the 2021 financial year we rebrand our Consumer Lending segment “Azora”. The Consumer Lending segment achieved a profit before tax of $17.2m, a 36% increase. Profitability was positively impacted by a reduction in costs and a material reduction in the cost of funding. 8 Executive Directors’ Review Continued Net cash inflow from operating activities During the 2021 financial year, FSA Group maintained strong net cash inflow driven by long term annuity income from clients, a material reduction in costs and in the cost of funding. Net cash inflow from operating activities was $29.5m, a 52% increase. Net cash inflow from operating activities $17.1m $19.4m $29.5m 52% FY2019 FY2020 FY2021 % Change No of clients/loan pool size Average client life in years Services Informal/Debt Agreements 15,780 4.5 to 5.5 Consumer Lending PIA/Bankruptcy Home Loans Personal Loans 1,025 $382m $65m 3 3 to 4 4 to 5 COVID-19 We are very conscious of the impact COVID-19 has had and continues to have on our staff and clients. We have provided a safe working environment for our people and implemented flexible work arrangements including working from home. We work closely with clients affected by COVID-19 to ensure we achieved positive outcomes for them. Strategy and Outlook Our focus over the 2022 financial year will be as follows: Services Regrow the segment as demand returns. Consumer Lending Develop a broker channel and grow our loan pools. Earnings Capital Management Earning guidance will be provided during the 2022 financial year. Due to our strong net cash inflow driven by long term annuity income from clients, we expect our full year dividend to be between 6 cents to 7 cents per share with the balance of earnings to be re-invested to support the growing loan pools. We plan to continue with our on market share buy-back as opportunities arise. Preparing our business for the future Continue with the offshoring to our Philippine and Indian offices a number of administrative tasks and automating others. FSA GROUP LIMITED Annual Report 2021 9 Our People The past 12 months has been a difficult and challenging time for our team. We therefore provided our team with the support and assistance needed to ensure their well-being, which in turn allowed them to continue to deliver excellent and ethical customer service and support. Our people are our greatest asset and we acknowledge and thank them for their efforts and commitment during a challenging year. Tim Odillo Maher Executive Director Deborah Southon Executive Director 10 Financial Statements for the year ended 30 June 2021 11 Directors’ Report 22 Auditor’s Independence Declaration 23 Statement of Profit or Loss and Other Comprehensive Income 24 Statement of Financial Position 25 Statement of Changes in Equity 26 Statement of Cash Flows 27 General information 28 Notes to the Financial Statements 53 Directors’ Declaration 54 Independent Auditor’s Report 57 Shareholder Information 59 Corporate Information FSA GROuP LIMITED Annual Report 2021 11 Directors’ Report For the year ended 30 June 2021 The Directors present their report, together with the Financial Statements, on the Consolidated Entity consisting of FSA Group Limited (“Company” or “parent entity”) and the entities controlled and its interests in associates at the end of, and during, the year ended 30 June 2021. Directors The Directors of the Company at any time during or since the end of the financial year are: David Bower Tim Odillo Maher Deborah Southon Sam Doumany (retired 2 September 2020) Information on Directors David Bower (Non‑Executive Chairman) Experience and Expertise Mr David Bower was appointed on 23 April 2015 and was appointed Chairman on 2 September 2020. 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 the Remuneration Committee. Interest in shares and options Ordinary shares 160,800 Tim Odillo Maher (Executive Director) Experience and Expertise Mr Odillo Maher was appointed on 30 July 2002. Mr Odillo Maher holds a Bachelor of Business Degree (majoring in Accounting and Finance) from Australian Catholic University and is a Certified Practising Accountant. Other current (listed company) directorships Nil Former (listed company) directorships in last 3 years Nil Special responsibilities Member of the Audit & Risk Management Committee and the Remuneration Committee. 12 Directors’ Report (continued) For the year ended 30 June 2021 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 Member of the Audit & Risk Management Committee and the Remuneration Committee. Interest in shares and options Ordinary shares 12,960,047 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 retired 2 September 2020. 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 (majoring in Accounting and Finance) from the University of Sydney and is a Fellow of CPA Australia. 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 Consolidated Entity provides 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 $20,108,514 (2020: $16,315,946). Dividends declared and paid during the year • On 11 September 2020, a fully franked final dividend relating to the year ended 30 June 2020 of $3,742,850 was paid at 3.00c per share; and • On 26 February 2021, a fully franked interim dividend of $3,742,850 was paid at 3.00c per share. FSA GROuP LIMITED Annual Report 2021 13 Dividends declared after the end of year On 12 August 2021, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on 31 August 2021 with a record date of 18 August 2021. 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 interests, have increased from $62,857,375 at 30 June 2020 to $75,652,996 at 30 June 2021. Treasury policy The Consolidated Entity does not have a formally established treasury function. The Board is responsible for managing the Consolidated Entity’s finance facilities. Liquidity and funding The Consolidated Entity has sufficient funds to finance its operations, and also to allow the Consolidated Entity to take advantage of favourable business opportunities. Further details of the Consolidated Entities’ access to facilities are included in Note 12 of the Financial Statements. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Consolidated Entity during the financial year. Matters subsequent to the end of the financial year 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 2021 except as follows: • On 12 August 2021, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on 31 August 2021 with a record date of 18 August 2021. 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. 14 Directors’ Report (continued) For the year ended 30 June 2021 Share options As at 30 June 2021 there were no options on issue and no shares were issued during the year. 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 during the current financial year. 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 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 2021. Key Management Personnel have the authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity directly or indirectly. 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. To that end, the Consolidated Entity embodies the following principles in its remuneration framework: • provide competitive rewards to attract high calibre executives; • focus on creating sustained shareholder value; • significant portion of executive remuneration at risk, and aligned with shareholder interests; and • differentiation of individual rewards commensurate with contribution to overall results and according to individual accountability, performance and potential. 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 meetings 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. Non‑Executive Director Remuneration Non‑Executive Directors David Bower Non‑Executive Chairman 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. FSA GROuP LIMITED Annual Report 2021 15 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 27 November 2020 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 2021 is detailed in Table 1 of this Remuneration Report. Executive Directors and Senior Executive Remuneration Executive Director Deborah Southon Senior Executive Cellina Chen Executive Director Chief Financial Officer/Company Secretary Remuneration Report cont. The Company aims to reward the Executive Director 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 Director 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 are granted to Executives based on specific targets and ‘KPI’s being achieved. KPI’s 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. The remuneration of the Executive Director and Senior Executive for the year ended 30 June 2021 is detailed in Table 1 of this Remuneration Report. 