Greater Building Society Ltd
2013/14 Annual Report
For the Year Ended 30 June 2014
Head Office: 103 Tudor Street Hamilton NSW 2303 PO Box 173 Hamilton NSW 2303 P 1300 651 400 F 02 4921 9112
Greater Building Society Ltd. • ABN 88 087 651 956 • AFSL/Australian Credit Licence No. 237476
Contents
Chairman’s Report
1
CEO’s Report
2
A Greater Way of Banking
4
Our People
8
Our Community
12
Greater Charitable Foundation 15
Financial Statements 30 June 2014
19
Greater Building Society Ltd
Greater Board Members; Front row L to R: Malcolm McDonald, Jayne Drinkwater, Wayne Russell 2nd row: Roger Cracknell, Scott Robinson Back row: Russell Ware
Chairman’s Report
The last financial year saw the Greater Building
Society achieve an outstanding financial result. It is
very pleasing to report a record profit for the year.
The Board and management have continued their
focus on managing costs and improving efficiency
to have capital to invest in major projects such as
our new core banking system and digital banking.
These investments will assist us in keeping pace with
increasing changes in technology, competition,
the regulatory environment, and allows us to
introduce better products and services to our
customers. It is about being nimble and able to
react so that we remain relevant and continue
to meet our customers’ changing needs.
This year we have also increased our capital
adequacy, a measure of our financial strength,
to 17.43%, giving us further capacity to invest in
the future.
Being nimble is a key reason we have brought
forward our planning for the new Strategic Plan.
1
The good profit results follow Standard and Poors
(S&P) favourably changing our counterparty
credit rating from BBB/Stable/A-2 to BBB/
Positive/A-2. S&P said the revised rating outlook
was due to The Greater’s strengthening risk
management capabilities, particularly around IT,
and its “measured approach” to managing the
modernisation of its core banking system. Our overall
risk position was supported by our further reductions
in securitisation usage, very low interest rate risk
and credit loss experience.
On the regulatory front, the Board welcomes
APRA’s revision of Prudential Standard APS 111
Capital Adequacy: Measurement of Capital to give
mutuals more flexibility to issue regulatory capital
instruments while retaining their structure. The Board
has also separated its audit and risk committees to
comply with upcoming prudential requirements
and to enhance our governance.
Also on the regulatory front, the Board welcomes
the Financial Services Inquiry. At the time of
writing the Interim Report had been released. The
Greater, like other regional banks and customer
owned financial institutions, is simply asking for a
more level playing field so that we can continue to
offer Australian consumers competition and a real
alternative to the major banks.
Outgoing CEO Don Magin was instrumental in
pushing for the inquiry and making the case for
customer owned financial institutions as Chairman
of our industry body, the Customer Owned
Banking Association. The Board thanks him for that
contribution and, more particularly, his contribution
to The Greater over 27 years. Don has left The
Greater in great financial shape. We wish him all
the best in the next stage of his career and life.
New CEO Scott Morgan and his executive team will
continue the important focus on financial strength
Annual Report for the Year Ended 30 June 2014
Chairman, Wayne Russell
CEO, Don Magin
CEO’s Report
as well as continuing to transform The Greater into
a more modern, sophisticated, customer focussed
banking organisation.
I’d like to pay tribute to former Greater Chairman,
John Kilpatrick, who has stepped down as Chairman
of The Greater Charitable Foundation. John has
served The Greater family well for 16 years.
I am looking forward to working with the new
Greater Charitable Foundation Chairman Ian
Nelmes as I join the Foundation Board.
The Board and I wish to thank The Greater’s staff for
their focus on our customers and for being open
to the continuing need for change to serve them
properly. I am fortunate to chair a very good team
and I also thank my fellow directors for their hard
work and support again this year.
To our customers, I say The Greater is in good
financial shape and changing to ensure we are
able to continue to make your life greater.
Wayne Russell
Chairman
It is with a great deal of emotion that I write my
last report to our customers as CEO of this great
organisation. After 27 wonderful years, including six
and a half years as CEO, I am taking the opportunity
to spend more time with my family and take on new
career challenges.
I am pleased to report that the organisation is in
good financial shape, having achieved a record
net profit of $31.36 million, up 10.39% on last year.
Our loan portfolio grew slightly by 0.84%. This modest
growth level is because customers are repaying debt
more quickly (a sign of consumer confidence) but
also reflects how exposed some of our current and
potential customers are to deteriorating economic
conditions in regional areas. We are comfortable
with the result given the competitive environment in
which we are operating. The deposit portfolio has
grown by 4.02%, demonstrating once again that we
are continuing to look after our deposit customers
even though the funds are not specifically needed
for lending at this time.
The profit we have made is important because it
helps deliver on our vision of “Always, customer first”.
As a customer owned institution, we are able to invest
these profits back into new systems and channels
to allow us to improve products and services for
customers. Our other main focus is in supporting local
communities, and the Board has used our increased
profitability to allocate an additional $500,000 to
The Greater Charitable Foundation to improve life
2
Greater Building Society Ltd
outcomes in the communities in which we operate
on behalf of customers.
That’s what families and communities do, help
each other. The Greater has been like a second
family to me. As CEO, one of my priorities has been
to preserve The Greater’s family culture. It is one
of the reasons why we have consistently achieved
outstanding customer satisfaction results. I am
a strong believer that happy staff means happy
customers. Our family has changed and grown
but we are united by our focus on customers and
our local communities.
As our customers change the way they do banking
and as we continue to focus on improving efficiency,
our family is not growing as quickly as once forecast,
enabling us to stay in our Hamilton headquarters for
the foreseeable future.
We have been making other changes including
rationalising several branches that are no longer
meeting customers’ needs as they choose to
use other nearby branches or other channels,
particularly Mobile Banking.
I’d like to congratulate all of The Greater’s staff
for the way they are embracing change. More is
required to keep challenging the dominance of
the big banks.
3
Most of all I would like to thank our staff for their
friendship and support. While the job of a CEO is
always challenging, through the unique Greater
culture, I have been fortunate to be able to have a lot
of fun at work, as it should be. I will certainly miss you!
I am always impressed by the way our staff willingly
give back to the organisations supported by us and
our Foundation. That’s another one of the things
that sets The Greater apart from big banks. To the
wonderful people at our business partners, it has
been a privilege to work with you, and my staff
and I have gained so much from the experience.
In my role as the Chair of the Customer Owned
Banking Association, I have enjoyed the opportunity
to experience the passion and commitment that my
peers share for customer owned banking, and I am
grateful for the opportunities that I have had to explore
options to promote the mutual model globally.
It has been a privilege to serve The Greater’s
customers. The Greater and its customers have a
strong future ahead. My deepest thanks to everyone
for their support and friendship during my many years
at The Greater. I wish you all the best for the future.
Don Magin
Chief Executive Officer
Greater Executive Committee; Seated L to R: Greg Taylor, Don Magin, Lisa Presbury, Doug Williams
Standing L to R: Chris Hodgins, Bruce White, Scott Morgan, Steve Taylor, Bruce Mackie
Annual Report for the Year Ended 30 June 2014
A Greater Way of Banking
•Market-leading rates
•Holiday offer makes home loan even greater value
•Greater is Australia’s most loved banking organisation
•Better branches
•More ways to connect – mobile and social banking
Great value rates – always
The Greater continued to offer customers some
of the best interest rates in the marketplace,
particularly if comparison rates are used.
It passed on the RBA’s cut of 0.25% to its home loan
rates in August, taking its Ultimate (packaged) Home
Loan rate below 5%. A month prior it had cut its
One Year Fixed Ultimate rate to match the lowest
advertised one year fixed rate in Australia. In April
2014 it cut two, three, four and five year Ultimate
fixed rates with three year rates going below 5%.
A new discounted offer on Ultimate home loans
over $300,000, with a loan-to-value ratio of 80%
or less, was also planned for release on 1 July 2014,
making this the lowest variable package rate of
any financial institution in Australia.
Great Rate holiday offer
In March 2014, The Greater introduced a successful
new holiday offer for customers to make its Great
Rate (basic) Home Loan even better value.
Anyone taking out a new home loan or switching
their existing home loan ($200,000 and over) to the
Great Rate Home Loan before 30 June 2014 was
able to choose from:
Holiday and savings survey
Prior to the introduction of its holiday
offer The Greater conducted research on
holiday and saving intentions of 858 people
(customers and non-customers) across the
regional NSW areas of the Illawarra, Hunter,
Central West, Central Coast, Mid-North
and North Coasts, New England and
Northern Rivers.
The key findings
•A holiday is the second most popular reason
for saving (29%) just behind general savings
and emergencies (31%).
•56% of people have had a holiday in the last
12 months, while 17% have not had a holiday
in more than five years.
•47% of people are likely to travel in the next
12 months and 41% of those people plan to
travel in Australia.
•The USA is the preferred country for those
planning to travel overseas in the next
12 months.
•return flights to Los Angeles for two
•a five-night holiday to Fiji for two
•a range of South Pacific cruises for two
•a Gold Coast family holiday
The no-catch offer was a genuine bonus
to customers.
4
Greater Building Society Ltd
A Greater Way of Banking
Australia’s most loved banking
organisation and building society
of the year for customer service
Roy Morgan Research this year showed The Greater
to be Australia’s most loved banking organisation.
Better branches
This year The Greater refurbished its Tuggerah branch
and relocated its Nowra branch to provide a better
customer experience and improve staff amenity.
The Greater also took out the Roy Morgan Customer
Satisfaction Award for Best Building Society for 2013.
The award is based on data collected for monthly
awards. The Greater has won the building society
award every month from January 2013 to June 2014 –
a record-breaking 18 times in a row.
Roy Morgan data for the six months to September
2013 showed The Greater had an aggregated
customer satisfaction score of 97%, the highest
of any Australian financial institution, making it
“Australia’s most loved banking organisation”.
The customer satisfaction ratings are collected from
Roy Morgan’s single-source survey of approximately
50,000 Australians annually – the world’s largest
ongoing single-source survey.
The refurbished Tuggerah branch
Greater supports best practice
customer service
Hunter Valley winemaker Hungerford Hill took out
the inaugural 2013 Hunter Business Award for
Customer Service (less than 20 staff) in August.
The Greater was the sponsor of this award. The
Hunter Business Awards are the largest and most
prestigious regional business awards in Australia.
Greater Head of Marketing Matt Hingston accepting the
Roy Morgan Customer Satisfaction Award
5
Deputy CEO Greg Taylor (far right) presents the 2013 Hunter Business
Award for Customer Service (less than 20 staff) to Hungerford Hill staff
Annual Report for the Year Ended 30 June 2014
Greater ways to connect
Customers have even more ways to connect to
The Greater with the launch of three new social
media channels in March.
The Greater had previously operated in social media
using Twitter, YouTube and its blog. Facebook, Google
Plus and employment networking site LinkedIn are
now other ways customers can find out more about
The Greater’s products and services, support for its
community as well as helpful information on financial
matters to make their lives greater. The Greater
Charitable Foundation also introduced a Facebook
page and Instagram account.
Another point of connection with local
communities was established with the Greatest
Moments project. Online pages are highlighting the
fantastic achievements and milestones of the towns
in which The Greater operates. This year, Greatest
Moments pages were established for the Hunter,
Central Coast and NSW South Coast regions.
Changes were also made to Internet Banking to
make the service even greater for customers.
A tipping point was reached late in the financial year
with more customers now accessing Internet Banking
via mobile devices than through personal computers.
Other highlights
•The Greater was one of the first financial
institutions to sign up to V.me by Visa
(now renamed “Visa Checkout”), a new
electronic wallet for online shopping.
•Customers are now able to use Xero as
well as MYOB BankLink to directly transfer
financial information to their accountant.
•Newcastle advertising and branding
agency Out of the Square Media (OOTS)
was appointed as The Greater’s new
agency for three years.
•The Greater was named one of Australia’s
‘Top 5 home lenders’ in the 2013 Mozo
People’s Choice Awards. The Greater had
taken out a number of Top 5 awards in each
of the four years the awards have been
running in categories such as home loans,
savings accounts and debit cards.
•A tender was issued for business partner
insurance products. It has since been won
by current partner Allianz Insurance.
Looking ahead, The Greater will launch a new,
more customer-friendly website and make further
improvements to its Mobile Banking services in the
first half of the 2014/15 financial year.
Connect with The Greater’s social media channels
The Greater receives 1,000 likes on Facebook
6
Greater Building Society Ltd
A Greater Way Of Banking
Customers win thanks to Greater
This year a number of lucky customers have not
only benefitted from great products and services,
but have also won one of the many competitions
The Greater ran this year.
•Tamworth (Kootingal) couple Andrew and Lyn
won a Term Investment of $5,000 in a competition
by seeing a Bridges Financial Planner through
The Greater.
•Anne and Ken from Medowie near Newcastle won
$5,000 in The Greater’s Travel Money competition.
•There were 21 winners in The Greater’s holiday
competition. People in Orange, Dubbo, Bathurst,
the Hunter, Central Coast and the Illawarra were
able to win the holidays on offer in the Great Rate
Home Loan offer through local media outlets.
Branch staff celebrate customers’
100th birthdays
Staff at two branches surprised their much loved
customers with a celebration in the branch to mark
their 100th birthdays.
Happy birthday to:
Lila Johns – Woy Woy branch
Charles Lonergan – Morisset branch
Tamworth Branch Manager Mitchell Balderston with Andrew and Lyn
after they won a $5,000 term investment
•Getju from Unanderra in the Illawarra, got a
cheaper premium, 12 months FREE roadside
assistance and won a new car when he switched
his comprehensive car insurance to Allianz through
The Greater in a national competition run by Allianz.
Judy Arms, Therese Irwin and Kathy Rathbone from Woy Woy
branch join Lila Johns in celebrating her 100th birthday
7
Warrawong Branch Manager Wendy Triffitt presents customer
Getju with his brand new car
Annual Report for the Year Ended 30 June 2014
Our People
•Staff recognised for long service to
The Greater and its customers
•Greater women shine in staff awards
•Kristy Bagnall an emerging leader
•Greater staff give back
Long service awards
The Greater’s Long Service Awards program recognises
staff service at 10, 15, 20, 25, 30, 35 and beyond years
of service. The following 67 staff achieved 20 years or
more service during the 2013/14 financial year.
A number of long-serving staff were honoured by
CEO Don Magin at a special dinner.
Farewell and thanks
The Greater farewelled several long-serving staff this
year including Business Banking specialists Andrea
Rufo and Paul Harrison as well as Ballina Branch
Manager Terry Chandler.
Name
Yrs of
Service
Name
Yrs of
Service
Name
Yrs of
Service
William Brandon
40
Colin Hope
27
Vicki Rowett
23
Gail Smith
40
Wendy Morris
27
Donna Adamson
23
Suzanna Sherman
35
Louise Spencer
27
Tracy Gee
23
Gaye Pike
35
Dawn Gowie
26
Stephen Taylor
23
Mirella Liddell
34
Robert Lowcock
26
Maria Di Claudio
23
Gregory Taylor
34
Lauren Tickner
26
Debra Dwyer
23
Diane Jones
34
Mitchell Johns
26
Katherine Davis
23
Julieanne O’Sullivan
33
Elizabeth Schneider
26
Linda Monahan
23
John Bailey
32
Sharon White
26
Wes Lassam
23
Wendy Ryan
32
Stephen Clifford
25
Susan Smart
23
Peter Marquet
32
Colleen Hodgins
25
Toni Parkinson
22
Chris Hodgins
32
Wayne Dean
25
Kristine Loadsman
22
John Wolski
30
Duncan Coulton
25
Richard Penfold
21
Sharon Wicks
29
Helen O’Connor
25
Matthew Scully
21
Wayne Goodchild
29
Stephen Goverd
25
Helen Snape
21
Glenda Kopp
29
Megan McInnes
24
Catherine Jones
21
David Smith
29
Janelle Haller
24
Annette Clarke
20
Christine Mogford
29
Yvonne Stone
24
Annette Avery
20
Kevin Buckley
29
Paul Gibson
24
Catherine Thomas
20
Donna Ryan
28
David Bryde
24
Shane Greig
20
Kristine Carter
28
Susan Caponecchia
23
Rona Green
20
Lisa Hense
27
Glenda Bartrop
23
Don Magin
27
Janelle Modinger
23
8
Greater Building Society Ltd
Our People
Greater women are
emerging leaders
Two Greater Building Society staff members
took out Emerging Leader awards at the
2013 national Customer Owned Banking
Association conference.
Don Magin, Gail Smith, Bill Brandon and Wayne Russell
Two Greater staff clock up
80 years of service
In January, The Greater honoured its two
longest-serving staff members who both
clocked up 40 years’ service.
