credit union south prospectus

Transcription

CREDIT UNION SOUTH
(trading as NZCU South)
PROSPECTUS
- relating to the offer of debt securities
dated 18 November 2014 and amended by Memorandum of Amendments to Registered
Prospectus dated 19 March 2015 and 24 July 2015
CREDIT UNION SOUTH
Having its registered office at:
Level 1, Public Trust Building
442 Moray Place, Dunedin 9016
Ph 0800 86 56 36 Fax (03) 477 6910
Email: enquiriesnzcusouth.co.nz
Website: WWW. nzcusouth . co . nz
CRE36369 4442528.1
INDEX
Content
Page
DIRECTORY
1
KEY INFORMATION SECTION
2
1.
MAIN TERMS OF OFFER
3
1.1
Name and address of the Credit Union
3
1.2
Description of the activities of the Credit Union
4
1.3
The Offer
5
1.4
Shares
5
1.5
Share Accounts
10
1.6
Loans
14
2.
DETAILS OF REGISTRATION OF CREDIT UNION
15
2.1
Registration
15
2.2
Rules of the Credit Union
15
2.3
Register of Members
16
2.4
Other statutory information
16
3.
DIRECTORATE AND ADVISERS
16
3.1
Directors and officers
16
3.2
Trustees
16
3.3
Audit comnn ittee
17
3.4
Auditors
17
3.5
Solicitors
17
3.6
Prudential Supervisor
18
3.7
Bankers
18
4.
RESTRICTIONS ON DIRECTORS' POWERS
18
5.
MATERIAL CONTRACTS
18
5.1
Deed of Modification to Trust Deed dated 26 November 2012
18
5.2
Deed of Modification to Trust Deed dated 21 October 2014
18
6.
PENDING PROCEEDINGS
18
7.
RANKING OF SECURITIES
18
8.
DETAILS OF TRUST DEED AND OTHER RESTRICTIONS ON THE CREDIT
UNION
19
Trust Deed
19
8.1
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8.2
Prudential Supervisor's statement
23
8.3
Other restrictions on the Credit Union
24
9.
OTHER TERMS OF OFFER AND SECURITIES
24
9.1
Risks
24
9.2
Securitisation
30
9.3
Guarantors
30
9.4
Surety and insurance
30
9.5
Other terms
31
10.
PLACES OF INSPECTION OF DOCUMENTS
31
10.1
Credit Union
31
10.2
Companies Office
31
11.
OTHER MATERIAL MATTERS
32
11.1
Securities Act (Credit Unions) Exemption Notice 2010
32
11.2
Financial Markets Conduct Act 2013
32
11.3
Credit Rating
32
11.4
FSCL Dispute Resolution Scheme
34
11.5
Not a registered bank
34
11.6
NZACU dispute
34
11.7
No other material matters
35
12.
SUMMARY FINANCIAL STATEMENTS
35
13.
FINANCIAL STATEMENTS
35
14.
ACQUISITION OF BUSINESS OR SUBSIDIARY
35
15.
DIRECTORS' STATEMENT
35
16.
INDEPENDENT AUDITORS' REPORT
35
INDEX OF MATTERS REQUIRED TO BE DISCLOSED BY SCHEDULE 2 TO THE
SECURITIES REGULATIONS 2009
GLOSSARY
APPENDIX ONE — SUMMARY FINANCIAL STATEMENTS
APPENDIX TWO — AUDITED ANNUAL FINANCIAL STATEMENTS
APPENDIX THREE — INDEPENDENT AUDITORS' REPORT
APPENDIX FOUR — SHARE ACCOUNTS
APPENDIX FIVE — PRUDENTIAL SUPERVISOR'S STATEMENT
APPENDIX SIX — DIRECTORATE
APPENDIX SEVEN — DIRECTOR AND EXECUTIVE OFFICERS DISCLOSURES
CRE36369 4442528.1
DIRECTORY
CREDIT UNION:
Credit Union South
442 Moray Place
Dunedin 9016
PO Box 6294
Dunedin 9059
Phone (03) 0800 86 56 36
Fax
(03) 477 6910
SOLICITORS TO THE CREDIT UNION:
Lane Neave Lawyers
137 Victoria Street
Christchurch 8013
PO Box 13149
Christchurch 8141
Phone (03) 379 3720
Fax
(03) 366 9066
PRUDENTIAL SUPERVISOR:
Trustees Executors Limited
Level 7
51 Shortland Street
Auckland 1010
PO Box 4197
Auckland 1140
Phone (09) 308 7100
Fax
(09) 308 7101
AUDITORS:
PricewaterhouseCoopers
Westpac Building
106 George Street
Dunedin 9016
PO Box 5848
Dunedin 9058
Phone (03) 470 3600
Fax
(03) 470 3601
LEGISLATION:
All legislation referred to in
this Prospectus can be viewed
at wvvvv.leciislation.qovt.nz
PLACE WHERE REGISTER OF
MEMBERS KEPT:
Credit Union South
442 Moray Place
Dunedin 9016
CRE36369 4442528.1
BANKERS:
Westpac New Zealand Limited
396 George Street
PO Box 6204
Dunedin 9059
Phone (03) 477 8197
Fax
(03) 477 2188
New Zealand Association of Credit Unions
Central Fund Facility
Level 3,
25 Teed Street
Auckland 1023
PO Box 9582
Auckland 1149
Phone (09) 309 9551
Fax
(09) 309 9571
COMPANIES OFFICE:
Ministry of Business, Innovation and
Employment
Northern Business Centre
Level 18, ASB Centre
135 Albert Street
Auckland 1010
Private Bag 92061
Victoria Street West
Auckland 1142
Phone 0508 266 726
Fax
(09) 912 7787
REGISTRAR OF FINANICAL SERVICE
PROVIDERS:
Registrar of Financial Service Providers
Companies Office (see above)
FINANCIAL MARKETS AUTHORITY:
Level 5, Ernst & Young Building
2 Takutai Square, Britomart
Auckland 1010
Phone (09) 300 0400
Fax
(09) 300 0499
RESERVE BANK OF NEW ZEALAND
2 The Terrace
Wellington 6011
PO Box 2498
Wellington 6140
Phone (04) 472 2029
FINANCIAL SERVICES COMPLAINTS
LIMITED
PO Box 5967
Lambton Quay
Wellington 6145
Phone 0800 347 257
2
KEY INFORMATION SECTION
The following information is a necessarily brief summary of information that will be important in
making a decision to invest in the Credit Union. It is intended to assist you in reading this
Prospectus only and is not a substitute for the information contained in the Prospectus.
The Offer of the shares by the Credit Union is an offer of debt securities under the Securities
Act 1978.
Credit Union
The Credit Union is a financial co-operative offering financial services to its customers, who are
called Members. Members hold their shares in share accounts operated by the Credit Union. The
Members are the owners of the Credit Union and they elect its board of directors.
The Credit Union's assets are legally owned by the trustees, who are elected by the Members of
the Credit Union. The trustees hold the Credit Union's assets for the benefit of the Credit Union
and its Members. The Credit Union has appointed Trustees Executors Limited to act as statutory
trustee for the Members (referred to as "Prudential Supervisor" in this Prospectus), in accordance
with the Securities Act 1978. For more information concerning the Prudential Supervisor's role,
please refer to paragraph 3.6 of this Prospectus.
Offer Terms
•
This Prospectus provides important information concerning an offer of shares in the Credit
Union.
•
Shares are issued at $1.00 and must be paid in cash.
•
Shareholders in the Credit Union are termed "Members".
•
Shares are not transferrable. For more information concerning what happens to a
Member's shares on his or her death, please refer to paragraph 1.4 ("Transfer of shares")
of this Prospectus.
•
While shares are usually available for withdrawal on call, the Friendly Societies and Credit
Unions Act 1982 provides that a 60 day notice period for withdrawals may be required (the
terms and conditions of the share accounts may also provide that withdrawals can only be
made on maturity without forgoing some of the interest).
•
No person or entity guarantees the repayment of the shares or the payment of any returns
on the shares.
Fees and Charges
In addition to the costs of the shares, Members are required to pay fees and charges on the Share
Accounts operated by them, please refer to Appendix Four of this Prospectus for more details.
Benefits
The rate of return on shares depends on the Credit Union's profitability, and the type of
share account you choose to hold your shares in and the terms and conditions of that
account (including, for example, the current rate of return on that account and the term of
investment).
Members have the right to vote on certain matters relating to the Credit Union (e.g.
election of directors). On every matter to be determined by a vote, Members will be
entitled to one vote each, irrespective of the number of shares they hold.
Risks
•
The principal risks relevant to the Offer relate to the risk of the Credit Union becoming
insolvent; general market risk, credit risk in relation to members, security position risk in
relation to loans and competition/geographical location risk. It is possible that Members
may not get returns on their shares and that the value of shares could fall below $1.00
should such risks materialise. For more information concerning the risks involved with this
Offer, please refer to paragraph 9.1 of this Prospectus.
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3
1.
1.1
MAIN TERMS OF OFFER
Name and address of the Credit Union
Name of Credit Union: Credit Union South (trading as NZCU South) (Credit Union)
Registered Office:
Level 1, Public Trust Building, 442 Moray Place, Dunedin
9016
Postal Address:
PO Box 6294, Dunedin 9059
Email Enquires:
enouiriesRnzcusouth.co.nz
Credit Union Service Centres
Otago Region
Dunedin — Central
Service Centre
Level 1, Public Trust Building, 442 Moray Place,
Dunedin 9016
Phone: 0800 86 56 36 Fax: (03) 447 6910
Hours: 8.00am — 5.00pm Mon — Fri
Dunedin
26 Filleul Street, Dunedin 9016
Phone: (03) 477 1473 Fax: (03) 477 6910
Hours: 9.00am — 5.00pm Mon & Fri,
9.30am — 5.00pm Tues,
9.00am — 6.00pm Wed & Thurs
Oamaru
4/6 Coquet Street, Oamaru 9400
Phone: (03) 434 2240 Fax: (03) 434 2159
Hours: 9.00am — 5.00pm Mon, Wed, Thurs & Fri,
9.30am — 5.00pm Tues
Southland Region
Invercargill
52 Don Street, Invercargill 9810
PO Box 1437, Invercargill 9840
Phone: (03) 211 3950 Fax (03) 211 3952
Hours: 9.00am — 5.00pm Mon, Tues, Thurs & Fri,
9.30am — 5.00pm Wed,
Gore
82 Main Street, Gore 9710
PO Box 342, Gore 9740
Phone: (03) 208 3721 Fax: (03) 208 1173
Hours: 9.00am — 5.00pm Mon - Fri
Canterbury Region
Christchurch — Hamby
Branch
Shop 125, The Hub, Hornby Mall, 418 Main South
Road, Hornby, Christchurch 8042
PO Box 16436, Hornby, Christchurch
Phone: (03) 375 7200
Fax: (03) 344 6371
Hours: 9.00am — 5.00pm Mon, Thurs & Fri,
9.30am — 5.00pm Tues,
9.00am — 6.00pm Wed
Christchurch —
CRE36369 4442528.1
409 Colombo Street, Corner Colombo and
4
Sydenham Branch
Wordsworth Streets, Sydenham, Christchurch 8023
PO Box 7010, Sydenham, Christchurch 8240
Phone: (03) 365 0420 Fax (03) 367 2809
Hours: 9.00am — 5.00pm Mon, Wed, Fri,
9.30am — 5.00pm Tues,
9.00am — 6.00pm Thurs
Timaru
33 Canon Street, Timaru 7910
PO Box 305, Timaru 7940
Phone: (03) 688 9514 Fax: (03) 688 9367
West Coast Region
Greymouth
34 Mackay Street, Greymouth 7805
Phone: (03) 768 0184 Fax: (03) 768 0179
Nelson Region
Nelson
Shop 2A, 126 Trafalgar Street, Nelson 7010
PO Box 316, Nelson 7040
Phone: (03) 539 1700 Fax: (03) 548 9822
Hours: 9.00am — 5.00pm Mon, Tues, Thurs & Fri,
9.30am — 5.00pm Wed
Richmond
Shop 64, Richmond Mall, 212 Queen Street,
Richmond 7020
Phone: (03) 539 1700 Fax: (03) 544 2432
Hours: 9.00am — 5.00pm Mon - Thurs,
9.30am — 5.00pm Fri
1.2
Description of the activities of the Credit Union
The Credit Union is a financial co-operative registered as a credit union under the
Friendly Societies and Credit Unions Act 1982 (Act). The objectives of the Credit
Union are the promotion of thrift amongst its Members by the accumulation of their
savings, the use and control of the Members' savings for their mutual benefit, the
training and education of the Members in the wise use of money and in the
management of their financial affairs and, at the discretion of the Credit Union and as
a minor adjunct to its other objects, the welfare of its Members and the making of
donations for charitable, cultural, benevolent or philanthropic purposes.
The Credit Union's primary activity over the five years preceding the date this
Prospectus as delivered to the Registrar of Financial Service Providers for
registration has been to provide a co-operative savings facility for Members to form a
loan fund.
The principal assets of the Credit Union are the loan pool (including mortgage
advances to customers and finance receivables), deposits and other investment
securities, cash and cash equivalents, leasehold improvements, fixtures and fittings,
computer equipment and motor vehicles. The principal assets of the Credit Union are
used solely for furthering its objects described above. The principal assets are not
subject to obligations in favour of another person that modify or restrict the Credit
Union's ability to deal with the assets, other than as provided in the Trust Deed, which
is detailed at paragraph 8.1 and as provided in the Agency Banking and Card
CRE36369 4442528.1
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Services Exhibit between the Credit Union and NZACU and the Managed Services
Agreement with Fuji Xerox New Zealand Limited, which is explained further in
paragraph 7.
At the date of this amended Prospectus, the Credit Union has a Standard & Poor's
local currency (New Zealand dollar) credit rating of BB/Negative. This is a long-term
issuer credit rating of BB with a Negative Outlook. For more information about this
credit rating see paragraph 11.3.
1.3
The Offer
This Prospectus details an offer to subscribe for $1 fully paid-up redeemable shares
(shares) in the Credit Union (Offer). The Offer is made by the Credit Union to a
section of the public, being persons who meet the following membership criteria:
(a)
any person residing or working in New Zealand, including any such person
aged 16 years or younger;
(b)
any charitable entity as defined in the Charities Act 2005; and
(c)
any incorporated society registered under the Incorporated Societies Act
1908,
(Membership Criteria).
Shareholders in the Credit Union are termed "members" (Members). The Credit
Union offers prospective and existing Members the ability to subscribe for shares in
the Credit Union. A prospective member is a person who meets the Membership
Criteria but does not yet have shares in the Credit Union (Prospective Members).
The terms of the shares are described in detail at paragraph 1.4. A Member's shares
must be held in one or more of the Share Accounts offered by the Credit Union, which
are described at paragraph 1.5.
The Offer of the shares by the Credit Union is an offer of debt securities and is
subject to the terms of the Securities Act 1978 and Part Two of the Financial Markets
Conduct Act 2013. The Credit Union has appointed Trustees Executors Limited
(Prudential Supervisor) as statutory trustee of the Offer under this Prospectus for
the purposes of the Securities Act 1978. The Prudential Supervisor's appointment
and the parties' respective rights and obligations are recorded in a Trust Deed
entered into by the parties, dated 7 February 2001, as amended by a deed of
modification to the Trust Deed dated 15 October 2002, a deed of modification to the
Trust Deed dated 19 November 2010, a deed of modification to the Trust Deed dated
26 November 2012 and a deed of modification to the Trust Deed dated 21 October
2014 (together the Trust Deed) and registered with the Registrar of Financial Service
Providers. Please refer to paragraph 8.1 for further information about the Trust Deed.
1.4
Shares
Members contribute to the Credit Union by way of shares that make up the capital of
the Credit Union.
Minimum subscriptions
The minimum number of shares that a Member can subscribe for in one transaction is
one fully-paid up share at $1.
Minimum shareholding
Each Member must hold a minimum of one fully paid-up share in the Credit Union, or
such higher number as may be determined from time to time by the board of the
Credit Union (Board) provided the minimum number does not exceed ten fully paidup shares. A person will cease to be a Member of the Credit Union if that person fails
to hold the minimum number of fully paid-up shares in the Credit Union.
CRE36369 4442528.1
6
Maximum shareholding
The maximum amount of shares which may be held by any one Member shall be
fixed by the Board from time to time, in accordance with the Rules and the Trust
Deed. At the date of the Prospectus, the Board has fixed the maximum amount of
shares which may be held by any one Member at $500,000 without prior approval of
the Board to exceed this amount.
Joint shareholding
Shares may be held by two or more Members jointly. For the purposes of the Act, the
person first named in the Credit Union's ledger will be deemed to be the Member to
whom the share was allotted and who will have the sole vote in respect of that joint
shareholding in any meeting of the Credit Union's Membership. Refer to "Meetings of
Members and voting rights" below for further information on voting.
Applications for shares
Initial application for shares (Prospective Members)
A Prospective Member's initial application to subscribe for shares must be made on
the Credit Union's standard application form, which is available on request from any
of the Credit Union's service centres.
A Prospective Member's application form, payment for his or her initial share
subscription, and evidence of identification must be presented in person by the
Prospective Member at any of the Credit Union's service centres.
The Credit Union will only accept applications from Prospective Members who meet
the Membership Criteria and can provide appropriate evidence of identification.
The Credit Union reserves the right to accept or decline a Prospective Member's
application without giving any reason for its decision.
Subsequent applications for shares (Members)
A Member's initial application form in respect of an Account (above), once accepted,
governs his or her subsequent subscriptions for shares into that Account. All
payments received by the Credit Union from or for the Account of a Member are
deemed to be an application by that Member to subscribe for additional shares in that
Account in the amount of the payment received.
Payment for shares
The shares are of a fixed amount, being $1, and cannot be allotted to a Prospective
Member or Member until fully paid-up in cash. Subscriptions for shares not in whole
dollar amounts are credited to the Member's account and are deemed to be an
advanced payment on a subscription for an additional share and the Member will be
liable for the unpaid portion of that share.
Subscriptions for shares are payable in the manner required by the Credit Union,
which may include payment in cash or by way of personal or bank cheque, direct
credit, automatic payment, salary or wage deduction or as otherwise agreed in writing
by the Credit Union. Many businesses will deduct a Member's payments directly from
his or her salary or wages on request and direct credit the payment to his or her
Share Account(s). This arrangement may be put in place by the Credit Union with a
business, with their prior agreement, if Members so request.
The shares issued pursuant to this Prospectus rank equally with all other shares
issued by the Credit Union.
Meetings of Members and voting rights
An annual general meeting of Members (AGM) must be held no later than 30
September each year at such time and place as the Board may prescribe.
CRE36369 4442528.1
7
A special general meeting of Members (SGM):
(a)
must be called by the chairperson of the Credit Union, on application of at
least 100 Members, to consider the business proposed in such application;
(b)
may be called by resolution of the directors, the trustees and/or the audit
committee of the Credit Union; and/or
(c)
may be called by the Prudential Supervisor to raise and discuss any issue
relating to the administration of the affairs of the Credit Union.
On every matter to be determined by a vote of Members, each Member is entitled to
one vote only, irrespective of the number of shares he or she holds and whether the
shares are held jointly with any other person. For jointly held shares, the person first
named on that account will have the sole vote in respect of that shareholding.
Matters on which Members may vote at the Credit Union's AGM or at an SGM
(together General Meetings) are the appointment of trustees, confirmation of the
appointment of the auditor, and any amendment to the rules of the Credit Union
(Rules). The appointment of directors will be decided by ballot (either postal or
electronic as approved by the Board) and adopted at the AGM. For further
information about the Rules please see paragraph 2.2.
A Member that is a charitable entity or an incorporated society may appoint, by notice
in writing, a representative to attend and vote (on behalf of the entity or society) at a
General Meeting. Such representative shall be entitled to vote on behalf of the entity
or society, provided:
(a)
that appointment is made by written notice;
(b)
a copy of that notice is delivered to the Credit Union not less than 24 hours
before the stated commencement time of the relevant meeting;
(c)
the notice has not expired (i.e. its term has not passed); and
(d)
the notice relates to the General Meeting at which the representative is
attending and voting.
The Rules do not otherwise allow a Member to vote by proxy. This means that a
Member who is a natural person cannot appoint a proxy to vote on his or her behalf.
Statement of shareholding
The Credit Union does not issue share certificates to Members. All deposits to, and
withdrawals from, a Member's Share Account(s) will be entered in the Member's
Share Account(s).
The Credit Union will, on request and not less than every six months during the
period of Membership, forward a statement of account to each Member of his or her
shareholding in the Credit Union. Members may register to receive statements by
email on a more frequent basis. Additional paper statements will incur a fee as set
out in Appendix Four.
A Member may use the Credit Union's automated telephone service, secure internet
service (including smartphone application) or cellular TXT service to establish the
balance of his or her Share Account(s). A Member must obtain a log-in identification
and password from the Credit Union before using the automated telephone service or
secure internet service for the first time. A Member must register with the Credit
Union for the use of the cellular TXT service. These automated services are
generally available 24 hours a day, seven days a week.
CRE36369 4442528.1
Transfer of shares
Shares in the Credit Union are not transferable except where a Member has
nominated in writing that a person is to receive his or her shareholding in the Credit
Union on the Member's death, or any other monies payable by the Credit Union to
him or her, at that time. However, any such nomination can only provide that a
person receive that part of the Member's shareholding or monies payable by the
Credit Union up to a maximum of $2,000. Furthermore, to be legally enforceable, any
such nomination must be signed by the Member and delivered or sent to the
registered office of the Credit Union, or made in the register of Members kept at the
Credit Union's registered office. Please refer to paragraph 2.3 for a further
explanation of the register of Members.
If a Member purports to transfer more than the $2,000 maximum then that will not
affect the transfer of the first $2,000, however the remainder of the sum purported to
be transferred will be dealt with in accordance with the details set out under "Death or
bankruptcy" below.
Withdrawal from Membership
A Member may withdraw from Membership of the Credit Union at any time.
Following a Member's withdrawal from Membership, the Credit Union must pay-out
the Member in accordance with the process set out at under the heading "Pay-outs"
below.