16 Directors’ Report (continued) For the year ended 30 June 2021 Executive Director Tim Odillo Maher Executive Director The Consolidated Entity has entered into a consultancy agreement with ATMR Ventures Pty Ltd. Tim Odillo Maher is one of the key personnel of ATMR Ventures Pty Ltd. The remuneration paid to ATMR Ventures Pty Ltd for the year ended 30 June 2021 is detailed in Table 2 of this Remuneration Report. A Securities Trading Policy has been adopted for Directors’ and employees’ dealings in the Company’s securities. Employment contracts and consultancy agreement It is the Board’s policy that employment agreements are entered into with the Executive Directors (with the exception of Tim Odillo Maher), Senior Executive and employees. The Consolidated Entity has entered into a consultancy agreement with ATMR Ventures Pty Ltd. Tim Odillo Maher is one of the key personnel of ATMR Ventures Pty Ltd. Employment contracts and the consultancy agreement are for no specific fixed term unless otherwise stated. Executive Directors and Senior Executive The employment contracts entered into with the Executive Director 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 Board assessment based on KPI achievement Board assessment based on 5 year plan achievement Resignation/notice period Three months Serious misconduct Company may terminate at any time Payouts upon resignation or termination, outside industrial regulations Board discretion The consultancy agreement entered into with ATMR Ventures Pty Ltd of which Tim Odillo Maher is one of the key personnel contain the following key terms: Event Success fee Company Policy Board assessment based on outcomes Material breaches period Company may terminate at any time Termination for convenience period Three months (a) Details of Directors and Key Management Personnel (i) Non‑Executive Directors David Bower Sam Doumany (ii) Executive Directors Tim Odillo Maher Deborah Southon (iii) Senior Executive Cellina Chen Non‑Executive Chairman Non‑Executive Chairman (retired 2 September 2020) Executive Director Executive Director Chief Financial Officer/Company Secretary The Directors and the Senior Executive comprise the Key Management Personnel of the Consolidated Entity. FSA GROuP LIMITED Annual Report 2021 17 Perfor‑ mance based Total Post‑ Employ‑ ment Super‑ annuation and other benefits $ $ % (b) Remuneration of Directors and Key Management Personnel Table 1 Short‑term Long‑term Salary & Fees Cash Bonus Non‑cash benefits Cash Bonus Non‑cash benefits Non‑Executive Directors $ David Bower 2021 2020 Sam Doumany (retired) 2021 2020 Stan Kalinko (retired) 2021 2020 Executive Director Deborah Southon 52,675 73,513 19,927 141,775 – 38,658 $ – – – – – – $ – – – – – – 2021 2020 422,823 *– **4,735 514,461 125,000 3,794 $ – – – – – – – – $ – – – – – – 5,004 6,984 57,679 80,497 1,893 21,820 13,469 155,244 – – 3,673 42,331 **6,967 (18,906) 25,000 25,000 459,525 649,349 Senior Executive Cellina Chen 2021 2020 Total Remuneration 2021 2020 212,740 * – **41,438 ^250,000 224,162 100,000 26,799 – **4,167 4,167 21,694 21,002 530,040 376,130 708,165 – 46,173 250,000 11,134 53,591 1,069,064 992,569 225,000 30,593 – (14,739) 70,128 1,303,551 – – – – – – 0% 19% 47% 27% * No bonus was paid to Key Management Personnel in relation to their performance during financial year 2020. The Board decided to defer the assessment of the 2020 bonus due to the impact of COVID‑19. ^ A long term incentive bonus was paid to Cellina Chen in relation to her performance during financial year 2015 to 2019. Due to the restructuring of the business, the initial KPI’s set at the commencement of the 5 year plan incentive were no longer appropriate. The bonus was approved at the Board’s discretion. ** Annual leave and long service leave accrual movement has been included in the non‑cash benefits above. A bonus in relation to current financial year performance will be paid in the subsequent financial year with an estimated range of: Executive Director: Deborah Southon: $Nil Senior Executive: Cellina Chen: $75,000 – $150,000 18 Directors’ Report (continued) For the year ended 30 June 2021 Table 2 Consultancy fees excluding GST paid to ATMR Ventures Pty Ltd of which Tim Odillo Maher is one of the key personnel. Executive Director Tim Odillo Maher 2021 2020 Fees Success fee Total Fees $ $ $ 438,000 538,375 ^^– 125,000 438,000 663,375 ^^ No success fee was paid to ATMR Ventures Pty Ltd in relation to its performance during financial year 2020. The Board decided to defer the assessment of the 2020 success fee due to the impact of COVID‑19. A success fee in relation to the current financial year performance will be paid in the subsequent financial year with an estimated range of: $Nil Consolidated Entity’s earnings and movement in shareholder’s wealth for the last five years is as follows: Operating income prior to adoption of AASB 15 Operating income after adoption of new AASB 15 Net profit before tax prior to adoption of AASB 15 Net profit before tax after adoption of new AASB 15 Net profit and other comprehensive income after tax attributable to members prior to adoption of AASB 15 Net profit and other comprehensive income after tax attributable to members after adoption of new 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) prior to adoption of AASB 15 Basic EPS (cents) after adoption of new AASB 15 Diluted EPS (cents) prior to adoption of AASB 15 Diluted EPS (cents) 30 June 2021 30 June 2020 30 June 2019 30 June 2018 30 June 2017 – – – $70,630,226 61,434,416 $68,180,292 $69,742,110 $66,155,145 – – – – $23,492,625 29,712,695 $24,750,627 $22,164,979 $19,670,917 – – – $15,116,886 20,108,514 16,315,946 $14,411,166 $12,606,598 $0.87 $1.04 6.00c $1.02 $0.87 6.00c – 16.12 13.05 – 16.12 – 13.05 $1.40 $1.02 5.00c – 11.52 – 11.52 $1.36 $1.40 7.00c ‑ $1.01 $1.36 7.00c – 12.08 10.08 – 10.08 – 12.08 – A review of bonuses paid to the Executive Director and Senior Executive, and the success fee paid to ATMR Ventures Pty Ltd of which Tim Odillo Maher is one of the key personnel, over the previous five years is consistent with the operational performance of the Consolidated Entity in those periods. (c) Options issued as part of remuneration for the year ended 30 June 2021 There were no options issued as part of remuneration during or since the end of the financial year. FSA GROuP LIMITED Annual Report 2021 19 (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 2020 Purchased on market Other Changes Balance 30 June 2021 Directors Tim Odillo Maher Deborah Southon David Bower Senior Executive Cellina Chen Total 42,809,231 12,960,047 90,800 – 55,860,078 – – – – – – – – – – 42,809,231 12,960,047 90,800 – 55,860,078 (g) Loans to Directors and Key Management Personnel There were no loans to Directors. A loan of $110,000 was advanced to Cellina Chen during the year. (h) Other transactions with Directors and Key Management Personnel and related parties There were no transactions with Directors and Key Management Personnel and related parties. (i) Voting and comments made at the Company’s 2020 Annual General Meeting (“AGM”) At the 2020 AGM, 99.57% of the votes received supported the adoption of the Remuneration Report for the year ended 30 June 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. This concludes the Remuneration Report which has been audited. 20 Directors’ Report (continued) For the year ended 30 June 2021 Directors’ Meetings The number of meetings held and attended by each Director during the year is as follows: David Bower Tim Odillo Maher Deborah Southon Sam Doumany (retired) Total number of meetings held during the financial year Number of meetings held while in office Meetings attended 9 9 9 1 9 9 9 9 1 Audit & Risk Management Committee Meetings The number of meetings held and attended by each member during the year is as follows: David Bower Tim Odillo Maher Deborah Southon Sam Doumany (retired) Total number of meetings held during the financial year Remuneration Committee Meetings The number of meetings held and attended by each member during the year is as follows: David Bower Tim Odillo Maher Deborah Southon Total number of meetings held during the financial year Proceedings on behalf of the Company Number of meetings held while in office Meetings attended 3 3 3 1 3 3 3 3 1 Number of meetings held while in office Meetings attended 2 2 2 2 2 2 2 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. FSA GROuP LIMITED Annual Report 2021 21 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 22. 