Gail Smith and Bill Brandon were both
presented gifts and a plaque by Chairman
Wayne Russell and CEO Don Magin in
recognition of their dedication to the
company and its customers.
HR Manager Kristy Bagnall won the national 2013
Emerging Leader Award. Senior Business Analyst
Vanessa Nirmal won one of four Emerging Leader
Tertiary Education Scholarships.
Kristy used her $10,000 prize to attend a
leadership course at Harvard University
and will also attend the 2014 World Credit
Union Conference.
This is the second year in a row that a Greater
staff member has taken out the top award
for emerging talent. Internal Communication
Specialist Emma Avery won the award in
2012. Kristy and Emma were also recipients
of the Hunter Business Women’s Network 2013
Emerging Leader scholarships.
Gail is Executive Assistant to the CEO and
Board. Bill is the Lending Services System and
Administration Manager. He has also worked
as a Branch Manager in the Illawarra and at
New Lambton.
The pair started within three days of each other
in January 1974. Gail worked in the typing pool
and Bill started as a Clerk in Head Office.
Gail has been the Executive Assistant to all
but one of The Greater’s CEOs.
“I love my job because every day is different
and I have made some truly great friends
here,” she says.
Bill said when he started, The Greater had
assets of $50 million and today it has assets
of $5 billion.
“I love working at The Greater and the people
are fantastic,” Bill said.
Wayne and Don paid tribute to the pair
and thanked them for their tremendous
contribution to The Greater.
9
HR Manager Kristy Bagnall being presented with the
national 2013 Emerging Leader Award
Annual Report for the Year Ended 30 June 2014
Staff recognised
Employee of the Year Award
Shellharbour Branch Customer Service Officer
Ivana Pejovska is The Greater’s Employee of
the Year.
As well as striving to always give the best
customer service, Ivana has been a leading
volunteer for the KidzSpeak program, funded
by The Greater Charitable Foundation.
Ivana was selected from these other finalists
who won Employee of the Quarter Awards.
Ian Nelmes Award for Service
Annette Avery took out this year’s Ian Nelmes
Award. The award, in honour of former Greater
Chairman and current Greater Charitable
Foundation Chairman Ian Nelmes, is chosen
by The Greater’s executive. It recognises the
performance and the contribution a person
makes in demonstrating and promoting The
Greater’s cultural values.
The awards are one part of The Greater’s staff
reward and recognition program.
•Vickie Moles, Lake Haven Branch
Customer Service Officer
•Alessandra Saltos, Senior Corporate Lawyer
•Catherine Huff, Senior Learning
& Development Consultant
•Liz Hedge, Salamander Bay
Branch Supervisor
•Rachel Vincent, Ballina Branch Customer
Service Officer
•Michael Clement, Ballina Branch
Lending Manager
Annette Avery (centre) received this year’s Ian Nelme’s Award
•Sarah Winn, Business Analyst Cadet
•Sam Graham, Online Content Specialist
Employee of the Year Ivana Pejovska volunteering
with KidzSpeak
10
Greater Building Society Ltd
Our People
Staff give back
•In February, 24-year-old Risk Officer Jaide
Burt cut and auctioned her ponytail to raise
more than $15,000 to fund Cancer Patients
Foundation, Look Good... Feel Better workshops
to support those who have cancer.
She did so in memory of her Aunty who died
of breast cancer.
A total of 92 Greater staff in 23 teams participated in the
global health and wellness initiative called STEPtember
Greater staff embrace The Greater’s culture of
giving back by doing some amazing things of
their own volition.
•A total of 92 Greater staff in 23 teams
participated in an Australian-inspired
global health and wellness initiative called
STEPtember. They raised more than $13,000
for Cerebral Palsy Alliance programs to
help adults and kids with cerebral palsy. The
team took enough steps to climb Mount
Everest and Mount Kilimanjaro 70 times.
•Head of Customer Relations Lisa Presbury
was recognised by Heal for Life Foundation
for her services to the charity. She organises
fundraising as well as working bees on
the Foundation’s property. Lisa and her
fellow members of The Greater executive
all donate money weekly to provide
annual scholarships for young women
who are rebuilding their lives after having
experienced abuse or childhood trauma.
11
Jaide Burt cut and auctioned her ponytail to raise more than
$15,000 to fund Look Good... Feel Better workshops
•Business Banking Specialist Andrea Rufo and
close friends have raised almost $500,000 for
cancer research and support services in honour
of his late wife Sandra through five biennial Pink
Frangipani Balls. Sandra died in 2005 after a
courageous 10-year battle with breast cancer.
The Greater has been a sponsor of every ball.
Annual Report for the Year Ended 30 June 2014
Our Community
• Greater supports a range of community and sporting organisations
• Support for next Olympians
• Greater staff give back
• Investment in medical research pays off for community
As a customer owned financial institution The Greater
does not have the same pressure for shareholder
returns as the major banks. It puts its profits back
into offering competitive rates, low fees and support
for the communities in which it operates. Below are
some of the organisations and events sponsored
or supported by The Greater this year. The Greater
also funds The Greater Charitable Foundation to
support charities that are working to improve the
lives of people and families in The Greater’s area of
operations and beyond (see page 16).
The Illawarra’s largest Christmas tree
Christmas cheer was brought to Illawarra people
with The Greater funding the installation of the
nine-metre KidzWish Christmas Tree outside the
Entertainment Centre for the third year in a row.
Gardens for Father Chris Riley to help
Cessnock youth
Young people in Cessnock using the local Father
Chris Riley’s Youth Off The Streets drop-in centre
now have a supply of fresh vegetables, herbs
and gardens to care for thanks to staff from the
Finance and Risk departments as well as from PwC
Newcastle’s auditing team. Each year The Greater
and PwC staff do a day’s work for a charity.
Armidale Hospital bed
Armidale residents are less likely to have to wait or
need to travel for surgery with the arrival of a new
$50,000 operating theatre bed at Armidale Hospital,
supplied by The Greater. The donation came from the
$1.5 million fund established when The Greater merged
with Armidale Building Society in 2011. The money is to
be spent in the New England area over 15 years.
The Greater funded the installation of the nine-metre
KidzWish Christmas Tree
Top: Greater and PwC finish work on gardens at Father Chris Riley’s
Youth Off The Streets Cessnock drop-in centre
Bottom: Greater Director Roger Cracknell tries out the new operating
theatre bed for Armidale Hospital staff
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Greater Building Society Ltd
Our Community
Renewed support to help people
enjoy sport
Sport plays an important part in the lives of The
Greater’s customers and the communities in which
they live. The Greater renewed its sponsorship of two
sporting organisations, helping their communities to
enjoy the benefits of sport.
It will remain the major naming rights sponsor for
the 2014 and 2015 Newcastle and Hunter Rugby
competitions, including the finals series. The Greater
became the naming rights sponsor in 2010, rescuing
NHRU and local rugby clubs, after it endured the
2009 season without a major sponsor.
Greater’s investment in regional
medical research pays a dividend
to community
A report and news of the commercialisation of
an anti-cancer drug has showed there has been
a significant benefit to both researchers and the
community from The Greater’s support for
medical research.
A report was commissioned this year, analysing the
social return on investment (SROI) of the donated
funding The Greater and The Greater Charitable
Foundation provided to Hunter Medical Research
Institute (HMRI) for two stroke research projects.
The Report found that for one project the SROI
was 6.63 and for another it was 2.30.
This year Australian company Viralytics announced it
planned to use $27 million worth of global institutional
investment to conduct one UK and two US clinical
trials before commercialisation of its anti-cancer
drug, Cavatak. The drug has been developed out
of research that was initially looking at cures for the
common cold by HMRI researchers. The research
was kickstarted with funding from The Greater almost
15 years ago. It is now potentially among the most
significant immunotherapy drugs developed for the
treatment of melanoma over the past decade.
Fifteen researchers are now involved in the
drug’s development.
The Greater’s CEO, Don Magin, with then NHRU General Manager,
Fenton Coull
Young Central Coast athletes, such as Josh English,
and their coaches benefitted from The Greater
renewing its sponsorship of the Central Coast
Academy of Sport for another year. CEO Don Magin
and Central Coast branch staff joined in celebrating
the success of the Central Coast Academy of Sport’s
programs at its Scholarship Presentation and Awards
Night in November.
The Greater Building Society is an inaugural
supporter of HMRI. Funding of HMRI transferred to
The Greater Charitable Foundation when it was
established in 2011. Together the organisations have
provided HMRI with more than $1.3 million.
The Greater again sponsored the Hunter Track
Classic. Athletics Australia and NSW Athletics
organised the event, which brought some of
Australia’s top athletes to the Hunter region
to compete in February 2014.
13
Dr Bivard from HMRI and Charitable Foundation CEO Anne Long
Annual Report for the Year Ended 30 June 2014
21st Greater Building Society Olympic
Sports Scholarships
Greater Building Society 2013–2014 Olympic
Sports Scholarship Recipients
Four up-and-coming Hunter athletes, including
Paralympic medallist Maddison Elliott, were
awarded their first ever Greater Building Society
Olympic Sports Scholarship this year.
Meg Bailey
Swimming
Taylor Corry
Swimming (AWD)
Kailani Craine
Figure Ice Skating
Maddison Elliott
Swimming (AWD)
Teegan McCloy
Clay Target Shooting
Georgia McConville
Water Polo
Gordon Marshall
Water Polo
Aaron Royle
Triathlon
Sophie Stanwell
Track and Field
Mariah Williams
Hockey
A total of 10 athletes across seven different sports
were awarded the $2,000 scholarship. Triathlete
Aaron Royle received his fifth successive scholarship.
In the 21 years the scholarships have been
operating, more than $340,000 has been provided
to support more than 100 athletes. A quarter of the
athletes have represented Australia at an Olympic
or Paralympic Games including legends such as
Justin Norris, Angie Bainbridge, Nathan Outteridge,
Jenni Screen, Heath Francis, Matthew Helm, Simon
Orchard and Natalie Ward. Three current and three
former scholarship holders competed at the 2014
Commonwealth Games in Glasgow.
The scholarships are managed for The Greater by
Hunter Academy of Sport.
The next round of scholarships will be announced in
November 2014.
Scholarship starts career
At this year’s scholarship ceremony, Commonwealth
Games medallist and world champion triathlete
Aaron Royle told how his first scholarship changed
his career.
He had been offered an opportunity to go to Europe
for some coaching. With no money, he was about
to decline when he was told he’d won The Greater’s
Olympic scholarship.
Aaron said that he was able to gain experience and
skills in Europe to set great foundations for his career.
14
Hunter Olympic Sport Scholarship holders Kailani Craine, Mariah Williams, Taylor Corry, Aaron Royle, Georgia McConville and Meg Bailey
Greater Building Society Ltd
The Greater Charitable Foundation
The Greater has a proud and long history of giving
back to the community in which we live and work.
The Greater Charitable Foundation is continuing
that tradition by providing support to families and
communities throughout our business footprint.
Since establishment in 2011, the Foundation has
allocated more than $4 million in funds. Over the
past 12 months, the Foundation has funded 11
charities to undertake activities including: furthering
medical research; taking music to disadvantaged
school communities; providing services to families as
they face chronic illness, autism, cerebral palsy and
life-limiting conditions; and providing young people
with education and training.
Over
500 hours
spent
volunteering
Partners
$4 million
in allocated
funds
During 2013, The Greater Charitable Foundation
worked with the following charity partners to
help improve the life outcomes of families
and communities:
Australian Children’s Music Foundation
Supported
11 charities
Autism Spectrum Australia (Aspect)
Cerebral Palsy Alliance
200
Greater staff
have now
volunteered for
charity partners
www.greaterfoundation.org.au
15
Heal For Life Foundation
Hunter Institute of Mental Health
Hunter Medical Research Institute (HMRI)
KidzWish Foundation
Starlight Children’s Foundation
Annual Report for the Year Ended 30 June 2014
New Partners in 2014
YWCA NSW
The Greater welcomed three new charity partners
to our Foundation family at the start of 2014.
Camp Quality
Foundation funding is supporting the Play Therapist
program in the in-patient ward and day unit at the
paediatric oncology ward at John Hunter Children’s
Hospital in Newcastle. The Camp Quality Play
Therapists focus on supporting the psychosocial
development of children diagnosed with cancer in
order to build their resilience and promote effective
coping strategies.
Youth Off The Streets
The Greater Charitable Foundation is funding Youth
Off The Streets’ Hunter Valley Futures Program to
support communities within the greater Cessnock
and Maitland regions, focusing on tailored
early-intervention and education programs for
disadvantaged children and young people.
Funding from the Foundation is supporting YWCA
NSW’s Community in the Kitchen Program for
at-risk young people aged between 15 and 24 in
the Northern Rivers region of NSW. The program
is designed to help young people reach their
educational and social potential by providing
employment and training opportunities.
The Foundation also provided additional funding
to some of the current partners to ensure the
continuation and expansion of their programs.
Volunteering
A key platform of the Foundation’s activities is
the involvement of The Greater staff in funded
projects through volunteering or pro bono
assistance. Over the past year, more than 200
Greater staff have volunteered their time with
one or more of our Foundation partners.
Foundation Support
Region
Foundation
Northern Rivers
YWCA NSW
Taree
ACMF
Hunter Region
Aspect, HIMH, HMRI,
CPA, HFL
Central Coast
CPA
Illawarra/South Coast
KidzWish
Regional NSW & Gold Coast
Starlight
Cessnock/Weston/Kurri Kurri
Youth Off The Streets
Map is not to scale and is indicative of coverage areas only.
Version 1.1 August 2014 Greater Building Society Ltd. ABN 88 087 651 956 AFSL/Australian Credit License No: 237476
16
Greater Building Society Ltd
The Greater Charitable Foundation
Volunteering
“I think it is so wonderful that the Foundation
gives employees the opportunity to volunteer, it
is a great way of introducing us to the charity... I
felt so lucky to be part of the day...
Our presence offered an additional aspect to
the day, not only with the activities that we did,
but also with the children and parents having
someone else to talk to and interact with. And
also for me personally, I felt honoured I was able
to be part of the fun with the families...”
Greater staff member Leanne Rix after
volunteering at a Camp Quality Family Camp.
“Words cannot express how grateful I am
for the support of The Greater and their staff.
The support has allowed us to reach so many
children and their families...this has made a
huge difference to the hospital experience for
the families and kids.”
Ken Gamma, Hospital Programs Manager NSW.
Branch Supervisor Lorraine Erskine helping to deliver the
KidzSpeak Program to children at Cringila Children’s House
Greater staff visit the John Hunter Hospital with the Starlight Captains – September 2013
17
Annual Report for the Year Ended 30 June 2014
“We can’t thank you enough for providing
families with such an amazing program. You
are giving families the best start for the long, hard
road ahead. It was my pleasure to provide you
all with a little personal insight into the world of
autism.”
Parent of a child with autism who took part in
the EIRP program funded by the Foundation
and then presented to The Greater staff about
her family’s experience.
Card Services Supervisor Lynda Casey volunteering at
Autism Spectrum Australia’s Playgroup at the Aspect School
in Thornton – March 2014
Greater Staff working alongside their mentees at the Cerebral
Palsy Alliance Ignition Mentoring session – April 2014
YWCA NSW CEO Anna Bligh congratulating the graduates of the Community in the Kitchen Program in Lismore – June 2014
18
Greater Building Society Ltd
Financial Statements
30 June 2014
Contents
19
Directors’ Report
20
Independent Auditor’s Report to the Members
25
Directors’ Declaration
27
Statement of Comprehensive Income
28
Balance Sheet
29
Statement of Changes in Equity
30
Statement of Cash Flows
31
Notes to and Forming Part of the Financial Statements
32
Annual Report for the Year Ended 30 June 2014
Directors’ Report
The Directors have much pleasure in presenting their report on the consolidated financial statements
consisting of Greater Building Society Ltd (the Society) and the entities it controlled at the end of, or during,
the year ended 30 June 2014.
Directors
The following persons held office as Directors for the whole of the financial year and up until the date of this report.
W M Russell, B.Comm, CA, GAICD, MIIA(Aust)
Mr Russell joined the Board in April 2011. He has extensive experience in providing auditing and assurance services,
having worked as an audit and assurance partner at PricewaterhouseCoopers for 20 years. He is currently a partner
at accountancy firm Pitcher Partners. Mr Russell is involved in a number of industry associations and is a member of
the executive and past President of the Australian Financial Institutions Auditors Association. Mr Russell has been the
Chairman of the Board since his appointment on the 29 November 2011.