Death or bankruptcy
When a Member dies, the following people will be the only persons recognised by the
Credit Union as having any title to the deceased Member's interest in the shares:
(a)
the survivor or survivors (where the deceased was a joint holder of the
shares); or
(b)
the executors/administrators of the deceased's estate where the deceased
was the sole holder of the shares, but only for the purpose of allowing them to
withdraw the shares, as set out below, to pass onto the beneficiaries of the
estate and not for the purpose of retaining the shares or transferring the
shares to any beneficiary.
However, neither of the above will apply to the extent that the deceased has validly
transferred his or her shares to a nominated person in accordance with the procedure
set out under the heading "Transfer of shares" above.
In the case of the death of a joint holder of the shares his or her estate shall remain
liable in respect of any share which has been jointly held by that Member with other
persons.
Where a sole holder of shares becomes bankrupt, the Credit Union must pay-out the
official assignee any funds which exceed the amount owing to the Credit Union.
In either death or bankruptcy the Credit Union must make payments in accordance
with the process set out under the heading "Pay-outs" below. The Board may require
any person who is not the Member to produce such evidence as the Board may
require before making payment to a person who is not the Member.
Non-Qualifying Members
Should a Member cease to meet the Membership Criteria (see paragraph 1.3), then
that Member will be deemed to be a "non-qualifying member" for so long as he or she
does not meet those criteria (Non-Qualifying Member).
A Non-Qualifying Member may, subject to the provisions of the Act, the Rules and the
Trust Deed, purchase shares and receive loans. A loan to a non-qualifying member
may not exceed the shares held by that Member.
CRE36369 4442528.1
9
The number of Non-Qualifying Members must not exceed 10% of the total
Membership of the Credit Union.
If the number of Non-Qualifying Members exceeds 10% of the total Membership of
the Credit Union, the Rules authorise the Board to terminate the Membership of as
many Non-Qualifying Members as is necessary to reduce that number to the required
level. In exercising this power, the Board will:
(a)
terminate the Membership of those Non-Qualifying Members it considers to
have had the least involvement in the Credit Union; or
(b)
if it is unable to draw such a distinction, terminate the Membership of those
Non-Qualifying Members who are selected by ballot, conducted from a group
of Non-Qualifying Members selected by the Board, as having had the least
involvement in the Credit Union.
Following the termination of a Non-Qualifying Member's Membership, the Credit
Union must pay-out the Member in accordance with the process set out under the
heading "Pay-outs" below.
Expulsion from membership
A Member may be expelled from membership if authorised by the Chief Executive
Officer of the Credit Union (CEO), such expulsion to be confirmed by a majority vote
of the Board at its next available meeting, if, in the CEO's or the Board's opinion, that
Member is guilty of conduct which is derogatory or otherwise prejudicial to the
interests of the Credit Union.
Following a Member's expulsion, the Credit Union must pay-out the Member in
accordance with the process set out under the heading "Pay-outs" below.
Pay-outs
When the Credit Union is required to pay-out a Member as detailed above (following
withdrawal from Membership, death or bankruptcy, termination of a Non-Qualifying
Member's membership or expulsion from Membership), the Credit Union will pay the
Member all amounts paid-up on shares by the Member, plus any returns owing to the
Member at the time of the pay-out, but only as funds become available to the Credit
Union and only after deducting all amounts due from the Member to the Credit Union.
The Credit Union will make this pay-out by cheque or direct credit to a nominated
bank account.
Please refer to paragraph 1.5 ("Withdrawals") for how withdrawals may be made and
the terms and conditions applicable to withdrawals.
Disputes
Any dispute or complaint between a Member and the Credit Union, including disputes
as to continuation of Membership, will, on application to the Credit Union, be
considered and resolution sought in accordance with the Rules. The Credit Union
keeps a register of complaints received. In the event that the dispute or complaint
cannot be resolved to the satisfaction of the Member, the Member may apply to
Financial Services Complaints Limited (FSCL) for a ruling that will be binding on both
parties. Refer to paragraph 11.4 for further information on FSCL's Dispute Resolution
Scheme.
Investigation
Application may be made to the Registrar of Friendly Societies and Credit Unions
(Registrar) for an investigation into the affairs of the Credit Union, on application of at
least 200 Members.
CRE36369 4442528.1
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1.5
Share Accounts
A Member's shareholding must be held in one or more of the Share Accounts
operated by the Credit Union. Details of the Share Accounts at the date of this
Prospectus, including the terms and conditions of each, the rates of return offered at
the time of subscription (or how those rates may be calculated), the minimum amount
of shares required to be held, the terms of the investments, the timing of repayment
and the methods of withdrawal, are generally set out below and in more detail in
Appendix Four.
A Member must nominate in writing the Share Account(s) in which his or her
shareholding is/are to be held. Each Share Account may offer differing terms and
conditions as to the:
(a)
rate of return (if any);
(b)
calculation of returns;
(c)
frequency of payment of returns;
(d)
fees and charges;
(e)
minimum and/or maximum shareholding (if any);
minimum and/or maximum term of investment (i.e. its maturity date) (if any);
(g)
methods of withdrawal; and
(h)
other terms and conditions,
as detailed in Appendix Four (Terms and Conditions).
Variations to Term and Conditions
The Board may (subject to any restriction in the Act, the Rules, the Trust Deed, or
otherwise at law) vary any of the Terms and Conditions of any Share Account by
notice in the Credit Union's newsletter, which is distributed to all Members. The
variation will not take effect until after such notice has been given.
Types of Share Accounts
Term Share Accounts
It is the Board's intention that:
(a)
shares placed in a Term Share Account for 12 months or longer will earn a
regular, periodic return at the rate and time specified in the account
application form; and
(b)
shares placed in a Term Share Account for less than 12 months will earn a
return at the rate of return specified in the account application form, which will
be payable on maturity.
Please refer to Appendix Four for details of the Terms and Conditions for Term Share
Accounts at the date of this Prospectus.
On-Call and Notice of Withdrawal Accounts
It is the Board's intention that shares placed in an On-Call or a Notice of Withdrawal
Account will, subject to the Board's absolute discretion to vary the rate of return,
receive a variable monthly or annual return at the rate of return and frequency
applicable to that Account on any given month (as set by the Board from time to time
at its absolute discretion). Some On-Call and Notice of Withdrawal Accounts are
transactional accounts and may not earn a return (at the date of this Prospectus
CRE36369 4442528.1
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those accounts are BillPay Account, AutoPay Account, Money Management Account
and Seasonal Saver Account).
At the date of this Prospectus the following On-Call and Notice of Withdrawal
Accounts are offered by the Credit Union: Everyday Account, BillPay Account,
AutoPay Account, Goal Saver Account, Success Saver Account, Loyalty Saver
Account, Money Management Account and Seasonal Saver Account.
Please refer to Appendix Four for details of the Terms and Conditions for On-Call and
Notice of Withdrawal Accounts at the date of this Prospectus.
Special Share Accounts
It is the Board's intention that shares placed in a Special Share Account will either:
(a)
earn a regular, periodic return at the rate of return and frequency applicable to
that Account in any given month (as set by the Board from time to time at its
absolute discretion); or
(b)
receive a variable annual return from the profits of the Credit Union.
At the date of this Prospectus the Credit Union offers the Christmas Saver Account as
a Special Share Account.
Please refer to Appendix Four for details of the Terms and Conditions for Special
Share Accounts at the date of this Prospectus.
Returns
The return on the shares is dependent on the type of Share Account in which the
shares are placed, in particular: the Terms and Conditions, the rate of return offered
at the time of application, the minimum amount of shares required to be held, the
term of investment and the timing of repayment, of that Account.
The rate of return on the shares is also dependent on the profitability of the Credit
Union.
Maintenance of returns
The maintenance of the rate of return paid by the Credit Union, if any, is largely
dependent on annual surpluses being earned through the ongoing profitability of the
Credit Union. The amount of any surplus available for distribution to Members is
subject to the Credit Union's obligations to maintain:
(a)
its capital ratio (refer to paragraph 9.1 ("Regulation of Non-bank Deposit
Takers") for further information on the capital ratio); and
(b)
a prudential reserve as required by the Trust Deed, which cannot be utilised
by the Credit Union to pay returns without the Prudential Supervisor's consent
(refer to paragraph 8.1 ("Prudential Reserve") for further information on the
prudential reserve).
Historically the Credit Union had maintained a general reserve being the equivalent of
5% of the total assets of the Credit Union. That requirement was removed by the
operation of section 14 of the Friendly Societies and Credit Unions Amendment Act
2012 (Amendment Act) which came into force on 31 August 2012. Any distribution
of Retained Earnings is subject to the requirements of the Trust Deed and the Credit
Union's obligations to maintain its capital ratio.
Payment of returns
Returns payable on a Member's shares will, unless otherwise advised in writing or
provided in the terms of the relevant share account, be credited to the Member's
Share Accounts at such intervals as is provided in the terms of the accounts. Only
the Credit Union is liable to pay the returns on the shares, and payment of any return
is not guaranteed.
CRE36369 4442528.1
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Returns will be payable as follows:
(a)
all returns payable on Special Share Accounts and Term Share Accounts with
terms of less than 12 months will be paid on maturity;
(b)
all returns payable on Term Share Accounts with terms of 12 months and
over may be paid quarterly or compounded, at the Member's option; and
(c)
all returns payable on On-Call and Notice of Withdrawal Accounts will be paid
at such intervals provided in the Terms and Conditions of the relevant Share
Account.
Fees and charges
In addition to the cost of the shares, Members are required to pay fees and charges
on the Share Accounts operated by them.
The types, level and method of calculating the account fees and charges payable on
each of the share accounts at the date of this amended Prospectus are set out in
Appendix Four. Prospective Members and Members may contact the Credit Union
for a schedule of current maximum fees and charges.
Member Rebate Programme
At the end of each month, all or part of the fees and charges paid by a Member may
be rebated by the Credit Union under the Credit Union's member rebate programme
(Member Rebate Programme).
The rebate is calculated on the value of a Member's relationship with the Credit Union
that month, taking into account the minimum monthly balance of the Member's total
savings, loans and investments for that month:
Value of Monthly Relationship
Rebate
$0
to $1,999.99
$2,000 to $4,999.99
$5,000 to $9,999.99
$10,000 to $24,999.99
$25,000 to $49,999.99
$50,000 and over
$0.00
$2.00
$5.00
$8.00
$12.00
$50.00
Other service charges may still apply that are not part of the Member Rebate
Programme. If a Member qualifies for a rebate, that Member will receive a rebate to
the lower of the face value of the rebate or the total of fees and charges paid by him
or her during the course of that month.
Withdrawals
Subject to the provisions of the Act and the Rules, Members operate their Share
Accounts in a similar manner to bank accounts. While shares are usually available to
be withdrawn at call, the Rules provide that the Credit Union has the right at any time
to require a 60 day notice period for withdrawal. For withdrawals from Maturing
Accounts before maturity, refer to "Early repayment" below.
The methods of withdrawal available to Members will depend on the Terms and
Conditions of the Share Account set out at Appendix Four, but may include:
(a)
making a withdrawal request at any time via the Credit Union's
ACCESSPHONE automated telephone system (telephone banking)
ACCESSWEB secure internet service (internet banking) or ACCESSMOBILE
secure smartphone and tablet application (App);
(b)
using ACCESSCARD (a debit card) through the EFTPOS network system or
at certain ATMs;
CRE36369 4442528.1
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(c)
using ACCESSDEBIT (a debit card) through the EFTPOS network system or
at certain ATMs and through internet banking systems;
(d)
direct debit;
(e)
automatic payment;
(f)
cheque withdrawal; and/or
(g)
a withdrawal made using ACCESSTXT provided that the transfer is made to a
pre-loaded bank account.
If a withdrawal of shares would reduce a Member's paid-up shareholding to less than
the Member's total liability (including any contingent liability) to the Credit Union, then:
(a)
in the case of a Non-Qualifying Member, the withdrawal will not be permitted;
and
(b)
in any other case, the withdrawal will be permitted only if the indebtedness is
by way of approved credit facility.
If the Credit Union fails, on written demand, to repay money it has borrowed, the
Credit Union cannot make loans to, or permit withdrawals by, its Members. The
Credit Union is not entitled at law to consent to any Member withdrawals if, as a
consequence, the Credit Union would then be unable to meet its debts as they fall
due.
Maturity
Shares in a Term Share Account or Special Share Account (Maturing Account) will
mature on their respective maturity dates, as described under the heading "Term
Share Accounts" in Appendix Four, or as otherwise varied from time to time by the
Board.
Prior to maturity of shares in a Maturing Account, Members will be sent a copy of the
Credit Union's Investment Statement. Upon the maturity of shares in a Maturing
Account, the Member may withdraw the shares in accordance with the Terms and
Conditions of the Account. Interest no longer accrues after maturity.
If a Member has given previous instructions for any shares held in a Maturing
Account to be automatically reinvested upon maturity, the shares will be reinvested
into the Share Account nominated, or if no Share Account is nominated into the same
Share Account, and will be subject to the Terms and Conditions (including the rate of
return) applicable to that Account at the time of reinvestment. The Credit Union is not
required to give a Member notice of the reinvestment of their funds, unless the Credit
Union has received notice in writing from the Member that notice of reinvestment is
required.
Shares in On-Call and Notice of Withdrawal Accounts are available at call or on
notice, as described in Appendix Four, and do not have a maturity date.
Early repayment
The Credit Union prefers not to make repayments of shares held in Maturing
Accounts prior to maturity. Written application may be made to the Board for the
early repayment of such shares, but in such cases the return payable will be subject
to adjustment in accordance with the Terms and Conditions of the Account. The rate
of return earned throughout the term will be reduced by the amount stated as the
"Break rate" in Appendix Four.
Taxation
This section summarises the key tax consequences that apply to Members who are
New Zealand residents for tax purposes. This summary is based on New Zealand
CRE36369 4442528.1
14
income legislation and interpretation as at the date of this Prospectus. It is not
intended to be an authoritative or a complete statement of all the tax laws applicable
to the Credit Union and its Members. You should seek your own tax advice in
relation to your personal tax position. In particular, there may be different tax rules
relating to you if you are a non-resident of New Zealand for tax purposes.
The Credit Union is required by law to deduct Resident Withholding Tax (RWT) from
any returns paid or credited to any person resident in New Zealand, and to account
for this deduction to the Inland Revenue Department (IRD). Provided Members
supply the Credit Union with their IRD number and nominate the RWT rate at which
they wish deductions to be made, RWT will be deducted at the rate nominated.
A Member's RWT rate will be the then current rate prescribed by IRD for the
particular Member's taxable income at that time.
In the event that:
(a)
a Member omits to notify the Credit Union of his or her IRD number, the
Credit Union will deduct RWT at the "no notification rate" prescribed by the
IRD (or such other amount as required by law); or
(b)
a Member has notified the Credit Union of his or her IRD number, but omits to
nominate the appropriate rate, RWT will be deducted at the "no notification
rate" prescribed by the IRD (or such other amount as required by law).
The Credit Union is not required to deduct RWT from any Member who holds a valid
Certificate of Exemption from RWT (Certificate). Members who hold a Certificate are
required to provide a copy of it to the Credit Union as soon as possible before the
exemption from RWT can apply.
An investment in shares in the Credit Union will have taxation consequences. The
effect of taxation will vary according to each Member's personal circumstances.
Prospective Members and Members are encouraged to obtain independent
professional advice on their personal tax circumstances and the possible effect on
their personal tax circumstances of being a Member of the Credit Union.
1.6
Loans
The Credit Union makes loan advances from the share capital of the Credit Union to
its Members (loans). The availability of loans to Members is dependent upon the
availability of funds to the Credit Union from its share capital at any particular time. If
the Credit Union fails, on written demand, to repay money it has borrowed, the Credit
Union cannot make loans to its Members.
Loans to Members are subject to the terms of the Act, the Rules and the Trust Deed,
which may from time to time specify the maximum amount which may be loaned to
any Member, the maximum term of loans or the lending to asset ratio to be observed
by the Credit Union.
As at the date of this Prospectus the indebtedness of a Member to the Credit Union
must not exceed:
(a)
10% of the Credit Union's total tangible assets, in the case of a secured loan;
(b)
5% of the Credit Union's total tangible assets, in the case of an unsecured
loan; or
(c)
such lesser amount as the Board may from time to time determine.
See paragraph 8.1 ("Financial ratios") for further information on the lending to asset
ratios to be applied.
CRE36369 4442528.1
15
As at the date of this Prospectus the maximum period over which a loan made to a
Member must be repaid to the Credit Union is fixed by the Board, but must not
exceed:
(a)
thirty years, in the case of a loan secured by first mortgage;
(b)
ten years, in the case of a loan secured by other means; or
(c)
five years, in the case of an unsecured loan.
All applications for loans must be made on the form prescribed by the Board from
time to time. The Member will be required to detail in the application form the
purpose for which the loan is desired, the security offered (if any) and such other
information as the Board may require. A loan application form can be obtained from
any of the Credit Union's service centres. Refer to paragraph 1.1 for details of the
Credit Union's service centres.
For further details of the Credit Union's terms and conditions of lending, please
contact the Credit Union. Refer to paragraph 9.1 ("Security position risks") for further
information on the loan process.
The Board reserves the right to decline any application for a loan without giving any
reason.
2.
DETAILS OF REGISTRATION OF CREDIT UNION
2.1
Registration
The Credit Union was registered on 9 June 1988 as a Credit Union under the Act.
The Credit Union's registration number is 1802885.
The Credit Union changed its name from Credit Union Mainland to Credit Union
South on 1 October 2007.
A public file relating to the registration of the Credit Union is kept by the Companies
Office. To view this file or any part of it investors can either contact the Ministry of
Business, Innovation and Employment's Business Service Centre by Freephone at
0508 266 726, or details can be viewed on the Companies Office's website at
vvww.business.qovt.nz/companies/, select "Search Other Registers", then "Credit
Unions", and search the Credit Union's name or registration number (details above).
The Credit Union was registered on the Financial Service Providers Register on 25
November 2010 with registration number FSP27046.
The Credit Union is a financial co-operative and is not a registered bank in terms of
the Reserve Bank of New Zealand Act 1989 (Reserve Bank Act). The Credit Union
is a non-bank deposit taker (NBDT) in terms of the Non-bank Deposit Takers Act
2013 (NBDT Act) (refer to paragraph 9.1 ("Regulation of Non-bank Deposit Takers")
for more information on the regulation of NBDTs).
2.2
Rules of the Credit Union
The Credit Union operates in accordance with the Rules, which are registered with
the Registrar. Any person may inspect a copy of the Rules upon request, during
office hours, at the registered office of the Credit Union or via the Companies Office's
website (details at paragraph 2.1). The Credit Union will not charge an inspection fee
for producing or photocopying the Rules.
The Rules may be amended by Special Resolution (being a 75% majority vote) of the
Members voting by postal vote or electronic vote and declared at a General Meeting.
The latest amendments to the Rules were put to Members by way of an electronic
ballot and were declared amended at the AGM of the Credit Union held on 24
CRE36369 4442528.1
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September 2014. A copy of the amendments to the Rules was registered with the
Registrar on 30 October 2014.
2.3
Register of Members
A register of the Members of the Credit Union is kept at the Credit Union's registered
office. The register is open to inspection by any Member during the Credit Union's
office hours. The Credit Union will not charge an inspection fee for producing the
register but is under no obligation to provide a copy of it, or part of it, to any Member.
2.4
Other statutory information
An application has not and will not be made to NZX Limited for permission to quote
the Credit Union's shares on the New Zealand Exchange or otherwise.
3.
DIRECTORATE AND ADVISERS
3.1
Directors and officers
The names, addresses and qualifications of the directors of the Credit Union at the
date of this Prospectus are included in Appendix Six. Relevant disclosures of each
director and senior officer, such as disciplinary history and/or remuneration other than
from director's fees or salary, are included in Appendix Seven. All directors and
senior officers can be contacted at the Credit Union's registered office.
The Rules require that there be not less than five, nor more than seven, directors of
the Credit Union, which number may include up to two independent directors who
must not have a significant contractual relationship with the Credit Union. Additional
directors may be appointed in limited circumstances.
The non-independent directors are elected by the Members by postal or electronic
vote prior to the AGM. The independent directors (if any) are appointed by the nonindependent directors.
No Member that is a charitable entity or an incorporated society shall be nominated
for, or elected to, any office in the Credit Union. Employees of the Credit Union
cannot be directors of the Credit Union.
The directors serve a term of three years, retire by rotation, and are eligible for reelection upon the expiry of their current term of appointment. Directors may serve no
more than nine years continuous service as a director after which time they shall
retire and stand down for at least two years before being eligible to stand for further
election.
In the event of a vacancy caused by the death, resignation or disqualification of a
director, the Board shall appoint a Member to fill the vacancy and that Member will
hold office until the next AGM or until the election of a successor.
The directors elect from their number the following officers: Chairman, Deputy
Chairman, Secretary, and Treasurer. No person who is nineteen years of age or
younger shall hold office as Treasurer. The Secretary of the Credit Union is the
person listed as holding that position in Appendix Six.
The board of directors meet on at least ten occasions per year and report to the
Members annually at the AGM. The majority of directors shall constitute a quorum for
the transaction of business at any meeting of the Board.
3.2
Trustees
The names, addresses and qualifications of the trustees of the Credit Union at the
date of this Prospectus are identified in Appendix Six.
The Rules require that there be not less than one, nor more than three, trustees of
the Credit Union, who each must also be a Member and a Director (but not the
Secretary or the Treasurer). The Credit Union is not an incorporated body. Instead,
the Act provides that all property belonging to the Credit Union is vested in the
CRE36369 4442528.1
17
trustees, for the use and benefit of the Members, and all persons claiming through the
Members, according to the Rules.
The Members elect the trustees at the AGM. No trustee may be elected for a term
exceeding his or her term then remaining as a director.
Only directors of the Credit Union who are twenty years of age or older are eligible to
be trustees. No trustee may be elected for a term exceeding his or her term then
remaining as a director.
The trustees serve a term of three years, retire by rotation, and are eligible for reelection as a trustee upon the expiry of their current term of appointment.
In the event of a vacancy caused by the death or disqualification of a sole trustee, a
new trustee must be elected by the Members as soon as practicable. The trustees
meet monthly and report to the Members annually at the AGM.