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 4th 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 12 August 2021 22 Auditor’s Independence Declaration To the Directors of FSA Group Limited and the entities it controlled during the year 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 RYAN POLLETT TO THE DIRECTORS OF FSA GROUP LIMITED As lead auditor of FSA Group Limited for the year ended 30 June 2021, 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. Ryan Pollett Director BDO Audit Pty Ltd Sydney, 12 August 2021 BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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. FSA GROuP LIMITED Annual Report 2021 23 Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2021 Revenue and other income Fees from services Finance income Finance expense Net finance income Total operating income Employee benefit expense Marketing expense Operating expenses Impairment expenses Office facility expenses Depreciation and amortisation expense Unrealised gains on fair value movement of derivatives Total expenses 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 and 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) Consolidated Entity Notes 2021 $ 2020 $ 2 2 2 2 2 31,677,359 41,746,293 39,941,645 40,778,763 (10,184,588) (14,344,764) 29,757,057 26,433,999 61,434,416 68,180,292 (16,401,277) (23,846,974) (5,819,002) (7,585,677) (4,776,001) (5,519,160) (2,318,376) (4,765,349) (1,821,808) (2,017,928) (943,783) (643,546) 358,526 948,969 (31,721,721) (43,429,665) 29,712,695 24,750,627 17 (8,941,373) (7,419,410) 20,771,322 17,331,217 – – 20,771,322 17,331,217 662,808 1,015,271 20,108,514 16,315,946 20,771,322 17,331,217 3 3 16.12 16.12 13.05 13.05 The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Financial Statements. 24 Statement of Financial Position as at 30 June 2021 Current Assets Cash and cash equivalents Trade and other receivables Other assets Total Current Assets Non‑Current Assets Trade and other receivables Right of use assets Investments Plant and equipment Intangible assets Deferred tax 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 Total Financing Assets Total Assets Current Liabilities Trade and other payables Contract liabilities Lease liability Provisions Current tax liabilities Borrowings Derivatives Total Current Liabilities Non‑Current Liabilities Contract liabilities Lease liability Provisions Deferred tax liabilities Total Non‑Current Liabilities Financing Liabilities Borrowings to finance personal loan assets Limited‑recourse 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 interests Total Equity Consolidated Entity Notes 2021 $ 2020 $ 4 4 8 6 17 5 5 7 2 8 9 12 2 8 9 17 12 12 12 10 18,930,111 18,361,210 988,573 38,279,894 4,313,128 10,317,800 – 2,101,974 2,169,178 1,187,557 20,089,637 7,980,442 19,399,262 1,320,277 28,699,981 7,555,304 11,451,345 385 1,491,367 2,653,447 742,248 23,894,096 3,837,569 12,332,930 64,930,182 382,471,633 463,572,314 521,941,845 4,010,137 27,915,984 63,159,110 393,815,196 488,900,427 541,494,504 4,745,599 458,909 813,489 2,229,326 3,588,265 306,647 – 12,142,235 496,315 9,789,398 357,167 3,155,508 13,798,388 – 42,384,982 377,963,244 420,348,226 446,288,849 75,652,996 6,360,492 65,682,158 72,042,650 3,610,346 75,652,996 5,847,151 405,745 723,960 2,426,822 1,290,118 447,547 401,134 11,542,477 822,782 10,647,457 432,259 2,962,275 14,864,773 5,010,874 42,393,650 404,825,356 452,229,880 478,637,130 62,857,375 6,360,492 53,059,345 59,419,837 3,437,538 62,857,375 The Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements. FSA GROuP LIMITED Annual Report 2021 25 Statement of Changes in Equity For the year ended 30 June 2021 Balance at 30 June 2019 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 Share buy‑back Balance at 30 June 2020 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 Share capital Retained earnings Non‑ controlling interests $ $ $ Total $ 6,707,233 44,247,880 3,157,267 54,112,380 – – – – – 16,315,946 1,015,271 17,331,217 – – – 16,315,946 1,015,271 17,331,217 (7,504,481) – (7,504,481) – (735,000) (735,000) (346,741) (346,741) 6,360,492 53,059,345 3,437,538 62,857,375 – – – – – 20,108,514 662,808 20,771,322 – – – 20,108,514 662,808 20,771,322 (7,485,701) – (7,485,701) – (490,000) (490,000) Balance at 30 June 2021 6,360,492 65,682,158 3,610,346 75,652,996 The Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements. 26 Statement of Cash Flows For the year ended 30 June 2021 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Finance income received Finance cost paid Income tax paid Consolidated Entity 2021 $ 2020 $ Notes Inflows/ (Outflows) Inflows/ (Outflows) 34,590,161 41,863,283 (27,854,078) (38,769,660) 39,987,087 40,796,691 (10,316,724) (16,700,370) (6,895,302) (7,756,743) Net cash inflow from operating activities 16 29,511,144 19,433,201 Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of intangibles Acquisition of right of use assets Net decrease/(increase) in home loan assets Net increase in personal loan assets Net decrease in other loans Net cash inflow/(outflow) from investing activities Cash flows from financing activities Net (repayment)/receipt of borrowings Payment of lease liability Payment of distributions to non‑controlling interests Share buy‑back 10 Dividends paid to the Company’s shareholders Net cash (outflow)/inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year The Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements. (986,534) (1,298,915) 6 (83,588) – (270,116) (21,069) 10,520,328 (12,730,099) (3,111,442) (5,963,910) – 312,226 6,338,764 (19,971,883) (31,890,418) 37,016,461 (789,742) (490,000) – (58,859) (735,000) (346,741) (7,485,701) (7,504,481) (40,655,861) 28,371,380 (4,805,953) 27,832,698 39,906,563 12,073,865 35,100,610 39,906,563 FSA GROuP LIMITED Annual Report 2021 27 General information For the year ended 30 June 2021 Consolidated entity FSA Group Limited is a for‑profit listed public company (ASX: FSA), incorporated and domiciled in Australia. The consolidated Financial Statements incorporate the financial information of FSA Group Limited (“Company” or “parent entity’) and the entities controlled and its interests in associates together referred to as the “Consolidated Entity”. Principal activities The Consolidated Entity provides debt solutions and direct lending services to individuals. Basis of preparation 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 (“accounting standards”), and the Corporations Act 2001. 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. The Financial Statements are presented in Australian dollars and rounded to the nearest dollar. Judgements and estimates In the process of applying the Consolidated Entity’s accounting policies, management have made a number of judgements and applied estimates of future events. Accounting policy – depreciation Plant and equipment are depreciated on a straight‑line basis over their useful lives. 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 Judgements and estimates that are material to the Financial Statements are disclosed in the following Notes: Page 30 Page 33 Page 34 Note 2 Note 4 Note 5 Revenue and income Page 40 Note 13 Financial instruments Trade and other receivables Page 41 Note 14 Financial risk management Financing assets New and amending accounting standards New and amending accounting standards that are not yet mandatory have not been early adopted. The accounting policies of the Consolidated Entity have been consistently applied. Enhanced communication The Financial Statements have been prepared using principles of enhanced communication, including using simple descriptions and sentence structures, avoiding the use of boilerplate narratives, ranking information that highlights its importance, and presenting information in a suitable format to make it easier to understand. Authorisation The Financial Statements are authorised for issue by the Directors on 12 August 2021. 