Special Responsibilities: Member of the Audit & Risk Management Committee, Member of the Remuneration
Committee, Member of the M&A Strategy Committee and Chairman of the Succession Planning Committee.
D S Robinson, B.Surveying (Hons) MAICD
Mr Robinson joined the Board in October 2007 and has over 30 years’ experience in surveying, town planning and
land development. He is the Managing Director of ADW Johnson, a leading Hunter based consultancy in surveying,
town planning, engineering and land development. Mr Robinson has also previously worked as a part-time teacher
at TAFE and was a Junior Officer in the Royal Australian Navy.
Special Responsibilities: Deputy Chairman of the Board, Chairman of the IT Steering Committee, Chairman of
Parkwood Unit Trust (a subsidiary of The Greater involved in land development), Member of the M&A Strategy
Committee, Member of the Succession Planning Committee and Member of the Marketing Steering Committee.
W R Ware, LL.M.(Hons), FAICD
Mr Ware joined the Board in February 2009. He practised law for 14 years until 1987 when he became a professional
Company Director and Business Consultant. He has served on the boards of a number of public companies in diverse
industries for over 27 years. He is a co-owner and Director of Rosedale Gardens Retirement Living, a retirement village
at Cooranbong, south of Newcastle.
Special Responsibilities: Chairman of the Remuneration Committee and Member of the Succession Planning Committee.
M L McDonald, B Ec. FCA, GAICD
Mr McDonald joined the Board in May 2009. He has practised as a Chartered Accountant for over 30 years and was
a Partner in the Newcastle Offices of Touché Ross & Co and KPMG Peat Marwick until his resignation in 1994. He has
since that date and until recently practised on his own account. He is a Trustee of the Anglican Diocese of Newcastle
and has considerable involvement in the Not for Profit sector at Board and Committee level.
Special Responsibilities: Chairman of the Audit & Risk Management Committee, Member of the Succession Planning
Committee and Member of the Remuneration Committee.
V J Drinkwater, B Ec. MBA (with merit), GAICD, CAHRI
Mrs Drinkwater joined the Board in October 2010. She has extensive experience as a Senior Executive in operations,
customer service, IT and marketing. Mrs Drinkwater was previously employed as Interim CEO New Zealand, Chief
Marketing Officer and Chief Operating Officer at nib health funds limited. She is currently a Principal of local firm,
Arion Systems and is also a Trustee of the Anglican Diocese of Newcastle.
Special Responsibilities: Member of the Remuneration Committee, Member of the Succession Planning Committee
and Chair of the Marketing Steering Committee.
R J Cracknell, CPA, FAICD
Mr Cracknell joined the Board in May 2011. He was Chief Executive of ABS Building Society from 1973 until April 2011
and has over 40 years’ experience in the Building Society Industry. He has held various executive positions with the
Australian Permanent Building Societies (NSW Division) and was a Councillor of AAPBS (National). Mr Cracknell was a
partner in the accountancy firm of Jones, Cracknell & Starr for over 40 years.
Special Responsibilities: Member of the Audit & Risk Management Committee, Member of the Succession Planning
Committee and Chairman of the M&A Strategy Committee.
20
Greater Building Society Ltd
Directors’ Report (continued)
Company Secretary
For the whole of the financial year the Company Secretary has been Mr B E Mackie B Leg S, LLM, F Fin. Mr Mackie
is a qualified Lawyer with over 20 years’ experience in public, private and corporate legal practice, the majority of
that time working in large public companies providing financial products and services. Mr Mackie joined the Greater
Building Society Ltd in 2003.
Corporate Objectives
The Society’s long term objective is to ensure the financial viability of the Society and to provide a range of financial
services to members that are competitive and meet their needs. Short term objectives involve seeking opportunities
to grow the business, either by new products or services or by an expansion of distribution networks. Growth
aspirations are however, sought in a prudent and sustainable manner. Current strategies to achieve these objectives
are to maintain a network of well-presented and convenient locations; to continue to expand the Society’s branch
network into new areas; to expand the range of products and services to meet the demands of members; to
continue to provide a superior service level; to strive to enhance the member experience at all points of contact;
to be an employer of choice and to provide a challenging and enjoyable workplace; and to continue to build
capacity and knowledge with good corporate governance.
The Society measures its performance using a range of financial and non-financial indicators. The main financial
indicators are interest margins, cost to income ratio, return on equity, profit per employee, loan portfolio growth and
deposit portfolio growth, while non-financial indicators include number of products and services per member, staff
and member satisfaction surveys.
Principal Activities
The principal activity during the year of the consolidated entity comprising the Greater Building Society Ltd and
the controlled entities consisted of the provision of financial services to members in the form of taking deposits and
providing financial accommodation. Those activities enhanced the financial position of the Society and provided
the platform to enable the Society to improve the quality of its distribution channels and expand the range of
products and services available to members.
Results Of The Consolidated Entity
2014
$’000
2013
$’000
Profit after income tax expense
31,361
28,410
(255)
(691)
31,106
27,719
Less profit attributable to outside equity interests
Profit attributable to members of the Greater Building Society Ltd
Review Of Operations
A review of operations of the consolidated entity is contained in the Chairman’s and Chief Executive Officer’s Report.
21
Annual Report for the Year Ended 30 June 2014
Directors’ Report (continued)
Directors’ Meeting
The persons holding office as Directors of the parent entity during the year were; W M Russell, D S Robinson, W R Ware,
M L McDonald, V J Drinkwater and R J Cracknell. The number of meetings of the Directors (including meetings of
Committees) held during the year and the number of meetings attended by each Director were as follows:
Board of
Directors
Number of
Meetings
Audit & Risk
Remuneration IT Steering
Management
Committee
Committee
Committee
11
7
8
4
M&A
Strategy
Committee
Marketing
Steering
Committee
Succession
Planning
Committee
2
5
5
W M Russell
11 / (11)
7 / (7)
8 / (8)
4 / (4)
2 / (2)
5 / (5)
5 / (5)
D S Robinson
11 / (11)
–
–
4 / (4)
2 / (2)
5 / (5)
5 / (5)
M L McDonald
11 / (11)
7 / (7)
5 / (8)
–
–
–
4 / (5)
W R Ware
10 / (11)
–
8 / (8)
–
–
–
5 / (5)
V J Drinkwater
11 / (11)
–
7 / (8)
–
–
5 / (5)
5 / (5)
R J Cracknell
11 / (11)
7 / (7)
–
–
2 / (2)
–
5 / (5)
Insurance Of Officers
During the financial year, the Society paid premiums to insure the Directors and Senior Executive Officers of the
Society and its controlled entities.
In accordance with normal commercial practice, disclosure of the total amount of premium payable under, and the
nature of the liabilities covered by the insurance contract, is prohibited by a confidentiality clause in the contract.
The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that
may be brought against the officers in their capacity as officers of the consolidated entity.
State Of Affairs
There was no significant change in the state of affairs of the consolidated entity during the financial year.
Member Liability
The Society is a company limited by shares and guarantee. The Society has not issued shares. The guarantee
is provided by members of the Society and is limited to $1 per member. The total amount that members of the
company are liable to contribute if the company were wound up is $240,262.
After Balance Date Events
The Directors are not aware of any matters or circumstances that have arisen since 30 June 2014 that have
significantly affected or may significantly affect:
A)The operations of the consolidated entity,
B) The results of those operations, or
C)The state of affairs of the consolidated entity in the financial years subsequent to 30 June 2014.
Likely Developments And Expected Results Of Operations
There are no material likely developments in the operations of the consolidated entity, other than continued
profitable operations, at the date of this report.
22
Greater Building Society Ltd
Directors’ Report (continued)
Proceedings On Behalf Of The Company
No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Society, or to intervene in any proceedings to which the Society is a party, for the purpose of taking
responsibility on behalf of the Society for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Society with leave of the Court under Section
237 of the Corporations Act 2001.
Environmental Regulation
The Society or its controlled entities are not subject to any significant environmental regulation.
Auditors’ Independence Declaration
A copy of the Auditors’ Independence Declaration as required under Section 307C of the Corporations Act 2001 is set
out on page 25.
Rounding Of Amounts
The amounts in the financial statements have been rounded to the nearest thousand dollars under the option
available to the Society under ASIC Class Order 98/100. The Society is an entity to which the Class Order applies.
Auditor
PricewaterhouseCoopers Australia continues in office in accordance with Section 327 of the Corporations Act 2001.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers Australia) for audit and non-audit
services provided during the year are disclosed in Note 27.
W M Russell
Chairman
Signed at Hamilton this 23rd day of September 2014 in accordance with a resolution of the Directors.
23
Annual Report for the Year Ended 30 June 2014
Directors’ Report (continued)
24
Greater Building Society Ltd
Independent Audit Report to the Members
25
Annual Report for the Year Ended 30 June 2014
Independent Audit Report to the Members (continued)
26
Greater Building Society Ltd
Directors’ Declaration
In the Directors’ opinion:
A)
T he financial statements and notes set out on pages 28 to 71 are in accordance with the
Corporations Act 2001, including:
i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
iving a true and fair view of the Society’s and consolidated entity’s financial position as at
ii) G
30 June 2014 and of their performance, as represented by the results of their operations,
changes in equity and their cash flows, for the financial year ended on that date; and
B)
There are reasonable grounds to believe that the Society will be able to pay its debts as and when they
become due and payable; and
C)
Note 1(A) confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors.
W M Russell
Chairman
Signed at Hamilton this 23rd day of September 2014.
27
Annual Report for the Year Ended 30 June 2014
Statement Of Comprehensive Income
for the Year Ended 30 June 2014
Consolidated
Notes
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
Interest revenue
2
264,079
291,043
276,862
291,368
Interest expense
3
(139,775)
(169,902)
(154,388)
(172,025)
124,304
121,141
122,474
119,343
23,830
24,895
22,223
19,743
148,134
146,036
144,697
139,086
(104,039)
(106,405)
(100,615)
(100,966)
44,095
39,631
44,082
38,120
(12,734)
(11,221)
(13,129)
(11,163)
31,361
28,410
30,953
26,957
31,106
27,719
30,953
26,957
255
691
–
–
31,361
28,410
30,953
26,957
Net interest income
Non-interest income
Non-interest expense
4
5
PROFIT BEFORE INCOME TAX
Income tax expense
6
PROFIT FOR THE YEAR
PROFIT ATTRIBUTABLE TO
Members of Greater Building Society Ltd
Non-controlling interests
25
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss
Available for sale assets
23
–
–
–
–
Cash flow hedges
23
(1,137)
(2,543)
(1,137)
(2,543)
Income tax relating to these items
23
341
763
341
763
Revaluation of land and buildings
23
404
7
314
70
Fair value assets through other comprehensive income
23
293
1,101
293
1,101
Income tax relating to these items
23
(209)
(333)
(182)
(351)
(308)
(1,005)
(371)
(960)
31,053
27,405
30,582
25,997
30,798
26,714
30,582
25,997
255
691
–
–
31,053
27,405
30,582
25,997
Items that will not be reclassified to profit or loss
Total other comprehensive income
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO
Members of Greater Building Society Ltd
Non-controlling interests
25
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
28
Greater Building Society Ltd
Balance Sheet
as at 30 June 2014
Consolidated
Notes
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
ASSETS
Cash and cash equivalents
7
234,438
160,219
215,999
153,583
Investment securities
8
576,442
554,835
1,009,851
563,463
Other receivables
9
916
1,189
2,756
1,879
Derivative financial instruments
10
3,546
4,438
3,546
4,438
Loans and advances
11
4,229,021
4,193,842
4,229,021
4,193,842
Inventories
12
–
1,535
–
–
Other financial assets
13
3,547
3,255
4,150
5,526
Deferred tax assets
14
3,279
3,509
3,316
3,650
Property, plant and equipment
15
27,759
29,027
27,759
29,027
Investment properties
16
4,303
4,301
4,303
4,301
Intangible assets
17
1,663
1,398
1,663
1,398
5,084,914
4,957,548
5,502,364
4,961,107
TOTAL ASSETS
LIABILITIES
Payables and other liabilities
18
7,552
9,677
7,551
8,976
Deposits
19
4,423,591
4,185,057
4,426,513
4,189,675
Current tax liabilities
20
4,607
3,532
4,607
3,492
Derivative financial instruments
10
130
379
130
379
Other financial liabilities
21
251,719
391,609
669,239
395,084
Provisions
22
10,057
9,816
10,057
9,816
4,697,656
4,600,070
5,118,097
4,607,422
387,258
357,478
384,267
353,685
TOTAL LIABILITIES
NET ASSETS
MEMBERS’ FUNDS
Reserves
23
30,051
30,309
27,619
27,656
Retained profits
24
357,207
326,151
356,648
326,029
387,258
356,460
384,267
353,685
–
1,018
–
–
387,258
357,478
384,267
353,685
Non-controlling interests
TOTAL MEMBERS’ FUNDS
25
The above Balance Sheet should be read in conjunction with the accompanying notes.
29
Annual Report for the Year Ended 30 June 2014
Statement Of Changes In Equity
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
Notes
$'000
$'000
$'000
$'000
Reserves
23
30,309
30,546
27,656
27,638
Retained profits
24
326,151
299,467
326,029
300,050
Non-controlling interests
25
TOTAL EQUITY AT THE START OF THE FINANCIAL YEAR
1,018
1,092
–
–
357,478
331,105
353,685
327,688
TOTAL PROFIT & LOSS FOR THE YEAR
Retained profits
24
31,106
27,719
30,953
26,957
Non-controlling interests
25
255
691
–
–
31,361
28,410
30,953
26,957
TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR
Reserves
23
(308)
(1,005)
(371)
(960)
(308)
(1,005)
(371)
(960)
OTHER TRANSACTIONS WITHIN EQUITY FOR THE YEAR
Transfer from retained profits to reserves
23
50
768
334
978
Transfer from reserves to retained profits
24
(50)
(768)
(334)
(978)
Non-controlling interest adjustment
23
–
(267)
–
–
Distributions provided for or paid to non-controlling interests
25
(299)
(765)
–
–
Return of capital paid to non-controlling interests
25
(974)
–
–
–
(1,273)
(1,032)
–
–
TOTAL EQUITY AT THE END OF THE FINANCIAL YEAR
Reserves
23
30,051
30,309
27,619
27,656
Retained profits
24
357,207
326,151
356,648
326,029
Non-controlling interests
25
–
1,018
–
–
387,258
357,478
384,267
353,685
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
30
Greater Building Society Ltd
Statement Of Cash Flows
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
Inflows/
(Outflows)
Inflows/
(Outflows)
Inflows/
(Outflows)
Inflows/
(Outflows)
264,504
290,181
277,289
290,499
18,141
17,358
18,141
17,358
3,379
7,104
1,245
502
(139,825)
(176,591)
(156,102)
(177,195)
Operating expenses paid
(99,041)
(97,631)
(99,685)
(94,152)
Income taxes paid
(11,202)
(9,459)
(11,202)
(9,459)
Net advances and repayments in loans and advances
(43,548)
(80,499)
(35,404)
(81,044)
Net placements and redemptions in investment securities
(20,091)
(128,930)
(11,161)
(129,105)
Net acceptances and payments in deposits
238,973
203,137
237,280
205,290
211,290
24,670
220,401
22,696
8
740
2,650
859
(3,966)
(4,299)
(3,953)
(4,264)
709
360
709
360
17
12
521
1,302
(3,232)
(3,187)
(73)
(1,743)
(132,957)
(160,597)
(157,912)
(159,500)
(882)
(670)
–
–
(133,839)
(161,267)
(157,912)
(159,500)
74,219
(139,784)
62,416
(138,549)
160,219
300,003
153,583
292,129
234,438
160,219
215,999
153,583
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Fees and commissions received
Other income received
Interest paid
NET CASH PROVIDED BY OPERATING ACTIVITIES
30
CASH FLOWS FROM INVESTING ACTIVITIES
Net purchases and sales in other financial assets
and liabilities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Dividends and distributions received
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of commercial notes
Distributions Paid
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net increase/(decrease) in cash held
CASH AT THE BEGINNING OF THE FINANCIAL YEAR
CASH AT THE END OF THE FINANCIAL YEAR
7
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
31
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Basis of Preparation
The financial report includes separate financial statements for Greater Building Society Ltd as an individual entity
(ie the Society) and the consolidated entity consisting of the Society and all its subsidiaries.
The financial statements of the Society and the consolidated entity are general purpose financial reports prepared
in accordance with provisions of Australian Accounting Standards and the Corporations Act 2001 in Australia.
The Society’s and consolidated entity’s financial statements also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Greater Building Society Ltd
is a for-profit entity for the purposes of preparing financial statements.