3.3
Audit committee
At the date of this Prospectus, the persons named in Appendix Six elect the audit
committee. The audit committee can be contacted at the Credit Union's registered
office.
The Rules require the Credit Union to have an audit committee. The audit committee
is appointed by the directors as a committee of the Board and must consist of two or
more Members, at least one of whom must be a director.
The principal duties of the audit committee are to:
3.4
(a)
monitor the trustees' and directors' compliance with the Act, the Rules, the
Trust Deed, the Securities Act 1978, Part Two of the Financial Markets
Conduct Act 2013 (FMC Act), the International Credit Union Operating
Principles and all other applicable operating procedures and legislation;
(b)
make or cause to be made a routine operating inspection of the Credit
Union's affairs at least once every three months, which must include an
examination of the Credit Union's books and an inspection of the securities,
cash, accounts and loans;
(c)
inspect the Credit Union's officer conflicts register and ensure that it is
properly maintained;
(d)
report to the Board with its recommendations on the appointment of an
internal auditor and external auditor; and
(e)
make all reports required from the Credit Union pursuant to the Act, the NBDT
Act and the Securities Act 1978.
Auditors
The Members of the Credit Union have appointed PricewaterhouseCoopers as the
Credit Union's external auditor. The auditor's contact details are included in the
Directory. The auditor is registered under the Auditor Regulation Act 2011. Other
than in their capacities as auditors and providers of other assurance services, they
have no relationship with, or interests in, the Credit Union.
The audited financial statements of the Credit Union for the year ended 30 June 2014
were registered in accordance with the Financial Reporting Act 1993 on 3 October
2014. The independent auditors' report is attached as Appendix Three.
3.5
Solicitors
The Credit Union's solicitors are Lane Neave and its contact details are included in
the Directory.
CRE36369 4442528.1
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3.6
The Prudential Supervisor is Trustees Executors Limited, and its contact details are
included in the Directory. The Prudential Supervisor has been granted a licence
under the Financial Markets Supervisors Act 2011 to act as a supervisor in respect of
debt securities. The licence expires on 16 January 2018 and is subject to reporting
conditions. A copy of the Trustee's licence is publicly available from the Financial
Markets Authority website: wvvw.fma.govt.nz/help-me-com ply/trustees/licensedtrustees-and-statutory-su pervisors.
3.7
Bankers
The Credit Union's banker is Westpac Banking Corporation.
From time to time the Credit Union places funds on deposit with other registered
banks including Heartland Bank, SBS Bank, and the Bank of New Zealand. The
Credit Union does not use any other facilities offered by these banks.
The Credit Union also places funds on deposit and uses transactional facilities with
the New Zealand Association of Credit Unions' trading as Co-op Money NZ (NZACU)
Central Fund Facility, and its contact details are included in the Directory. The
NZACU Central Fund Facility is not a registered bank.
The contact details of the Credit Union's banker and the NZACU Central Fund Facility
are included in the Directory.
4.
RESTRICTIONS ON DIRECTORS' POWERS
Rule 30 provides details of the duties imposed on the Board and directors. While the
list is permissive and non-exhaustive, some of the duties expected of the directors
come with their own restrictions set out by the Act. Full details may be found in the
Rules, but the restrictions set out by the Act are more fully described at paragraph
8.3.
5.
MATERIAL CONTRACTS
The material contracts entered into by the Credit Union in the two years preceding the
date of this Prospectus are as set out below.
5.1
Deed of Modification to Trust Deed dated 26 November 2012
The Credit Union and the Prudential Supervisor entered into a deed of modification to
the Trust Deed dated 26 November 2012, to make various amendments to the Trust
Deed to accommodate the legislative reforms enacted by the Amendment Act.
5.2
Deed of Modification to Trust Deed dated 21 October 2014
The Credit Union and the Prudential Supervisor have entered into a deed of
modification to the Trust Deed dated 21 October 2014 to make various amendments
to the Trust Deed to include further quantitative liquidity requirements in accordance
with the Deposit Takers (Liquidity Requirements) Regulations 2010.
6.
PENDING PROCEEDINGS
There are no legal proceedings or arbitrations pending at the date of this Prospectus
that may materially affect in an adverse manner, the Credit Union.
7.
RANKING OF SECURITIES
The aggregate amount of securities, being the shares issued by the Credit Union to
its Members, that ranked in point of security equally with the shares offered by the
Credit Union to potential and existing members pursuant to this Prospectus, was
$90,847,000 as at 30 June 2014 ($86,547,000 as at 30 June 2013).
There are no securities that are secured by a charge over the assets of the Credit
Union that rank in point of security ahead of the shares offered by the Credit Union to
Members or Prospective Members pursuant to this Prospectus.
The Credit Union's obligation to repay monies owing on Members' shares is secured
to the extent permitted by law by a first-ranking equitable assignment by way of
CRE36369 4442528.1
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security, granted in favour of the Prudential Supervisor under the Trust Deed, over
the whole of the Credit Union's present and future undertaking, assets and revenues,
including the proceeds received for the subscription of shares and unpaid share
capital (if any) (Equitable Assignment). Please refer to paragraph 8.1 for further
information about the Trust Deed.
As a consequence of, and in addition to, the Equitable Assignment, the Credit Union
has granted to the Prudential Supervisor a security interest in all its present and afteracquired personal property and the Prudential Supervisor has registered a financing
statement under the Personal Property Securities Act 1999 in respect of the same.
The grant of the security interest was recorded and confirmed in the Trust Deed.
Please refer to paragraph 8.1 for further information about this security.
The Credit Union has granted a specific security interest to Fuji Xerox New Zealand
Limited (Fuji Xerox) that is registered on the Personal Property Securities Register.
This interest does not rank in priority to, ahead of, or equally with, the Prudential
Supervisor's interest except in relation to the specified assets. The Prudential
Supervisor has given its consent to the grant of this specific security interest.
A claim by a Member who had given notice of withdrawal of his or her shares prior to
liquidation of the Credit Union would rank ahead of claims by any other creditors and
ahead of Members who had not given such notice. However, if, at the time of the
Credit Union being placed in liquidation, a Member had not given notice of withdrawal
of his or her shares, and the Prudential Supervisor had not exercised its powers
under the Trust Deed to accelerate the repayment of the monies owing in respect of
the shares, then the Member would be treated as a shareholder in the liquidation and
would rank behind secured and unsecured creditors (if any) and behind Members
who have given such notice, but ahead of any holder of "credit union securities" as
defined in section 107A of the Act. The Credit Union has not, and will not, issue
credit union securities during the term of this Prospectus. With the Prudential
Supervisor's prior written consent the Credit Union may grant a security interest over
or affecting all or any part of its assets and any such security interest(s) may take
priority over the Members' claims for withdrawal secured by the Trust Deed.
On 17 October 2012, the Prudential Supervisor consented to the Credit Union's entry
into an Agency Banking and Card Services Exhibit between the Credit Union and
NZACU and a Deed of Arrangement and Indemnity between the Credit Union and
Westpac Banking Corporation, subject to certain conditions, including that the
Settlement Bond arrangement with NZACU will be for a maximum of 3% of the total
tangible assets or such greater amount to be agreed from time to time.
On 27 March 2014, the Prudential Supervisor consented to increase the Settlement
Bond arrangement with NZACU under the Agency Banking and Card Services
Exhibit, to a maximum sum of 3.5% of the total tangible assets. The NZACU agreed
to this increase on 4 April 2014.
8.
DETAILS OF TRUST DEED AND OTHER RESTRICTIONS ON THE CREDIT
UNION
8.1
Trust Deed
The Credit Union has appointed the Prudential Supervisor the statutory trustee of the
offer of shares detailed in this Prospectus for the purposes of the Securities Act 1978.
The Prudential Supervisor's appointment and the parties' respective rights and
obligations are recorded in the Trust Deed between the parties dated 7 February
2001, as modified by a deed of modification to the Trust Deed dated 15 October
2002, a deed of modification to the Trust Deed dated 19 November 2010, a deed of
modification to the Trust Deed dated 26 November 2012 and a deed of modification
to the Trust Deed dated 21 October 2014.
The following is a summary of the provisions of the Trust Deed. Investors requiring
further information are referred to the Trust Deed itself.
CRE36369 4442528.1
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Equitable assignment by way of security
The Credit Union's grant of an equitable assignment by way of security to the
Prudential Supervisor is recorded in the Trust Deed. Please refer to paragraph 7 for
further information about the Equitable Assignment.
Security interest in personal property
The Credit Union's grant of a security interest in all its present and after-acquired
personal property, including the Credit Union's present and future accounts
receivable and all the Credit Union's present and future right in relation to any
accounts receivable, to the Prudential Supervisor is recorded in the Trust Deed.
Please refer to paragraph 7 for further information about the security interest in the
Credit Union's personal property.
Further charges
Under the Trust Deed, the Credit Union has covenanted that it will not grant any
charge or other security interest in priority to, or ranking equally with, the Equitable
Assignment, without the Prudential Supervisor's prior written consent. The Prudential
Supervisor has given its consent to the grant of a specific security interest to Fuji
Xerox — refer to paragraph 7.
Prudential Reserve
The Credit Union is required by the Trust Deed to maintain a prudential reserve. The
Trust Deed requires that the Credit Union transfer an amount equal to 10% of the
gross income from interest receipts to the prudential reserve until the prudential
reserve reaches and is maintained at 10% of the total tangible assets of the Credit
Union.
The operation of the Amendment Act, and the amendments to the Rules approved at
the AGM held on 26 September 2013, mean that the Credit Union is no longer
required to maintain a general reserve which previously formed part of the prudential
reserve. The general reserve was transferred to the Retained Earnings.
The Credit Union's prudential reserve is held as Retained Earnings which at 30 June
2014, had a balance of $18,923,000, and as at 30 June 2013, had a balance of
$18,644,000 and a Property Revaluation reserve which as at 30 June 2014 had a
balance of $954,000. The total reserve as at 30 June 2014 was $19,877,000.
Financial ratios
Under the Trust Deed, the Credit Union has covenanted, subject to the terms and
conditions contained in the Trust Deed, not to:
(a)
permit its total liabilities to exceed 90% of its total tangible assets;
(b)
permit its secured liabilities to exceed 1% of its total tangible assets;
(c)
permit its liquid assets to be less than 8% of its total tangible assets (Liquid
Asset Ratio);
(d)
permit the total amount of returns paid in cash over a six month period or
more, to exceed cash actually received over the same period;
(e)
permit its liquid assets to be less than 115% of any deficit arising from the
contracted principal and interest due from the members in the next 3 months
less the aggregate of 20% of the principal of member's accounts payable
during the next 3 months, 100% of the interest on the member's accounts
payable during the next 3 months (in each case based on contractual
maturities) and 20% of undrawn committed lending facilities;
(f)
fail to ensure that it has sufficient assets at all times to discharge all debts as
they fall due;
CRE36369 4442528.1
21
(g)
permit the aggregate of its secured investments, unsecured investments and
listed securities, to exceed 15% of its total tangible assets;
(h)
permit the aggregate of its unsecured investments to exceed 1% of its total
tangible assets (Unsecured Investment Ratio);
(i)
permit its Capital Ratio to be less than 10% if the Credit Union does not have
a credit rating, or to be less than 8% if the Credit Union does have a credit
rating, as determined and calculated in accordance with the Deposit Takers
(Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations
2010;
(i)
permit related party exposures to exceed 15% of Capital, as determined and
calculated in accordance with the Deposit Takers (Credit Ratings, Capital
Ratios, and Related Party Exposures) Regulations 2010; or
(k)
borrow any monies except on terms and conditions to which the Prudential
Supervisor has previously consented in writing. Such borrowing is not to
exceed 15% of the Credit Union's total paid-up share capital and reserves,
unless the borrowing is to fund expenditure of a capital nature subject to the
prior approval of the Prudential Supervisor.
The Credit Union has a $2,500,000 overdraft facility with the NZACU Business
Services Division Trust. There are no conditions attached to this facility. The
Prudential Supervisor has agreed that for the purposes of calculating the Liquid Asset
Ratio, the Credit Union may include, as a "liquid asset", the unused portion of this
overdraft facility. As at the date of this Prospectus, the overdraft facility is undrawn
and the Credit Union does not require the overdraft facility to meet the Liquid Asset
Ratio. Further detail in relation to the Credit Union's Capital Ratio is provided at note
4 in the audited financial statements attached in Appendix Two.
The Credit Union has purchased subordinated base capital notes from the NZACU
Business Services Division Trust. The Prudential Supervisor has agreed that
$2,896,423 of the total subordinated base capital notes purchased by the Credit
Union can be excluded from the calculation of the Unsecured Investment Ratio. The
terms of the subordinated base capital notes are set out at note 11 to the most recent
audited financial statements of the Credit Union which are for the year ended 30 June
2014 and are included in Appendix Two.
On 19 July 2012, the Prudential Supervisor consented to the Credit Union's payment
of distributions to Members for the 2012/13 financial year, as proposed by the Credit
Union. The consent to the distributions was granted even though the budget
indicated that earnings might be less than expenditure, because a significant part of
the increased expenditure related to one-off restructuring costs and because the
reserves as a percentage of total assets exceeded 15%.
The Credit Union breached the terms of the Trust Deed by making distributions of
interest and dividends in excess of surplus earned by the Credit Union for the month
of November 2013. On 16 December 2013, the Prudential Supervisor consented,
pursuant to clause 5.2(b) of the Trust Deed, to the Credit Union continuing of offer
and issue shares while in breach of the provisions of the Trust Deed.
The Prudential Supervisor consented on the same date to the Credit Union's
proposed payment of distributions to Members for the period ending December 2013
in excess of the surplus earned by the Credit Union for that period.
On 24 January 2014, the Prudential Supervisor consented, pursuant to clause 5.3(c)
of the Trust Deed to the Credit Union making distributions of interest and dividends to
Members for the months of January to April 2014 in excess of the year to date
surplus for the months of January, February, March and April 2014.
CRE36369 4442528.1
22
On 17 April 2014, the Prudential Supervisor consented to the Credit Union providing
a loan to an associated person pursuant to clause 5.2(f) of its Trust Deed.
On 1 July 2014, the Prudential Supervisor consented pursuant to clause 5.2(e) of the
Trust Deed to the Credit Union acquiring 66% shareholding in Taxcheck.co.nz
Limited. For further details see paragraph 14 ("Acquisition of Business or
Subsidiary").
Further covenants
The Credit Union has given a number of further covenants to the Prudential
Supervisor under the Trust Deed in order to better assure the performance of its
obligations to its Members. Some of the most important covenants that the Credit
Union has given include:
(a)
to comply with the Act, its Rules and all applicable laws relating to
governance matters;
(b)
to meet all its registration, filing and reporting obligations;
(c)
to provide copies of all communications to and from regulatory bodies;
(d)
to meet all obligations to security holders;
(e)
to notify the Prudential Supervisor immediately if it becomes aware that an
event has occurred which would allow the Prudential Supervisor to review the
Credit Union's compliance with the Trust Deed or to enforce its rights under
the Trust Deed;
(f)
to maintain its register of members, comply with all its obligations, pay its
debts in a timely manner and conduct its business in a proper and efficient
manner;
(g)
to comply with the Prudential Standards Manual prepared by the NZACU with
the approval of the Prudential Supervisor;
(h)
not to declare dividends or (except with the consent of the Prudential
Supervisor) issue shares while in breach of the Trust Deed or Securities Act
1978;
(i)
not to change the Rules without the prior consent of the Prudential
Supervisor;
(i)
not to acquire or dispose of any asset from or to, or engage the services of,
any "associated person" (including directors and other officers of the Credit
Union) other than for full market value, on an arms-length basis, in the
ordinary course of the Credit Union's business, and only after having given
not less than ten business days' notice of its intention to do so to the
Prudential Supervisor;
(k)
to promptly provide to the Prudential Supervisor written notice of all present
and after-acquired serial numbered personal property and such other details
as are necessary to enable the registration of a valid financing statement or
financing change statement in respect of the Credit Union's personal property
by the Prudential Supervisor;
(I)
to ensure that all debts or liabilities owed by the Credit Union to third parties,
other than normal trade creditors, are subordinated debts of the Credit Union;
(m )
at all times to comply with a risk management programme that meets the
requirements of the NBDT Act; and
CRE36369 4442528.1
23
(n)
at all times to comply with an Anti-Money Laundering and Countering
Financing of Terrorism (AML/CFT) compliance programme that corn plies with
the requirements of the Anti-Money Laundering and Countering Financing of
Terrorism Act 2009 and its regulations.
The Credit Union is also required to furnish the Prudential Supervisor with half-yearly
unaudited and annual audited financial statements prepared in accordance with
generally accepted accounting practice.
The directors of the Credit Union are also required to furnish the Prudential
Supervisor with a quarterly certificate detailing the Credit Union's compliance with the
ratios set out in the Trust Deed, compliance with the risk management programme of
the Credit Union and whether any security interest has been created or permitted to
exist in respect of the Credit Union's personal property, together with monthly internal
accounts (Directors' Quarterly Certificate).
The directors note that at the date of this Prospectus the Credit Union complies with
all its obligations under the Trust Deed, subject to the AML/CFT compliance
programme (refer to paragraph 9.1 "Regulatory Risk" for further details).
Prudential Supervisor's powers and obligations
The Prudential Supervisor is appointed to act in the interests of the Members by
monitoring the Credit Union's compliance with its obligations under this Prospectus,
the Act, the Rules and the Trust Deed. The Prudential Supervisor is under a duty to:
(a)
exercise reasonable diligence to ascertain whether or not the Credit Union
has committed any breach of the Trust Deed or any of the conditions of issue
of the shares; and
(b)
do all things that it is empowered to do to cause any breach of those terms to
be remedied (except if it is satisfied that the breach will not materially
prejudice the security (if any) of the shares or the interests of the holders of
the shares).
The Prudential Supervisor must exercise reasonable diligence to ascertain whether or
not the assets of the Credit Union are sufficient, or likely to be sufficient, to meet its
obligations to Members, as they fall due.
The Trust Deed gives the Prudential Supervisor wide ranging powers to enforce the
Credit Union's obligations under the Trust Deed. For example, if the Credit Union
breaches the Trust Deed then the Prudential Supervisor may declare:
(a)
a "Review Event", in which case the Prudential Supervisor may require the
Credit Union to provide a proposal to restore itself to a sound financial
position or otherwise improve its financial structure, which, if approved by the
Prudential Supervisor, it must implement under the Prudential Supervisor's
supervision; or
(b)
an "Enforcement Event", in which case the Prudential Supervisor may elect to
call up all amounts owing under the Trust Deed, appoint a receiver to manage
the affairs of the Credit Union, and/or deal with the Credit Union's property or
perform the functions of a receiver itself as if it were a receiver.
The Trust Deed entitles the Prudential Supervisor to rely on Directors' Quarterly
Certificates in exercising its duties.
8.2
Prudential Supervisor's statement
Attached as Appendix Five is a statement by the Prudential Supervisor that, at the
date of this Prospectus:
(a)
CRE36369 4442528.1
the offer of the shares in the Credit Union complies with any relevant
provisions of the Trust Deed; and
24
(b)
8.3
the Prudential Supervisor does not guarantee repayment of any monies nor
any returns payable on the shares that may become payable by the Credit
Union to any Member.
Other restrictions on the Credit Union
A number of statutory restrictions are imposed by the Act on the Credit Union. Those
principal restrictions not addressed elsewhere in this Prospectus are outlined below:
Borrowing
The Credit Union's ability to borrow is restricted by sections 101(2) and 109 to 117 of
the Act.
Section 101(2) of the Act provides that a credit union may take no action or do
anything which is not directly pursuant to or incidental to its objects or in furtherance
of them or is in contravention of the Act or its rules. The objects of the Credit Union
are set out at paragraph 1.2.
Section 109 of the Act provides that a credit union may borrow money if that
borrowing is authorised by, and in accordance with, its Rules and the Trust Deed.
The Rules allow the Credit Union to borrow as approved by the Board. The Trust
Deed prohibits the Credit Union from borrowing without the Prudential Supervisor's
prior consent, and the Credit Union may only borrow an amount greater than 15% of
the Credit Union's total paid-up share capital plus its reserves with the Prudential
Supervisor's prior consent.
The Credit Union may borrow money if the borrowing is authorised by, and in
accordance with, the Rules and the Trust Deed.
Land and buildings
Section 113 of the Act provides that the Credit Union may only hold an interest in land
or buildings if authorised by, and in accordance with, the Rules and the Trust Deed.
The Trust Deed and the Rules have been amended to allow the Credit Union to own
land and buildings for the purposes of conducting its business thereon or therein,
such amendments being made on 26 November 2012 and 26 September 2013
respectively.
The Credit Union may hold an interest in land as security for a loan to a Member.
Investment
Under section 117 of the Act the Credit Union may invest its funds only if authorised
by, and in accordance with, the Rules and the Trust Deed, or with the NZACU or a
bank.
9.
9.1
OTHER TERMS OF OFFER AND SECURITIES
Risks
The principal risks of a Member investing in the shares, which are not disclosed
elsewhere in this Prospectus, are as follows:
Profitability
The Credit Union saw substantial growth in the loan portfolio during the financial year
ending 30 June 2014. While growth in lending was around 17% for the year, this was
not reflected in interest income due to the weighted average interest rate of the loan
portfolio reducing over the year.
The reported operating surplus for the year ended 30 June 2014 was $279,000. In
addition, one of the Credit Union's properties was revalued to its registered market
valuation which had the impact of adding $954,000 to the Credit Union's total
comprehensive income.
CRE36369 4442528.1
25
Preliminary projections for the year ending 30 June 2015 indicate a return to a
satisfactory level of surplus.
Competition
The Credit Union is restricted as to the class of persons to whom it may offer shares
and accept as Members. This restriction is called the Credit Union's "common bond",
and is specified in Rule 5 and at paragraph 1.3. As the Credit Union is competing
with banks and other financial institutions operating in the national savings and loans
market, restrictions on membership may affect the Credit Union's profitability and the
returns payable to Members. The Credit Union is not a registered bank in terms of
the Reserve Bank Act.