28 Notes to the Financial Statements For the year ended 30 June 2021 The Notes to the Financial Statements are arranged in five sections: 29 PERFORMANCE 29 Note 1: Segment information 30 Note 2: Revenue and income 32 Note 3. Earnings per share 33 ASSETS 33 Note 4. Trade and other receivables 35 Note 5. Financing assets 36 Note 6. Intangible assets 37 LIABILITIES 37 Note 7. Trade and other payables 37 Note 8. Leases 38 Note 9. Provisions 38 EQuITY AND BORROWINGS 38 Note 10. Share capital 39 Note 11. Dividends 39 Note 12. Borrowings 40 Note 13. Financial instruments 41 Note 14. Financial risk management 43 Note 15. Fair value measurements 44 OTHER 44 Note 16. Cash flow information 44 Note 17. Income tax 46 Note 18. Auditor’s remuneration 46 Note 19. Key Management Personnel disclosures 46 Note 20. Interests in subsidiaries 50 Note 21. Parent entity information 50 Note 22. Deed of cross guarantee 52 Note 23. Contingent liabilities 52 Note 24. Events occurring after reporting date FSA GROuP LIMITED Annual Report 2021 29 PERFORMANCE This section focuses on the Consolidated Entity’s performance and returns to shareholders for the year ended 30 June 2021. Note 1: Segment information Reportable segments The Consolidated Entity’s operating segments are distinguished and presented based on the differences in providing services and providing finance products. From this information, the Consolidated Entity’s chief operating decision makers have identified reportable segments that are subject to different regulatory environments and legislation: Reportable segment Description Services Offering a range of services to assist clients wishing to enter into a payment arrangement with their creditors, including informal arrangements, debt agreements, personal insolvency agreements and bankruptcy. Consumer Lending Other/unallocated Offering non‑conforming home loans and personal loans to assist clients wishing to purchase a property or consolidate their debt or to purchase a motor vehicle. 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. Segment information The results of the reportable segments are reconciled to the Consolidated Entity’s financial information as follows: Operating Segment Services Consumer Lending Other/unallocated Consolidated Total 2021 $ 2020 $ 2021 $ 2020 $ 2021 $ 2020 $ 2021 $ 2020 $ Revenue and Income: Fees from services 31,268,536 41,170,187 378,081 528,359 Finance income Finance expense 1,829 1,934 39,936,122 40,761,038 (404,945) (32,291) (9,779,643) (14,312,496) Net finance income (403,116) (30,357) 30,156,479 26,448,542 Total operating income 30,865,420 41,139,830 30,534,560 26,976,901 Results: Segment profit before tax 12,088,836 11,728,057 17,196,011 12,617,442 Income tax (expense)/benefit (3,968,278) (3,549,882) (5,162,329) (3,757,432) Profit for the year 8,120,558 8,178,175 12,033,682 8,860,010 30,742 3,694 – 3,694 34,436 427,848 189,234 617,082 47,747 31,677,359 41,746,293 15,791 39,941,645 40,778,763 23 (10,184,588) (14,344,764) 15,814 63,561 29,757,057 26,433,999 61,434,416 68,180,292 405,128 29,712,695 24,750,627 (112,096) (8,941,373) (7,419,410) 293,032 20,771,322 17,331,217 Segment assets Reclassification Total Assets 44,642,125 49,428,767 469,847,265 493,066,826 26,475,871 26,476,146 540,965,261 568,971,739 (19,023,416) (27,477,234) 521,941,845 541,494,505 Each reportable segment accounts for transactions consistently with the Consolidated Entity’s accounting policies. Centrally incurred costs for shared services are allocated between segments based on employee numbers as a percentage of the total head count. 30 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Note 2: Revenue and income Fees from services Fees from services comprise fees from contracts with customers for personal insolvency services. Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity is expected to be entitled (“the transaction price”) in exchange for transferring distinct performance obligations to clients as follows: Service Fees Performance obligations Revenue recognition Debt agreements and informal arrangements Application fees and administration fees Performance obligations comprises two distinct services: (1) Initial service to prepare debt proposal for consideration by the creditors and the Australia Financial Security Authority, and (2) Monthly or periodic activities that include setting up the debt agreement or informal arrangement, 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. Revenue is recognised as follows: (1) The initial service at a point in time when the debt proposal is completed, and (2) Over time when the monthly or periodic activities are delivered. The total consideration in the contract is collected over the contract term. Bankruptcy and personal insolvency agreements Trustee fees Estate administration Recognised over time as work progresses and time is billed. Application of accounting policy 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 including an estimate of any variable consideration, allocates the transaction price to the separate performance obligations on the basis of the relative stand‑alone selling price of each distinct 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 services promised. Judgements When applying the revenue recognition accounting policy to debt agreements and informal arrangements, management have determined that: • The stand‑alone selling price of the initial service is based on the Consolidated Entity’s set up costs using a gross‑plus margin approach. • The monthly or periodic activities represent a series of distinct services that are substantially the same – revenue is recognised using an output method based on the numbers of time periods (e.g. months) to be provided over the term of the contract. Revenue for these services is recognised substantially in line with the pattern of collection of cash from the debtor’s monthly or periodic cash payments. Goods & Services Tax (GST) The Consolidated Entity is liable for GST when the consideration for the application and administration service provided is received, and recognises the GST liability at this point. FSA GROuP LIMITED Annual Report 2021 31 unsatisfied performance obligations The aggregate amount of the transaction price allocated to debt agreement and informal arrangement administration services that are unsatisfied is $40,780,997 as at 30 June 2021 ($61,108,522 as at 30 June 2020) 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 unrecoverable payments Consolidated Entity 2021 $ 2020 $ 19,844,620 24,714,263 13,251,252 19,396,213 5,640,169 11,655,095 2,044,956 5,342,951 40,780,997 61,108,522 When a debtor is behind in their monthly or periodic payments, the Consolidated Entity continues to recognise the revenue that it is entitled to collect for services transferred, but that may not be recoverable. Impairment is assessed as outlined in Note 4. Contract liability 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 services associated with the advance collection. Current contract liability Non‑current contract liability Reconciliation of the carrying amount: Opening balance Payments received in advance Transfer to revenue – included in the opening balance Transfer to revenue – other balances 458,909 496,315 955,224 405,745 822,782 1,228,527 1,228,527 1,280,908 350,687 (623,990) – 689,740 (742,121) – 955,224 1,228,527 Net finance income Finance income comprises interest income and finance fee income: • Interest income is recognised using the effective interest method. • 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 or, where income relates to loan origination, income is deferred and amortised over the effective life of the loan using the effective interest method. Net finance income is presented net of finance costs, which comprise interest expense on borrowings using the effective interest method. 