The financial statements of the Society and the consolidated entity are prepared under the historical cost
convention, as modified by the revaluation of certain financial assets and liabilities (including derivative instruments)
at fair value, certain classes of property and investment property.
All amounts are expressed in Australian dollar currency.
The significant accounting policies adopted in the preparation of these financial statements and that of the previous
financial year are set out below. These policies have been consistently applied to all periods presented, unless
otherwise stated.
i) Critical account estimates and significant judgements
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise judgement in the process of applying the accounting policies. The notes of
the financial statements set out the areas involving a higher degree of judgement or complexity, or areas where
assumptions are significant to the Society and its consolidated entity financial statements. The most significant of
these are:
• impairment losses on loans and advances,
• consolidation of special purpose entities, and
• fair valuation estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including reasonable expectations of future events. Management believes the estimates used in preparing the
financial statements are reasonable. Actual results in the future may differ from those reported.
ii) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for
30 June 2014 reporting periods. The consolidated entity’s assessment of the impact of these new standards
and interpretations is set out below.
Revenue from contracts with customers (effective 1 January 2017)
The IASB has issued a new standard for the recognition of revenue. This will replace IAS18 which covers
contracts for goods and services and IAS11 which covers construction contracts. The new standard is based on
the principle that revenue is recognised when control of a good or service transfers to a customer, so the notion
of control replaces the existing notion of risks and rewards. While the consolidated entity does not expect the
new standard to have an impact on how revenue is recognised, it is yet to perform a detailed assessment.
B) Consolidation
i) Controlled entities
The consolidated financial statements comprise the financial statements of the Society and its controlled entities
(together, ‘the consolidated entity’). The consolidated entity controls an entity when the consolidated entity is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. The effects of all transactions between entities in the
consolidated entity have been eliminated in full. Non-controlling interest in the results and equity of controlled
entities, where the Society owns less than 100% of the issued capital, are shown separately in the consolidated
statement of comprehensive income, statement of changes of equity and balance sheet.
Where control of an entity was obtained during the financial period, its results have been included in the
consolidated statement of comprehensive income from the date on which control commenced. Where control
of an entity ceased during the financial period, its results are included for that part of the financial period during
which control existed.
Investments in subsidiaries are accounted for by the Society at cost.
32
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
ii) Business combinations
The acquisition method of accounting is used to account for all business combinations. The consideration
transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities
incurred and the equity interests issued by the group. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at
the acquisition date.
Acquisition-related transaction costs are expensed as incurred.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and
the acquisition date fair value of any previous equity interest in the acquired entity, over the fair value of the
net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a
bargain purchase.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
iii) Securitisation
Securitised positions are held through a number of Special Purpose Entities (‘SPEs’). These securitised positions
allow the Society to access funding. The Society does not consolidate a SPE it does not control. Where it can
sometimes be difficult to determine whether the Society does control the SPE, it makes judgements about its
exposure to the variable returns of the entity and its ability to affect those returns. The Society has consolidated
its SPEs. Accordingly, their underlying assets, liabilities, revenues and expenses are reported in the Society’s
consolidated balance sheet and statement of comprehensive income.
iv) Land development investment
During the year, the Society had an equity investment in a controlled entity involved in the development of
land for subdivision and subsequent sale as residential lots. This controlled entity was wound up during the year.
Development properties are classified as inventory and carried at the lower of cost and net realisable value.
Cost includes expenses incidental to the cost of acquisition, development and holding costs excluding borrowing
costs. Costs are allocated on a per lot basis based on direct cost allocation where possible or by an averaging
process by applying indirect costs across all relevant lots.
Contracts are generally conditional upon performance of some condition of the contract, sale is
recognised upon the satisfaction of the condition which generally is upon settlement of the contract.
C) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Chief Executive Officer. All operating segments
are less than the required quantitative threshold to require separate disclosure.
D) Revenue Recognition
i) Interest revenue
Interest income arising from loans and held to maturity investment securities is brought to account using the
effective interest rate method. Incremental fees and transaction costs associated with the origination of loans
and held to maturity investment securities which are an integral part of the effective interest rate are deferred
and recognised in the statement of comprehensive income on a yield basis over the expected life of the
financial instrument.
The effective interest rate is that rate that exactly discounts estimated future cash flows throughout the life of the
financial instrument.
The balance outstanding of the deferred origination income and expense is recognised in the balance sheet
as an adjustment to the carrying amount of the loans and held to maturity investment securities outstanding.
33
ii) Other revenue
Other income, commission and fee income is recognised in the statement of comprehensive income as revenue
on an accruals basis when the service has been provided or incurred.
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
E) Income Tax
The consolidated entity has adopted the balance sheet liability method of tax-effect accounting which focuses
on the tax effect of transactions and other events that affect amounts recognised in either the balance sheet or
a tax-based balance sheet.
Deferred tax assets and liabilities are recognised for temporary differences, except where the deferred tax asset/
liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that the future taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
The Society and certain wholly owned Australian controlled entities implemented the tax consolidation legislation
as of 1 July 2002. The Australian Taxation Office has been notified of the decision. As a consequence, those entities
are taxed as a single entity and the deferred tax assets and liabilities of those entities are set off in the consolidated
financial statements.
Tax funding and sharing agreements between the Society and certain wholly owned Australian controlled entities,
known as ‘group member entities’, apply from 1 July 2013. Broadly, group member entities are required to calculate
their notional tax liability as if they were standalone taxpayers before transferring their tax liability to the head entity.
Such transfers will be effected on intercompany account. The Society has responsibility for settling the consolidated
entity’s income tax liability with the ATO.
F) Financial Assets
The consolidated entity has elected to apply AASB 9 Financial Instruments and AASB2009-11 Amendments to
Australian Accounting Standards arising from AASB 9 from 1 July 2010, because the new accounting standards
provide more reliable and relevant information for users to assess the amounts, timing and uncertainty of
future cash flows.
All financial assets are initially recognised at fair value plus, in the case of financial assets and liabilities not classified
as at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial asset.
Financial assets are then classified as either a debt or equity financial asset, which in turn determines their
subsequent accounting measurement. The categories and measurement treatments are:
i) Debt Financial Asset
A debt financial asset is classified as at amortised cost only if both of the following criteria are met:
• the asset is held within a business model with the objective to collect the contractual cash flows, and,
• the contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal outstanding.
The nature of any derivatives embedded in the debt financial asset are considered in determining whether the
cash flows of the asset are solely payment of principal and interest on the principal outstanding and are not
accounted for separately.
A gain or loss on a debt financial asset that is subsequently measured at amortised cost and is not part of a
hedging relationship is recognised in profit or loss when the financial asset is derecognised or impaired and
through the amortisation process using the effective interest rate method.
If either of the two criteria above are not met, the debt financial asset is classified as at fair value through
profit or loss.
A gain or loss on a debt financial asset that is subsequently measured at fair value and is not part of a hedging
relationship is recognised in profit or loss and presented net in the income statement within other income or
other expenses in the period in which it arises.
34
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
ii) Equity Financial Asset
All equity financial assets are measured at fair value.
Equity financial assets that are held for trading are measured at fair value through profit or loss. Changes in
the fair value of financial assets at fair value through profit or loss are recognised in other income or other
expenses in the income statement as applicable. Interest income from these financial assets is included in
the net gains/(losses). Dividend income is presented as other revenue.
For all other equity financial assets (ie. equity financial assets other than held for trading) the consolidated entity
can make an irrevocable election at initial recognition of each equity financial asset to recognise changes in
fair value through other comprehensive income (OCI) rather than through profit or loss.
Where management has elected to present fair value gains and losses on equity financial assets in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss.
Gains and losses arising from subsequent changes in fair value for equity financial assets nominated as fair value
through other comprehensive income are recognised directly in the financial asset at fair value through other
comprehensive income reserve in equity, until the asset is derecognised, at which time the cumulative gain or
loss will be transferred to retained profits. Dividends from equity financial assets continue to be recognised in
profit or loss as other revenue when the right to receive payments is established and as long as they represent
a return on investment.
Equity financial assets are measured at fair value. Fair values of quoted equity financial assets in active markets
are based on current bid prices. If the relevant market is not considered active (or the securities are unlisted),
the consolidated entity establishes fair value by using valuation techniques, including recent arm’s length
transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly
used by market participants. Where equity financial assets cannot be reliably valued they are recorded at cost.
G) Cash And Cash Equivalents
Cash and cash equivalents includes cash on hand and deposits at call and other short term, highly liquid investments
with original maturities of three months or less that are readily convertible to cash and are subject to an insignificant
risk of changes in value.
H) Investment Securities
i) Asset recognition
Investment securities are classified as debt financial assets and are measured at amortised cost using the
effective interest rate method. Amortised cost is calculated by taking into account any discount or premium
on acquisition, over the period to maturity. Any gains or losses from investments are recognised in profit and
loss when the investments are derecognised, on impairment, as well as through the amortisation process.
ii) Revenue recognition
Interest income arising from investment securities is recognised in the statement of comprehensive income
using the effective interest rate method (refer Note 1D).
iii) Investments in associates
Associates are those entities over which the consolidated entity exercises significant influence, but not
control. Investments in associates are accounted for in the financial statements using the equity accounting
method. Under this method, the consolidated entity’s share of the post acquisition profits or losses of associates
is recognised in the consolidated statement of comprehensive income, and its share of post acquisition
movements in reserves is recognised in consolidated reserves. The cumulative post acquisition movements
are adjusted against the carrying amount of the investment.
Investments in associates are accounted for by the Society at cost.
I) Loans And Advances
i) Asset recognition
Loans and advances are classified as loans and receivable assets and are recognised when cash is advanced
to members. They are carried at amortised cost using the effective interest rate method (refer Note 1F).
35
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
ii) Revenue recognition
Interest income arising from loans is brought to account using the effective interest rate method (refer Note 1D).
Loan fees received and transaction costs directly attributable to the acquisition of the loan are deferred and
included as an adjustment to the interest revenue of the loan on a yield basis over the expected life of the loan
using the effective interest rate method. The deferred revenues and costs are included in the balance sheet as
part of the value of the loans and advances outstanding.
Other loan fees, commissions and other service fees provided in relation to services are recognised as profit and
loss as other income on an accruals basis.
iii) Loan impairment
All loan assets are subject to regular review and assessment for possible impairment. Allowances for impairment
losses on loans are based on an incurred loss model, which recognises an allowance where there is objective
evidence of impairment.
Specific allowances are raised for losses that may be incurred for loans that are known to be impaired.
Estimated losses on these loans are measured at the difference between the loans carrying amount and
the present value of the estimated cash flows discounted at the loans effective interest rate.
Where individual loans are found to not be impaired they are grouped together with loans of similar credit risk
characteristics and then assessed collectively for impairment. Any loan that has been individually assessed
and considered impaired is excluded from the collective assessment.
Loans that are collectively assessed for impairment are estimated on the basis of historical loss experience
adjusted for any current conditions that may have impacted on the historical loss experience.
A credit loss reserve is maintained in equity to cover credit risks inherent in the loan portfolio. Movement in the
credit loss reserve is recognised as an appropriation of retained profits (refer Note 1S).
iv) Restructured loans
A restructured loan is a non-commercial facility where the original contractual terms have been modified to
provide concessional changes for reasons relating to financial difficulties of the borrower. Where the loan after
restructuring remains doubtful and it is not well secured the loan shall be subject to impairment. Loans will only
be recognised as restructured once the customer has formally agreed to the new terms.
v) Assets acquired through enforcement of security
Assets acquired through enforcement of security are assets acquired in full or partial settlement of a loan or
similar facility through enforcement of security arrangements.
vi) Bad debts written-off
Bad debts are written-off as identified by management and the Board of Directors when it is reasonable to
expect that the recovery of the debt is unlikely.
Bad debts will be written-off directly to profit and loss in the period in which they are identified. Bad debts can
be written-off directly against the allowance for impaired losses only to the extent that the allowance balance
includes a specific allowance in respect of the debt being written-off.
J) Plant, Property And Equipment
i) Asset recognition
Land and buildings are initially recognised at cost and then subsequently carried at fair value less
accumulated depreciation.
Plant and equipment are initially recognised at cost and then subsequently carried at cost less accumulated
depreciation and less any impairment adjustment. Assets are reviewed for impairment annually.
Cost includes expenditure directly attributable to the acquisition of the asset.
Items of equipment, furniture and fittings and other small assets, which cost less than $1,000 will be expensed
at the time of purchase.
36
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
ii) Revaluations
Land and buildings are carried at fair value at the date of the revaluation less any subsequent accumulated
depreciation of buildings and accumulated impairment losses.
Increases in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in other
comprehensive income and accumulated in the property revaluation surplus reserve in equity. To the extent that
the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit
or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive
income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to
profit or loss. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any
revaluation surplus reserve relating to the particular asset being disposed is transferred to retained profits.
The balances in the asset revaluation surplus reserve for each particular asset are net of any potential capital
gains tax liability.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included
in profit and loss in the year the item is derecognised.
Fair value is determined by reference to market-based evidence, which is the amount which the assets could
be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length
transaction as at the valuation date. Annual assessments of the fair value is made by the Directors, supplemented
by independent valuations performed every three years (or more often if circumstances require) ensuring that
the carrying amount does not differ materially from the asset’s fair value at the balance sheet date.
iii) Depreciation
Depreciation is calculated so as to write-off the net cost or revalued amount of each item of property, plant and
equipment (excluding land) over its expected useful life. Additions are depreciated from the date of acquisition.
The consolidated entity uses the following rates and methods of depreciation:
Rate
Method
Buildings
2.5%
straight line
Office Furniture
25%
reducing balance
Office Equipment
25%
reducing balance
Motor Vehicles
30%
reducing balance
Computer Hardware
40%
reducing balance
Cash Dispensing Units
15%
straight line
Leasehold improvements are amortised over the shorter of the unexpired period of the lease or the useful life of
the leasehold improvements on a prime cost basis.
Useful lives and residual values are reviewed annually and reassessed in light of commercial and technological
developments. If an asset’s carrying value is greater than its recoverable amount due to a useful life, residual
value or impairment adjustment, the carrying amount is written down immediately to its recoverable amount.
Adjustments arising from such restatements and on disposal of fixed assets are recognised in profit and loss.
For taxation purposes the consolidated entity determines an effective life to allow assets to be depreciated.
The consolidated entity generally uses the reducing balance method of depreciation for tax purposes.
37
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
K) Investment Properties
Investment properties are initially recognised at cost and then subsequently carried at fair value. Cost includes
expenditure directly attributable to the acquisition of the asset.
Fair value is determined by reference to market-based evidence, which is the amount which the assets could
be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length
transaction as at the valuation date. Annual assessments of the fair value are made by the Directors, supplemented
by independent valuations performed every three years (or more often if circumstances require) ensuring that the
carrying amount does not differ materially from the asset’s fair value at the balance sheet date.
Changes in fair values for investment properties are recognised directly in profit and loss.
Where the property is used by the consolidated entity for its own occupation the property is classified as plant,
property and equipment.
L) Inventory
No expenditure is treated as an asset where it has no realisable value or it is insignificant in size and nature.
Items such as printed internal forms, advertising brochures, etc are not treated as inventory.
All inventories are stated at the lower of cost and net realisable value.
M) Intangible Assets
i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the consolidated entity’s
share of the net identifiable assets of the acquired entity at the date of acquisition. Goodwill on acquisitions
of controlled entities is included in intangible assets. Goodwill on acquisitions of associates is included in the
carrying value of investments in associates. Goodwill is not amortised but tested for impairment annually, or
more frequently if events indicate that it might be impaired. In this event, it is carried at cost less accumulated
impairment losses.
ii) Computer software
Costs directly incurred in acquiring computer software, plus costs incurred in developing major products
or systems that will contribute to future period financial benefits through revenue generation and/or cost
reductions are capitalised to computer software and amortised over the estimated useful life. Costs incurred
on research and software maintenance are expensed as incurred.
The consolidated entity uses the following rates and methods of depreciation:
Rate/ Life Method
Major System or Product Development
Computer Software
3 to 7 years straight line
40% reducing balance
N) Members’ Deposits
Members’ deposits are measured at amortised cost using the effective interest rate method (refer Note 1F).
Interest on deposits is brought to account using the effective interest rate method (refer Note 1D).
O) Financial Liabilities
Financial liabilities are measured at amortised cost using the effective interest rate method (refer Note 1D) except for
derivatives, financial liabilities designated as at fair value through profit and loss, and in other limited circumstances
as allowed under AASB 9 Financial Instruments which are subsequently measured at fair value through profit and loss.
