FSA share price surges 16% thanks to positive annual report

The FSA share price has today stormed higher as the company announced positive results for FY 2020. We take a closer look at the details.

| More on:
man sitting at desk behind sign that says debt help signifying fsa share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The FSA Group Ltd (ASX: FSA) share price today surged higher after the company reported better than expected full year results. The FSA share price was up 15.56% to $1.04 by the market's close.

What FSA Group does

FSA Group is a provider of debt solutions and direct lending services to individuals in Australia. FSA has serviced thousands of Australians for just over 19 years. FSA offers a range of debt solutions and direct lending services. The company says it tailors these services to suit clients' individual circumstances and to achieve successful outcomes for its clients. FSA has two business divisions which are Services and Consumer Lending.

How did FSA perform in FY 2020?

As stated by FSA, the 2020 financial year has been a year of challenges however it has also presented opportunities. For FY 2020, FSA Group generated $68.2 million in operating income, a 2% decrease on the prior corresponding period (pcp).  

This was largely due to the fact that, during the 2020 financial year, new client numbers for informal arrangements and debt agreements decreased by 5%. Clients for personal insolvency agreements and bankruptcy also decreased by 20% compared to the pcp. FSA Group currently manages $353 million of unsecured debt under informal arrangements and debt agreements. During the 2020 financial year, FSA paid $89 million in dividends to creditors.

Profit after tax was announced to be $16.3 million, a 13% increase compared to the results of 2019. The net cash inflow from operating activities was $19.4 million, a 14% increase. This was aided by home and personal loans growing by 4% from $441 million to $457 million. 

The company announced a fully franked final dividend of 3 cents per share, bringing the full year dividend to 6 cents per share.

What's next for the FSA share price?

For 2021, FSA will seek to rebrand Azora (finance solutions for small businesses) and focus on growing its home loan and personal loan pools. The company is also aiming to maintain its leading position in a niche market and improve its informal arrangement offering, based on client and creditor feedback. Despite strong cash inflow, FSA will not provide FY 21 earnings guidance until a later date. However, the company advised it expects the FY 21 dividend to be between 6 – 7 cents per share.

On a side note, Sam Doumany is retiring after 17 years as Chairman of the company. He is expected to step down on 2 September, his 83rd birthday.

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Which beaten down ASX 200 share did Goldman Sachs just upgrade to a buy rating?

The broker has become more bullish on this stock following last week's update.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Best Shares

The best ASX shares to invest $1,000 in right now

Analysts think that putting your money into these stocks could be a smart move.

Read more »

green etf represented by letters E,T and F sitting on green grass
Share Market News

4 ASX ETFs to buy for FY25 and beyond

Could these ETFs be top options for investors looking for long term picks?

Read more »

A smiling woman sips coffee at a cafe ready to learn about ASX investing concepts.
Opinions

How I'd invest $10,000 in ASX shares right now

I’m bullish about the prospects of these stocks.

Read more »

A fortune teller looks into a crystal ball in an office surrounded by business people.
Share Market News

What's the outlook for shares vs. property in FY25?

Generally speaking, there is optimism among the experts for both shares and property in FY25.

Read more »

Happy shareholders clap and smile as they listen to a company earnings report.
Best Shares

Top ASX shares to buy before earnings season

It's almost time to take a look at the books!

Read more »

sad party goer sitting alone after celebration
Share Market News

Here are the top 10 ASX 200 shares today

The ASX 200 had a horrible end to its trading week this Friday.

Read more »

A young female investor sits in her home office looking at her ipad and smiling as she sees the QBE share price rising
Broker Notes

3 ASX shares brokers tip for significant outperformance in FY 2025

Leading brokers expect some significant outperformance from these three ASX shares.

Read more »