Members' returns
The rate of return on shares is dependent on annual surpluses being earned through
the ongoing profitability of the Credit Union. The rate of return on shares is therefore
dependent on the ability of the Board and senior management of the Credit Union to
prudently manage the Credit Union and generate an operating surplus for its
Members. Should the Credit Union's profitability be threatened then the Credit Union
may reduce the rate of return, or even pay no return, on shares.
General market risk
Like all businesses, the Credit Union's financial performance may be affected by the
state of the New Zealand and international economies. Natural disasters (such as
earthquakes), wars, acts of terrorism, a recession, the failure of financial market
participant(s) and/or economic slowdowns will generally have a negative impact on
demand for goods and services and thus, income. Further, as the Credit Union's
membership is based principally in the South Island, the Credit Union's financial
performance may be subject to any regional economic downturn.
The "Global Financial Crisis" and recent finance company failures have the potential
to taint other operators in the financial sector. The potential of this taint having some
negative impact on withdrawal and reinvestment rates, and thus on the Credit Union's
liquidity, cannot be dismissed. There is also the risk that further failures or
insolvencies could occur, which could detrimentally affect investor confidence.
Either of these may adversely affect Prospective Members' or Members' ability to
invest in or retain shares and/or meet loan payment obligations to the Credit Union.
This in turn may negatively affect the Credit Union's financial performance,
profitability and surplus available to pay returns to Members.
General political risk
Policies and decisions of the Government and other regulatory bodies in New
Zealand may impact on the Credit Union's financial performance, profitability and
surpluses available to pay returns to Members. For example, the imposition of direct
taxation may reduce the Credit Union's profitability. A change of Government policy
that affects Members' income and thus their ability to invest in or retain shares in the
Credit Union and/or meet loan payment obligations to the Credit Union, may reduce
the Credit Union's profitability.
Regulatory risk
The Credit Union is required to comply with various legal obligations, and any
material failure to comply with these could result in damage to the Credit Union's
reputation and/or expose the Credit Union to financial and/or other penalties.
Any change to existing laws, or the introduction of new laws, could result in additional
requirements being imposed on the Credit Union and/or result in increased costs for
the Credit Union. Relevant law changes include the Financial Markets Conduct Act
2013 (FMC Act) the remainder of which came into force on 1 December 2014 and
which will eventually replace the Securities Act 1978, the Anti-Money Laundering and
Countering Finance of Terrorism Act 2009 which came into full effect on 30 June
2013, and the Non-bank Deposit Takers Act which came into force on 1 May 2014.
CRE36369 4442528.1
26
Regulation of Non-bank Deposit Takers
The Non-bank Deposit Takers Act 2013 (NBDT Act) came into force on 1 May 2014.
It introduced new measures covering licensing of non-bank deposit takers (NBDT),
suitability assessments for directors and senior officers, restrictions on changes of
ownership and new powers for the Reserve Bank of New Zealand (Reserve Bank) to
detect and manage instances of distress or failure of NBDTs. Section 11 of the
NBDT Act requires that all NBDT's must be licensed. Applications to be licensed as
an NBDT must be made to the Reserve Bank which will only grant a licence if it is
satisfied that the Credit Union will comply with the NBDT Act and any regulations
made under it on an on-going basis and the Reserve Bank receives a suitability
notice for each Director. The Credit Union obtained its NBDT licence on 16 February
2015.
There is a risk that the Credit Union may not be able to maintain its NBDT licence and
if it loses its licence or the licence is not renewed it will no longer be able to take
deposits from Members. The Credit Union has assessed this risk and considers it to
be negligible.
The NBDT Act and associated NBDT regulations, require NBDT with an approved
credit rating to maintain a minimum capital ratio of no less than 8% of risk-weighted
capital, to limit their aggregate related party exposures to no more than 15% of their
risk-weighted capital and maintain certain quantitative liquidity requirements. At the
date of this Prospectus, the Credit Union meets these requirements. However, if the
Credit Union becomes unable to meet its obligations under the NBDTs regime then
the Credit Union will be in breach of the NBDT regime and subject to enforcement
under the NBDT Act and the Trust Deed.
The Credit Union has a risk management programme, that has been approved by the
Prudential Supervisor, in place to assist compliance with the NBDT Act.
AML/CFT Compliance Programme
The Credit Union has covenanted to the Prudential Supervisor under the Trust Deed
to comply with an AML/CFT compliance programme that complies with the
requirements of the Anti-Money Laundering and Countering Financing of Terrorism
Act 2009 (AML Act).
The Credit Union has an AML/CFT compliance programme that complies with the
requirements of the AML Act and its regulations with the exception of section 57(c) of
the AML Act requiring on-going customer due diligence. Concerns about the
capability of the Credit Union to comply with this section of the AML Act were raised
with the directors in February 2014 and subsequently, an independent external
review was conducted by PricewaterhouseCoopers which completed in September
2014. The review highlighted shortfalls of the AML/CFT compliance programme of the
Credit Union. The Credit Union has undertaken an independent audit of the AML/CFT
compliance programme in accordance with the AML Act and aside from the Risk
Assessment complies with the AML Act and its regulations. The Credit Union is
reviewing the Risk Assessment methodology to remedy those issues raised by the
independent audit.
Transition to Financial Markets Conduct Act
The FMC Act was passed on 13 December 2013 and was being progressively bought
into force, with the final sections in force from 1 December 2014. The FMC Act
replaces the existing requirement for the Credit Union to have a registered
prospectus and investment statement with a requirement to prepare a single product
disclosure statement (PDS).
Under Part Two of the FMC Act the Credit Union must not engage in conduct that is
misleading or deceptive or make false or misleading representations.
The FMC Act also includes a transition period for existing offers. The Credit Union
has until 1 December 2016 to comply with the new provisions, or it can elect to opt
CRE36369 4442528.1
27
into the FMC Act earlier by giving notice to the Financial Markets Authority and the
Registrar of Financial Service Providers. The Credit Union anticipates transitioning to
the FMC Act by 31 December 2015.
To opt in to the FMCA regime, the Credit Union will need to:
(a)
give the Financial Markets Authority 20 working days' notice of its intention to
opt in to the FMC Act regime;
(b)
publish a product disclosure statement for all new offers of financial products;
(c)
amend the Trust Deed;
(d)
ensure there is a licensed supervisor designated as the trustee under the
Trust Deed; and
(e)
make periodic disclosures on an online register as and when required.
The PDS will contain a short key information summary of the purpose and key
aspects of the Credit Union's offer, followed by a more detailed description of the
offer. The Credit Union will be required to lodge the PDS on a new register of offers of
financial products. In addition, the Credit Union will also be required to lodge all
further material information and documents on this register for its Members and the
public to view.
There will be a cost involved in preparing the PDS and associated documentation
required to comply with the new FMC Act.
Commerce and Consumer Affairs Omnibus Bill
A new Regulatory Systems Bill is expected in 2015 that will amend a number of Acts
including the Friendly Societies and Credit Unions Act 1982. Proposed changes are
expected to include provisions for credit unions to incorporate, simplifying statutory
objectives of Credit Unions to cover generally the conduct of activities for the benefit
of members, giving credit unions powers of a natural person, amending the ultra vires
rules and permitting credit unions to make loans to small to medium enterprises that
are related to credit union members.
The Credit Union will need to be aware of any changes proposed and if new
legislation is passed there will be costs involved in reviewing and amending relevant
Credit Union documents to ensure they are compliant with any new requirements.
Security position risks
Before making a loan advance, the Credit Union assesses the Member's debt
servicing ability and any security offered by him or her as collateral for the loan
advance. The Credit Union may take security over all or part of the Member's assets
(generally chattels, motor vehicles and/or Credit Union shares) as collateral. Refer to
paragraph 9.1 ("Credit risk") for further details on the Credit Union's credit and lending
policy.
The following are some risks that may arise in relation to the Credit Union's security
position.
Taking no or low-ranking security
If the Credit Union does not take security, or if it takes security which ranks lower in
priority to another person's security, then if that Member defaults on the loan:
(a)
the Credit Union's ability to realise the collateral (the Member's assets) may
be restricted or prohibited by the terms of any higher ranking security; and/or
(b)
if the collateral is realised, either by the Credit Union or by the higher ranking
security holder, the amount realised, after the higher ranking security holder
CRE36369 4442528.1
28
has taken their share, may be insufficient to discharge the loan, in which case
the Credit Union will have to write-off that undischarged amount.
Security pricing risk
Where security is taken for a loan advance, the value of that security (based on its
market price) may fluctuate, and may likely decrease. If the market price of the
security has decreased then it is possible that, if the collateral is realised upon the
Member's default, the amount realised may be insufficient to discharge the loan, in
which case the Credit Union will have to write-off that undischarged amount.
The Credit Union may incur losses in either of the above circumstances (no or lowranking security and security price risk), which may negatively affect its financial
performance, profitability and surpluses available to pay returns to Members. Despite
this, the Credit Union minimises this risk by making provision for doubtful debts in a
manner consistent with generally accepted accounting principles.
Credit risk
The Credit Union relies on its Members to repay their loans and to make interest
payments on the due date. Loans are made to Members in accordance with the
Credit Risk Policy of the Credit Union and are repayable on demand. Full details of
loans to Members can be found at note 8 in the most recent audited financial
statements of the Credit Union for the year ended 30 June 2014, attached as
Appendix Two. Any loans made to related parties are approved by the Prudential
Supervisor and are subject to the policies applicable to all Members.
If the Credit Union suffers the negative effects of the "Security position risks" (above)
in relation to a significant number of its loans this will have a negative impact on its
financial performance, profitability and surpluses available to pay returns to Members.
If this was sufficiently substantial so as to cause the winding-up of the Credit Union,
then the value returned to Members in respect of their shares will fall. The Credit
Union has procedures in place to monitor past due and impaired loans to Members.
In the year ended 30 June 2014, the Credit Union increased its provision for
impairment of loans and advances by $142,000 (for the 12 months ended 30 June
2013 there was a $253,000 decrease). This allowed a prudent provision for
impairments as loan balances increased from $70,992,000 to $82,709,000. For more
details see note 9 to the most recent audited financial statements of the Credit Union
for the year ended 30 June 2014.
The Credit Union has a credit and lending policy that is used to manage its exposure
to credit risk. As part of this policy, the Credit Union:
(a)
assesses a borrower's debt servicing ability and conducts a credit evaluation
on the borrower, before making a loan advance;
(b)
sets limits on exposure;
(c)
imposes defined lending criteria; and
(d)
monitors and controls lending by prudent credit measures.
NZACU credit risk
As at 30 June 2014, the Credit Union had $11,000,000 invested as call and term
deposits through the NZACU's central banking deposit scheme ($15,000,000 as at 30
June 2013) and held $3,095,833 of base capital notes issued by the NZACU
unchanged from the position ($3,095,833 as at 30 June 2013). While these
investments are permitted under the Trust Deed as investments in a "Prime Debtor",
there are no trust or security arrangements governing these investments. Further,
there is no active market for the base capital notes issued by the NZACU.
Accordingly, there is a concentration of credit risk with respect to the Credit Union's
investments in the NZACU, which are unsecured. The Credit Union continues to
CRE36369 4442528.1
29
actively monitor the NZACU's performance, the Credit Union's exposure to this credit
risk, and the need to impair its investments with the NZACU.
NZACU services risk
The Credit Union invests deposits in, and is reliant on, the NZACU to provide the
Credit Union with essential services such as its core computer operating system, a
central bank and "treasury" function, debit card facilities and insurance products.
Accordingly, there is a concentration of credit risk with respect to investments by the
Credit Union in the NZACU which are also unsecured. In the unlikely event that the
NZACU failed the immediate short term ability of the Credit Union to continue to
provide services to its Members will be impeded.
Liquidity risk
Liquidity risk arises from not having enough cash to meet financial obligations as they
fall due. This risk can arise from a mismatch in the maturity of monetary assets and
liabilities. The Credit Union manages this risk by producing a regular maturity cash
flow report, forecasting trend and expected cyclical liquidity requirements, and
generally monitoring the maturity profile of assets and liabilities. The Credit Union is
also able to manage its liquidity risk by limiting withdrawals in certain circumstances,
as described at paragraph 1.5 ("Withdrawals"). The Credit Union has a standby
facility of $2,500,000 available with the NZACU to assist with managing the liquidity
risk.
The Credit Union's monetary assets and liabilities have differing maturity profiles
depending on the contractual term and in the case of loans the repayment amount
and frequency. The period in which different monetary assets and liabilities held will
mature and be eligible for renegotiation or withdrawal can be found in note 19 to the
most recent audited financial statements of the Credit Union for the year ended 30
June 2014, attached as Appendix Two.
Change in credit rating
At the date of this amended Prospectus, the Credit Union has a Standard & Poor's
issuer credit rating of BB with a Negative Outlook. For more information about this
credit rating see paragraph 11.3.
In the event that this credit rating was downgraded it may have a material and
adverse impact on withdrawal and reinvestment rates for maturing term shares and
on the Credit Union's ability to raise new funds from Prospective Members and
Members.
If, as a result of such event, the Credit Union was unable to raise funds, the cost of
raising funds were to increase, or significant numbers of shares were withdrawn, this
may have a material and adverse effect on the financial performance and financial
condition of the Credit Union.
Insolvency
The Credit Union must remain solvent, that is, its assets must exceed its liabilities
and it must be able to meet its debts as they fall due. Long-term profitability
contributes towards solvency as this enables the Credit Union to maintain adequate
reserves.
The Credit Union could become insolvent and/or be wound up if a significant amount
of the loans due for repayment remain unpaid for an extended period of time, or
where as a result of the risks identified in this Prospectus or otherwise, the Credit
Union is for any reason unable to pay its debts as they fall due.
If the Credit Union becomes insolvent:
(a)
CRE36369 4442528.1
Members will not be required to pay any additional money other than those
amounts (if any) the Members owe to the Credit Union under the shares
and/or any loan;
30
(b)
the Credit Union is legally obliged to reject all requests for withdrawals from
Share Accounts, and will not be entitled to make any further loans from the
Credit Union's share capital; and
(c)
all Members' claims will rank equally (including those who invest under a later
prospectus) (however, see paragraph 7 ("Ranking of securities")).
Winding up
On a dissolution or winding up of the Credit Union, Members will receive no more
than $1 per share plus any returns owing at the time of dissolution or winding up.
Members do not share in any surplus arising from the sale of the Credit Union's
assets. Such surplus will be applied in accordance with the Rules and either paid to
the NZACU or applied to charitable purposes if 75% of Members pass a resolution to
that effect at a General Meeting called to dissolve or wind up the Credit Union.
Risk and return
Before making an investment in the shares, Prospective Members and Members
should consider the special trade factors and risks for that investment against the
returns offered. Investors should be aware that there is a direct relationship between
the risks of the investment and the return offered.
9.2
Securitisation
The Credit Union has recently undertaken a strategic review of its capital structure
and funding arrangements with a view to ensuring it is maximising its ability to use
Members' savings for their mutual benefit.
As a result of this review, the Credit Union believes that its Members would benefit
from a diversification of the Credit Union's funding sources. This is because Credit
Union's ability to make loans to Members is currently constrained by the value of
shares on issue at any time and their term.
The Board of the Credit Union has approved an initiative to investigate whether the
Credit Union should diversify its funding by entering into a securitisation programme,
including (but not limited to) seeking advice from professional advisers, engaging with
an arranging bank, discussing the securitisation programme with rating agencies,
regulators and other key stakeholders and preparing draft documentation. Before the
Credit Union commits to proceed with the securitisation programme, the transaction is
subject to Member and Prudential Supervisor approval, and the final approval of the
Board. The Board has authorised the Credit Union to incur costs of up to $600,000.00
in relation to the potential securitisation programme.
The benefits and risks associated with a securitisation transaction are being
evaluated by the Credit Union.
If the outcome of the investigation is favourable for proceeding with the securitisation
programme, the Credit Union will provide more information to its Members about the
securitisation programme and the benefits and risks of undertaking the transaction.
This is expected to be around the time of the Credit Union's 2015 AGM.
9.3
Guarantors
No person (including the Prudential Supervisor, the directors, trustees and audit
committee) guarantees the repayment of the value of the shares, or the payment of
any returns payable on shares.
9.4
Surety and insurance
Section 114 of the Act requires the officers of the Credit Union to give security for the
proper performance of their duties. An officer may do this by having one or more
people stand surety for his or her obligations, or by including the security in the
insurance policy offered under section 133 of the Act (see below), or by a specially
authorised friendly society, association of credit unions or insurance company.
CRE36369 4442528.1
31
At the date of this Prospectus, the officers' obligations are secured by way of an
insurance policy with Vero Liability Insurance Limited.
The Credit Union is also required by section 133 of the Act to be insured against
fraud or dishonesty. At the date of this Prospectus, the Credit Union has an
insurance policy with Vero Liability Insurance Limited in compliance with its
obligations under the Act
9.5
Other terms
All the terms of the Offer of shares in the Credit Union are set out in this Prospectus,
other than those implied by law or set out in a document that is:
(a)
registered with a public official;
(b)
available for public inspection; and
(c)
referred to in this Prospectus.
10.
PLACES OF INSPECTION OF DOCUMENTS
10.1
Credit Union
Each Prospective Member and Member is entitled to obtain, on request and free of
charge, the most recent copies of:
(a)
the Rules;
(b)
this Prospectus and the Credit Union's current investment statement;
(c)
the Trust Deed and any material contracts; and
(d)
the Credit Union's most recent audited financial statements.
The documents can be requested from or inspected at any one of the Credit Union's
service centres during the office hours detailed at paragraph 1.1 ("Credit Union
Service Centres").
10.2
Companies Office
Copies of:
(a)
the Rules;
(b)
this Prospectus;
(c)
the Trust Deed and any material contracts referred to in this Prospectus;
(d)
the Credit Union's audited financial statements; and
(e)
all other documents relating to the Credit Union's registration,
are also filed on a public register at the Companies Office. You will be able to view
most of the above documents via the Companies Office's website at
wvvw.business.govt.nz/companies/ by selecting "Search Other Registers" and
searching the Credit Union's name (Credit Union South) or registration number
(1802885). If a document is not available via the Companies Office's website you will
need to contact the Ministry of Business, Innovation and Employment's Business
Service Centre by Freephone at 0508 266 726 to arrange for the document to be
made available.
CRE36369 4442528.1
32
11.
OTHER MATERIAL MATTERS
Securities Act (Credit Unions) Exemption Notice 2010
In registering this Prospectus, the Credit Union has relied on the exemptions
contained in the Securities Act (Credit Unions) Exemption Notice 2010, whereby the
Credit Union has been granted an exemption from compliance with sections
37A(1)(d), 51, 52 and 54 of the Securities Act 1978 and clauses 1(3) and 12 of
Schedule 2, and regulation 40 of the Securities Regulations 2009 (in so far as that
regulation deems clauses 1(2) and 3 of Schedule 15 of the Securities Regulations
2009 to be contained in the trust deed relating to the debt securities). These
exemptions are subject to the conditions set out in the Securities Act (Credit Unions)
Exemption Notice 2010.
11.2
FMC Act
The Credit Union has until 1 December 2016 to transition to the new FMC Act
provisions unless it elects to opt in at an earlier date. There will be costs involved with
implementing the new regime. The Credit Union anticipates transitioning to the new
FMC Act by the end of the year. For more detail see paragraph 9.1 "Regulatory
Risks".
11.3
Credit Rating
At the date of this amended Prospectus the Credit Union has a Standard & Poor's
issuer credit rating of BB with a Negative Outlook. On 13 December 2011, Standard
& Poor's updated the Credit Union's credit rating from BB with a Stable Outlook to
BB- with a Stable Outlook. On 12 December 2012, the Credit Union's credit rating
was re-affirmed as BB- with a Stable Outlook. The Credit Union's credit rating was
updated from BB- with a Stable Outlook to BB- with a Negative Outlook on 16 May
2013 due to factors external to the Credit Union. On 10 December 2013 the Credit
Union's credit rating was updated again from BB- with a Negative Outlook to BB- with
a Developing Outlook. The Credit Union's credit rating was updated again on 11
December 2014 to BB with a Negative Outlook. The Credit Union obtained its first
credit rating on 19 February 2010.
The rating, which is an opinion of the creditworthiness of the Credit Union, has been
provided by Standard & Poor's, an internationally recognised ratings agency
approved by the Reserve Bank under section 157J of the Reserve Bank Act.
A Standard & Poor's issuer credit rating is an opinion about an obligor's (in this case
the Credit Union's) overall financial capacity to pay its financial obligations (i.e. its
creditworthiness). This opinion focuses on the obligor's capacity and willingness to
meet its financial commitments as they come due. A credit rating does not apply to
any specific financial obligation, as it does not take into account the nature of and
provisions of the obligation, its standing in bankruptcy or liquidation, statutory
preferences, or the legality and enforceability of the obligation.
Issuer credit ratings can be either long-term or short-term. Long-term issuer credit
ratings reflect the obligor's creditworthiness over a time period of one year or more.
Short-term issuer credit ratings reflect a shorter time period.
A local currency rating is an obligor's capacity to repay obligations in its local
currency, being New Zealand dollars.
The rating scale used by Standard & Poor's represents the breadth of opinions about
the creditworthiness of an issuer.
The long-term issuer rating categories, from strongest credit worthiness to most
vulnerable, are outlined below.
CRE36369 4442528.1
33
Category
Definition
MA
An obligor rated AAA has extremely strong capacity to meet its financial
commitments. AAA is the highest issuer credit rating assigned by
Standard & Poor's.
AA
An obligor rated AA has very strong capacity to meet its financial
commitments. It differs from the highest-rated obligors only to a small
degree.
A
An obligor rated A has strong capacity to meet its financial commitments
but is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligors in higher-rated
categories.
BBB
An obligor rated BBB has adequate capacity to meet its financial
commitments. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitments.
BB;
B; Obligors rated 'BB', 'B', 'CCC', and 'CC' are regarded as having
CCC; and significant speculative characteristics. 'BB' indicates the least degree of
speculation and 'CC' the highest. While such obligors will likely have
CC
some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB
An obligor rated BB is less vulnerable in the near term than other
lower-rated obligors. However, it faces major ongoing
uncertainties and exposure to adverse business, financial, or
economic conditions, which could lead to the obligor's inadequate
capacity to meet its financial commitments. This is the Credit
Union's credit rating.