All the consolidated entity’s financial liabilities except for derivatives are classified at amortised cost.
P) Provisions
The consolidated entity makes provision where it has a present legal or constructive obligation as a result of past
events and it is probable that an outflow of resources will be required to settle the obligation.
A provision for promotion and reward scheme costs is recognised when the present obligations arise. The provision
is measured as the amount unpaid at the balance date discounted by an estimated rate of non-usage.
38
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Q) Derivative Instruments
The consolidated entity uses derivative financial instruments to hedge its exposure to interest rate risks arising
from operational, financing and investment activities. In accordance with its treasury management policy,
the consolidated entity does not hold or issue derivative financial instruments for trading purposes.
All derivatives, including those used for balance sheet hedging purposes, are recognised on the balance sheet at
fair value and are disclosed as an asset where they have a positive fair value at balance date or as a liability where
the fair value at balance date is negative (refer Note 1F).
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently
remeasured to their fair value at balance date. Fair values for interest rate swaps is the estimated amount that
the Society would receive or pay to terminate the swap at the balance date, taking into account current interest
rates and the credit worthiness of the swap counter parties. Movements in the carrying amounts of derivatives
are recognised in profit and loss, unless the derivative is designated as a hedge and meets the requirements for
hedge accounting.
i) Cash flow hedges
For a derivative designated as hedging a cash flow exposure arising from a recognised asset or liability
(or a highly probable forecast transaction), the gain or loss on the derivative associated with the effective
portion of the hedge is initially recognised in equity in the cash flow hedge reserve and reclassified into the
statement of other comprehensive income when the hedged item is brought to account. The gain or loss
relating to the ineffective portion of the hedge is recognised immediately in profit and loss.
ii) Fair value hedges
For a derivative designated as hedging a fair value exposure arising from a recognised asset or liability
(or a firm commitment), the gain or loss on the derivative is recognised in profit and loss together with
any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
R) Employee Entitlements
i) Wages, salaries and annual leave
Liabilities for wages, salaries, annual leave and sick leave are recognised and are measured at the amounts
expected to be paid when the liabilities are settled.
ii) Long service leave
A liability for long service leave is recognised and is measured as the present value of expected future
payments to be made in respect of services provided by employees up to the balance date using the projected
unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields on national
government guaranteed securities with terms to maturity that match, as closely as possible, the estimated
future cash outflows.
iii) Superannuation
Contributions are made by the consolidated entity to an employee’s superannuation fund and are charged
as expenses when incurred. The consolidated entity has no legal obligation to cover any shortfall in the funds
liability to provide benefits to employees on retirement.
iv) On-costs
On-costs associated with employees, including payroll tax, are recognised as liabilities and expenses when the
employment to which they relate has occurred.
S) Reserves
With effect from 1 July 2005 the Society has established a reserve for credit losses to cover credit risks inherent but
not yet incurred in the loan portfolio (refer Note 1I (iii)). Movement in the credit loss reserve is recognised as an
appropriation of retained profits.
T) Goods And Services Tax
39
Where capital or expense acquisitions relate to input taxed activities goods and services tax is generally
non-recoverable from taxation authorities. Accordingly, where the amount of goods and services tax incurred is not
recoverable, the tax is recognised as part of the cost of acquisition of an asset or as part of an item of expense.
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
For the purposes of the statement of cash flows, receipts and payments from operations are inclusive of goods
and services tax.
U) Impairment
The carrying amounts of the consolidated entity’s assets are reviewed at least at the end of each reporting period to
determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount
is estimated. Any impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable
amount. Impairment losses are recognised in profit and loss unless the asset has previously been revalued, in which
case the impairment loss is recognised as a reversal but only to the extent of the previous revaluation amount.
V) Rounding Of Amounts
The company is of a kind referred to in ASIC Class Order 98/100, issued by Australian Securities and Investments
Commission, relating to the ‘rounding off’ of amounts in the financial statements. Amounts in the financial statements
have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the
nearest dollar.
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
7,597
9,491
6,875
9,381
24,920
26,500
38,376
26,812
231,562
255,052
231,611
255,175
264,079
291,043
276,862
291,368
128,978
152,343
129,023
152,372
10,797
17,559
25,365
19,653
139,775
169,902
154,388
172,025
3,684
3,768
3,684
3,768
17
12
17
12
14,428
13,441
14,428
13,441
16
18
16
18
2
–
2
–
16
–
106
–
2,215
497
2,215
497
Net gain on disposal of property, plant and equipment
197
41
197
41
Rental revenue
250
326
250
326
2,348
6,226
–
–
–
–
504
1,290
657
566
804
350
23,830
24,895
22,223
19,743
2. INTEREST REVENUE
Cash and cash equivalents
Investment securities
Loans and advances
3. INTEREST EXPENSE
Deposits
Other financial liabilities
4. NON-INTEREST INCOME
Commission
Dividend revenue (including revenue on wind up of wholly owned subsidiary)
Fee income
Impaired losses recovered
Net gain on revaluation of investment properties
Net gain on revaluation of land and buildings
Net gain on disposal of investment securities
Sales revenue from sale of inventory
Trust distributions
Other revenue
40
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
676
686
676
686
1,541
3,860
–
–
359
404
359
404
Depreciation – leasehold improvements
1,524
1,388
1,524
1,388
Depreciation – plant and equipment
1,886
2,086
1,886
2,086
52,335
51,192
52,335
51,192
Net loss on financial assets at fair value through profit and loss
–
23
–
23
Net loss on revaluation of investment properties
–
980
–
980
Net loss on revaluation of land and buildings
–
1,708
–
626
Net loss on disposal of other financial assets
10
–
10
–
Net loss on disposal of property, plant and equipment
84
353
84
353
Operating rental expense
9,578
9,360
9,578
9,360
Payment system processing costs
7,107
7,411
7,105
7,406
28,939
26,954
27,058
26,462
104,039
106,405
100,615
100,966
12,844
11,176
12,968
11,540
88
222
359
(200)
(198)
(177)
(198)
(177)
12,734
11,221
13,129
11,163
Income tax expense attributable to profit from operations
12,734
11,221
13,129
11,163
Aggregate income tax expense
12,734
11,221
13,129
11,163
Notes
5. NON-INTEREST EXPENSE
Amortisation of computer software
Cost of inventory sold
Depreciation – buildings
Employee related expense
Other general and administration expenses
6. INCOME TAX EXPENSE
A) Income Tax Expense
Current tax
Deferred tax
Adjustment to current tax of prior years
Deferred income tax expense/(revenue) included in income tax expense comprises
41
Decrease/(increase) in deferred tax assets
14
194
1,089
398
561
Increase/(decrease) in deferred tax liabilities
14
(106)
(867)
(39)
(761)
88
222
359
(200)
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Notes
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
B) Numerical Reconciliation Of Income Tax Expense To Prima Facie Tax Payable
Profit from operations before income tax expense
44,095
39,631
44,082
38,120
Prima facie tax payable at 30% (2013 – 30%)
13,229
11,889
13,225
11,436
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
Non-assessable income (exempt Charitable Foundation)
(18)
(70)
–
–
Non-assessable distributions
(89)
(325)
–
–
Research and development
(200)
(100)
(200)
(100)
13
15
13
15
–
–
292
–
(3)
(12)
(3)
(12)
(198)
(176)
(198)
(176)
12,734
(668)
13,129
(273)
12,734
11,221
13,129
11,163
Entertainment expenses
Debt forgiveness for consolidated entity
Sundry items
Under/(over) provision prior year
INCOME TAX EXPENSE
C) Amounts Recognised Directly In Equity
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss but directly
debited or credited to equity
Current tax – credited directly to equity
149
(57)
149
(182)
(16)
488
10
594
80
–
–
–
213
431
159
412
Cash on hand
18,916
17,892
18,937
17,877
Financial institution balance – at call
92,390
34,774
73,930
28,153
123,132
107,553
123,132
107,553
234,438
160,219
215,999
153,583
Net deferred tax – debited/(credited) directly to equity
14
Reserves – debited/(credited) directly to equity
23
7. CASH AND CASH EQUIVALENTS
All Cash and Cash Equivalents are current assets
Financial institution balance – short term
Short term cash and cash equivalents are those where original maturity is less than 90 days
42
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
Financial institutions balance
548,639
541,076
550,048
542,704
Investments in other securities
27,803
13,759
459,803
20,759
576,442
554,835
1,009,851
563,463
8. INVESTMENT SECURITIES
Investments with financial institutions are those where original maturity is greater than 90 days
Investment securities expected to mature within 12 months
142,020
195,554
141,312
195,098
Investment securities expected to mature after 12 months
434,422
359,281
868,539
368,365
576,442
554,835
1,009,851
563,463
Accrued income
224
253
224
253
Prepayments
692
832
678
813
–
104
1,854
813
916
1,189
2,756
1,879
3,546
4,438
3,546
4,438
3,546
4,438
3,546
4,438
693
155
693
155
2,853
4,283
2,853
4,283
3,546
4,438
3,546
4,438
130
379
130
379
130
379
130
379
130
196
130
196
–
183
–
183
130
379
130
379
–
–
–
–
9. OTHER RECEIVABLES
All Other Receivables are current assets
Other receivables
10. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instrument asset
Interest rate swap contracts – cash flow hedges
Derivatives expected to mature within 12 months
Derivatives expected to mature after 12 months
Derivative financial instrument liability
Interest rate swap contracts – cash flow hedges
Derivatives expected to mature within 12 months
Derivatives expected to mature after 12 months
Cash flow hedge ineffectiveness – gain/(loss)
43
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
130,595
144,606
130,595
145,981
Term loans
4,099,457
4,050,195
4,099,457
4,050,195
Gross loans and advances
4,230,052
4,194,801
4,230,052
4,196,176
(1,031)
(959)
(1,031)
(2,334)
Net loan and advances
4,229,021
4,193,842
4,229,021
4,193,842
Loans and advances expected to be paid within 12 months
1,367,403
1,068,919
1,367,403
1,069,270
Loans and advances expected to be paid after 12 months
2,861,618
3,124,923
2,861,618
3,124,572
4,229,021
4,193,842
4,229,021
4,193,842
11. LOANS AND ADVANCES
Overdrafts
Allowance for specific impairment losses
A) Allowance For Specific Impairment Losses
Movement in the allowance for specific impairment losses are as follows
Opening balance
959
1,828
2,334
1,828
Bad debt write-off
(263)
(712)
(1,235)
(712)
335
(157)
(68)
1,218
1,031
959
1,031
2,334
2,976
2,633
2,976
4,008
(1,031)
(959)
(1,031)
(2,334)
1,945
1,674
1,945
1,674
New/(Released) provision
B) Impaired Loans
Impaired loans with specific provision for impairment
Less provision
Impaired loans will be either assessed individually or grouped together with similar credit risk assets and assessed
collectively for impairment. Individual assessment will usually be performed where the risk exposure is either
significant by amount or of a particular product type. The consolidated entity in assessing individual specific
impairment will consider the counter parties willingness to meet their contractual arrangements, the counter parties
economic circumstances and their future financial prospects and the security provided.
Security for housing loans is in the form of registered mortgage over residential property real estate. Security for
commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for
personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges
against funds held on deposit.
44
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
C) Assets Acquired Through The Enforcement Of Security
Net fair value of assets acquired through the enforcement of security still held at the end of the financial year
Real estate
Other assets
265
235
265
235
–
8
–
8
265
243
265
243
Assets acquired during the year are disposed of as soon as practically possible with the proceeds used to reduce the
outstanding indebtedness. Any residual proceeds after the debt is repaid are returned to the borrower.
There were no assets through the enforcement of security during the year which were used by the Society or the
consolidated entity in its operations.
D) Past Due Loans
Analysis of loans that have not met their contractual repayment schedule but are not impaired
Less than 3 months past due
3 months to less than 6 months past due
6 months or more past due
84,279
88,267
84,279
88,267
3,669
1,284
3,669
1,284
1,565
2,500
1,565
2,500
89,513
92,051
89,513
92,051
Security for housing loans is in the form of registered mortgage over residential property real estate. Security for
commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for
personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges
against funds held on deposit.
12. INVENTORIES
All Inventories are current assets
Land
–
1,535
–
–
3,547
3,255
3,547
3,255
13. OTHER FINANCIAL ASSETS
All other financial assets are non-current assets
Equity financial assets
Controlled entities
45
–
–
603
2,271
3,547
3,255
4,150
5,526
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
CONTROLLED ENTITIES
Investment Holding
Name of Entity
Parkwood Unit Trust
Class of
Share 2014
Units
–
2013
2014
$’000
2013
$’000
Nature of Business
63%
–
1,669
Land Development
Greater Investment Services Pty Ltd
Ordinary 100%
100%
603
603
Management Services
Greater Property Holdings Number 1 Pty Ltd
Ordinary 100%
100%
–
–
Property Development
and Investment
100%
100%
–
–
Charitable Foundation
Ordinary 100%
100%
–
–
Trustee
Greater Charitable Foundation Trust
Greater Charitable Foundation Pty Ltd
N/A
GBS Receivables Trust No 3
N/A
N/A
N/A
–
–
Mortgage securitisation
special purpose entity
(wound up June 2014)
GBS Receivables Trust No 4
N/A
N/A
N/A
–
–
Mortgage securitisation
special purpose entity
GBS Receivables Repo Trust
N/A
N/A
N/A
–
–
Mortgage securitisation
special purpose entity
(created September 2013)
Waratah GBS Mortgages Trust No 1
N/A
N/A
N/A
–
–
Mortgage securitisation
special purpose entity
Notes:
a) All the above entities are incorporated in Australia.
b) The Parkwood Unit Trust was wound up in June 2014. Previously, the Trust owned 100% of the issued units in
Ashtonfield Unit Trust.
c) The Society has control of GBS Receivables Trust No 4, GBS Receivables Repo Trust (created September 2013) and
Waratah GBS Mortgages Trust No 1 as the Society is exposed to, and has the ability to affect, the variable returns
associated with these special purpose entities. GBS Receivables Trust No 3 was wound up during the year.
d) The GBS Receivables Repo Trust (created September 2013) is an internal securitisation and the Society holds all of
the notes on issue.
e) The investment holding in Greater Property Holdings Number 1 Pty Ltd was impaired as at 30 June 2014 and
written down to NIL (2013 NIL).
46
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
3,279
3,509
3,316
3,650
309
288
309
700
14. DEFERRED TAX ASSETS
Net Deferred tax assets
A) Composition Of Net Deferred Tax Assets
Deferred tax assets
The balance comprises temporary differences attributable to
Doubtful debts
Impaired assets
–
–
89
89
2,942
3,558
2,942
3,558
11
124
11
124
1,796
1,828
1,796
1,828
–
96
–
96
1,024
467
972
107
6,082
6,361
6,119
6,502
–
–
–
–
6,082
6,361
6,119
6,502
(18)
(46)
(18)
(46)
(812)
(778)
(812)
(778)
Investment securities
(40)
–
(40)
–
Derivatives
(79)
–
(79)
–
Loan origination costs
(60)
(145)
(60)
(145)
(1,009)
(969)
(1,009)
(969)
Property revaluation surplus reserve
(189)
(95)
(189)
(95)
Available for sale investments
(680)
(592)
(680)
(592)
Fair value assets through other comprehensive income
(925)
(1,196)
(925)
(1,196)
(1,794)
(1,883)
(1,794)
(1,883)
(2,803)
(2,852)
(2,803)
(2,852)
Employee benefits
Loan origination costs and fair value adjustments
Property, plant and equipment
Investment securities
Accruals
Amounts recognised directly in equity
Fair value assets through other comprehensive income
Deferred tax liabilities
Less set off of deferred tax liabilities
The balance comprises temporary differences attributable to
Prepayments
Property, plant and equipment
Amounts recognised directly in equity
Total set-off amount of deferred tax liabilities
47
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
Opening balance
6,361
7,487
6,502
7,100
Credited/(charged) to the statement of comprehensive income
(194)
(1,089)
(398)
(561)
(85)
(37)
15
(37)
6,082
6,361
6,119
6,502
2,852
4,217
2,852
4,217
(65)
(867)
(39)
(761)
16
(488)
(10)
(594)
–
(10)
–
(10)
Total set-off amount of deferred tax liabilities
2,803
2,852
2,803
2,852
NET DEFERRED TAX ASSETS
3,279
3,509
3,316
3,650
B) Movements In Net Deferred Tax Assets
Attributable to deferred tax assets
Under/(over) provision in prior year
Less off-set of deferred tax liabilities
Attributable to deferred tax liabilities
Opening balance
Charged/(credited) to the statement of comprehensive income
Charged/(credited) to equity
Under/(over) provision in prior year
C) Recovery Of Deferred Tax Assets
Attributable to deferred tax assets
Deferred tax assets to be recovered after more than 12 months
2,801
2,997
2,875
3,107
Deferred tax assets to be recovered within 12 months
3,281
3,364
3,244
3,395
6,082
6,361
6,119
6,502
1,850
72
1,850
72
953
2,780
953
2,780
2,803
2,852
2,803
2,852
3,279
3,509
3,316
3,650
Attributable to deferred tax liabilities
Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities to be settled within 12 months
NET DEFERRED TAX ASSETS
48
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
18,435
18,572
18,435
18,572
–
–
–
–
18,435
18,572
18,435
18,572
Leasehold improvements
13,341
13,090
13,341
13,090
Less accumulated depreciation
(9,265)
(8,501)
(9,265)
(8,501)
4,076
4,589
4,076
4,589
18,354
17,861
18,354
17,861
(13,106)
(11,995)
(13,106)
(11,995)
5,248
5,866
5,248
5,866
27,759
29,027
27,759
29,027
15. PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment are non-current assets
Land and buildings
Less accumulated depreciation
Plant and equipment
Less accumulated depreciation
PROPERTY, PLANT AND EQUIPMENT
A) Valuation Of Land And Buildings
The valuation of land and buildings is on the basis of fair market values based on existing use and are classified as
level 3 assets. During the financial year no land and buildings were transferred between categories. In determining
fair value the consolidated entity uses a variety of methods and makes assumptions that are based on market
conditions existing at the end of each reporting period. Specifically, inputs include observations of the net rental
market and current commercial capitalisation rates. An annual assessment is made by the Directors’ to ensure
that the carrying values do not differ materially from the fair value. The Directors assessments are supported by
independent valuations. Details of the independent valuations are shown below.