32 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Job Keeper income Job Keeper income was received by two subsidiaries within the Consolidation Entity. It has been netted against Employee benefit expense in the Statement of Profit or Loss and Other Comprehensive Income. Job Keeper income received was $2,003,600 for 2021 (2020: $852,000). Disaggregation of revenue Fees from services – Personal insolvency – Refinance broking – Other services Total revenue Finance income – Home loan assets – Personal loan assets – Other interest income Finance expense – Interest expense – home loan facilities – Interest expense – personal loan facilities – Interest expense – other lending facilities Net finance income Total operating income Note 3. Earnings per share The Consolidated Entity calculated basic and diluted earnings per share as follows: Total profit attributable to the members of the parent for the year ($) Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share (cents) Diluted earnings per share (cents) Consolidated Entity 2021 $ 2020 $ 31,268,536 41,170,186 378,081 30,742 528,282 47,825 31,677,359 41,746,293 24,471,194 25,844,528 15,464,928 14,916,509 5,523 17,726 39,941,645 40,778,763 (8,648,430) (12,666,597) (1,131,213) (1,645,899) (404,945) (32,268) (10,184,588) (14,344,764) 29,757,057 26,433,999 61,434,416 68,180,292 20,108,514 16,315,946 Number Number 124,761,680 124,987,712 124,761,680 124,987,712 16.12 16.12 13.05 13.05 FSA GROuP LIMITED Annual Report 2021 33 ASSETS This section focuses on the financial assets that the Consolidated Entity requires to operate its business. Note 4. Trade and other receivables Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for impairment using the expected credit loss method. Trade and other receivables comprise: Receivable type Description Approach to impairment Debt agreement and Informal arrangement receivables Bankruptcy and personal insolvency agreement receivables Receivables are receipted on a pro rata basis, in parity with other parties to the debt proposal throughout the debt proposal administration period (contract term), which is generally 2 to 5 years. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. Impairment allowances are estimated through an assessment of the receivables on a collective (portfolio) basis based on historical collections data and losses incurred. Receivables are receipted on a pro rata basis, in accordance with statutory approval of trustee remuneration, throughout the administration period, which is generally 3 years. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. Impairment allowances are estimated through an assessment of the receivables on both collective (portfolio) basis based on historical loss incurred, and also adjusted by individual matter assessment on an ongoing basis. Sundry receivables Other receivables. 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. 34 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Current Trade receivables Provision for impairment Non‑current Trade receivables Provision for impairment Total The movement in the provision for impairment Opening balance Provision for impairment recognised Unused provision reversed Bad debts Closing balance Credit risk Details of the Consolidated Entity’s credit risk is included in Note 14. The ageing profile of trade and other receivables is as follows: Ageing analysis – Trade and other receivables Not past due Past due Total Consolidated Entity 2021 $ 2020 $ 19,409,823 20,873,323 (1,048,613) (1,474,061) 18,361,210 19,399,262 4,459,305 7,738,441 (146,177) (183,137) 4,313,128 7,555,304 22,674,338 26,954,566 1,657,198 2,088,529 327,109 (178,106) 761,923 (174,914) (611,411) (1,018,340) 1,194,790 1,657,198 Consolidated Entity 2021 $ 2020 $ 16,060,095 19,150,187 7,809,033 9,461,577 23,869,128 28,611,764 FSA GROuP LIMITED Annual Report 2021 35 Note 5. Financing assets Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for impairment using the expected credit loss method. Financing assets comprise: Loan type Description Type Term Approach to impairment Home loan assets Loans secured against residential property. Secured 3‑4 years An impairment loss on an individual basis is recognised if the total expected or actual sale proceeds, resulting from enforced sale of security, in regard to an individual loan do not exceed the loan balance. In the event that expected or actual sales proceeds do not exceed the loan balance, this difference and any realisation costs would equal the impairment loss. Personal loan assets Loans secured against motor vehicles. Secured 4‑5 years An impairment allowance on a collective basis is recognised with regard to the underlying equity in the security or risk grade of the debtor for the loans receivable and also with regard to the payment history and any other information available, such as forward looking information that is available without undue cost of effort. Non‑securitised financing assets 250,920,262 217,836,666 68,153,032 65,673,999 Consolidated Entity Home loan assets Consolidated Entity Personal loan assets 2021 $ 2020 $ 2021 $ 2020 $ Securitised financing assets Total financing assets Provision for impairment Security Weighted average loan to valuation ratio Interest rate type Aging analysis Not past due Past due 0 – 30 days Past due 30 days Total Maturity analysis 132,667,518 176,622,537 – 383,587,780 394,459,203 68,153,032 65,673,999 (1,116,147) (644,007) (3,222,850) (2,514,889) 382,471,633 393,815,196 64,930,182 63,159,110 67% 67% Variable Variable 83% Fixed 85% Fixed 344,608,219 357,759,181 62,337,388 61,033,969 34,995,922 26,683,392 4,584,214 3,056,345 3,983,639 10,016,630 1,231,430 1,583,685 383,587,780 394,459,203 68,153,032 65,673,999 Amounts to be received in less than 1 year 8,178,008 7,885,901 17,222,100 15,449,970 Amounts to be received in greater than 1 year 375,409,772 386,573,302 50,930,932 50,224,029 383,587,780 394,459,203 68,153,032 65,673,999 The movement in the provision for impairment Opening balance Increase in provision Bad debts Closing balance 644,007 856,238 317,121 2,514,889 1,405,878 498,151 1,364,925 2,215,805 (384,098) (171,265) (656,964) (1,106,794) 1,116,147 644,007 3,222,850 2,514,889 36 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Note 6. Intangible assets Intangible assets Goodwill Intangible assets recognition Life Impairment Goodwill comprises an amount of $345,124 that is the amount by which the purchase price for the business of FSA Australia Pty Ltd and its controlled entities exceeded the fair value attributed to its net assets at date of acquisition by the parent company. Indefinite Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Software Software is measured on the basis of the cost of acquisition or development of software less subsequent accumulated amortisation and accumulated impairment losses 2 – 5 years Software is tested for impairment only if there is an indication that the carrying amount of the software may be impaired. Goodwill Recognised on consolidation Software Software at cost Accumulated amortisation Total intangible assets Movements during year (Software): Beginning of the year Additions Amortisation Consolidated Entity 2021 $ 2020 $ 345,124 345,124 4,987,359 4,903,771 (3,163,305) (2,595,448) 1,824,054 2,308,323 2,169,178 2,653,447 2,308,323 2,344,764 83,588 270,116 (567,857) (306,557) 1,824,054 2,308,323 FSA GROuP LIMITED Annual Report 2021 37 LIABILITIES This section focuses on the Consolidated Entity’s financial liabilities. Note 7. 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 8. Leases Consolidated Entity 2021 $ 2020 $ 754,889 1,484,908 3,702,625 4,101,672 288,085 4,745,599 260,571 5,847,151 The Consolidated Entity leases its office premises. The Consolidated Entity adopted AASB 16 Leases on 1 July 2019. On that date, the existing lease of the Company’s office premises had a remaining lease term of 12 months and all other operating leases were short term or low value. The Company entered into a new lease of office premises on 17 February 2020 and the lease has been capitalised as a right of use asset addition during the current year. The lease liability on initial recognition is measured at the present value of the contractual payments due to the lessor over the lease term of 10 years, with the discount rate determined at the Consolidated Entity’s incremental borrowing rate on the commencement of the lease. The right of use asset is depreciated over the lease term. The lease liability is accounted for using an effective interest method. Right‑of‑use assets Property Accumulated amortisation Lease liabilities Current Non‑current Additions of the right‑of‑use assets during the year ended 30 June 2021 were $21,213. Amounts recognised in profit or loss Depreciation charge of right‑of‑use‑assets Interest expense (included in finance cost) Operating rental expense Rental on previous office premises (short term) 11,472,558 11,451,345 (1,154,758) – 10,317,800 11,451,345 813,489 723,960 9,789,398 10,647,457 10,602,887 11,371,417 1,154,758 404,520 393,316 49,237 2,001,831 96,230 32,291 498,338 1,188,374 1,815,233 38 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Note 9. 