The Directors present their report, together with the financial report of Savings & Loans Credit Union (S.A.) Limited (‘the Credit Union’) and the consolidated financial report of the consolidated entity, being the Credit Union and its controlled entity, for the year ended 30 June 2007 and the auditor’s report thereon.
Principal activities
The principal activities of the consolidated entity during the course of the financial year were the provision of retail financial services and financial planning advice to our members and acting as an insurance agent.
There were no significant changes in the nature of these activities during the year.
Results of operations
Review of operations
The consolidated entity experienced a growth rate of 20% in assets under management during the 2006/2007 year taking total assets at 30 June 2007 to $2,571 million. The consolidated entity achieved a profit of $16.14 million after tax compared to last year’s result of $14.92 million, an increase of 8%. The 2006/2007 profit was transferred to reserves, resulting in a capital adequacy ratio of 12.75%, which is in excess of the 8% minimum required by Australian Prudential Regulation Authority (APRA) regulations.
Dividends on share capital
The consolidated entity has not paid or declared a dividend on Share Capital during the year ended 30 June 2007 and the Directors do not recommend that a dividend be paid out of the surplus for the year ended 30 June 2007.
State of affairs
The Credit Union achieved a growth rate of 20% which was high compared to finance industry benchmarks. The result was achieved due to the buoyant property market and the Credit Union continuing to increase its sales distribution network. The increase in profit was achieved due to the strong growth in assets while expense increases were minimised. For the second year in succession there was no increase in transaction fees during the financial year. In addition, the Credit Union sold its investment properties during the financial year, which realised a profit before tax of $1.15 million.
In the opinion of the Directors there were no other significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review.
Events subsequent to reporting date
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Credit Union, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.
Likely developments
The Credit Union will enter the second year of its five year strategic plan. The most significant development of this plan is the Credit Union’s entry into the Melbourne retail financial services market. Three branches will be opened in the 2007/08 financial year and further branches may be opened in subsequent years depending on the success of the venture. Additional branches will also be opened in South Australia and Northern Territory. In addition to growth, the strategic plan includes the continued delivery of new products and easier ways of transacting. The strong lending demand is expected to continue with growth levels of at least 15% planned in 2007/08.
Board of Directors
The Credit Union maintains a register of Directors in accordance with the Corporations Act 2001 requirements. The register includes details of each Director’s interest in securities issued by the Credit Union. The register is available for inspection without a fee. All Directors of the Credit Union are non-executive Directors.
The Directors of the Credit Union at any time during or since the end of the financial year are listed on pages 12 and 13 of this report.
Company Secretaries
Mr Greg Connor, (Dip. Teaching, BEd., Grad. Dip. Bus. Admin., JP, SF Fin), Chief Executive Officer, has held the position of company secretary for the past seven years and previously held the position of Chief Manager of Operations of a major financial institution for four years. Mr Greg Connor currently sits on the Board for the Children’s Youth and Women’s Health Service. He is also on the Board for the Australian Institute of Management (S.A. Division) and on the board of Abacus Australian Mutuals.
Mr Sam Molloy (BEc, BCom) has held the position of Corporate Governance Manager for eight years and has been employed at the Credit Union for the past 10 years.
Directors’ Meetings
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the Credit Union during the financial year are:
Directors’ interests
During the financial year, no Director of the consolidated entity has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors shown in the consolidated financial statements) by reason of a contract made by the Credit Union or its controlled entity or with any Director or with a firm of which a Director is a member, or with an entity in which a Director has a substantial interest.
Indemnification and insurance of officers
The Credit Union holds a Directors’ and Officers’ insurance policy on behalf of the Directors of each entity in the consolidated entity. The total policy premium in relation to the consolidated entity for the year ended 30 June 2007, which was paid for by the Credit Union, amounted to $43,178 (2006: $43,178).
The policy indemnifies Directors against damages, legal costs and expenses arising from any claim made against them jointly or separately in relation to their duties as Directors of the Credit Union or the controlled entity.
The Credit Union is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
The Lead Auditor’s Independence Declaration is set out on page 26 and forms part of the Directors’ Report for the year ended 30 June 2007.
Signed in accordance with a resolution of the Board of Directors of Savings & Loans Credit Union (S.A.) Limited.
W. R. Cossey, Chairperson
Dated at Adelaide this 29th day of August 2007.
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: The Directors of Savings & Loans Credit Union (S.A.) Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2007 there have been:
- no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
- no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
A Santin, Partner
Dated at Adelaide this 29th day of August 2007.