An obligor rated B is more vulnerable than the obligors rated BB, but the
obligor currently has the capacity to meet its financial commitments.
Adverse business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitments.
CCC
An obligor rated CCC is currently vulnerable, and is dependent upon
favourable business, financial, and economic conditions to meet its
financial commitments.
CC
An obligor rated CC is currently highly vulnerable. The 'CC' rating is
used when a default has not yet occurred, but Standard & Poor's
expects default to be a virtual certainty, regardless of the anticipated
time to default.
An obligor rated 'R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision the
regulators may have the power to favor one class of obligations over
others or pay some obligations and not others.
SD and D
An obligor rated 'SD' (selective default) or 'D' is in default on one or
more of its financial obligations including rated and unrated financial
obligations but excluding hybrid instruments classified as regulatory
capital or in non-payment according to terms. An obligor is considered in
default unless Standard & Poor's believes that such payments will be
made within five business days of the due date in the absence of a
stated grace period, or within the earlier of the stated grace period or 30
calendar days. A 'D' rating is assigned when Standard & Poor's believes
that the default will be a general default and that the obligor will fail to
pay all or substantially all of its obligations as they come due. An 'SD'
rating is assigned when Standard & Poor's believes that the obligor has
selectively defaulted on a specific issue or class of obligations but it will
continue to meet its payment obligations on other issues or classes of
obligations in a timely manner. An obligor's rating is lowered to 'D' or
'SD' if it is conducting a distressed exchange offer.
NR
An issuer designated NR' is not rated.
CRE36369 4442528.1
34
Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-)
sign to show relative standing within the major rating categories.
A Standard & Poor's rating may also include an 'Outlook' assessment. An Outlook
assessment considers the potential direction of a long-term credit rating over the
intermediate term (six to twenty four months) but does not mean the rating will
change. The principal Outlook definitions include: Positive — the rating may be
raised; Negative — the rating may be lowered; Developing — the rating may be raised,
lowered or remain the same depending on a number of economic factors; and Stable
— the rating is not likely to change. At the date of this Prospectus, the Credit Union
has a Developing Outlook.
An obligor, such as the Credit Union, rated "BB" is less vulnerable in the near-term
than other lower-rated obligors. However, it faces major ongoing uncertainties and
exposure to adverse business, financial, or economic conditions which could lead to
the obligor's inadequate capacity to meet its financial commitments.
Standard & Poor's ratings are statements of opinion, not statements of fact or
recommendations to buy, hold or sell any securities or make any other investment
decisions. Accordingly, any user of credit ratings should not rely on any such ratings
or other opinion issued by Standard & Poor's in making any investment decision.
Ratings are based on information received by Standard & Poor's. Ratings may be
changed, withdrawn or suspended at any time
For the latest ratings information, please visit:
www.standardandpoors.com/home/en/au or see NZCU South Investor Information at
https://nzcusouth.co.nz/about-nzcu-south/investor-information/
11.4
FSCL Dispute Resolution Scheme
The Credit Union joined FSCL's Dispute Resolution Scheme on 11 September 2013,
having previously been a member of the Banking Ombudsman's Dispute Resolution
Scheme since 1 December 2010. The FSCL Dispute Resolution Scheme is an
approved dispute resolution scheme under the Financial Service Providers
(Registration and Dispute Resolution) Act 2008.
A member who has made a complaint to the Credit Union without the issue being
resolved to their satisfaction, may refer the matter to FSCL for resolution by
Freephone at 0800 347 257, by email at infofscl.orq.nz, or by writing to:
Financial Services Complaints Limited
PO Box 5967
Lam bton Quay
Wellington 6145
There is no cost to the member should FSCL investigate the member's complaint.
Further information about FSCL's Dispute Resolution Scheme is available at
www.fscl.org.nz
11.5
Not a registered bank
The Credit Union is not a registered bank in terms of the Reserve Bank of New
Zealand Act 1989.
11.6
NZACU dispute
The Credit Union was in a dispute with NZACU regarding certain contractual
obligations. The parties have attended mediation in early 2014 and this dispute has
now been resolved. As at the date of this Prospectus, the Directors do not believe
that the outcome of this dispute has had a material adverse effect on the financial
performance or position of the Credit Union.
CRE36369 4442528.1
35
11.7
No other material matters
There are no material matters relating to the Offer of shares under this Prospectus
other than those set out in this Prospectus (other than contracts entered into in the
ordinary course of business).
12.
Summary Financial Statements of the Credit Union in respect of the consecutive
financial periods, (the 15 months) ended 30 June 2010, the years ended 30 June
2011, 30 June 2012, 30 June 2013 and 30 June 2014, being the date of the latest
audited financial statements of the Credit Union, are attached as Appendix One.
13.
The Credit Union's most recent audited financial statements are for the year ended
30 June 2014 and are attached as Appendix Two. The audited financial statements
were registered under the Financial Reporting Act 1993 on 3 October 2014.
14.
ACQUISITION OF BUSINESS OR SUBSIDIARY
On 4 July 2014 Credit Union acquired a 66.67% shareholding in Taxcheck.co.nz
Limited, a tax refund checking business for the sum of $20,000. The Prudential
Supervisor consented to the Credit Union acquiring the shareholding pursuant to
clause 5.2(e) of the Trust Deed.
15.
DIRECTORS' STATEMENT
The directors after due enquiry in relation to the period between the date of the latest
financial statements referred to in the Prospectus and the date this Prospectus was
delivered for registration, are of the opinion that, no circumstances have arisen that
materially and adversely affect:
16.
(a)
the trading or profitability of the Credit Union;
(b)
the value of the Credit Union's assets; and
(c)
the Credit Union's ability to pay its liabilities due within the next 12 months.
The independent auditors' report as described by clause 22 of the Regulations is
included in Appendix Three to this Prospectus. The independent auditors' report was
not modified in any respect.
CRE36369 4442528.1
36
THIS PROSPECTUS has been duly signed by each of the directors of Credit Union South or
by their agent authorised in writing.
John Marriott SHEARD
Anthony Robert DUNSTAN
Peter Anthony BOOTH
Janice Evelyn FREDRIC
Peter Len MCKNIGHT
CRE36369 4442528.1
37
INDEX OF MATTERS REQUIRED TO BE DISCLOSED BY
SCHEDULE 2 TO THE SECURITIES REGULATIONS 2009
Clause
Paqe(s)
1
Main terms of offer
3
2
Name and address of offeror
3
3
Details of registration of issuer
15
4
Guarantors
30
5
Names, addresses and other information
16
6
Restrictions on directors' powers
18
7
Description of activities of borrowing group
8
Summary financial statements
35
9
Acquisition of business or subsidiary
35
10
Material contracts
18
11
Pending proceedings
18
12
Issue expenses
13
Ranking of securities
18
14
Provisions of the Trust Deed and other restrictions on borrowing group
19
15
Other terms of offer and securities
31
4
N/A
16-18 Requirements in respect of financial statements
35
19
Places of inspection of documents
31
20
Other material matters
32
21
Directors' statement
35
22
Independent Auditors' report
35
CRE36369 4442528.1
GLOSSARY
In this Prospectus, unless the context requires otherwise:
Account has the same meaning as Share
Account;
Act means the Friendly Societies and
Credit Unions Act 1982;
loans means the loan advances made by
the Credit Union from the share capital of
the Credit Union to its Members, as more
fully detailed at paragraph 1.6;
AGM means an annual general meeting of
Members;
Maturing Account means a Term Share
Account and/or Special Share Account (as
appropriate);
Amendment Act means the Friendly
Societies and Credit Unions Amendment
Act 2012;
Member means a person who holds
shares in the Credit Union, and includes
Non-Qualifying Members;
Board means the board of directors of the
Credit Union;
Credit Union means Credit Union South
(trading as NZCU South);
Member Rebate Programme means the
programme by which the Credit Union may
rebate all or part of the fee and charges
paid by a Member in any month, as more
fully detailed at paragraph 1.5;
Directors' Quarterly Certificate means
the certificate provided by the directors as
detailed at paragraph 8.1;
Membership Criteria means those criteria
for membership of the Credit Union, set
out at paragraph 1.3;
Directory means the directory of advisers
to the Credit Union set out at page 1 of
this Prospectus;
NBDT means a non-bank deposit taker;
Equitable Assignment means the first
ranking equitable assignment by way of
security granted by the Credit Union in
favour of the Prudential Supervisor to
secure the Credit Union's obligations to
repay monies owing on shares, as more
fully detailed at paragraph 7;
FMC Act means the Financial Markets
Conduct Act 2013;
FSCL means Financial Services
Complaints Limited as detailed at
paragraph 11.4;
NBDT Act means the Non-bank Deposit
takers Act 2013;
Non-Qualifying Member means a person
who holds shares in the Credit Union but
who no longer meets the Membership
Criteria;
Notice of Withdrawal Account means
those Share Accounts detailed paragraph
1.5;
NZACU means the New Zealand
Association of Credit Unions trading as
Co-op Money NZ;
General Meeting means an AGM and/or
an SGM, as appropriate;
Offer means the offer of shares pursuant
to this Prospectus, more fully detailed at
paragraph 1.3;
IRD means the Inland Revenue
Department;
On-Call Account means those Share
Accounts detailed paragraph 1.5;
Liquid Asset Ratio has the meaning
given to that term at paragraph 8.1;
Prospective Member means a person
who meets the Membership Criteria but
does not have shares in the Credit Union;
CRE36369 4442528.1
Prudential Supervisor means Trustees
Executors Limited;
Special Share Account means those
Share Accounts detailed paragraph 1.5;
Registrar means the Registrar of Friendly
Societies and Credit Unions;
Term Share Account means those Share
Reserve Bank means the Reserve Bank
of New Zealand;
Terms and Conditions means the terms
Reserve Bank Act means the Reserve
Bank of New Zealand Act 1989;
Rules means the most recently amended
version of rules of the Credit Union;
RWT means Resident Withholding Tax;
SGM means a special general meeting of
Members;
Share Account means a share account
operated by the Credit Union in which
Members must place their shares, as more
fully described at paragraph 1.5;
Accounts detailed paragraph 1.5;
and conditions applicable to each Share
Account, as detailed in general terms at
paragraph 1.5 and more fully in Appendix
Four;
Trust Deed means the Trust Deed
entered into by the Prudential Supervisor
and the Credit Union, dated 7 February
2001, as amended by a deed of
modification to the Trust Deed dated 15
October 2002, a deed of modification to
the Trust Deed dated 19 November
2010,a deed of modification to the Trust
Deed dated 26 November 2012 and a
deed of modification to the Trust Deed
dated 21 October 2014 and registered with
the Registrar of Financial Service
Providers;
Shareholding means, in relation to a
Member, all of that Member's shares in the
Credit Union;
Unsecured Investment Ratio has the
meaning given to that term at paragraph
8.1; and
shares means the shares in the capital of
the Credit Union issued under this
Prospectus (or under any other prospectus
where the context requires);
Special Resolution has the meaning
given to that term in the Act;
CRE36369 4442528.1
References to chairperson, director,
secretary, treasurer, trustee and vicechairperson is a reference to those
officers of the Credit Union.
APPENDIX ONE
[Paragraph 12]
APPENDIX ONE - SUMMARY FINANCIAL STATEMENTS
SUMMARY FINANCIAL STATEMENTS FOR THE CREDIT UNION
CREDIT UNION SOUTH
Statement of Comprehensive income (in NZ 8'000)
NZ IFRS
Twelve months to
30-Jun-14
NZ IFRS
Twelve months to
30-Jun-13
NZ IFRS
Twelve months to
30-Jun-12
NZ FRS
Twelve months to
30-Jun-11
NZ IFRS
Fifteen months to
30-Jun-10
Interest revenue
Other revenue
Total revenue
11,937
5,693
17,631
11,870
5,146
17,010
13,171
4,503
17,734
13,880
4,603
18,483
10,396
5,364
21,760
Employee benefits
Bad and doubtful loans
Occupancy leases
Depreciation
interest expense
Other expenses
Total expenses
5,222
1,118
679
362
2,721
7,349
17,351
4,726
1,115
617
404
2,804
7,158
16,884
5,050
1,377
639
685
3,228
6,348
17,327
4,829
1,567
525
722
3,478
6,511
17,632
5,410
2,254
669
863
4,137
7,713
21,046
279
132
407
851
714
279
132
407
851
714
17,254
851
18,540
714
Net surplus before taxation
Tax expense
Total comprehensive income
Statement of Changes In Equity (In NZ $'000)
Opening equity
Total Comprehensive income
Transfer merging Credit Unions
Property Revaluation Reserve
Unrealised loss interest rate swaps
Closing equity
18,844
279
18,512
132
18,105
407
18,644
18,512
18,105
17,254
3,698
15,600
•
954
19,877
Balance Sheet (in NZ $'000)
Cash and cash equivalents
Deposits at NZ Association of Credit Unions
Deposits at Registered Banks
Trade and other receivables
Loans to members
Derivatives - interest rate swaps
Capital notes
Property, plant and equipment
Intan ible Assets
Total assets
2,905
11,000
11,025
1,086
81,526
2,819
15,000
15,003
1,020
69,951
2,794
18,500
15,000
989
72,891
2,845
23,000
1,000
463
83,850
444
87,864
3,096
2,105
142
112,885
3,096
1,183
3,096
1,618
3,096
1,947
3,096
1,942
108,072
114,888
116,207
112,644
Trade and other payables
Employee entitlements
Derivatives - Interest rate swaps
Members' deposits
Total liabilities
(1,696)
(465)
(90,847)
(93,008)
(86,547)
(89,428)
(2,455)
(672)
(22)
(93,227)
(96,376)
(2,163)
(038)
(191)
(95,110)
(98,102)
(1,887)
(568)
(283)
(92,652)
(95,390)
19,877
18,644
18,512
18,105
17,254
Net assets
(2,287)
(594)
Statement of Cash Flows (in NZ $'000)
Net cash from operating activities
Net cash from (or used In) investing activities
Net cash from (or used In) financing activities
Total net Increase (decrease) In cash held
Cash at beginning of the financial period
Net cash transferred in from merging Credit Unions
Gash at the end of the financial period
1,232
(9,424)
4,300
(3,892)
25,822
1,707
501
(6,680)
(4,472)
30,294
2,245
3,087
(1,883)
3,449
26,845
3,456
1,633
2,458
7,647
19,298
3,656
(3,485)
4 623
4,794
14,504
21,930
25,822
30,294
26,845
19 298
2,905
11,000
8,025
21,930
2,819
15,000
8,003
25,822
2,794
18,500
9,000
30,294
2,845
23,000
1,000
26,845
3,698
15,000
Represented by:
Cash and Cash Equivalents
Deposits at NZ Association of Credit Unions
Deposits at Registered Banks due within 90 days
19,298
Notes to Summary Financial Statements
1. This Summary Financial Statements was authorised for issue, by the Board, on the date of this Prospectus,
2. The specific disclosures Included in this Summary Financial Statements have been extracted from the full financial statements for each relevant period.
3. The full financial statements for each relevant period have been audited and each auditors report is unqualified.
There have not been any references in the independent auditor's reports In the last 5 years to an emphasis or matter or fundamental uncertainty and
they were not modified In any way.
4. The full financial statements have been authorised for Issue as follows:
a. for the year ended 30 June 2014 on 8 September 2014
b. for the year ended 30 June 2013 on 30 August 2013
c.for the year ended 30 June 2012 on 31 August 2012
d. for the year ended 30 June 2011 on 19 August 2011
e. for the 15 month period ended 30 June 2010 on 5 August 2010
5. The full financial statements have been prepared In accordance with NZ GAAP ("Generally Accepted Accounting Practice")
6, The Credit Union is a public-benefit entity and Is an individual entity..
7. Statement of compliance with NZ IFRS:
a. The full financial statements for the year ended 30 June 2014 in Appendix Two were prepared in accordance with NZ IFRS as
appropriate for public-benefit entitles.
b. The full financial statements for the year ended 30 June 2013 were prepared in accordance with NZ IFRS as appropriate for
public-benefit entities.
c. The full financial statements for the year ended 30 June 2012 were prepared in accordance with NZ IFRS as appropriate for
public-benefit entitles.
d. The full financial statements for the year ended 30 June 2011 were prepared in accordance with NZ IFRS as appropriate for
public-benefit entities.
e. The full financial statements for the fifteen months ended 30 June 2010 were prepared in accordance with NZ IFRS as
appropriate for public-benefit entities.
8. The presentation currency Is $NZ.
9. The Summary Financial Statements are a summary of the full financial statements and do not include all the disclosures provided In the
financial statements and cannot be expected to provide as complete an understanding as provided by the full financial statements.
10 Please refer to paragraph 10 headed "Places of inspection of Documents for details on how to obtain a copy of the full financial statements.
11, This Summary Financial Statements has been prepared in accordancemith FRS-43 Summary Financial Statements. The components of the
cash balances at the end of the financial periods ended 30 June 2011 and 30 June 2010 have been restated to include short term deposits
held at the NZ Association of Credit Unions and with Registered Banks, which were previously reported as investing activities.
12.No amounts have been provided for or credited by way of taxation as the Credit Union income is exempt under Section CW 44 of the Income
Tax Act 2007.
13.The equity method of accounting has not been used.
14.There are no contingent liabilities.
15, The Credit Union changed Its balance data from 31 March to 30 June and the period from 1 April 2009 to 30 June 2010 covered fifteen months.
16. For the year ended 30 June 2014, Land and Buildings are shown at fair value based on valuations by external independent valuers, less
subsequent depreciation. Valuations are performed with sufficient regularity to ensure the fair value of the revalued asset does not differ
materially from It's carrying amount,
For accounting periods ending 30 June 13 and earlier, Land and Buildings are stated at historical cost less depreciation and any impairment
losses.
Reference may be made to note 2 (n) to the financial statements contained in Appendix 2.
APPENDIX TWO
AUDITED ANNUAL FINANCIAL STATEMENTS
[Paragraph 13]
nzcu
south
CREDIT UNION SOUTH
FOR THE YEAR ENDED 30 JUNE 2014
CREDIT UNION SOUTH
CONTENTS OF FINANCIAL STATEMENTS
Directory
Statement of Comprehensive Income
Page 1
Statement of Changes in Equity
Page 2
Balance Sheet
Page 3
Statement of Cash Flows
Page 4
Notes to the Financial Statements
Page 6-27
CREDIT UNION SOUTH
(trading as NZGU South)
DIRECTORY
Board of Directors
Bevan E KiIlick
Peter C L Taylor
Dominique F Dowding
Anthony R Dunstan
John M Sheard
Peter L McKnight
Peter A Booth
Trustees
John M Sheard
Peter C L Taylor
Peter L McKnight
Management
Tanis E Dickie
Andrew D Leys
Craig W Taylor
Daryl A Soal
Marilyn G Richardson
Jonet F Warhurst
W Helen Malcolm
Michelle J Reihana
Chair and Independent Director
Deputy Chair and Elected Director
Secretary and Independent Director
Treasurer and Elected Director
Elected Director
Elected Director
Elected Director
Chair
Chief Executive Officer
Appointed 1 April 2014
Chief Executive Officer
Resigned 10 January 2014
Contract Chief Finance Officer
Finance Manager
Lending Manager
Marketing Manager
Collections Manager
Resigned 20 June 2014
Support Services Manager
Auditors
PricewaterhouseCoopers, Dunedin
Bankers
NZ Association of Credit Unions' Transactional Banking Facility
Westpac Banking Corporation, Dunedin North
Solicitors
Lane Neave Lawyers, Christchurch (Prospectus and Security Regulations Compliance)
Trustees Executors Limited, Auckland
Affiliations
New Zealand Association of Credit Unions
Credit Union Institute of New Zealand
Sovereign Home Loans and Life Insurance
CREDIT UNION SOUTH
STATEMENT OF COMPREHENSIVE INCOME
Note
TOTAL OPERATING REVENUE
2014
$'000
2013
$'000
17,631
17 016
,
Interest revenue
3(a)
11,937
11,735
Interest expense
3(b)
2,721
2,804
9,216
8,931
5,693
5,281
14,909
14,212
Net Interest Revenue
Other Income
3(c)
OTHER EXPENSES
Bad and doubtful loans
3(d)
1,118
1,115
Employee benefits
3(e)
6,222
4,726
579
617
Occupancy - operating leases
Depreciation
3(0
362
464
Other administration expenses
3(g)
7,349
7,158
14,630
14,080
OPERATING SURPLUS
279
132
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified as profit or loss
Revaluation of Property
954
TOTAL EXPENSES
TOTAL OTHER COMPREHENSIVE
INCOME
TOTAL COMPREHENSIVE INCOME
954
1 233
132
The attached notes to the financial statements form part of and should be read in conjunction with the financial statements.
Page 1
CREDIT UNION SOUTH
STATEMENT OF CHANGES IN EQUITY
Note
General
Reserve
Retained
Earnings
Property
Revaluation
$000
$'000
Reserve
Total
VON
18,644
18,644
Operating surplus
279
279
279
279
Balance at 1 July 2013
Other Comprehensive Income
Revaluation of Property
12
Total Other Comprehensive Income
Balance at 30 June 14
4
Transfer from General Reserve to Retained
Earnings
Total transferred
4
-
18,923
6,306
12,206
(6,306)
6,306
(6,306)
6,306
954
964
954
954
954
19,877
18,612
Operating surplus
132
132
132
132
18,644
18,644
4
The attached notes to the financial statements form part of and should be read In conjunction with the financial statements.
