I had the pleasure last Friday of attending the AGM for the FSA...

I had the pleasure last Friday of attending the AGM for the FSA Group. This is my second year of attendance. It will not be my last, God willing.

Obviously with the share price doing so well, there were smiles all-round the room. I have found the board to be extremely friendly and approachable. For shareholders, I think your investment is in safe hands.

You would have noticed on page 22 of the powerpoint slide that the company is going to embark on a personal loan trial. The initial trial will be carried out in January and February next year. Ten million dollars has been set aside for the trial. Tim advised that they get approximately 6.5 to 7 thousand calls a month from potential clients. Approximately a thousand of these are from callers looking for personal loans.

Demand clearly exists without having to spend any further dollars on advertising. Systems are already in place. The cost of introducing this new product should be minimal. They are considering trialling an interest rate of 15%. Tim claims that with GE Money leaving the industry, the market is somewhat unrepresented for the clients he is chasing. These are clients that the banks have rejected who are seeking better terms and more money than what payday lenders are willing to borrow.

You can imagine a client that has just finished paying off a debt agreement and then going into a bank for a car loan. They would really struggle to get a loan once they ticked the box stating that they had obtained protection under the bankruptcy act. Fox Symes to the rescue. FSA would be familiar with their situation and there recent financial history.

You get the feeling that Tim and the board are very conservative. This was demonstrated last year with the profit upgrades. They are not over promising and under delivering.

I believe that they have factored in an initial loss with this new business opportunity and therefore the 8% to 13% profit range which may have been a little less than what was expected.

In relation to other forms of lending, Tim claims that there is still growth to be extracted from home and business lending. Last year, with the home lending, even though the loan pool was smaller, profits increased thanks to commission received for brokering performed for another lender.

Given the ten million outlay, I personally do not think that they will be too active in the buy back over the coming months. A dividend of between 5.25 and 6 cents this financial year should see support for the share price.

This is not the type of company that is going to put out a releases each week to feed the punters, they are quietly getting on with running what they describe as a cash cow business. They are not interested in acquisitions or take overs, they just want to grow the business in a prudent way.

This posting is not a buy recommendation. The details may not be 100% accurate. DYOR, but whatever you do, hang in there for some further slow but steady growth over the next few years. Enjoy your dividends.