June 2014 – the Directors’ valuation considered the independent valuations performed at 30 June 2013 by P Macadam (AAPI),
Reg Valuer No. 3784 and H Pawlik (FAPI, CPV), Reg Valuer No. 1192 and B Green (AAPI), Reg Valuer No. 6283
B) Carrying Amounts That Would Have Been Recognised If Land And Buildings Were Stated At Cost
Freehold land and buildings stated on the historical cost basis, would be as follows;
Land and buildings
Cost
20,947
20,977
20,947
20,977
Accumulated depreciation
(4,042)
(3,640)
(4,042)
(3,640)
Net book amount
16,905
17,337
16,905
17,337
18,572
20,650
18,572
19,532
Additions
71
–
71
–
Disposals
(269)
–
(269)
–
–
27
–
–
16
(1,708)
106
(626)
404
7
316
70
(359)
(404)
(359)
(404)
18,435
18,572
18,435
18,572
C) Movement In Land And Buildings
Balance as at start of year
Building in course of construction
Revaluation increment/(decrement) recognised in profit and loss
49
Revaluation increment/(decrement) recognised in other
comprehensive income
Depreciation expense
Balance as at end of year
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
Balance as at start of year
4,589
4,469
4,589
4,469
Additions
1,029
1,686
1,029
1,686
Disposals
(18)
(169)
(18)
(169)
(1,524)
(1,388)
(1,524)
(1,388)
–
(9)
–
(9)
4,076
4,589
4,076
4,589
Balance as at start of year
5,866
6,555
5,866
6,555
Additions
1,552
1,862
1,552
1,862
Disposals
(284)
(474)
(284)
(474)
(1,886)
(2,086)
(1,886)
(2,086)
–
9
–
9
5,248
5,866
5,248
5,866
4,303
4,301
4,303
4,301
D) Movement In Leasehold Improvements
Depreciation expense
Transfer to plant and equipment
Balance as at end of year
E) Movement In Plant And Equipment
Depreciation expense
Transfer from leasehold improvements
Balance as at end of year
16. INVESTMENT PROPERTIES
All Investment Properties are non-current assets
Investment properties
A) Valuation Of Investment Properties
The valuation of investment properties is on the basis of fair market values based on existing use and are classified
as level 3 assets. During the financial year no investment properties were transferred between categories. In
determining fair value the consolidated entity uses a variety of methods and makes assumptions that are based
on market conditions existing at the end of each reporting period. Specifically, inputs include observations of the
net rental market and current commercial capitalisation rates. An annual assessment is made by the Directors to
ensure that the carrying values do not differ materially from fair value. The Directors assessments are supported by
independent valuations. Details of the independent valuations are shown below.
June 2014 – the Directors’ valuation considered the independent valuations performed at 30 June 2013 by P Macadam (AAPI), Reg
Valuer No. 3784 and H Pawlik (FAPI, CPV), Reg Valuer No. 1192 and B Green (AAPI), Reg Valuer No. 6283
B) Movement In Investment Properties
4,301
5,281
4,301
5,281
Additions
–
–
–
–
Revaluation increment/(decrement) recognised in profit and loss
2
(980)
2
(980)
4,303
4,301
4,303
4,301
Balance as at start of year
Balance as at end of year
50
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
C) Leasing Arrangements
The investment properties are leased to tenants under short term operating leases with rentals payable monthly.
Minimum lease payments receivable on leases of investment properties are as follows.
Minimum lease payments not recognised in the financial statements are receivable as follows
Within one year
107
161
107
161
Later than one year but before five years
158
252
158
252
Balance as at end of year
265
413
265
413
222
317
222
317
(6)
(6)
(6)
(6)
216
311
216
311
D) Amount Recognised In Profit And Loss For Investment Properties
Rental income
Direct operating expenses
17. INTANGIBLE ASSETS
All intangible assets are non-current assets
5,141
5,019
5,141
5,019
(3,478)
(3,621)
(3,478)
(3,621)
1,663
1,398
1,663
1,398
1,398
1,467
1,398
1,467
Additions
965
639
965
639
Disposals
(24)
(22)
(24)
(22)
Amortisation expense
(676)
(686)
(676)
(686)
Balance as at end of year
1,663
1,398
1,663
1,398
7,552
9,677
7,551
8,976
Call deposits
2,071,417
1,870,104
2,074,339
1,874,346
Term deposits
2,352,174
2,314,953
2,352,174
2,315,329
4,423,591
4,185,057
4,426,513
4,189,675
Computer software
Less accumulated amortisation
A) Movement In Software Balances
Balance as at start of year
18. PAYABLES AND OTHER LIABILITIES
All payables and other liabilities are expected to be settled within 12 months
Creditors and other accruals
19. DEPOSITS
51
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
4,607
3,492
4,607
3,492
–
40
–
–
4,607
3,532
4,607
3,492
251,719
391,609
–
–
Loans – securitisation special purpose entities
–
–
669,239
395,084
Loans – other
–
–
–
–
251,719
391,609
669,239
395,084
Other financial liabilities expected to be settled within 12 months
63,397
96,267
160,732
95,513
Other financial liabilities expected to be settled after 12 months
188,322
295,342
508,507
299,571
251,719
391,609
669,239
395,084
9,808
9,708
9,808
9,708
249
108
249
108
10,057
9,816
10,057
9,816
Provisions expected to be settled within 12 months
4,427
4,400
4,427
4,400
Provisions expected to be settled after 12 months
5,630
5,416
5,630
5,416
10,057
9,816
10,057
9,816
Fair value assets through other comprehensive income
2,547
2,342
2,547
2,342
Cash flow hedge reserve
2,602
3,398
2,602
3,398
Credit loss reserve
9,966
9,632
9,966
9,632
Property revaluation surplus reserve
2,873
2,781
441
221
–
93
–
–
10,699
10,699
10,699
10,699
1,364
1,364
1,364
1,364
30,051
30,309
27,619
27,656
20. CURRENT TAX LIABILITIES
All current tax liabilities are expected to be settled within 12 months
Income tax
Deferred tax liability
21. OTHER FINANCIAL LIABILITIES
Commercial notes
22. PROVISIONS
Employee benefits
Other
23. RESERVES
Revaluation on consolidation reserve
Business combination reserve
Community support reserve
52
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
MOVEMENT IN RESERVES
A) Fair Value Assets Through Other Comprehensive Income Reserve
Balance at beginning of year
2,342
1,571
2,342
1,571
Revaluation gross
293
1,101
293
1,101
Deferred tax
(88)
(330)
(88)
(330)
2,547
2,342
2,547
2,342
The fair value through other comprehensive income reserve relates to equity financial assets designated as fair value
through other comprehensive income. Fair value movements on these equity financial assets are held in equity
rather than through profit and loss as described in Note 1F.
B) Cash Flow Hedge Reserve
Balance at beginning of year
3,398
5,178
3,398
5,178
Recognised in equity during the year
(642)
(2,831)
(642)
(2,831)
Transferred to profit and loss during the year
(495)
288
(495)
288
341
763
341
763
2,602
3,398
2,602
3,398
Deferred tax
The cash flow hedge reserve represents the future value of hedged instruments which have been designated as
effective hedges in accordance with hedge accounting as described in Note 1Q (i).
C) Credit Loss Reserve
Balance at beginning of year
Transfer (to)/from retained profits
9,632
8,568
9,632
8,568
334
1,064
334
1,064
9,966
9,632
9,966
9,632
The credit loss reserve is a requirement of Australian Prudential Regulation Authority Prudential Standards and
represents the potential inherent losses in the loans and advances portfolio under a stressed economic environment.
D) Property Revaluation Surplus Reserve
Balance at beginning of year
2,781
2,776
221
172
Transfer (to)/from retained profits
(273)
–
–
–
Deferred tax
82
–
–
–
Revaluation gross
63
(398)
133
(255)
Deferred tax
(19)
119
(40)
76
Depreciation transfer gross
342
405
181
325
(103)
(121)
(54)
(97)
2,873
2,781
441
221
Deferred tax
The property revaluation surplus reserve is used to record the unrealised increments and decrements on the
revaluation of property as described in Note 1J.
53
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
93
304
–
–
(93)
(211)
–
–
–
93
–
–
E) Revaluation On Consolidation Reserve
Balance at beginning of year
Transfer (to)/from retained profits
The revaluation on consolidation reserve recognises the fair value of unrecognised assets acquired as a result of
consolidating a subsidiary.
F) Business Combination Reserve
Balance at beginning of year
Transfer (to)/from retained profits
10,699
10,699
10,699
10,699
–
–
–
–
10,699
10,699
10,699
10,699
1,364
1,450
1364
1,450
–
(86)
–
(86)
1,364
1,364
1,364
1,364
The business combination reserve recognises the net assets acquired on merger.
G) Community Support Reserve
Balance at beginning of year
Transfer (to)/from retained profits
The community support reserve has been set aside to provide services and facilities in the communities in which the
Greater Building Society operates.
24. RETAINED PROFITS
Retained profits
357,207
326,151
356,648
326,029
326,151
299,467
326,029
300,050
31,106
27,719
30,953
26,957
(334)
(1,065)
(334)
(1,064)
93
211
–
–
Movement in retained profits
Balance at beginning of year
Net profit in the year
Transfer (to)/from credit loss reserve
Transfer (to)/from consolidation reserve
Transfer (to)/from property revaluation surplus reserve
191
–
–
–
Transfer (to)/from community contribution reserve
–
86
–
86
Transfer to/(from) deferred tax assets
–
(267)
–
–
357,207
326,151
356,648
326,029
54
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
1,018
1,092
–
–
Share of operating profit
289
882
–
–
Share of net assets of acquired entity
(34)
(191)
–
–
Distribution paid or payable
(299)
(765)
–
–
Return of capital
(974)
–
–
–
–
1,018
–
25. NON-CONTROLLING INTEREST
Reconciliation of non-controlling interest in controlled entities
Balance at beginning of year
26. RELATED PARTIES
A) Controlled Entities
Information in respect of controlled entities is disclosed in Note 13.
B) Key Management Personnel
Key management personnel are the Directors and those Senior Executives that are responsible for the planning,
directing and controlling of the activities of the Society and consolidated entity. Details of changes to the Directors
are shown in the Directors’ Report.
Consolidated
Society
2014
2013
2014
2013
$
$
$
$
3,757,352
3,509,669
3,733,352
3,485,669
i) Compensation paid to key management personnel
Short term employee benefits
Post-employment benefits
355,167
306,386
355,167
306,386
Other long term benefits
263,964
330,293
263,964
330,293
Termination benefits
–
–
–
–
4,376,483
4,146,348
4,352,483
4,122,348
2,554,555
7,283,330
2,554,555
7,283,330
–
–
–
–
435,625
1,164,854
435,625
1,164,854
117,072
350,514
117,072
350,514
ii) Loans to key management personnel (including related parties)
Loans outstanding at beginning of year
Net balances from changes in personnel
Advances made during the year
Interest and fees charged
Repayments made during the year
(727,500)
(6,244,143)
(727,500)
(6,244,143)
Loans outstanding at end of year
2,379,752
2,554,555
2,379,752
2,554,555
Loans granted at commercial terms are provided at the same interest rate and terms available to members
generally. Security is taken in the majority of cases in accordance with the Society’s normal credit risk policy.
55
Loans granted at non-commercial terms relate to loans provided to Senior Executives in accordance with the
concessional staff loan policy. Under this policy, staff are eligible for loans at concessional rates of interest
dependent upon their length of employment, their seniority and their salary level.
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$
$
$
$
2,464,002
2,544,399
2,464,002
2,544,399
–
–
–
–
98,444
120,765
98,444
120,765
612,301
(201,162)
612,301
(201,162)
3,174,747
2,464,002
3,174,747
2,464,002
iii) D
eposits made by key management personnel (including related parties)
Deposits outstanding at the beginning of year
Net balances from changes in personnel
Interest paid
Net movement in deposits during the year
Deposits outstanding at the end of the year
The Society has entered into an Enterprise Agreement with its staff. Under this agreement the Society provides each
staff member a deposit account upon which no transaction fees are payable. These amounts are included in the
above disclosure.
C) Transactions With Other Related Parties
The Society has related party transactions with the following entities:
reater Rollover and Allocated Pension Fund invests funds with the Society. At balance date these
i) G
deposits totalled $15,179,000 (2013 $18,652,000). The Society acted as Administrator to the Trust until April 2013.
The Society provided administration services to the entity for $NIL (2013 $NIL) consideration, these services
ceased at April 2013.
ii) Greater Investment Services Pty Ltd invests funds with the Society. At balance date these deposits totalled
$2,067,000 (2013 $1,922,000). In support of the entities AFS licence the Society has provided a support agreement
including a financial support commitment to the entity. The entity acts as the manager for GBS Receivables Trust
No 3 (Dissolved, June 2014), GBS Receivables Trust No 4, GBS Receivables Repo Trust (Created, September 2013)
and Waratah GBS Mortgage Trust No 1. The Society provides administration services to the entity for $NIL
(2013 $NIL) consideration.
iii) P
arkwood Unit Trust was wound up in June 2014. Previous to this it invested funds with the Society. At balance
date these deposits totalled $NIL (2013 $1,611,000). Parkwood Unit Trust had a secured revolving credit loan
facility with the Society. At balance date the loan facility was for a total facility limit of $NIL (2013 $539,500)
with a balance outstanding of $NIL (2013 $NIL). The Trust also had unsecured loans on an interest free basis.
At balance date the balance outstanding is $NIL (2013 $NIL). The Trust carried out activities of land
development within the Hunter Valley Region. The Society provided administration services to the Trust
for $NIL (2013 $NIL) consideration.
iv) The Society provides custodian, basis swap, interest rate swap and redraw commitment facilities to GBS
Receivables Trust No 3 (Dissolved, June 2014), GBS Receivables Trust No 4 and GBS Receivables Repo Trust
(Created, September 2013) as well as acting as servicer of the securitised mortgages. These trusts are special
purpose entities that allow the Society to access funding by securitising mortgage loans. The revenues and
fees in relation to these services are part of the funding arrangements, accordingly, they are included in the
effective interest rate of the loan facility. The Society holds units in and invests funds with GBS Receivables Trust
No 4. At balance date the units had a value of $7,000,000 (2013 $7,000,000) and the deposits totalled $2,117,382
(2013 $2,083,950). The Society also holds all the units with GBS Receivables Repo Trust. At balance date the units
had a value of $425,000,000 (2013 $NIL).
v) Waratah GBS Mortgage Trust No 1 during the year accepted the sale of mortgages from the Society.
The Society provides custodian and interest rate swap facilities to the Trust as well as acting as servicer of
the securitised mortgages. The trust is a special purpose entity that allows the Society to access funding
by securitising mortgage loans. The revenues and fees in relation to these services are part of the funding
arrangements, accordingly, they are included in the effective interest rate of the loan facility.