Page 2
CREDIT UNION SOUTH
BALANCE SHEET
AS AT 30 JUNE 2014
Note
30 June 14
$1000
30 June 13
V000
MEMBERS' FUNDS
Retained earnings
4
4
18,923
954
18,644
19,877
18,644
6
2,905
2,819
6
6a
7
8-9
11,000
11,025
11 086
811526
15,000
15,003
1,020
69,951
11
12
12b
3,096
2,105
142
3,096
1,183
112,885
1081072
1,696
465
90,847
2,287
594
86,547
TOTAL LIABILITIES
93,008
89,428
NET ASSETS
191877
18,644
TOTAL MEMBERS' FUNDS
ASSETS
Deposits at New Zealand Association of
Credit Unions
Deposits at Registered Banks
Loans to members
New Zealand Association of Credit Union
Capital Notes
Property, plant and equipment
Intangible Assets
TOTAL ASSETS
LIABILITIES
Employee entitlements
Members' deposits
13
14
These financial statements are authorised for and on behalf of the Board by:
Bevan killick, Director
8 September 2014
Peter Taylor, Director
8 September 2014
Page 3
CREDIT UNION SOUTH
STATEMENT OF CASH FLOWS
Note
2014
$'000
2013
$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Dividends received .. NZACU Capital Notes
Fees and commissions received
Bad loans recovered
Interest paid
Payments to suppliers and employees
Net cash provided by operating activities
24
11,882
144
6,638
259
(3,312)
(13,279)
12,154
206
5,146
296
(2,958)
(13,136)
1,232
1,707
(12,952)
1,530
(472)
(29)
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase)/decrease in members' loans
Payments for plant, equipment and intangible assets
12
Decrease/(Increase) in term deposits with registered
banks
4,000
Net cash provided (used) by investing activities
(9,424)
(1,000)
501
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase/(decrease) in members' deposits
4,300
(6,680)
Net cash provided by/(used in) financing activities
4,300
(6,680)
Total net (decrease)/increase in cash held
Cash at the beginning of the period
(3,892)
25,822
(4,472)
30,294
Cash at the end of the period
21,930
25,822
Represented by:
Deposits at New Zealand Association of Credit Unions
Call and Short Term Deposits at Registered Banks
5
6
6a
2,905
11,000
8,025
2,819
15,000
8,003
21,930
25,822
Page 4
CREDIT UNION SOUTH
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Reporting Entity
The Credit Union is a financial Institution that is registered as a credit union under the Friendly Societies and Credit Unions Act 1982. The
purpose of the Credit Union Is to promote savings among Its members and to use those savings for their mutual benefit. The Credit Union
operates primarily in the South Island of New Zealand with Its registered office at 26 Fittest Street, Dunedin. As the Credit Union is providing a
community and social benefit, It Is designated a public benefit entity.
The Credit Union is restricted in Its borrowings and members contribute to the Credit Union by way of share subscriptions. The shares cannot
be transfemed or sold. Members are able to withdraw their funds subject to certain conditions. The Credit Union makes loans to members or
Invest funds on the members' behalf. Interest and other Income ore received by the Credit Linton and interest is paid ta depositing members
In the form of Interest on shares.
The Credit Union operates predominantly In one industry, being the investment of members' funds.
Trust Deed
To meet the requirements of The Securities Act 1978 a Trust Deed was entered into on 7 February 2001 between the Truatees of the Credit
Union and Trustees Executors Limited. Trustees EXecutore Limited as the Prudential Supervisor was appointee' to act in the interests of the
members of the Credit Union by monitoring the compliance by the Credit Union of its obligations, its Rules, the Trust Deed and the Friendly
Societies and Credit Unions Act 1982. In addition, the Prudential Supervisor is under duty to exercise reasonable diligence to ascertain
whether the Credit Union hae committed any breach or the Trust Deed or any of the conditions of issue of the shares: and bee sufficient assets
to meet its obligations to members, as they fail due.
2 STATEMENT OF ACCOUNTING POLICIES
The following are the material accounting policies adopted by the Credit Union In the preparation of the financial statements. Except where
stated, the accounting policies have been consistently applied to at periods presented.
(a) Basis of Preparation
The credit Union Is an Issuer for the purposes of the Financial Reporting Act 1993. The financial report Is a general purpose financial report
which has been prepared in accordance with the Financial Reporting Act 1003, the Frendly Societies and Credit Unions Act 1982 and the
Securities Regulations 2009
These financial statements were authorised for issue by the Directors on the date shown on the Balance Sheet on page three,
These financial statements are required to be registered to keep the prospectus current and have been prepared in accordance with New
Zeatand Generally Accepted Accounting Practice. They comply with the New Zealand equivalents to international Financial R eporting
Standards ('NZ IFRS'), International Financial Reporting Standards and other applicable Financial Repotting Standards as appropriate for
public benefit entitles. The comparative figures shown for 30 June 2013 have been taken rem the corresponding audited financial statements.
The financial statements have been prepared in accordance with the historical east convention, as modified for derivative financial instruments
which are stated at their fair value. Accounting policies are selected and applied In a manner which ensures that the resulting financial
information satisfies the concepts of relevance and reliability, thereby ensuring that the substance Of the underlying transactions or other
events is reported.
The application of NZ IFRS required management to make judgements, estimates and asaumptions about the carrying values at assets and
liabilities not readily available from other sources. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, Actual results may differ from these estimates. The estimates and
underlying assumptions aro reviewed on an ongoing basis. Revisions lathe accounting estimates are recognised In the period In which the
estimate is revised if the revision affects only that period, or in the period or revision and future periods if the revision affects both current and
future periods.
The presentation end functional currency Is New Zealand dollars and figures are rounded to the nearest thousand dollars ($'000) unless
othetwise stated.
Page 5
CREDIT UNION SOUTH
(b) Revenue Recognition
Interest Revenue on loans
interest revenue on loans is calculated on the daily loan balance outstanding and is charged at each payment date. This is the effective interest
method which allocates the Interest over the term of the loans to which they relate. Interest Income on Impaired loans Is recognised using the
rata of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Investment Revenue
Investment Interest revenue is recognised, on an effective Interest method which alludes the Interest over the period that it relates to.
Dividends on the New Zealand Association of Credit Unions Capital Notes are recorded as income once an entitlement to the Income Is notified
to the Credit Union.
Fees & Commissions Revenue
Fees and commissions are brought to account on an accrual basis when the service has been provided.
(e) Expense Recognition
Interest expense
Interest on members shares Is recognised as an expense In the period that It relates to using the effective interest method, which allocates the
Interest expense over the term of the members' shares to which they relate.
Other expenses
Other expenses are recorded In the period to which they relate.
(d)income Tax
No amounts have been provided for Income Tax as the Credit Union's income from members is exempt under section OW 44 of the Income Tax
Act 2007. Income derived other than from members does not result In a taxable profit.
(e)Goods & services Tax
Revenue, expenses and assets are recognised net of GOT except Lathe extent that GST is not recoverable from the Inland Revenue. In these
drcumstances, GOT Is recogised as part of the expense or coat of the asset.
(t) Leases
Leases of property, plant and equipment are operating leases as the substantial risks and benefits incidental to ownership of the asset, are
retained by the legal owner. Lease payments for operating leases are charged as expenses in the periods in which they are incurred on a
straight line method.
(g) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at cat with banks, other short-term highly liquid investments with original
maturitles of three months or less, and bank overdrafts repayable on demand.
(It) Deposits at the New Zealand AssocThtion of Credit Unions and Registered Banks
Depoolts at the New Zealand Association or Credit Unions end Registered Banks are recorded at cast, less any impairment losses,
(i) Trade and Other Receivables
These amounts represent amounts due far interest owing and other services performed by the Credit Union prior to the end of the financial
period whiah are not received. The amounts are expected lobe received within a year of recognition. They ere Initially recorded at fair value and
subsequently measured at cost less any Impairment provision.
Loans to Members
Loans to members are loans which are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market, They are Initially recognised at fair value plus transaction costa and subsequently measured at amortised cost, using the effective
Interest method, less provision for impairment.
(k) impainn oat of Loans
An assessment is made at each balance date whether there is objective evidence that loans are Impaired. A loan is Impaired and Impartment
losses are Incurred if, end only If, there is objective evidence of impairment as a result of one or more events that occurred after the Initial
recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash [lows of the loan and can be
reliably estimated. Objective evidence that a mortgage receivable is Impaired includes observable data that comes to the anent* of the
directors about the following loss events;
• significant financial difficulty of the member;
• a breach of contract, such as a default or delinquency In Interest or principal payments;
• a concession granted to the borrower that the lender would not otherwise consider for economicor legal reasons relating to the borrower's
financial difficulty; or
• it becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
The amount provided for impairment of loans Is determined by management and the Directors. The Prudential Standards Issued by the New
Zeeland Association of Credit Unions enable the minimum provision lobe based on specific percentages of the loan balance, contingent upon
the length of time the repayments are in arrears, and the security held. This approach Is adopted by the Credit Union. In addition, the Directors
make a provision for loans in arrears where the oollectability of the debts is considered doubtful by estimation of expeoted losses In relation to
loan portfolloe where specific Identification Is Impracticable.
Page 6
CREDIT UNION SOUTH
The Credit Union first assesses whether objective evidence of impairment exists individually far financial assets that are individually significant
and individually or collectively for financial assets that are not Individually significant if the Credit Union determines that no objective evidence of
impairment exists for an Individually assessed financial asset, whether significant or not. It includes the asset In a group of financial assets with
similar credit risk charaoteristios and collectively aasesses them for impairment. Assets that are individually assessed for Impairment and for
which an impairment loss Is or continues to be recognised are riot Included In a collective assessment for impairment
The amount of the loss Is measured as the difference between the assets carrying amount and the present value or estimated future cash flows
(excluding future credit losses that have not been Incurred) discounted at the financial asset's original effective interest rate, The carrying
amount of the asset Is reduced through the use of an allowarthe account and the amount of the loss Is recognised in the Statement of
Comprehensive Income. If a loan or held-to-maturity investment has a variable Interest rate, the discount rate for measuring any impairment toss
is the current effective Interest rate determined under the contract. As a practical expedient the Credit Union may measure impairment on the
basis of an Instrument's fair value using an observable market price.
For the purpose of a collective evaluation of impairment, financial assets are grouped oil the basis of similar credit risk characteristics (that Is, on
the beets of the Credit Union's grading process that considers asset type, Industry, geographical location, collateral type, past-due status and
other relevant teeters).
Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being Indicative of the debtors' ability to pay
all amounts due according to the contractual terms of the assets being evaluated,
Future cash flows for a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash
flows of the es sate in the Credit Union and historical loss experience for assets with credit risk characteristics similar to those in the Credit Union
Historical loss experience Is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the
period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of assets retiedt and are directionally consistent with changes in related observable data
from period to period (for exemple. changes in unemployment rates, property prices, payment status, or other factors Indicative of changes In the
probability of losses in the Credit Union and their magnitude), The methodology and assumptions used for estimating future cash flows are
reviewed regularly by the Credit Union to reduce any differences between loss estimates and actual loss experience.
Loans which ere known to be uncollectible are written off against the related allowance for impairment Such loans are written off after all the
necessary Procedures have been completed and the amount of the loss has been determined.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised (such as an Improvement in the debtors credit rating), the previously recognised impairment loss is reversed by adjusting
the allowance amount, with the reversal being recognised In the Statement of Comprehensive income.
The various components of impaired assets are as follows:
individually impaired loans are loans and advances for which there is reasonable doubt that the Credit Union wilt he able to collect all amounts of
principal and interest in accordance with the terms of the agreement and for which an individual assessment of impairment is made,
Colleofively/mpakedfoans are loans and advances that are not individually assessed for which a collective assessment of impairment is made based
on the length of time the loan lain arrears.
Restructured loans are loans where the original contractual terms have been modified to provide for concessions of interest, principal or repayment
for reasons related to financial difficulties of the menthes.
Assets acquired through the enforcement of security are assets acquired in full or partial settlement of a than or similar facility through the
enforcement of seourth‘arrangemente.
Pest-due loons are loans or similar facilities in arrears when a member has failed to make payment when contractually due which are not Impaired
leans. DO day past due loans are loans which have not been operated by the member within Its' key terms feral least 00 days and which are not
Impaired loans.
Page 7
CREDIT UNION SOUTH
NOTES TO TFIE FINANCIAL STATEMENTS
(I) Derivative financial instrurnents
Derivatives (Interest rate swaps) are entered into for the purpose of economically manning the interest rate risk of the Credit Union's fixed interest
mortgage portIolle. Interest rate swaps are recognised at lair value through profiler loss. The derivatives are not designated as an accounting hedge.
There are no Interest rate swaps held at befence date.
(n1) New Zealand Association of Credit Unions Capital Notes
The eaplial Notes are held as "available-for-sale" assets and are initially recognised at the amountof consideration peld which Is their fair value at the
date of acquisition.
Dividend income from "available-for-sale' assets is separately recognised in the Statement of Comprehensive Income as part of other income whorl
the Credit Union's right to receive payments is established (ex-dividend date).
"Available-far-sale" financial assets are normally carried at fair value in subsequent periods with changes in fair value being recognised In the
Statement of Comprehenetve income as part of other comprehensive income. However, as the Capital Notes are equity instruments end do not have a
quoted market price In an active market and the fair value cannot be measured reliably, they are measured at cost price In terms of the accounting
standard NZ IAS 39. Note that this concession Is likely to be removed in filture With a requirement to measure capital notes at fair value subsequent to
initial recognition.
The Credit Union assesses at each balance date whether there Is objective evidence that a financial asset or a group of financial assets Is impaired. In
the case of Capital Notes classified as "available-far-sale", In addition to the indicators described under note 2 (k) a significant or prolonged decline In
the fair velue of the Instrument below Its cost Is considered In determining whether the investment Is impaired. if any such evidence exists for
"available for sale" financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, is
recognised In the Statement of Comprehensive Income.
(n)Property, Plant and equipment
Land end buildings are shown at fair value, based on valuations by external independent valuers, fees subsequent depreciation for buildings,
Valuations are performed with sufficient regularity to ensure the fair value of a revalued asset does not differ materially from it's carrying amount. Any
accumulated depreciation at the date of the revaluation Is eliminated against the gross carrying amount of the asset and the net amount is restated
to the revalued amount of the asset.
Ail other property, plant and equipment Is stated at historical cost less depreciation and any impairment lasses. Historical cost includes expenditure
that is directly attributable to the acquisition of the Items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the itarn will flow to the Credit Union and the cost of the item can be measured reliably. All other repairs and
maintenance are charged la the Statement of Comprehensive Income during the financial period in which they are Incurred.
The buildings plant and equipment are depreciated on a straight line basis. Depreciation of buildings, plant and equipment is carculated using rates
which are estimated to expense the cost of the assets over their useful Wes, The rates are as follows:
Buildings 2-10% per annum on cost
Leasehold Improvements Term of Lease
Motor Vehicles 20% per annum on cost
Plant, Equipment & Computer Equipment 20-33% per annum on cost
Asset purchases of less than $500 are not capitalised.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at least at each financial period for any impalanent In value,
An asset's carrying amount is written down immediately to KS recoverable amotintif the asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with =vying amount. These are included In the Statement of Comprehensive
Income.
Intangible Assets
Acquired computer software licences are capitalised on the basis of the costs Incurred to bring to use the specific software. These costs are
amrnortIsecl over the estimated useful life (two to five years). Costs that are directly associated with the production of identifiable and unique software
products controlled by the Credit Union and wit probably generate economic benefits exceeding oostsbayand one year, are recognised as Intangible
assets. Computer software development costs are recognised as assets and ammortisedover their estimated useful lives (two to live years).
(o) impairment Testing a/ Assets (excluding property, plant and couture ant and loans)
At each reporting date, the Credit Union reviews the carrying values of its tangiblestesets to determine whether there Is any IndlcatIon that those
assets have been impaired, If such an Indication exists, the reeoverabie amount of the asset, being the higher of the asset's fair value less.costa to
sell and value In use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount Is expensed to
the Statement of Comprehensive income,
Page
CREDIT UNION SOUTH
(PI Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Credit Union prior to the end of the financial period which ere unpaid.
The amounts are unsecured end are usually paid within 30 days of recognition, Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the affective interest method.
(q)Employee Benefits
Liabilities for wages and salaries, including non monetary benefits, annual leave and long service leave expected to be settled within 12 months of
the reporting date are recognised in other payables in respect of employees' service up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are reoogniaed when the leave is taken and
measured at the rates paid or payable The liability for employee entitlements is carried at the present value of the estimated future cash flows.
Employee benefits payable inter than one year have been measured at the present value of the estimated future cash outflows to be made If
material.
(r) Members' Deposits
Members deposits are the members' shares In the Credit Union. For the Purposes of financial reporting, mothers' shares are recognised as debt
Instruments. They are recorded Initially at fair value and subsequently at amortised cost. All payments of dividends on these shares are recorded
as Interest payments. Members have the right to one Vote at the meetings of the Credit Union, regardless of the number of shares held. Interest on
deposits is brought to account on an accrual basis and Is presented as a part of trade and other payables.
(s)Financial Instruments Recognition
Financlai inetrements are Initially measured at fair value on trade date, which Includes transactions costs, when the related contractual rights or
obligations exist. Subsequent to initial recognition these Instruments are measured as set out below.
Financial assets at fair value through profit crams
A financial asset Is classified in this category only when the Credit Union becomes a party to the contractual provisions of the financial asset and if
acquired principally for the purpose of selling In the shod term or if so designated by management. Realised and unrealised gains and losses
arising from changes In the fair value of these assets are Included In the Statement of Comprehensive income In the period in which they arise.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are
stated at amortised costs using the effective Interest rate method.
Held-to.maturity investments
These investments have fixed maturities, and it Is the Credit Union's intention to hold these Investments to maturity. Any held-to-maturity
inveatrnents held by the Credit Union are stated at amortised cost using the effective Interest rate method.
Available-for-sale equity Instruments
Investments in Now Zealand Association of Credit Unions Capital Notes provide equity for the Association to enable it to provide essential services
to the Credit Unions, They are held as 'available-for-sale assele under NZ IAS 39. This classification recognises that they do not meet the
definition of "loans and receivables" or "held.to-maturity" Investments because they do not have a fixed or determinable Interest or dividend rate
attached to them.
Financial liabilirms
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt leas principal payments and amortisation using the
effective interest rate method. This category includes members' deposits and trade and other payables. Members' deposits meet the definition of
financial liabilities under NZ IAS 32 as they are secured by a first ranking registered Trust Deed over the Credit Union's assets and revenue.
(t)Statement of Cash Flows
Definitions of terms used in the Statement of Cash Flows:
Cash includes coins and notes, demand deposits and other highly liquid investments with original maturities of 3 months or less and includes at call
borrowings such as bank overdrafts, used by the organisation as part of Its day-to-day cash management,
Investing Activities are those activities relating to the acquisltion and disposal of current and non current Investments and any other non current
assets, They Include loans to members and repayments of loans by members.
Financing Activities ere those aotivitles relating lo changes in the also and composites of the capital structure of the Credit (Mien.
Operating Activities include all transactions and other events that are not investing or financing activities.
Certain cash flows have been netted in order to provide more meaningful disclosure as many of the cash flows ere received and disbursed on
behalf of members and reflect the activities of the members rather than those of the Credit Union. These include members' loans and borrowings.
Page 9
CREDIT UNION SOUTH
(u) critical Estimates, Judgements and Assumptions In Applying the Accounting Policies
Estimates and judgements are continually evaluated and are based on historical experience and other factors, Including expectations of future events
that era believed to be reasonable under the circumstances. This has an Impact an the one critical estimate, being the impalmtent provision for
doubtful loans (refer to note 9).
Impairment of Loans
The Credit Union makes estimates and assumptions concerning the future when assessing the Impairment provision on loans. The Credit Union
reviews its loan portfolio to assess impairment at least monthly. The impairment provision is adjusted based on evidence relating to borrowers
circumstances including the period that the loans are in arrears. The resulting accounting estimates will seldom equal the related actual results anti
there Is a significant risk of causing a materiat adjustment to the carrying amounts or assets and liabilities within the next financial year.
Impairment of Capital Notes
The Credit Union has used judgement concerning the future discounted cash flows of the New Zealand Association of Credit Unions Group when
assessing whether there th any impairment loss on the New Zealand Association of Credit Unions Capital Notes.
Fair Value of Land and Buildings
The Credit Union has used an external valuer to determine the fair value of land and buildings. The valuer has used the investment approach In
determining fair value
(v) New and Amended Standards Adopted
No new standards have been adopted, however the policy for lend and buildings tins been amended see Note 2 (n).
(w)Standards, Interpretations and Amendments to Published Standards that era not yet effective,
The following new and amended standard amendment and interpretation have been Issued by the Accounting Standards Review Board (now replaced
by the External Reporting Board) but have not been adopted by the Credit Union as they are not yet effective for the year ended 30 June 2014.
This Is:
NZ IFRS 9: Financial instruments
The new standard simplifies the classification criteria for financial assets, comparing to the current requirements of NZ IAS 39, which results in a
reduced number of categories of financial assets and some consequential amendments to disclosures required by Ni IAS 1 Presentation of Mancini
Statements and Ni IFRS 7 Financial instruments: Disclosures. The Credit Union's financial assets currently fell Into the category of Loan receivables
Within NZ IAS 39 classification. If NZ IFRS Owes adopted, these assets would have met the definition of the category of financial assets measured at
amortised cost. However, their measurement and disclosure would not have been affected. It also amends the fair value option for financial liabilities
to address the issue or credit risk.The Credit Union would not have any transactions to disclose under the new Ni IAS 1 and NZ IFRS 7 disclosure
requirements relating to gain or loss arising on derecognition of financial assets measured at amortised cost.
Other than the impact on the value of the NZACU Capital Notes as mentioned In (s) there will be no Impact an the Credit Unions accounting for
financial liabilities, as the new requirement only affect the accounting for financial liabilities that are designated as at fair value through profit or loss and
the Credit Union does not have any such liabilities.