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. Employee benefits A provision has been recognised for employee benefits relating to annual leave and long service leave. As at 30 June 2021, the Consolidated Entity employed 89 full‑time equivalent employees (2020: 127) plus a further 2 independent contractors (2020: 2). 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 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. Current Employee benefits Non‑current Employee benefits EQuITY AND BORROWINGS This section focuses on the Consolidated Entity’s capital structure and borrowing activities. Note 10. Share capital Share capital comprises: 124,761,680 (2020: 124,761,680) Fully paid ordinary shares Ordinary shares Balance 1 July Less shares bought back during year Balance 30 June Consolidated Entity 2021 $ 2020 $ 2,229,326 2,426,822 357,167 432,259 Consolidated Entity 2021 $ 2020 $ 6,360,492 6,360,492 Number Number 124,761,680 125,092,610 – (330,930) 124,761,680 124,761,680 On 27 November 2020, the Company announced an on market buy‑back in line with its capital management strategy. FSA GROuP LIMITED Annual Report 2021 39 Note 11. Dividends Dividends are recognised when declared during the financial year and at the discretion of the Company. Dividends recognised in the current financial period by FSA Group Limited are: Financial Year 2021 Final – ordinary Interim – ordinary Financial Year 2020 Final – ordinary Interim – ordinary Value per share $ 0.03 0.03 Value per share $ 0.03 0.03 Total Amount $3,742,850 $3,742,850 Total Amount $3,752,778 $3,751,703 Franked 100% 100% Franked 100% 100% Date of Payment 11‑Sep‑20 23‑Feb‑21 Date of Payment 13‑Sep‑19 13‑Mar‑20 12 August 2021, the Directors declared a fully franked final dividend for the year ended 30 June 2021 of 3.00 cents per ordinary share. This brings the full year dividend to 6.00 cents per ordinary share. Consolidated Entity 2021 $ 2020 $ Franking credits Franking credits available at the reporting date based on a tax rate of 30% 24,684,000 20,865,090 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% 3,378,857 1,290,118 Franking credits available for subsequent financial years based on a tax rate of 30% 28,062,857 22,155,208 Note 12. Borrowings Borrowings comprise: Borrowings Facility type Provider Limit Maturity date Drawn Security Non‑recourse warehouse Home loans Westpac $350m Oct‑23 $ 229,996,443 Institutional $20m Oct‑23 $ 17,581,947 Securitised Institutional Mar‑51 $ 130,070,123 Limited recourse warehouse Personal loans Westpac $75m Apr‑26 $ 42,350,000 Corporate Westpac $15m Mar‑24 $ – This facility is secured against current and future home loan assets of Azora Home Loans Warehouse Trust 1. This facility is secured against current and future home loan assets of the Fox Symes Home Loans 2019‑1 PP Trust. This facility is secured against current and future personal loan assets of the Azora Personal Loans Warehouse Trust 1. This facility is secured by a fixed and floating charge over the assets of FSA Group Limited and its controlled entities.   40 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Current – unsecured Credit cards Financing Liabilities – secured Bank loan to finance personal loan assets Limited recourse borrowings to finance personal loan assets Non‑recourse borrowings to finance home loan assets The carrying amounts of assets pledged as security are: Personal loan assets Home loan assets Consolidated Entity 2021 $ 2020 $ 306,647 447,547 – 5,010,874 42,384,982 42,393,650 377,963,244 404,825,356 420,348,226 452,229,880 68,767,751 67,169,247 394,804,563 421,731,180 463,572,314 488,900,427 Note 13. Financial instruments The Consolidated Entity undertakes transactions in a range of financial instruments, the risks associated with those financial instrument and recognition as follows: Financial instrument Type of instruments Risks Recognition Non‑derivative financial instruments Trade and other receivables Home loan assets Personal loan assets Cash and cash equivalents Other financial assets Trade and other payables Lease liabilities Short‑term loans Bank loans Warehouse facilities Securitised facilities Credit risk & Market risk Liquidity risk & Market risk Non‑derivative financial instruments (other than lease liabilities reported in Note 8) are recognised initially at fair value plus adjusted for any directly attributable transaction costs. Subsequent to initial recognition, non‑derivative financial instruments are measured at amortised cost using the effective interest rate method. Financial assets are reduced by the estimated of expected credit losses. Derivative financial instruments Interest rate swap contracts Market risk 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. FSA GROuP LIMITED Annual Report 2021 41 These financial instruments represented in the Statement of Financial Position are categorised under AASB 139 Financial Instruments: Recognition and Measurement as follows: Financial Assets Cash and cash equivalents Trade and other receivables Financing assets Assets and receivables at amortised cost Financial Liabilities Payables at amortised cost Financing liabilities Payables at amortised cost Consolidated Entity 2021 $ 2020 $ 18,930,111 7,980,442 22,674,338 26,954,566 463,572,314 488,900,427 505,176,763 523,835,435 5,052,246 6,294,698 420,348,226 452,229,880 425,400,472 458,524,578 Assets and liabilities measured at fair value through profit and loss: Derivatives – Interest rate swap contracts – (401,134) Note 14. Financial risk management 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. 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. Type of instruments Security Risk Management Impairment Assessment Personal insolvency receivables (debt agreements, informal arrangements, personal insolvency agreements and bankruptcy) Unsecured Debtors are assessed for serviceability and affordability prior to inception of each agreement Home loan assets 1st registered mortgage over residential property Personal loan assets Motor vehicle 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 security, and assessing the value of the security provided. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. 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 the trade receivable may be impaired. A 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 (i.e. weekly, fortnightly, and monthly).A loan is classified as being in hardship when a hardship application has been submitted and accepted. 42 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Liquidity risk Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. Type of instruments Risk Management Assessment Trade and other payables Lease liabilities Short‑term loans Bank loans Warehouse facilities Securitised facilities 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 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 The Consolidated Entity will be able to meet its financial obligations as they fall due 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 2021 Carrying amount $ Contractual Cash flows $ 12 months or less $ Trade and other payables 4,745,599 4,745,599 4,745,599 1 to 2 years $ – 2 to 5 years $ – 5 to 10 years $ – Leases 10,602,887 12,506,039 1,155,775 1,212,635 4,002,272 6,135,357 Other short‑term loans 306,647 306,647 306,647 – – Warehouse facilities 290,178,549 306,545,814 5,132,668 6,383,897 295,029,249 – – Securitised facilities 130,169,677 138,609,121 30,699,261 24,202,916 45,936,542 37,770,402 Total 436,003,359 462,713,220 42,039,950 31,799,448 344,968,063 43,905,759 30 June 2020 Trade and other payables 5,847,151 5,847,151 5,847,151 – – – Leases 11,371,417 13,579,770 1,098,341 1,153,015 3,809,396 7,519,018 Other short‑term loans 447,547 447,547 447,547 Bank loans 5,010,874 5,062,658 5,062,658 – – – – Warehouse facilities 268,553,016 281,685,344 22,226,681 216,407,846 43,050,817 – – – Securitised facilities 178,665,990 283,104,146 1,084,097 3,243,404 10,441,097 268,335,548 Total 469,895,995 589,726,616 35,766,475 220,804,265 57,301,310 275,854,566 FSA GROuP LIMITED Annual Report 2021 43 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. Type of instruments Risk Management Assessment Home loans Personal loans 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 on a non‑recourse basis to the Consolidated Entity. Personal loan assets are lent on fixed interest rates and are financed by variable rate borrowings. Personal loan terms average around 4 to 5 years which mitigate the Consolidated Entity’s exposure to interest rate risk on these borrowings. These borrowings are on a limited‑recourse basis to the Consolidated Entity. The Consolidated Entity performs interest rate sensitivity analysis to assess 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. The impact of the interest rate movement by 50 basis points were immaterial. 