56
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
vi) P
roperty Holdings Number 1 Pty Ltd invests funds with the Society. At balance date these deposits totalled $NIL
(2013 $NIL). Property Holdings Number 1 Pty Ltd had a secured revolving credit loan facility with the Society
that was closed December 2013. At balance date the loan facility was for a total facility limit of $NIL (2013
$1,500,000) with a balance outstanding of $NIL (2013 $NIL). An impairment loss was previously recognised on the
loan balance to the value of $NIL (2013 $1,375,000). The Entity also had an unsecured loan on an interest free
basis. At balance date the loan outstanding is $NIL (2013 $NIL). The Society provided administration services to
the entity for $NIL (2013 $NIL) consideration.
vii) G
reater Charitable Foundation invests funds with the Society. At balance date these deposits totalled $875,000
(2013 $1,099,000). The Trusts principal activities are the provision of distributions to other entities or persons to
advance or promote a charitable purpose. During the year the Society donated $1,700,000 (2013 $1,200,000)
to the foundation and provided administration services for $306,000 (2013 $217,000) consideration.
Consolidated
Society
2014
$
2013
$
2014
$
2013
$
265,145
296,597
212,485
239,667
Auditing services for prudential regulation reporting
55,616
108,403
55,616
108,403
Other audit related work
27,070
35,980
19,570
35,980
Taxation advisory services
117,504
155,435
111,504
152,435
27. REMUNERATION OF AUDITORS
PricewaterhouseCoopers Australia
Income received or due and receivable by the auditors for
Auditing services for the financial statements
of any entity within the consolidated entity
General advisory services
16,500
3,286
16,500
3,286
481,835
599,701
415,675
539,771
28. COMMITMENTS
The Group leases various ATM locations and Branch offices under non-cancellable operating leases expiring within
two to seven years. The leases have varying terms, escalation clauses and renewal rights.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows.
i) Lease commitments
Within one year
Later than one year but not later than five years
Later than five years
7,584
6,871
7,584
6,871
11,620
12,509
11,620
12,509
20
32
20
32
19,224
19,412
19,224
19,412
29. SEGMENTAL REPORTING
The consolidated entity’s operations are confined to one business segment being the provision of financial services
and products to members in the form of taking deposits and providing financial accommodation as prescribed by
the constitution.
57
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
Operating profit after income tax
31,361
28,410
30,953
26,957
Depreciation and amortisation
4,445
4,563
4,445
4,564
335
(156)
(68)
1,219
(2,215)
(497)
(2,215)
(497)
30. RECONCILIATION OF NET CASH
Provided By Operating Activities To Operating Profit After Income Tax
Impaired losses/(gains) on loans
Profit on sale of investments
Loss on sale of investments
10
–
10
–
(197)
(41)
(197)
(41)
84
353
84
353
Dividend and distributions received from investing activities
(17)
(12)
(521)
(1,302)
Fair value movement of land and buildings
(16)
386
(106)
449
(2)
2,301
(2)
1,156
Fair value movement of other financial assets
–
–
–
296
Investment in subsidiary via tax consolidation
–
–
–
115
Income tax attributed directly to equity
–
–
–
(19)
Inventory revaluation movement on sales
–
353
–
–
(3,433)
(6,424)
(4,382)
(5,143)
425
(863)
426
(868)
29
149
29
149
Decrease/(increase) in deferred tax assets
693
857
384
597
Decrease/(increase) in sundry debtors
299
(176)
482
(340)
1,535
2,013
–
–
–
307
–
307
Increase/(decrease) in income taxes payable
1,115
1,923
1,115
1,923
Increase/(decrease) in deferred taxes payable
163
(1,037)
203
(931)
1,101
119
(1,195)
176
241
(1,566)
241
(1,566)
Decrease/(increase) in loans and advances
(43,548)
(80,499)
(35,404)
(81,044)
Decrease/(increase) in investment securities
(20,091)
(128,930)
(11,161)
(129,105)
Increase/(decrease) in deposits
238,973
203,137
237,280
205,291
NET CASH PROVIDED BY OPERATING ACTIVITIES
211,290
24,670
220,401
22,696
Profit on sale property, plant and equipment
Loss on sale of property, plant and equipment
Fair value movement of investment properties
Increase/(decrease) in accrued interest payable
Decrease/(increase) in accrued interest receivable
Decrease/(increase) in other receivables
Decrease/(increase) in inventory
Decrease/(increase) in derivatives
Increase/(decrease) in creditors and accrued expenses
Increase/(decrease) in other provisions
58
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
4,911,076
5,458,750
4,915,132
31. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
A) Financial Assets And Liabilities
The carrying amount of the following categories of financial assets and liabilities are
Financial assets
Financial assets measured at amortised cost
5,041,892
Fair value through other comprehensive income
3,547
3,255
4,150
5,526
Financial assets that are designated hedging instruments
3,546
4,438
3,546
4,438
5,048,985
4,918,769
5,466,446
4,925,097
130
379
130
379
4,682,906
4,586,375
5,103,396
4,593,767
4,683,036
4,586,754
5,103,526
4,594,146
Financial liabilities
Financial liabilities that are designated hedging instruments
Financial liabilities measured at amortised cost
The consolidated entity early adopted AASB 9 Financial Instruments and AASB2009-11 Amendments to Australian
Accounting Standards arising from AASB 9 from 1 July 2010. This resulted in a re-classification of financial instruments
in 2012. Further information is provided in Note 1A (ii) and Note 1F.
B) Risk Management Framework
The consolidated entity’s activities are principally related to the use of financial instruments. The consolidated entity
predominantly accepts deposits from members at both fixed and floating rates for various periods and lends to retail
borrowers at both fixed and floating rates with a range of credit standings. Surplus funding is invested in high quality
liquid or investment securities. Accordingly, the consolidated entity’s activities are exposed to the following key
financial risks: market risk; credit risk; and liquidity risk.
Risks are monitored and managed using an enterprise wide risk management system. This system records all
the identified risks, the risk controls and risk mitigants used to manage the risks and an assessment of each risk.
These risks are formally reviewed by management and presented to the Audit & Risk Management Committee
on a quarterly basis.
Risk management is carried out by the Executive Committee, comprising of Senior Management Executives, under
policies approved by the Board of Directors (the Board). The Board provides written principles for the overall risk
management, as well as written policies covering specific areas as required, to meet minimum Prudential Standards
requirements issued by the Australian Prudential Regulation Authority (APRA).
These Risk Management Policies identify the consolidated entity’s policies and procedures, processes and controls
that comprise its risk management and control systems. These systems address key material risks, financial and
non-financial, likely to be faced by the consolidated entity. The policies and procedures are reviewed annually by
Senior Management and the Board to take account of changing circumstances. In addition, the Chief Executive
Officer annually certifies to APRA that Senior Management and the Board have identified key risks facing the
consolidated entity. The Board has established systems to monitor those risks, including setting and requiring
adherence to a series of prudential limits; adequate timely reporting processes; and compliance reporting
demonstrating that these risk management systems are operating effectively and are adequate having
regard to the risks they are designed to control.
59
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
C) Market Risk
The predominant market risk the consolidated entity is exposed to is interest rate risk. The consolidated entity is not
exposed to foreign exchange or other price risk.
The consolidated entity’s interest rate risk arises from the net difference in cash flows from long term fixed rate assets
or liabilities which are funded by or invested in floating rate assets or liabilities. Long term fixed rate assets include
loans advanced to members and other investment securities, while long term fixed rate liabilities includes deposits
raised from members and other wholesale funding arrangements. This exposure creates an interest rate risk because
the net balances and cash flows generated from these assets and liabilities are dependent upon movements in
interest rates.
The consolidated entity has established policy limits for the level of interest rate risk. Current policy measures interest
rate risk in terms of the net present value of a basis point (PVBP) movement in interest rates. PVBP measures the net
effect on the fair value of financial instruments for every one basis point (0.01%) change in the interest rate yield
curve. The policy has limits for the amount of movement in the fair value of net assets or liabilities exposed to a
hypothetical basis point variance before the risk requires active management. The limits are placed for specific time
periods together with an overall portfolio limit. The risk is managed by, or a combination of, changes to product
pricing or product terms to change consumer product purchasing preferences, by the use of interest rate swaps or
other derivative instruments, or by the maturity placement of investment securities. When interest rate swaps are used
for the above purpose, the consolidated entity may use hedge accounting.
For the PVBP model the cash flows from financial assets and liabilities are allocated into time buckets based on
contractual repricing except for ‘at call’ transactional accounts. At call transactional accounts are liabilities raised
from members and historically have limited sensitivity to movements in interest rates. The model allocates the portion
of the transactional account balances that is sensitive to movements in interest rates into the less than three months’
time bucket while the remaining portion of transaction account balances that are not sensitive to interest rate
movements are evenly allocated into each time bucket over a five year time horizon. The yield curve used in the
PVBP model is based off the relevant published interbank interest rates.
The following tables set out the consolidated entity’s and Society’s exposure to interest rate risk, measured by the
present value of a basis point change in the yield curve.
PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2014 – CONSOLIDATED
FINANCIAL INSTRUMENTS
Net Exposure ($’s)
LESS THAN 3
MONTHS
3 TO 12
MONTHS
1 TO 3
YEARS
3 TO 5
YEARS
OVER 5
YEARS
TOTAL
7,294
11,532
-19,010
5,906
-1,254
4,468
PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2014 – SOCIETY
FINANCIAL INSTRUMENTS
Net Exposure ($’s)
LESS THAN 3
MONTHS
3 TO 12
MONTHS
1 TO 3
YEARS
3 TO 5
YEARS
OVER 5
YEARS
TOTAL
7,299
11,550
-18,860
6,185
-1,254
4,920
PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2013 – CONSOLIDATED
FINANCIAL INSTRUMENTS
Net Exposure ($’s)
LESS THAN 3
MONTHS
3 TO 12
MONTHS
1 TO 3
YEARS
3 TO 5
YEARS
OVER 5
YEARS
TOTAL
9,022
4,608
-27,623
9,146
-1,610
-6,457
PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2013 – SOCIETY
FINANCIAL INSTRUMENTS
Net Exposure ($’s)
LESS THAN 3
MONTHS
3 TO 12
MONTHS
1 TO 3
YEARS
3 TO 5
YEARS
OVER 5
YEARS
TOTAL
9,022
4,660
-27,355
9,610
-1,610
-5,673
60
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
D) Credit Risk
The consolidated entity’s credit risk predominantly arises from the risk that counter parties will not meet their
contractual obligations with the consolidated entity. The main exposure to credit risk for the consolidated entity is
either loans provided to members or investments made for prudential liquidity needs.
Credit risk exposure for loans is minimised by prudent assessment of each individual loan applicant, obtaining
security for the majority of loans made and where credit risk warrants undertaking credit insurance.
The credit risk policy assesses the credit worthiness of the applicant considering not only the ability to service the
loan but also other factors such as length and stability of employment, asset accumulation and stability of residency.
To facilitate this, a credit risk grading system is used which scores or grades loan applicants based on the above
criteria. Security still remains an important consideration in assessing the granting of credit. The pricing offered to loan
applicants is dependent upon a combination of the loan applicant’s credit risk grade, the security provided and the
reason or purpose for the credit request.
The consolidated entity minimises concentration of credit risk in relation to loans by dealing with a relatively large
number of individual members of the consolidated entity. Exposure to credit risk is limited to the market area that
the consolidated entity participates in. The consolidated entity is active in the retail finance markets of Newcastle,
Hunter Valley, Central Coast, Sydney, South Coast, Central West and North Coast of New South Wales and South East
Queensland. The Society imposes portfolio limits for each loan product and for each credit risk grade. These portfolio
limits seek to limit the consolidated entities exposure to certain products which represent a specific credit exposure
and also to ensure the portfolio is not concentrated in a specific category of credit risk grade loan applicants.
Security for housing loans is in the form of registered mortgage over residential property real estate. Security for
commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for
personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges
against funds held on deposit. Where appropriate, guarantees are also sought from related parties to a loan. No
security is taken for loans via credit cards and some personal loans. Credit risk also arises in relation to financial
guarantees given to certain parties. Such guarantees are secured by a registered mortgage over real estate
property or by a charge over funds held on deposit.
The Society has entered into a number of residential mortgage backed securitisation arrangements. Loans are
equitability assigned to special purpose vehicles. These special purpose vehicles issue commercial notes to note
holders secured by the cash flows arising from the loans. A substantial component of the credit risk has been
transferred to the unit holders. The Society still retains the market risk, operational risk and some credit risk from these
loans. Due to the retention of substantially all the risks and rewards of these loans, the Society and the consolidated
entity continue to recognise these assets as ‘loans and advances’.
The following sets out the carrying value of loans and the associated liabilities. The fair value of the transferred assets
and associated liabilities approximates their carrying value.
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
260,496
419,991
260,496
419,991
261,909
416,516
261,909
423,516
Carrying amount of transferred assets
Loans and advances
Carrying amount of associated liabilities to the transferred assets
Commercial notes
61
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Credit risk exposure for treasury transactions (i.e. investment securities, cash and derivative transactions) to counter
parties is minimised by limiting transactions to pre-approved financial institutions. The consolidated entity also has
policies that limit the amount of credit exposure to individual counter parties and limit portfolio exposures based on
external credit rating agency bands.
The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the
carrying amount of these indicated in the balance sheet except for loans and advances. For loans and advances
the maximum credit risk exposure for the consolidated entity is $3,972M (2013 $3,778M) and for the Society is $3,972M
(2013 $3,778M). For loans that are securitised, credit risk is transferred to a special purpose vehicle (refer Note 1B). This
maximum exposure does not take into account the value of any security.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to the
external credit rating (if available) or the security provided. The following table provides an analysis of credit risk for
financial assets that are neither past due or impaired by either external credit rating or type of security.
Consolidated
Society
2014
2013
2014
2013
$'000
$'000
$'000
$'000
18,916
17,892
18,937
17,877
- A1+/AAA
51,925
25,740
33,465
19,119
- A1/AA+/AA/AA-
45,454
9,034
45,454
9,034
- A2/A+/A/A-
118,143
107,554
118,143
107,553
- A3
–
–
–
–
- Unrated
–
–
–
–
27,803
43,978
461,921
53,062
- A1/AA+/AA/AA-
262,897
280,044
262,189
279,588
- A2/A+/A/A-
235,548
208,480
235,548
208,480
- BBB+
30,237
–
30,237
–
- Unrated
19,957
22,333
19,957
22,333
916
1,189
2,756
1,879
3,546
4,438
3,546
4,438
3,809,891
3,584,937
3,809,891
3,584,937
6,784
29,062
6,784
29,062
- other security
38,896
52,672
38,896
52,672
- no security
24,438
15,565
24,438
15,565
3,547
3,255
4,150
5,527
4,698,898
4,408,507
5,116,312
4,413,460
Financial assets that are neither past due nor impaired
Cash on hand
Cash & cash equivalents – by external credit rating (S&P)
Investment securities – by external credit rating (S&P)
- A1+/AAA
Other receivables (unsecured)
Derivative financial instruments
- A1+/AAA
Loans and advances
- mortgage over residential property security
- mortgage over other property
Other financial assets (unsecured)
62
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
Effect of collateral – all loans where the consolidated entity bears the credit risk
For loans where the consolidated entity bears the credit risk, the carrying value of the loans and the degree of credit
risk involved is shown in the table below. Loans classed as ‘Fully Secured’ are residentially secured loans with either
full mortgage insurance or with a loan to valuation ratio of 80% or less. Loans classed as secured are residentially
secured loans with either partial or no mortgage insurance or a loan to valuation ratio of more than 80% plus
commercial loans secured by non-residential property plus secured consumer loans and secured guarantees. Loans
with no security are unsecured consumer loans or credit cards.