New Accounting Standards Framework
The Minister of Commerce has approved a new Accounting Standards Framework developed by the External Reporting Board (XRB). Under this
Accounting Standards Framework, the Credit Union is classified as a Public Benefit Entity (PBS) and Ills expected that it will be required to apply the
new PIM Standards as applicable for private not-tor-profit entities. These standards were to be developed by the XRB based on current International
Public SectorAccounting Standards (1PsA5). The effective date for the new standards for PBS's Is expected to be for reporting periods begining on or
after 1 April 2015. This means the Credit Union expects to transition to the new standards in preparing the 30 June 2016 financial statements. The
Credit Union lain the process of assessing the implications of transItioning to the NFP POE Standards,
Due to the change in the Accounting Standards Framework for PBS's, the XRB has effectively frozen the financial reporting requirements for public
benefit entitles up until the new Accounting Standards Framework Is effective. Therefore all new NZ IFRS and amendments to existing Ni IFRS issued
after 1 June 2011 will not be applicable to PBE's. Accordingly, no disclosure has been made abottt new or amended NZ IFRS that exclude PBS's from
their scope,
Page 10
CREDIT UNION SOUTH
3 REVENUE AND EXPENSES
(a) Interest Revenue
Interest on Loans
2014
2013
$'000
$'000
10,963
10,377
1,358
074
Interest on Investments
$11,937
$11,735
1,182
1,539
1,188
1,818
$2,721
$2,604
1,528
1,142
155
1,555
1,040
135
Other Income
263
031
1,604
72
189
867
1,483
14
Total Other Income
06,693
$6,281
1,663
(253)
Bad Loans Recovered
1,234
143
(259)
Total Bad and Doubtful Loans
$1,116
01,116
5,041
4,575
151
Total Interest Revenue
(b) Interest Expense
Interest on Members' Call Shares
Interest on Members Term Shares
Total Interest Expense
(c) Other Monte
Accessoard - Eftpos Card Transaction Fees
Loan Application Fees
Dividends on New Zealand Association of Credit Union Capital Notes
Cost Recovery Fees
Commissions Earned
Other Fees Charged
(d) Bad and Doubtful Loans
Bad Loans Written Off
Provision far Loan Impairments - (decrease)iincrease
(e) Employee Benefits
Salaries
181
Other
(235)
Total Employee Benefits
$6,222
$4,726
(t) Depreciation
Buildings
Leasehold Improvements
70
170
88
184
Motor Vehicles
101
21
102
20
Total Depreciation
$302
$404
Plant and Equipment
Page ii
CREDIT UNION SOUTH.
3 REVENUE AND EXPENSES - Continued
(o)
2614
2013
8'009
8'000
35
36
1300
096
082
272
35
20
1,264
752
335
335
1,031
-
Other Administration Expenses
Auditors Remuneration - PrioewaterhouseCoopers
External Audit - Audit of Financial Statements
Other assurance services . Controls Assurance and AML & CFT advisory services
Accesscard Charges
Advertising and Marketing
Bank and Cash Delivery Charges
Credit Checks and Debt Recovery
Dale Processing Charges
1,024
12
108
202
56
Ammortisstfon of Software Casts
Other Occupancy Costs
Dffectors' Fees
Directors' Expenses and Training
Loyalty Fee Rebate
Staff Training and Seminars
Office Expenses
Telephone
Printing, Stationery & Postage
Consultancy Fees
664
84
136
355
177
107
191
195
53
829
Restructure Costs
Other Sundry Expenses
1,343
88
106
223
264
117
592
723
Tore/ Other ArlmtnIstratton Expenses
87,349
67,158
The restructuring costs relate to redundancies and similar costs for the closure of several branches and agencies during the financial year
ended 30 June 2013. There have been no further restructuring costs during the year ended 30 June 2014.
(It) Interest Rates
Interest is paid to members and relates to the Credit Union's ability to pay the interest. At limes during the period the Credit Union may
offer depositors special accounts that have a pre-set interest rate. Interest rates applied to members' deposits for the period were (%
per annum):
Call Shares
Si Everyday Account
82 Bilipay and 83 Autopsy Accounts
85 Goal Saver Account
Se Loyalty Saver Account
67 Chriatmas Saver and 58 Christmas Hamper Accounts
510 Success Saver Account
2014
1.60%
0.00%
2,00%
2.00- 3.00%
2.00%
3.50%
0.09%
0.00%
511 Money Management Account
512 Seasonal Saver Account
Tern) Shares
11 Term Deposit (1-2 months)
2.00 - 3.00%
13 Term Deposit (3 months)
2.25 - 3.25%
3.25 - 4-26%
0.65- 4.66%
3,60 - 5.25%
Other terms may be available on request.
Page 12
2013
1.90%
0.00%
2.00%
2.00 - 3,00%
2.00%
3.50%
0.00%
0.00%
2.00 3.00%
2.25 - 3.25%
3.00 -4.00%
3,25 - 4.26%
3,50 - 4.50%
CREDIT UNION SOUTH
4 RESERVES
Reserves as at 30 June 2014
Retained
Earnings
Balance brought forward
Operating surplus for the period
Property Revaluation
Balance carried forward
Reserve % to Total Assets
$000
16,844
279
13,923
18.76%
General
Reserve
$000
•
0.00%
Property
Revaluation
Reserve
$000
.
954
954
0.85%
Total
Reserves
Von
18,644"
279
954
15,677
17,61%
Reserves as at 30 June 2013
Retained
Earnings
Balance brought forward
Operating surplus for the period
Total Transferred
Balance carried forward
Reserve % to Total Assets
$000
12,206
132
6,306
18,4344
17.25%
General
Reserve
$000
6,306
Property
Revaluation
Reserve
V000
•
-
(6,306)
0.00%
Total
Reserves
V000
10,512
132
-
.
18,544
0,00%
17.25%
Relained Earnings
Retained earnings arise from retained surpluses accumulated from operations.
General Reserve
in past years a General Reserve was established in accordance with Section 119 of the Friendly Societies and Credit Unions Act 1982
which required the Credit Union to transfer 5% of gross earnings to the General Reserve until the General Reserve la the equivalent of
5% of total assets. Following the enactment of the Friendly Societies and Credit Unions Amendment Act 2012 there is no longer a
requirement to maintain a General Reserve. Accordingly, this reserve has been transferred to Retained Earnings.
Total Reserves
The Trust Deed requires that the total reserves, including retained earnings, amount to at least 10% of the total assets of the Credit
Union.
Average interest Rates
6
CASH AND GASH EQUIVALENTS
Cash on hand
Bank Balances
6
2014
2013
0.00%
0.001/4
0.50%
0.50%
2014
$•000
1,199
1,706
2,905
2013
$'000
1,209
2013
2014
2.65%
4.02%
$'000
2,000
9,000
11,000
20'13
$000
1,000
14,000
1,610
2,619
DEPOSITS AT NEW ZEALAND ASSOCIATION OF CREDIT UNIONS
2014
Call Deposits
3.30%
4.11%
Term Deposits
15,000
The Credit Union does not hold tradeable securities, Effeotive interest rates are the original contracted values. All balances are available
within 3 months. The deposits with the New Zealand Association of Credit Unions' central banking facility are excess funds held on behalf of
the Credit Union. The New Zealand Association of Credit Unions minimises Its exposure to credit risk by maintaining a diversified portfolio
with the majority of inVestrnentS being deposits in banks and money market securities. Movements In market rates will not affect the recorded
value of these Investments.
6a DEPOSITS AT REGISTERED BANKS
2014
2013
Call Deposits
Heartland Bank
Term Deposits
ONZ deposits maturing within 3 months
LINZ deposits maturing from 3 to '12 months
2014
$'000
2013
4.25%
4.10%
2,025
$000
1,003
4.33%
4.33%
3.55%
4.30%
6,000
3,000
11,025
7,600
7,000
15,003
$3,000,000 of the 811,025,000 (2013 $7,000,000 of $15,003,027) is invested for e period greater than 90 days and less than a year.
Page 13
CREDIT UNION SOUTH
7
TRADE AND OTHER RECEIVABLES
2014
$'000
600
72
Accrued Interest
Accrued Dividends - Capital Notes
Insurence Rebates Rectelvable
Prepayments and Accounts Receivable
351
63
2013
$'000
668
62
260
30
1,088
1,020
2014
$'000
77,120
$000
All trade and other receivables are due within 1 year.
8 LOANS TO MEMBERS
Loans era made In accordance with the Credit Risk Policy of the Credit Union and are repayable on demand.
A prevision for impairment has been made at the end of the reporting period.
Bad loans are written off against the provision for impairment and the provision adjusted accordingly.
(a) Loans to members comprises:
Neither Past Due nor Impaired
Past Due but Not impaired
Up to 30 days
Impaired Individually
Impaired collectively
Grose Loans
Less:
Allowance for Impairment Individually
Allowance for impairment collectively
Net Loans
2013
66,923
2,761
38
2,790
82,709
43
2,350
70,992
38
1,145
43
998
1,03
61,526
1,041
69,951
2014
$'000
20,799
2013
$'000
17,196
137
10,650
51,172
52,709
24
11,469
42,283
1,676
04 Credit quality - Security dissection
Secured by first mortgage over real estate
Secured by second mortgage over real estate
Secured by members shares In the Credit Union
Unsecured loans
70,992
Ills Impracticable to provide a valuation of the collateral security held against loans because of the large number of loans that the Credit
Union has at any one time. A breakdown of the quality of the security on a portfolio baste Is:
2014
$,000
15,051
3,471
2013
$'000
12,809
2,364
3,676
20,686
17,219
(I) Loans to Individual or related groups of Members which exceed 10% of
equity
Nil
Nil
(11) Loans to members concentrated to individuals employed In any
particular industry
Nil
Nil
Security held as mortgage against real estate is on the basis of:
- loan to valuation ratio of lass than 80%
• loan to valuation ratio of more than 60%
- loan to valuation ratio of more than 80% (insured under the Welcome
Horne Loan Scheme)
642
(c) Credit quality • Concentration of loans
(111) Loans to members concentrated solely in New Zealand which Is the
common bond of the Credit Union
(iv) Loans drawn down by member type
Loans to natural persons
- Residential loans and facilities
• Personal loans and facilities
Loans to Charitable Trusts and incorporated Societies
100%
100%
2014
2013
$'000
$•000
20,888
Page 14
61,823
17,219
53,779
82,709
70,992
CREDIT UNION SOUTH
9
IMPAIRMENT OF LOANS AND ADVANCES
(a) Provision for Impairment
Opening belence
Increasef(Decreess) In provision for Impairment In period
2014
6,000
1,041
142
1,294
(263)
ealence carried forward
1 183
1 041
2013
(3) Key assumptions hi determining the provision for Impairment
In the course of the preparation of these financial statements the Credit Union has determined the likely Impairment loss on loans
which hava not maintained loan repayments in accordance with the loan contract, or where there is other evidence of potential
impairment such as Industrial restructuring, Job losses or economic circumstances.
In Identifying the Impairment likely from these events the Credit Union is required to estimate the potential Impairment, This can be
based an the Individual circumstances of the member (individually Impaired loans) or based on the length of time the loan Is in arrears
(collectively impaired loons). The impairment provision on collectively Impaired loans Is based on the following formula:
Period of impairment
% of balance
1 day to 30 days
0.5%
31 days to 90 days
20.0%
91 days to 180 days
40.0%
181 days to 270 days
60.0%
271 days to 385 days
80,0%
Over 385 days
100.0%
This provision is checked to historical write offs and an additional provision Is made If necessary.
(c)impairment of Loans
Collectively
Provisioned Restructured
Loans
Loans
$'000
6000
2,350
1,631
(1,191)
Gross Receivables
Carrying Amount at 1 July 2013
Addition to Class
Written Off
Deletions from Class
Carrying Amount at 30 June 2014
Impairment Prevision
impairment at 1 July 2013
Additions to Class
Written Off
Impairment at 30 June 2014
Net impaired Loans at 30 June 2014
impairment Provision
Impairment at 1 July 2012
Additions to Class
Written Off
Deletions front Class
Impairment at 30 June 2013
Net Impaired Loans at 30 June 2013
Total
6'000
2,393
1,669
(1,234)
2,790
38
2,826
998
1,338
(1,191)
43
35
(43)
1,041
1,376
(1,234)
1,145
1,645
38
1,183
1,645
Collectively
Provisioned Restructured
Loans
Loans
6'000
60000
3,073
•
915
(1,338)
Gross Reseivables
Carrying Amount atI July 2012
Addition to Crass
Written Off
Carrying Amount at 30 June 2013
individually
Impaired
Loans
$0000
43
35
(43)
Individually
Impaired
Loans
6000
67
(24)
Total
60000
3,140
915
(1,602)
2,350
43
2,393
1,227
1 4 09
(1,638)
67
1,234
1,409
(1,682)
995
1 352
(24)
43
1,041
,352
Restructured Loans and Loans with Enforcement of Security
There were no restructured loans, no loans where real estate or other assets were acquired through the
enforcement of security at 50 June 2014 (50 June 2013 Nil). All 90 day past due loans are Included In the
Individually Impaired and collectively Impaired loan categories.
(d)interest ahd Other Revenue recognised and foregone
2014
6'000
Interest revenue on non-accrual and restructured loans
Interest foregone on non-accrual and restructured loans
7
Page 15
2013
$'000
12
14
CREDIT UNION SOUTH
10
DERIVATIVES - INTEREST RATE SWAPS
2014
2013
8'000
$000
Interest rate swap contracts
There are no remaining swaps (30 June 201$ NIB,
Derivative Instruments used by the Credit lIniun
The Credit Union enters Into derivative transactions through the New Zealand Association of Credit Unions In the normal course of
business as a partial hedge to reduce the exposure to fluctuations In interest rates In accordance with the Credit Union's financial risk
management policies, The lest swap matured on 25 March 2013,
11 NEW ZEALAND ASSOCIATION OF CREDIT UNIONS CAPITAL NOTES
New Zealand Association of Credit Unions Capital Notes, classified as 'available-For-sale' financial assets, are issued by the New
Zealand Association of Credit Unions' Business Services Division as Trust Base Capital Notes (Capital Notes). These represent Monies
Invested with the NZACU Business Services Division Trust for an open-ended term, The Capital Notes constitute unsecured obligations
of the Business Services Division Trust and rank equally and without priority or preference among themselves, The Capital Notes rank
after creditors in the event of the winding up of the Business Services Division Trust. Capital Notes may only be sold or transferred to
another Credit Union that is a member of the Business Services Division Trust and with the consent of the Business Services Division
Trust's Board of Directors, The Capital Notes are redeemable in full, with five years notice, by the Association, However, the Credit
Union has no Intention of redeeming the Investments In the forseeable future,
There is no sufficiently active market far these securities which have no guaranteed rate of return,
Dividends are payable on a six monthly basis subject to the profitability of the Business Services Division Trust. Capital Notes are non
current assets.
The Now Zealand Association of Credit Unions has been generating a surplus in the last three financial years and has increased its'
asset backing for the Capital Notes which had previously fallen below par.
The recent history of dividend payouts as a return on the Capital Notes supports the view that the Capital Notes are appropriately
valued at their face value and It is determined that no impairment loss has arisen at balance date. Consequently, the carrying value of
the Capital Notes approximates their fair value at balance date.
2014
2012
Investments in Capital Notes
$'900
$'000
Total Capital Notes at fair value
Total Avallable-for-sale investments
3,095
3,096
3,098
3,096
Page 16
CREDIT UNION SOUTH
12 PROPERTY, PLANT AND EQUIPMENT
(a) Classes of Properly, Plant & Equipment
Land
At cost
Revaluation
2013
$`000
300
530
Buildings
At cost
Revaluation
Accumulated depreciation
The rateable value of Land and Buildings at
82 Main Street, Gore as at 1 Aug 13 was
The property at 52 Don Street has a registered valuation
by Thayer Todd Valuations Ltd as at 30 June 2014 of
2014
$000
530
300
00
975
623
69)
(346)
976
277
2729
2,458
$225,000
61,495,000
Leasehold ininrcvalnclits
At cost
Write down of assets no Ianger in U9B
(1,311)
1,418
.
(937)
(2034)
,
481
424
3,369
3,302
Plant & Equipment
At cost
Write down of assets no longer In use
(2,740)
611
(514)
(3,182)
97
140
109
109
Motor Vehicles
At cost
(88)
Total Property, Plant & Equipment
(87)
21
42
2,105
1,183
(b) Movements in Carrying Am mints
Reconciliation of the carrying amounts or each chase of property, plant and equipment between the beginning and end of each period:
Land and
Leasehold
Plant &
Buildings Improvements
Equipment motor Vehicles
Total
9000
$'000
$.000
van
Ivaaa
677
424
140
42
1,103
Revaluation
054
954
.
Additions
271
59
330
Depreciation Expense (25) (214) (102) (21) (362)
Carrying amount at 30 June
1,506
481
97
21
2,105
2014
30 June 14
30 Juno 13
Revaluation
Additions
Disposals
Depreciation Expense
Carrying amount at 30 June
2013
Land and
Leasehold
Buitdings improvements
$000
Vooa
675
602
..
a
(25)
(257)
577
424
Plant &
Equipment Motor Vehicles
$'000
$'000
273
68
20
(8)
(162)
(20)
140
42
Total
$'000
1,618
..
35
(a)
(464)
1,183
There were no impairment losses in respect Of property, plant end equipment (2013 nil). All property, plant and equipment are non
currant assets.
12b
INTANGIBLE ASSETS
During the year, computer sofhivare was purchased with a useful life of more than one year and based on the expected useful life of each
package, has ham amMortised as shown, In the prior year, there were no intangible Assets.
2,014
$'000
154
(12)
Additions
AmmortisatIon of Software Costs
142
Page 17
2,013
9000
CREDIT UNION SOUTH
13 TRADE AND OTHER PAYABLES
Acerued Interest Payable
Goods and Services Tax
Resident Withholding Tax
Sundry Creditors end Monied Expenses
Accesscard -ATM and Eftpos Card Settlement
Acceestiabitoard - ATM and Eftpos Card Settlement
2014
2013
$000
734
51
33
841
193
44
$008
591
35
33
550
999
79
1 898
2 287
Trade and other payables are current liabilities.
14 MEMBERS DEPOSITS
2014
2013
$000
$000
Cal/ Shares
Savings Accounts
Christmas Saver Account
Lcyalty Account
17,426
18,142
Total Call Shares (at current liabilitles)
62373
52,094
31,774
3,174
30,875
3,077
Term Shares
Original Maturity Terms
0-3 months
4-6 months
7-9 months
10-12 months
Greater than 12 months
1,090
13,234
215
11,228
978
11,194
11,165
12,707
11,146
Total Term Shares
38,474
84,453
Total Members' Deposits
90,847
86,547
Deposits from members are accepted on the basis of a fixed value of $1 per share. Deposits not In whole dollars are deemed to be
advance subscriptions for shares. Dividends not paid In cash, and reinvested by members, are deemed to be subscriptions for shares
and add to the members' share balance In the Credit Union. The Directors believe the reported values reflect fair value,
Members' shares are secured by a first ranking equitable assignment by way of security over the whale of the Credit Union's present
and future undertaking, property, assets and revenues, including the proceeds received for the subscription for shares and unpaid
capitol (if any), The equitable assignment by way of security was granted in favour of Trustees Executors Limited, the Prudential .
Supervisor of the Credit Union, Under a Trust Deed dated ? February 2001, which has been registered with the Registrar of Companies.
The Credit Union has also granted to Trustees Executors Limited a security Interest in all Its present and after-acquired personal
property as additional security for the members' shares. Trustees Executors Limited has registered a financing statement under the
Personal Property Securities Act 1999 in respect of the same. The grant of this security Interest was recorded In a Deed a Modification
to Trust Deed dated 15 October 2002, which has been registered with the Registrar of Companies,
On 19 February 2010 the Credit Union obtained a long-term Issuer credit rating of BB with a stable outlook from Standard
& Poor's. This credit ruling was revised to EiLl- with a stable outlook on 13 December 2011, re-aMened as BB- with a stable outlook,
on 12 December 2012 and revised to 00- with a negative outlook on IS May 2013. On 10 December 2013, the Credit Union's credit
rating was updated from BB- with a Negative Outlook to BB- with a Developing Outlook,
15 COMMITMENTS
(a) Future Capital Commitments
2014
$000
2013
V000
As at balance date, the Credit Union has contracted to purchase property,
plant end equipment to the value of:
(9) Operaling Lease Commitments
As at balance date, the Credit Union has entered Into the operating lease agreements for the premises of
remaining branches In the South (eland (except Invercargill and Gore).
Operating leases contracted for but not
capitalised In the financial statements, payable;
Not longer than 1 year
Longer thanl and not longer than 5 years
600
1,197
458
436
1,70p
994
336
142
572
207
478
770
Longer than 5 years
Each lease is for a used term, with varying rights or renewal and with rent payable monthly In advance,
(c) Outstanding Loan Commitments
Loans and credit facilities approved but not paid out at the end of the
financial period:
Loans approved but not paid out
Undrawn overdraft end line of credit
Page 18
CREDIT UNION SOUTH
16 STANDBY BORROWING FACILITIES
The Credit Union has a groaa borrowing facility (as an overdraft facility) with the New Zealand Association of
Credit Unions at 30 June 2014 of 62 500,000 (30 June 2013 52,500,000), There are no borrowings against this facility.
The interest rate is 5.15% p.a (30 June 2013 5.15%) and the penalty rate is 7.75% p,a.(30 June 2013 7.75%),
There are no material terms of use,
17
CONTINGENT LIABILITIES
There are no material contingent liabilities as at 30 June 2014 (30 June 2313, N11),
18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The board has endorsed a policy of compliance and risk management to match the risk profile of the Credit Union.
Key risk management policies encompassed in the overall rink management framework include:
- Market Risk and Hedging Policy management
- Credit risk management
- Liquidity risk management
- Capital adequacy management
The Credit Union has undertaken the following strategies to minimise the risks arising from financial Instruments:
Market Risk and Hedging Policy
The Credit Union Is not exposed to currency risk, and other price risk. The Credit Union does not trade In the financial instruments it holds on
Its books.
The Credit Union is exposed to interest rate risk arising from changes in market Interest rates.
The policy of the Credit Union to manage the risk is to maintain a balanced "an book" strategy by ensuring the net Interest rate gaps between
members loans and members' shares ere not excessive. The measured gap in each 3 month range is to be maintained between 7,5% and
9.00% of the difference between interest on loans and members deposits. The gap is measured monthly to identify any large exposures to
the interest rate movements and to rectify the excess through targeted fixed rate interest products available through Investment assets, and
term deposit liabilities to rectify the imbalance to within acceptable levels. The Credit Union's exposure to interest rate risk is set out in Note 20
which details the contractual interest rate change profile and Note 10 which sets out the interest rate swaps used to minimise interest rate
risk,
The following tables summarise the sensitivity of the Credit Union's financial assets and liabilities to a 1% movement in interest
rates on fixed Interest loans and on mamba's deposits as It affecits the Credit Union's financial position and results.