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. Note 15. Fair value measurements 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. Except as detailed in the following table, the Directors consider that due to their short‑term nature the carrying amounts of financial assets and financial liabilities, which include cash, current trade receivables, current payables and current borrowings, are assumed to approximate their fair values. For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short‑term nature. Financial assets Current receivables net of deferred tax Non‑current receivables net of deferred tax Financing assets Personal loan assets Home loan assets Jun‑21 Book value $ Jun‑21 Fair value $ 4,924,871 4,924,871 3,918,453 3,883,165 64,930,182 76,064,981 382,471,633 406,696,899 44 Notes to the Financial Statements (continued) For the year ended 30 June 2021 OTHER 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 on derivatives Loss on write off investments Increase/decrease in assets and liabilities: Trade and other receivables Other current assets Tax assets/liabilities Trade and other payables Provisions Cash flows from operating activities Note 17. Income tax Income tax Consolidated Entity 2021 $ 2020 $ 20,771,322 17,331,217 2,098,541 643,546 (401,134) (948,969) 1,041,447 1,278,059 5,402,771 5,065,686 58,401 2,046,071 (706,355) (337,334) (1,233,689) (3,013,885) (272,586) 121,236 29,511,144 19,433,201 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. 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. 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. 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. 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. FSA GROuP LIMITED Annual Report 2021 45 Consolidated Entity 2021 $ 2020 $ 9,504,511 6,921,216 (252,075) (311,063) 502,182 (3,988) 8,941,373 7,419,410 28,391 (2,893,685) (280,466) 3,395,867 (252,075) 502,182 29,712,695 24,750,627 8,913,808 7,425,188 31,856 (3,597) 38,297 (1,286) 8,942,067 7,462,199 15,630 69,578 (16,324) (112,367) 8,941,373 7,419,410 2,317,659 2,173,736 38,644 873,462 25,140 764,137 3,180,866 3,411,425 20,008 84,592 6,430,639 6,459,030 (5,243,082) (5,716,782) 1,187,557 742,248 5,303,251 5,243,653 3,095,340 3,435,404 (5,243,083) (5,716,782) 3,155,508 2,962,275 (a) Income tax expense Current tax expense Deferred tax expense Over provision for current tax payable in a prior period Deferred income tax expense included in income tax expense comprises: Increase/(decrease) in deferred tax assets (Decrease)/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% (2020: 30%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income Non‑deductible expenses Adjustment for overseas tax rates Under provision in the prior year Tax Offsets Income tax expense (c) Deferred tax assets Provisions Capital legal expenses Accrued expenditure Lease liability Other Deferred tax liability offset on tax consolidation Total deferred tax assets (d) Deferred tax liabilities Temporary difference on assessable income Temporary difference on lease Deferred tax liability offset on tax consolidation Total deferred tax liabilities 46 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Note 18. Auditor’s remuneration Auditors of the Consolidated Entity – BDO and related network forms Audit and review of financial statements Consolidated Entity Controlled entities and joint operations Total audit and review of financial statements Other statutory assurance services Non‑audit services Taxation compliance services Taxation advice and consulting Other training and consulting Total non‑audit services Total services provided by BDO Note 19. Key Management Personnel disclosures Remuneration of Directors and Key Management Personnel Short‑term employee benefits Long‑term employee benefits Post‑employment benefits Consultancy fees Consolidated Entity 2021 $ 2020 $ 144,000 25,950 169,950 4,500 91,594 15,662 3,650 110,906 280,856 159,000 28,500 187,500 9,000 63,280 76,405 4,000 143,685 340,185 754,339 261,134 53,591 438,000 1,248,162 (14,739) 70,128 663,375 1,507,064 1,966,926 Note 20. 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. The following entities are subsidiaries of FSA Group Limited Name FSA Australia Pty Ltd Azora Finance Group Pty Ltd (formerly Fox Symes Home Loans Pty Ltd) Azora Personal Loans Pty Ltd(1) (formerly Fox Symes Personal Loans Pty Ltd) 104 880 088 Group Holdings Pty Ltd Country of Incorporation  Australia Australia Australia Australia FSA GROuP LIMITED Annual Report 2021 47 Percentage of equity interest held 2021 % 100 100 100 100 2020 % 100 100 – 100 (1) Azora Personal Loans Pty Ltd (formerly Fox Symes Personal Loans Pty Ltd) was previously owned by Azora Finance Group Pty Ltd (formerly Fox Symes Home Loans Pty Ltd), it was acquired by FSA Group Ltd during the period. The following entities are subsidiaries of FSA Australia Pty Ltd Name Fox Symes & Associates Pty Ltd Fox Symes Debt Relief Services Pty Ltd Easy Bill Pay Pty Ltd Aravanis Insolvency Pty Ltd Fox Symes Business Services Pty Ltd Country of Incorporation  Australia Australia Australia Australia Australia Percentage of equity interest held 2021 % 100 100 100 65 75 The following entities are subsidiaries of Azora Finance Group Pty Ltd (formerly Fox Symes Home Loans Pty Ltd) Name Azora Finance (Services) Pty Ltd (formerly Fox Symes Home Loans (Services) Pty Ltd) Azora Finance (Management) Pty Ltd (formerly Fox Symes Home Loans (Management) Pty Ltd) Country of Incorporation Australia Australia Fox Symes Home Loans (Mortgage Management) Pty Ltd Australia Azora Direct Pty Ltd (formerly Fox Symes Financial Pty Ltd) Australia Azora Personal Loans Pty Ltd (formerly Fox Symes Personal Loans Pty Ltd) Azora Home Loans Warehouse Trust 1 (formerly Fox Symes Home Loans Warehouse Trust 1) FSHL Prime Warehouse Trust 1 Fox Symes Home Loans 2019‑1 PP Trust Australia Australia Australia Australia Percentage of equity interest held 2021 % 100 100 100 100 – 100 – 100 2020 % 100 100 100 65 75 2020 % 100 100 100 100 100 100 100 100 48 Notes to the Financial Statements (continued) For the year ended 30 June 2021 The following entity is a subsidiary of Azora Personal Loans Pty Ltd (formerly Fox Symes Personal Loans Pty Ltd) Name Azora Personal Loans Warehouse Trust 1 (formerly Fox Symes Personal Loans Warehouse Trust 1) Country of Incorporation Australia Percentage of  equity interest held 2021 % 100 2020 % 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 2021 % 100 100 100 100 The following entity is a subsidiary of Aravanis Insolvency Pty Limited Name Aravanis Advisory Limited Country of Incorporation India Percentage of  equity interest held 2021 % 99.99 2020 % 100 100 100 100 2020 % 99.99 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 Name Aravanis Insolvency Pty Limited Australia Fox Symes Business Services Pty Limited Australia Principal activities Personal insolvency agreements and Bankruptcies Accounting and taxation Parent Non‑controlling interests Ownership interest 2021 Ownership interest 2020 Ownership interest 2021 Ownership interest 2020 65% 65% 35% 35% 75% 75% 25% 25% FSA GROuP LIMITED Annual Report 2021 49 Aravanis Insolvency Pty Limited 2021 $ 2020 $ 14,462,535 13,500,429 317,046 413,900 14,779,581 13,914,329 1,157,635 3,503,153 4,660,788 10,118,793 825,804 3,375,664 4,201,468 9,712,861 6,628,712 9,800,157 (3,900,802) (5,651,347) 2,727,910 4,148,810 (837,478) (1,248,691) 1,890,432 2,900,119 – – 1,890,432 2,900,119 2,198,232 3,038,354 (9,706) (20,410) (1,403,120) (2,099,382) 785,406 918,562 661,653 3,601,015 1,015,044 3,429,362 Summarised Statement of Financial Position Current assets Non‑current assets Total assets Current liabilities Non‑current liabilities Total liabilities 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 in cash and cash equivalents Other financial information Profit attributable to non‑controlling interests Accumulated non‑controlling interests at the end of reporting period The non‑controlling interest of Fox Symes Business Services Pty Limited was insignificant and therefore information has not been provided. 