ALL LOANS WHERE ENTITY BEARS THE CREDIT RISK 2014 – CONSOLIDATED
FULLY SECURED
$’000
SECURED
$’000
NO SECURITY
$’000
TOTAL
$’000
3,669,459
213,809
–
3,883,268
Mortgage Over Other Property
–
7,656
–
7,656
Other Security
–
40,124
–
40,124
No Security
–
–
41,450
41,450
3,669,459
261,589
41,450
3,972,498
LOANS
Mortgage Over Residential Property
TOTAL
ALL LOANS WHERE ENTITY BEARS THE CREDIT RISK 2013 – CONSOLIDATED
FULLY SECURED
$’000
SECURED
$’000
NO SECURITY
$’000
TOTAL
$’000
3,575,102
99,140
–
3,674,242
Mortgage Over Other Property
–
31,478
–
31,478
Other Security
–
52,951
–
52,951
No Security
–
–
19,646
19,646
3,575,102
183,569
19,646
3,778,317
LOANS
Mortgage Over Residential Property
TOTAL
ALL LOANS WHERE ENTITY BEARS THE CREDIT RISK 2014 – SOCIETY
FULLY SECURED
$’000
SECURED
$’000
NO SECURITY
$’000
TOTAL
$’000
3,669,459
213,809
–
3,883,268
Mortgage Over Other Property
–
7,656
–
7,656
Other Security
–
40,124
–
40,124
No Security
–
–
41,450
41,450
3,669,459
261,589
41,450
3,972,498
LOANS
Mortgage Over Residential Property
TOTAL
63
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
ALL LOANS WHERE ENTITY BEARS THE CREDIT RISK 2013 – SOCIETY
FULLY SECURED
$’000
SECURED
$’000
NO SECURITY
$’000
TOTAL
$’000
3,575,102
99,140
–
3,674,242
Mortgage Over Other Property
–
31,478
–
31,478
Other Security
–
52,951
–
52,951
No Security
–
–
19,646
19,646
3,575,102
183,569
19,646
3,778,317
LOANS
Mortgage Over Residential Property
TOTAL
Loans that are past due but not impaired
An age analysis of loans that are past due but not impaired is set out in the table below. A loan is considered to be
past due when any payment under contractual terms has been missed. The amount included is the carrying value,
rather than the overdue amount.
LOANS – PAST DUE BUT NOT IMPAIRED 2014 – CONSOLIDATED
LOANS
LESS THAN 3 MONTHS
$’000
3 TO 6 MONTHS 6 MONTHS OR MORE
$’000
$’000
TOTAL
$’000
52,239
14,256
4,699
71,194
Mortgage Over Other Property
678
128
66
872
Other Security
988
131
51
1,170
No Security
16,277
–
–
16,277
TOTAL
70,182
14,515
4,816
89,513
Mortgage Over Residential Property
LOANS – PAST DUE BUT NOT IMPAIRED 2013 – CONSOLIDATED
LOANS
LESS THAN 3 MONTHS
$’000
3 TO 6 MONTHS 6 MONTHS OR MORE
$’000
$’000
TOTAL
$’000
85,521
1,284
2,500
89,305
Mortgage Over Other Property
134
–
–
134
Other Security
225
–
–
225
2,409
–
–
2,409
88,289
1,284
2,500
92,073
Mortgage Over Residential Property
No Security
TOTAL
LOANS – PAST DUE BUT NOT IMPAIRED 2014 – SOCIETY
LOANS
LESS THAN 3 MONTHS
$’000
3 TO 6 MONTHS 6 MONTHS OR MORE
$’000
$’000
TOTAL
$’000
52,239
14,256
4,699
71,194
Mortgage Over Other Property
678
128
66
872
Other Security
988
131
51
1,170
No Security
16,277
–
–
16,277
TOTAL
70,182
14,515
4,816
89,513
Mortgage Over Residential Property
64
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
LOANS – PAST DUE BUT NOT IMPAIRED 2013 – SOCIETY
LOANS
LESS THAN 3 MONTHS
$’000
3 TO 6 MONTHS 6 MONTHS OR MORE
$’000
$’000
TOTAL
$’000
85,521
1,284
2,500
89,305
Mortgage Over Other Property
134
–
–
134
Other Security
225
–
–
225
2,409
–
–
2,409
88,289
1,284
2,500
92,073
Mortgage Over Residential Property
No Security
TOTAL
The coverage provided by collateral held in support of loans that are past due but not impaired is shown in the table
below. The estimated realisable value of collateral held is based on a combination of formal valuations currently held
in respect of such collateral and management’s assessment of the estimated realisable value of collateral held given
its experience with similar types of loans in similar situations and the circumstances peculiar to the subject collateral.
A loan is deemed ‘Fully Secured’ when it is residentially secured with either full mortgage insurance or with a loan
to valuation ratio of 80% or less. ‘Partially Secured’ includes other residentially secured loans not considered ‘Fully
Secured’ and other loans that have a non-residential property security. A loan is classed as ‘Unsecured’ if there is no
security or if the security value is less than the loan carrying amount.
EFFECT OF COLLATERAL – PAST DUE BUT NOT IMPAIRED 2014 – CONSOLIDATED
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
66,306
4,888
–
71,194
Mortgage Over Other Property
688
184
–
872
Other Security
972
198
–
1,170
–
–
16,277
16,277
67,966
5,270
16,277
89,513
LOANS
Mortgage Over Residential Property
No Security
TOTAL
EFFECT OF COLLATERAL – PAST DUE BUT NOT IMPAIRED 2013 – CONSOLIDATED
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
73,666
15,639
–
89,305
Mortgage Over Other Property
–
134
–
134
Other Security
–
225
–
225
No Security
–
–
2,409
2,409
73,666
15,998
2,409
92,073
LOANS
Mortgage Over Residential Property
TOTAL
65
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
EFFECT OF COLLATERAL – PAST DUE BUT NOT IMPAIRED 2014 – SOCIETY
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
66,306
4,888
–
71,194
Mortgage Over Other Property
688
184
–
872
Other Security
972
198
–
1,170
–
–
16,277
16,277
67,966
5,270
16,277
89,513
LOANS
Mortgage Over Residential Property
No Security
TOTAL
EFFECT OF COLLATERAL – PAST DUE BUT NOT IMPAIRED 2013 – SOCIETY
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
73,666
15,639
–
89,305
Mortgage Over Other Property
–
134
–
134
Other Security
–
225
–
225
No Security
–
–
2,409
2,409
73,666
15,998
2,409
92,073
LOANS
Mortgage Over Residential Property
TOTAL
Loans that are impaired
The following table shows the gross amount of impaired loans, along with the provision for impairment and
assessment of the coverage provided by collateral held in support of impaired loans. The classification of a loan as
‘Fully Secured’, ‘Partially Secured’ and ‘Unsecured’ is on the same basis as the loans past due but not impaired.
EFFECT OF COLLATERAL – IMPAIRED LOANS 2014 – CONSOLIDATED
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
Mortgage Over Residential Property
–
2,183
–
2,183
Mortgage Over Other Property
–
–
–
–
Other Security
–
58
–
58
No Security
–
–
735
735
Total
–
2,241
735
2,976
Impairment Provision
–
(346)
(685)
(1,031)
Carrying Amount
–
1,895
50
1,945
LOANS
66
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
EFFECT OF COLLATERAL – IMPAIRED LOANS 2013 – CONSOLIDATED
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
Mortgage Over Residential Property
–
–
–
–
Mortgage Over Other Property
–
1,849
433
2,282
Other Security
–
54
–
54
No Security
–
–
297
297
Total
–
1,903
730
2,633
Impairment Provision
–
(332)
(627)
(959)
Carrying Amount
–
1,571
103
1,674
LOANS
EFFECT OF COLLATERAL – IMPAIRED LOANS 2014 – SOCIETY
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
Mortgage Over Residential Property
–
2,183
–
2,183
Mortgage Over Other Property
–
–
–
–
Other Security
–
58
–
58
No Security
–
–
735
735
Total
–
2,241
735
2,976
Impairment Provision
–
(346)
(685)
(1,031)
Carrying Amount
–
1,895
50
1,945
LOANS
EFFECT OF COLLATERAL – IMPAIRED LOANS 2013 – SOCIETY
FULLY SECURED
$’000
PARTIALLY
SECURED $’000
UNSECURED
$’000
TOTAL
$’000
Mortgage Over Residential Property
–
–
–
–
Mortgage Over Other Property
–
1,849
433
2,282
Other Security
–
54
–
54
No Security
–
–
1,672
1,672
Total
–
1,903
2,105
4,008
Impairment Provision
–
(332)
(2,002)
(2,334)
Carrying Amount
–
1,571
103
1,674
LOANS
67
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
E) Liquidity Risk
The consolidated entity’s liquidity risk arises from the risk that the consolidated entity will encounter difficulties in
financing its obligations associated with financial liabilities.
The consolidated entity manages liquidity risk by maintaining sufficient cash and highly marketable securities to
not only respond to expected cash flow events but also to provide for a range of unexpected cash flow events. The
consolidated entity has established policy limits around the minimum level of liquidity and the quality of liquid assets
that it holds for liquidity management purposes.
The following tables show the contractual maturity of financial liabilities.
FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2014 – CONSOLIDATED ENTITY
FINANCIAL LIABILITIES
Payables and other accruals
Deposits
Derivatives
Other financial liabilities
TOTAL
Unrecognised loan commitments
LESS THAN
3 MONTHS
$’000
3 TO 12
MONTHS
$’000
1 TO 3
YEARS
$’000
3 TO 5
YEARS
$’000
OVER 5
YEARS
$’000
TOTAL
$’000
7,552
–
–
–
–
7,552
3,425,553
747,003
222,865
28,170
–
4,423,591
93
37
–
–
–
130
2,410
47,467
86,901
49,472
65,469
251,719
3,435,608
794,507
309,766
77,642
65,469
4,682,992
40,466
–
–
–
–
40,466
FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2013 – CONSOLIDATED ENTITY
FINANCIAL LIABILITIES
Payables and other accruals
Deposits
Derivatives
Other financial liabilities
TOTAL
Unrecognised loan commitments
LESS THAN
3 MONTHS
$’000
3 TO 12
MONTHS
$’000
1 TO 3
YEARS
$’000
3 TO 5
YEARS
$’000
OVER 5
YEARS
$’000
TOTAL
$’000
9,677
–
–
–
–
9,677
3,317,721
641,247
192,647
33,443
–
4,185,058
120
124
94
41
–
379
7,876
225,314
59,627
37,026
61,766
391,609
3,335,394
866,685
252,368
70,510
61,766
4,586,723
56,950
–
–
–
–
56,950
68
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2014 – SOCIETY
FINANCIAL LIABILITIES
Payables and other accruals
Deposits
Derivatives
Other financial liabilities
TOTAL
Unrecognised loan commitments
LESS THAN
3 MONTHS
$’000
3 TO 12
MONTHS
$’000
1 TO 3
YEARS
$’000
3 TO 5
YEARS
$’000
OVER 5
YEARS
$’000
TOTAL
$’000
7,551
–
–
–
–
7,551
3,428,475
747,003
222,865
28,170
–
4,426,513
93
37
–
–
–
130
34,945
118,188
218,259
125,924
171,923
669,239
3,471,064
865,228
441,124
154,094
171,923
5,103,433
40,466
–
–
–
–
40,466
FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2013 – SOCIETY
FINANCIAL LIABILITIES
Payables and other accruals
Deposits
Derivatives
Other financial liabilities
TOTAL
Unrecognised loan commitments
69
LESS THAN
3 MONTHS
$’000
3 TO 12
MONTHS
$’000
1 TO 3
YEARS
$’000
3 TO 5
YEARS
$’000
OVER 5
YEARS
$’000
TOTAL
$’000
8,976
–
–
–
–
8,976
3,322,339
641,247
192,647
33,443
–
4,189,676
120
124
94
41
–
379
11,351
225,314
59,627
37,026
61,766
395,084
3,342,786
866,685
252,368
70,510
61,766
4,594,115
56,950
–
–
–
–
56,950
Annual Report for the Year Ended 30 June 2014
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
F) Fair Value Measurements
The following tables present the consolidated and the Society’s assets and liabilities measured and recognised at fair
value as at the reporting date.
FINANCIAL ASSETS AND LIABILITIES – CONSOLIDATED ENTITY
FAIR VALUE MEASUREMENTS
CONSOLIDATED CONSOLIDATED
2014
2013
$’000
$’000
SOCIETY
2014
$’000
SOCIETY
2013
$’000
ASSETS
LEVEL 1
Interest rate swap contracts – cash flow hedges
–
–
–
–
Interest rate swap contracts – at fair value
–
–
–
–
3,228
2,934
3,228
2,934
3,546
4,438
3,546
4,438
Interest rate swap contracts – at fair value
–
–
–
–
Equity financial assets
–
–
–
–
Interest rate swap contracts – cash flow hedges
–
–
–
–
Interest rate swap contracts – at fair value
–
–
–
–
320
320
923
2,592
7,094
7,692
7,697
9,964
Interest rate swap contracts – cash flow hedges
–
–
–
–
Interest rate swap contracts – at fair value
–
–
–
–
130
379
130
379
–
–
–
–
Interest rate swap contracts – cash flow hedges
–
–
–
–
Interest rate swap contracts – at fair value
–
–
–
–
130
379
130
379
Equity financial assets
LEVEL 2
Interest rate swap contracts – cash flow hedges
LEVEL 3
Equity financial assets
TOTAL ASSETS
LIABILITIES
LEVEL 1
LEVEL 2
Interest rate swap contracts – cash flow hedges
Interest rate swap contracts – at fair value
LEVEL 3
TOTAL LIABILITIES
70
Greater Building Society Ltd
Notes to and Forming Part of the Financial Statements
for the Year Ended 30 June 2014
The fair value of financial assets and liabilities traded in active markets (such as publicly traded equity financial
assets) is based on quoted market prices at the end of the reporting period. The quoted market price used for
financial assets held by the consolidated entity is the current bid price. These instruments are included in level 1.
The fair value of financial assets and liabilities that are not traded in an active market (for example over-the-counter
derivatives) is determined using valuation techniques. The consolidated entity uses a variety of methods and
makes assumptions that are based on market conditions existing at the end of each reporting period. The fair
value of interest rate swaps is calculated as the present value of estimated future cash flows. These instruments
are included in level 2.
During the financial reporting period no assets or liabilities were transferred between categories.
Level 3 financial assets and liabilities are investments in non-listed entities, including controlled entities as set out
in Note 13. These investments are illiquid and include non-traded shares and units in unit trusts where there are no
reliable inputs that can be used to estimate a fair value. The Society therefore measures these investments at cost
which is supported by the net tangible assets of the entities invested in exceeding the cost value of the shares. The
carrying value of level 3 financial assets and liabilities has not changed during the financial year. However, Parkwood
Unit Trust, which has a value of $1,669,000, was wound up in June 2014. 32. CAPITAL MANAGEMENT
The consolidated entity has established a Capital Management Policy and Internal Capital Adequacy Assessment
Process (ICAAP) Summary Statement. Their objectives are to ensure that the consolidated entity and the Society both
maintain a level of capital that is:
• consistent and appropriate to the risks the consolidated entity and the Society is exposed to from its activities;
• sufficient to provide a buffer to absorb any unanticipated losses from its activities and, in the event of any major
problem, enable it to continue operating while the problem is being addressed; and
• sufficient to provide depositors and creditors confidence that the consolidated entity and the Society will continue
to honour its obligations to them.
The above policies are consistent with the requirements of the Prudential Standards issued by the Australian
Prudential Regulation Authority (APRA).
The consolidated entity and the Society are required by APRA to measure and report capital on a risk weighted basis
in accordance with the requirements of the Prudential Standards (known as ‘capital adequacy’). APRA requires
the consolidated entity and Society to maintain minimum levels of capital to risk weighted assets. The consolidated
entity and Society have met the capital requirements imposed by the Prudential Standards throughout the current
and previous financial year. The Board has a policy of imposing an additional level of capital above the minimum
required by APRA.
Capital adequacy is measured as a ratio of capital to risk weighted assets. Capital is split into two tiers. Common
Equity Tier 1 is generally retained earnings, a portion of the property reserves, reserve balances available for general
use and other regulatory adjustments relating to items that are included in equity but are treated differently for
capital adequacy purposes. It excludes the fair value assets through other comprehensive income reserve.
Tier 2 capital includes qualifying subordinated liabilities and the credit loss reserve.
The Society and consolidated entity has adopted the standardised approach for measuring credit and operational
risk. Credit risk is measured based on allocating weightings to assets that seek to reflect the varying levels of risk
associated to on balance sheet assets and off balance sheet exposures. Operational risk is measured based on risk
weighting the investment and lending portfolios, plus each significant non-interest income source.
The consolidated entity capital results can be viewed at:
https://www.greater.com.au/About-Us/Regulatory-Disclosures/Regulatory-Disclosures.aspx
These results are unaudited, but are consistent with the consolidated entity’s prudential reporting requirements.
33. COMPANY DETAILS
Greater Building Society Ltd (ABN 88 087 651 956) is a company limited by shares and guarantee, incorporated and
domiciled in Australia. The registered office and principal place of business is:
Greater Building Society Ltd | 103 Tudor Street | Hamilton NSW 2303
71
The financial report was authorised for issue by the Directors on 23rd day of September 2014. The Directors have the
power to amend and reissue the financial report.
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