50 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Note 21. 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 Retained earnings Total equity Financial performance Profit after income tax Other comprehensive income Total comprehensive income for the year 2021 $ 2020 $ 23,046,698 13,008,119 8,465,084 8,465,084 31,511,782 21,473,203 3,344,977 3,344,977 1,596,886 1,596,886 28,166,805 19,876,317 6,360,492 6,360,492 21,806,313 13,515,825 28,166,805 19,876,317 15,776,188 8,603,876 – – 15,776,188 8,603,876 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 22 for further details. There are no contingent liabilities or commitments in the parent entity (2020: $Nil). Note 22. 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’. FSA GROuP LIMITED Annual Report 2021 51 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 Other income Total operating income Total expenses 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 2021 $ 2020 $ 22,256,808 26,389,609 8,120 (4,851) 3,269 16,535,242 15,756 23 15,779 – 38,795,319 26,405,388 (336,245) (492,235) 38,459,074 25,913,153 (6,367,120) (8,049,194) 32,091,954 17,863,959 – – 32,091,954 17,863,959 12,777,758 4,528,647 13,136,401 11,278,360 6,433 2 25,920,592 15,807,009 1,315,585 8,465,084 1,648,222 8,465,084 9,780,669 10,113,306 35,701,261 25,920,315 120,171 458,909 3,378,857 3,957,937 496,315 1,148,910 1,645,225 5,603,162 210,547 405,745 1,607,155 2,223,447 822,782 1,279,263 2,102,045 4,325,492 30,098,099 21,594,823 6,360,496 6,360,496 23,737,603 15,234,327 30,098,099 21,594,823 52 Notes to the Financial Statements (continued) For the year ended 30 June 2021 Note 23. Contingent liabilities There were no contingent liabilities relating to the Consolidated Entity at reporting date except the following: Home loans At reporting date, home loan applications that had been accepted by the Consolidated Entity but not yet settled amount to $11,589,250 (2020: $8,188,250). Home loans are usually settled within 4 weeks of acceptance. Personal loans At reporting date, all personal loan applications that had been accepted by the Consolidated Entity were settled. Personal loans are usually settled within one week of acceptance. Note 24. 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 2021 except as follows: • On 12 August 2021, the Directors declared a 3.00 cent fully franked final dividend to shareholders to be paid on 31 August 2021 with a record date of 18 August 2021. FSA GROuP LIMITED Annual Report 2021 53 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 2021 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 22 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 22. 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 12 August 2021 Deborah Southon Executive Director Sydney 12 August 2021 54 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 2021, 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) (ii) Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and 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 (including Independence Standards) (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 Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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. FSA GROuP LIMITED Annual Report 2021 55 Recoverability of receivable balances Key audit matter How the matter was addressed in our audit As disclosed in the Statement of Profit or Loss and Our audit procedures included, among others; Other Comprehensive Income, impairment expenses of $2,318,376 relating to the Group’s trade and other receivables and financing assets which have been recognised as at 30 June 2021.  Review of the provisioning methodology applied, ensuring compliance with AASB 9 Financial Instruments through comparison to historical cash collections data and The Group summarises the trade and other consideration of trends into the future; receivables and financing assets balances and the provision applied in notes 4 and 5 of the financial statements. Given the quantum of the assets and the judgement exercised by the Group in determining the recoverable amount of each of the classes of asset and calculating the impairment charges, we considered this area to be significant for our audit.    Verification of key inputs to supporting data and re-computation of the balance date provisions to ensure mathematical accuracy; Ensured the impact of COVID-19 has been considered in the forward-looking estimates; and Review of the disclosures relating to the provisioning methodology to ensure appropriate and complete disclosures are presented in 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 2021, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. 56 Independent Auditor’s Report (continued) To the members of FSA Group Limited 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 on pages 14 to 19 of the directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of FSA Group Limited, for the year ended 30 June 2021, 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 Audit Pty Ltd Ryan Pollett Director Sydney, 12 August 2021 FSA GROuP LIMITED Annual Report 2021 57 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 26 July 2021. 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 312 455 253 369 82 117,911 1,465,196 2,155,563 11,104,573 109,918,437 1,471 124,761,680 The number of security investors holding less than a marketable parcel of 476 securities ($1.05 on 26 July 2021) is 176 and they hold 10,578 securities. 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 ADST Pty Ltd BJR Investment Holdings Pty Ltd J P Morgan Nominees Australia Pty Limited UBS Nominees Pty Ltd Ruminator Pty Limited Contemplator Pty Limited Bulwarra Pty Ltd Dundas Ritchie Investments Pty Ltd Microequities Asset Management Pty Ltd HSBC Custody Nominees (Australia) Limited National Nominees Limited Karia Investment Pty Ltd Maramindi Pty Ltd Fernane Pty Ltd Garrett Smythe Ltd Harold Cripps Holdings Pty Ltd Investment Custodial Services Limited Gattenside Pty Ltd Top 20 Total 26,000,000 16,809,231 12,960,047 11,111,111 6,413,553 4,425,256 3,491,440 2,597,622 1,773,775 1,500,000 1,160,207 1,147,887 1,030,000 966,666 900,000 877,168 768,878 700,541 689,660 590,541 20.84% 13.47% 10.39% 8.91% 5.14% 3.55% 2.80% 2.08% 1.42% 1.20% 0.93% 0.92% 0.83% 0.77% 0.72% 0.70% 0.62% 0.56% 0.55% 0.47% 95,913,583 124,761,680 76.88% 100% 58 Shareholder Information (continued) To the members of FSA Group Limited Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Mazamand Group Pty Ltd ADST Pty Ltd BJR Investment Holdings Pty Ltd Voting rights All ordinary shares carry one vote per share without restriction. Restricted securities Number of shares 16,559,026 11,888,514 11,111,111 As at the date of this report there were no ordinary shares subject to voluntary restriction agreements. Business objectives The Consolidated Entity has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives. FSA GROuP LIMITED Annual Report 2021 59 Corporate Information Directors David Bower – Non‑Executive Chairman Tim Odillo Maher – Executive Director Deborah Southon – Executive Director Chief Financial Officer Cellina Chen Company Secretary Cellina Chen Registered Office and Corporate Office Level 13 1 Oxford Street Darlinghurst NSW 2010 Phone: +61 (02) 8985 5565 Fax: +61 (02) 8985 5358 Solicitors Hopgood Ganim Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000 Share Register Automic Level 5, 126 Phillip Street Sydney NSW 2000 GPO Box 5193 Sydney NSW 2001 Auditors BDO Audit Pty Ltd Level 11 1 Margaret Street Sydney NSW 2000 Country of Incorporation Australia Securities Exchange Listing Australian Securities Exchange Ltd ASX Code: FSA Internet Address www.fsagroup.com.au Australian Business Number ABN 98 093 855 791 60 This page has been left blank intentionally. www.colliercreative.com.au #FSA0016 F S A G r o u p L i m i t e d | A n n u a l R e p o r t 2 0 2 1 www.fsagroup.com.au 

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