The 1% movement is used because management believes that this is the reasonably possible change to the Official Cash Rate (OCR)
within the next 12 months.
1
Financial Assets
2014 - Interest Rate Risk
-1%
+1%
Carrying
Profit &
Profit &
amount
Equity
Equity
2013- Interest Rate Risk
-1%
Profit &
Carrying
amount
Equity
+1%
Profit &
Equity
NZACU and Bank Deposits
23,731
(237)
237
31,813
(316)
316
Loan Receivables
01,520
(615)
015
55,951
(700)
700
105,257
(1,052)
1,052
101,504
(1,016)
1,016
90,647
006
(908)
85,547
865
(865)
90,647
908
(908)
65,547
865
(1305)
_(14e_1)
144
Financial Liabilities
Members' deposita
Derivatives
Total (deorease)finorease
reee
7:
(1677.
The Credit Union performs sensitivity analysts to Measure Market risk exposures, The method used in determining the sensitivity was to
evaluate the profit based on the timing of the interest repricing on the banking book of the Credit Union for the next 12 months. In doing the
calculation the aesumptions applied were that:
- The interest rate change would be applied equally over loan products
- The rate change would be as at the beginning of the 12 month period and no other rate changes would he effective during the period
The term deposits would all reprice to the new interest rate at the term maturity, or be replaced by deposits with similar terms
and rates
applicable.
- All loans would be repaid in accordance with the current average repayment (or contractual repayment terms)
• The value and mix of call savings to term deposits will be unchanged
- The value and mix of personal loans lo mortgage loans will be unchanged
There has been no change to the Credit Unions exposure to market risk or the way the entity manages and measures market risk le the
reporting period.
Page 19
CREDIT UNION SOUTH
18
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Continued
Credit Risk - Loans
Credit risk is the risk that the other party to a financial Instrument will fall to discharge their obligation resulting in the Credit Union Incurring a
financial loss, Tills usuaily occurs when debtors fall to settle their obligations owing kith() entity. There is no Individual concentration of
credit risk with respect of loans and receivables as the Credit Union has a large number of customers. The credit policy is that loans are only
made to members that ere creditworthy.
The Credit Union has established policies or procedures over the:
- Credit assessment and approval of loans and facilities covering acceptable risk assessment and security requirements
- Limns of exposure over the value to individual borrowers, non mortgage secured loans, commercial lending and concentrations
to geographic and industry groups considered at high risk of default
- Reassessing and review of the credit exposures on loans and facilities
- Establishing appropriate provisions to recognise the impairments of loans
- Debt recovery procedures
- Review of compliance with the above policies.
Regular reviews of compliance are conducted as pert of the internal audit scope.
The risk of losses from the loans undertaken is primarily reduced by the nature and quality of the security taken. The board policy Is to lend
no more than 40% (201340%) of the loans In secured residential mortgages which carry an 80% Loan to Valuation ratio or better. There are
13 mortgages that have a Loan to Valuation ratio In excess of 80% (2013, (4)). All loans over $26,000 require collateral security which the
Credit Union can enforce by disposing of the secured assets In the event of default,
Daily reports monitor the loan repayments to detect delays in repayments and recovery action is undertaken after 7 days If not rectified. For
loans where repayments are doubtful, external consultants are engaged to conduct recovery action once the loan is over 90 days in arrears,
The exposures to tosses arise predominantly in the non secured personal loans and facilities.
The significant accounting judgements related to the determination of the provision for Impairment of loans are set out in Note 0.
Credit Risk Liquid investments
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Credit Union
incurring a financial loss, This usually occurs when members fail to settle their loan obligations to the Credit Union.
There is a concentration of credit risk with respect to investment receivables with the placement of investments In the New Zealand
Association of Credit Unions and registered banks. The credit policy is that investments are only made to institutions that are credit
worthy,
The risk of losses from the liquid investments undertaken Is reduced by the nature and quelity of the independent rating of the investee
and the limits to concentration on one entity.
The board policy is to place the majority of investments with the New Zealand Association of Credit Unions, an aasociation set up to
Support the Member Credit Unions, The Association has a credit rating of 813- (Standard & Poor's) and invests principally in bank
deposits and money market securities.
Any other investments may only be with New Zealand registered Banks.
Credit Ftisk Equity Investments
The Credit Union does not have equity investments other than the Capital Notes in the New Zealand Associations of Credit Unions (refer
note 11).
Liquidity Risk
Liquidity risk Is the risk that the Credit Union may encounter difficulties raising funds to meet commitments associated with financial
Instruments, e.g. borrowing repayments. It Is the galley of the Board of Directors that the Credit Union maintains adequate cash reserves
and committed credit facilities so as to meet the member withdrawal demands when requested.
The Credit Union manages liquidity risk by:
Continuously monitoring forecast and actual daily cash flows
- Reviewing the maturity profiles of financial assets and liabilities
- MaMtaining adequate reserves, liquidity support facilities and reserve borrowing facilities
- Regularly monitoring loan repayments and comparing to forecest cash flows,
- The Credit Union has a standby borrowing facility with the NZACU to provide support to the Credit Union If necessary at short notice.
The Credit Union's policy is to maintain at least 0% of total assets as liquid assets capable of being converted to cash within seven days.
The ratio Is monitored and reported to management, the Credit Union Directors and its' Trustees on a regular basis. Should the liquidity
ratio fail below this level, the management and board are to address the matter and ensure that the liquid funds are obtained from new
deposits or borrowing facilities available.
Page 20
CREDIT UNION SOUTH
18
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES - Continued
The maturity profile of the financial IlabilItles, based on the contractual repayment terms, is set out in Me specific Note 19. Whilst
there is liquidity deficiency for the within one month period of 639,946,000 as at 30 June 2014(30 June 2013 $40,972,000), based on
the contractual arrangements, the Directors can manage any potential Mismatch and meet its obligations as they fall due, due to
continued reinvestment of shares at historical levers, the liquidity support facility and as all loans to members are repayable on
demand. In addition, the profile assumes that all members' shares are repaid when they mature. In the ordinary course of business of
the Credit Union normally retains the members deposits which are due within 1 month ensuring that it does not need to demand
repayment of the members loans.
The ability to demand repayment of at member loans provides the Credit Union with ready access to funds if some or all members
shams required repayment. The Credit Union also has the right at any lime to require a sixty day notice period for repayment of
members shares and has an undrawn overdraft facility of $2,000,000 with the New Zealand Association or Credit Unions (refer Note
16).
Capital Management
The Credit Union Is regulated under the Friendly Societies and Credit Union Act 1982, The Credit Union operates tinder a Trust Deed
which requires the minimum reserves to be held by the Credit Union to be 10% of total assets. The Credit Union reserves as at the end
of the reporting period are stated in Note 4.
The Credit Union's capital is determined as follows:
2014
$000
2013
Tier 1
Retained earnings
Total Tier 1 reserves
18,923
954
18,644
$19,077
$18,044
Tier 1 capital ratio
1761%
17.00%
In addition, the Credit Union must comply with the "Deposit Takers (Credit Ratings. Capital Ratios and Refated Party Exposures)
Regulations 2010" which came into affect on 1 December 2010. These regulations require a minimum of B% capital ratio (equity to
risk weighted assets) and the Credit Union meets the requirements of these regulations.
As at 30 June 2014, the Credit Union's capital ratio was 14.95% 12013 15.84%).
To manage the Credit Union's capital, which can be affected by excessive growth and by changes in total assets, the Credit Union
regularly reviews the capital adequacy ratio and miters major movements in the asset levels, Policies have been Implemented to
require reporting to tile board and the trustee if the capital ratio falls below 10%, Further, an annual capital budget projection of the
capital level is maintained to address how strategic decisions or trends may impact on the capital level,
Page 21
CREDIT UNION SOUTH
19 MATURITY PROFILE OF FINANCIAL ASSETS AND LIABILITIES
Monetary assets arid liabilities have differing maturity profiles depending on the contractual term, and in the ease of Mans the
repayment amount and frequency. The associated table shows the period In which different monetary assets and liabilities held will
mature and be eligible for renegotiation or withdrawal. In the case of loans, the table shows the period over which Ilie principal
outstanding will be repaid based on the remaining period to the repayment date assuming contractual repayments are maintained,
Interest on members' loans and Interest on members shares are inoluded In the totals below.
'000
30 June 2014
Within 1 Month 14 Months
3 -6 Months
6 12 Months
2. 6 Yasru
1.2 years
Over 5 Years
Total
Monetary Assets Receivable
Cash, Bank and NZACU
Deposits
Loans kr members
Future interest on loans
Capital Notes
rota! MonataryAssets
Receivable
12,931
1,088
9,000
2,365
5137
-
4,588
1,714
8,787
2,359
-
12,580
3,907
20,402
5,423
21,411
5,465
14,400
0,704
3,096
1,086
02,709
26,829
3,096
17,259
16,202
12,126
16,687
25,915
25,876
24,296
138 451
Within 1 Month 1 • 3 Months
3 - 6 Months
0,000
-
24,031
-
'ON
30 June 2014
Monetary Liabilities Payable
Members Deposits
Future Interest an Deposits
Food Monetary Liabilities
Payable
Liquidity Deficlancyt(Excess)
1,807
55,408
8.12 Months
1-2 Years
2-0 Years
Over 6 Years
Total
-
-
-
-
-
-
1,807
13,146
512
8,433
543
0,050
12
-
111
7,800
286
90,647
1 764
57,214
0,086
13,658
8,978
5,362
12
-
04,308
39,945
(7,216)
1,532
(7.691)
(19,553)
312
(26,864)
(24,290)
(44,143)
The expected liquidity Is as per the contractual table above except that the members deposits which are due within one month are riot
expected to be repaid but to continue at the same level to provide continuing funds for the Credit Union.
$'000
30 Juno 2013
Within 1 Month 14 Months
3 - 8 Months
6 - 12 Months
1-2 years
2 - 8 Years
Over 8 Years
Total
Monetary Assets Receivable
Cash, Bank end NZACU
Deposits
Leans to members
Future Interest an been
Capital Notes
11,822
1,020
2,122
832
-
14,000
3,000
4,000
4,080
1,005
.
5,986
2,206
-
11,104
3,709
Total Monetary Assets
Receivable
18,798
19,885
11,204
Within 1 Month t .3 Months
3 • 6 Months
32,822
17,811
4,901
-
18,102
4,941
18 003
22,793
23,103
0 - 12 Months
1-2 Years .,
11,625
5,242
3,090
19 963
1,020
70,902
23,510
.
3,090
131 440
'000
30 June 2013
2- 6 Years
Over t Years
Total
.
Monetary Liabilities Payable
Trade sod other payables
Members Depoalls
Future interest on Deposits
2,287
54,300
01
6,195
200
.
10,834
846
.
8,025
512
.
7,041
459
62
Total MonetaryLlabilities
Payable
56,768 ,
8,395
11,180
8,637
7,500
62
Liquidity Oeficlanoygyeeas)
40.872
(10,306)
(15,203)
(13,290)
(24)
Page 22
----...
(23,041)
.
-
2,287
86,547
1,608
-
90,442
(19,963)
(41,004)
e SA
U
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us
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30Jun
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FixedInterest Rate Maturing in:
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1 to 2
30 Jun
01
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cc
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30 Jun
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nonths
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Total Monetary Assets
1:- :::
INTEREST RATERISK
FORTHE YEARENDED30JUNE2014
NOTES TOTHEFINANCIAL STATEMENTS
CREDITUNIONSOUTH
0
tn
;5
3
2
q g z
cia
■
ii o
E fr-c
n
CREDIT UNION SOUTH
21
OTHER CREDIT RISKS
(a) Maximum Credit Risk Exposure
The Credit Union's maximum credit risk exposure, Without taking into account the value of any collateral or other security, in the event
other parties fell to perform their obligations under financial instruments in relation to each class of recognised financial asset, is the
carrying amount of those assets as indicated In the Balance Sheet
(5) Concentrations of Credit EMk
The Credit Union minimises concentrations of credit risk in relation to bens by undertaking transactions with a large number of
customers. Credit risk is currently managed in accordance with the Prudential Standards to reduce the Credit Unions exposure to
potential failure of countafparneo to meet their obligations under the contract or arrangement. All loans are to members of the Credit
Union who are concentrated mainly within the South Island of New Zealand.
(c) Large Counterparties
The Credit Union has exposure to counter-parties in excess of 10% of equity as follows:
Number of Counte partiee
30 June 2013
30 A1110 2014
Greater than 100% of equity
Between 90% and 100% of equity
Between 80% end 90% of equity
Less than 10% of equity
_
1 NZACU
1 BNZ
1 Heartland
1 NZACU
1 BNZ
•
1 Heartland
In relation to loans to members, where a member lies shares as security or deemed security, the security has not been taken into
account when calculating the percentage of exposure.
(d) Loans to Members
Loans can only be made to Credit Union members. Loan interest rates range from 5.93% to 24.23% p.e, (30 June 2013 5.95% to
24.25% p.a. including those delinquent loans with penalty interest of 5,00%). The Credit Union has a credit risk policy that requires
various levels and types of security for loans and provides that a portion of loans may be secured over the borrowing member's shares,
The Friendly Societies and Credit Unions Act 1982 limits the risk of any one member and provides, along with the loan agreement that
any and ail shares might be used to offset an individual loan to the limit of their liability. Under section 110 of the Act, the maximum
Indebtedness and repayment terms of a member shall not, without the prior oonsentof the Registrar, exceed the following limits:
Unsecured Loan - 6% of the value of the assets of the Credit Union and a maximum term of 6 years
Secured Loan - 10% of Ilia value of the assets of the Credit Union and a maximum term of 10 years
The Registrar of Friendly Societies and Credit Unions has approved an extension of the secured loan term from 10 to 30 years for loans
on first mortgage.
22 CONCENTRATION OF FUNDING
The Credit Union's source of funding Is members deposits. Accordingly, funding is concentrated in and limited to the area of the
'common bond' of the Credit Union and consequently funding is from individuals (residing or working within New Zealand), registered
charitable entities and incorporated societies within New Zealand with the majority of members within the South island, The funding
from members Is recorded as members' shares in the Balance Sheet.
Page 24
CREDIT UNION SOUTH
23
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Ali financial assets and liabilities, with the exception of loans to members are short-term inatrumenta where their carrying Amount In
the Balance Sheet equates to their fair values. As detailed In the accounting policies, loans are carried et estimated realisable value
after providing for impairments The Directors believe that any differences between carrying value and fair value are hot material because the
loan periods are relatively short and can be changed to "en demand" by the Trustees. In addition, interest rate differences between
lending dates and balance date are not signifioant.
Fair value measurements of financial instruments are classified using a Fair Value Hlerachy (with levels 1-3) that reflects the eignIficence
of the inputs used In making the measurements, The fair value of financial instruments that are not traded In an active market is
determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it la available
and rely as little as possible on entity specific estimates.
The three different levels have been defined as follows
Quoted prices (unadjusted) in active markets for Identical assets or liabilities - (level 1)
- Inputs other than quoted prices included within level 1 that are observable for the asset and liability, either directly (that is as prices)
or Indirectly (that is, derived from prices) - (level 2)
- Inputs for the asset and Debility that are not based on observable market dale (that is, unobservable inputs) - (level 3)
The only financial Instruments held by the Credit Union that were recognised at fair value are derivative assets and liabilities.
Derivatives were used by the Credit Union to manage interest rate risk arising from Interest rate changes. An Independent valuation of fair
value was obtained at the and of each reporting period. The fair velue was calculated by using data sourced from Eloomberg to derive the zero..
coupon discount factor that corresponds to each swap's payment and floating rate reset data over the remaining life of a swap, as at each
reporting period. Management considered the derivatives held by the Credit Union to be included in level 2 as all significant inputs required
to fair value the derivatives are observable.
24
CASH FLOW STATEMENT RECONCILIATION
Reconciliation of net cash (tow from operating activities with operating surplus
Operating surplus/(loss)
Non Cash items
Depreciation
Loss on Disposal of Fixed Assets
Bad Loans expense
Provision for Loan Impairment
Changes in Assets and Liabilities
Interest Rate Swaps - Derivatives
Decrease/(Increase) in Trade and Other Receivables
(Decrease)/Increase In Trade and Other Payabres and Employee Entitlements
Net Cash Provided by Operating Activities
2014
$000
2(113
$000
270
132
362
1,234
143
1,663
(253)
(66)
(720)
(22)
(31)
(246),
1,232
Page 25
464
1,707
CREDIT UNION SOUTH
n
RELATED PARTY DISCLOSURES
The Credit Union deals with Directors and Trustee(s) on the same terms and conditions applled to all members
(Including Interest rates on loans and shares):
Directors' holdings at balance data are:
2014
$'000
2013
53
32
Owing to Directors (Shares)
Owing by Directors (Loans)
Interest expense (On Shares)
Interest income (On Loans)
There are no shares from Directors exceeding 12 months. Directors' loans (if any) are repayable on demand,
The Directors received fees of $201,500 (30 June 2013 $195,000) for their services,
Key management persons are those with authority and responsibtlity for planning, directing and controlling the activities
of the Credit Union, directly or indirectly, including any director (whether executive or otherwise) of the entity.
Control Is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Key management persons comprise tile Directors and the three (2013 two) executive officers responsible for the day
to day financial and operational management of the Credit Union,
Key management remuneration
(excluding directors' fees):
Short terra employee benefits including final payment made to outgoing CEO,
Long term employee benefits
2014
6'000
588
2013
588
364
Total remuneration
364
-
Remuneration shown as short term benefits means (where applicable) wages, salaries, paid annual leave,
sick leave, bonuses and the value of fringe benefits received, but excludes out of pocket expense reimbursements.
As at 30 June 2014, Andrew Leys, the Chief Executive Officer of Credit Union South until 10 January 2014 is a beneficial owner of
Texcheok.co,nz Limited, a company that provides tax refund services to members of the credit union, The credit union received 627,531
In commissions for the year ended 30 June 2014 (2013 $36,977),
26 EVENTS OCCURRING AFTER BALANCE DATE
There are no known events subsequent to 30 June 2014 which would materially affect these financial statements (2015 nil),
Page 25
CREDIT UNION SOUTH
FOR THE YEAR ENDEt) 30 JUNE 2014
27
CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
30 June 2014
Financial assets as per Balance Sheet
Credit Unions and trading banks
Trade and other receivables (excluding
prepayments)
Loans to members
Capital Notes
Total
6600
2,905
22,025
22,025
1,029
81,526
.
107,485
$000
Financial liabilities as per Balance Sheet
Trade and other payables (excluding
provisions and employee benefits)
Members' deposits
Total
Financial assets as per Balance Sheet
Credit Unions and trading banks
Trade and other receivables (excluding
prepayments)
Loans to members
Capital Notes
Total
Total
0'000
2,905
Financial liabilities at fair value through
profit or loss
30 June 2013
Avallable-for.sale
9'000
.
3,098
3,098
Other
financial
liabilities
V000
1,687
00,847
92,544
0'000
Avallable-for.sale
0'000
1,029
81,528
3,096
110,881
Total
6'000
1,897
00,047
92,544
Total
0'000
2,619
2,819
30,03
30,003
990
69,951
990
69,951
9,090
106,859
103,763
Financial liabilities at fair value through
profit or foss
$'000
Financial liabilities as par Balance Sheet
Trade and other payable$ (excluding
provisions and employee benefits)
Members' deposits
Total
3,096
3,096
Other
financial
liabilities
6'000
2,287
56,547
813,834
Page 27
Total
6'800
2,257
86,547
98,834
pwc
Independent Auditors' Report
to the members of Credit Union South
Report on the Financial Statements
We have audited the financial statements of Credit Union South (the "Credit Union") on pages 1
to 27, which comprise the balance sheet as at 30 June 2014, the statement of comprehensive
income and the statement of changes in equity and statement of cash flows for the year then
ended, and the notes to the financial statements that include a summary of significant
accounting policies and other explanatory information.
Directors' Responsibility fin. the Financial Statements
The Directors are responsible for the preparation of these financial statements in accordance
with generally accepted accounting practice in New Zealand and that give a true and fair view of
the matters to which they relate and for such internal controls as the Directors determine are
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
AU ditors'
Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing (New Zealand) and
International Standards on Auditing. These standards require that we comply with relevant
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors'
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditors
consider the internal controls relevant to the Credit Union's preparation of financial statements
that give a true and fair view of the matters to Which they relate, in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Credit Union's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
We have no relationship with, or interests in, Credit Union South other than in our capacities as
auditors and providing extended assurance services. These services have not impaired our
independence as auditors of Credit Union South.
PricewaterhouseCoapers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
7'; +64 (9) 355 8000, P: +64 (9)355 8001, www.pwc.cont/nz
28
pwe
Independent Auditors' Report
Credit Union South
Opinion
In our opinion, the financial statements on pages I to 27:
(i)
comply with generally accepted accounting practice in New Zealand;
(ii)
comply with International Financial Reporting Standards; and
(ill)
give a true and fair view of the financial position of the Credit Union as at
so June 2014 and its financial performance and cash flows for the year then ended.
Report on Other Legal and Regulatory Requirements
We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act
1993. In relation to our audit of the financial statements for the year ended 30 June 2014:
1)
we have obtained all the information and explanations that we have required; and
(ii)
in our opinion, proper accounting records have been kept by the Credit Union as far
as appears from an examination of those records.
(
Restriction on Use of our Report
This report is made solely to the Credit Union's members, as a body. Our audit work has been
undertaken so that we might state to the Credit Union's members those matters which we are
required to state to them in an auditors' report and for no other purpose, To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Credit
Union and the Credit Union's members, as a body, for our audit work, for this report or for the
opinions we have formed.
112)
4-
11.CpAJOLI.A,.
qa_ar
.
Chartered Accountants
9 September 2014
Aucldan.d
29
APPENDIX THREE
[Paragraph 3.4]
pwc
Directors
Credit Union South
P0 Box 6294
Dunedin 9059
18 November 2014
Dear Directors
Independent Auditors' Reportfor Inclusion in the Prospectus
As auditors of Credit Union South ("the Credit Union") we have prepared this report
pursuant to clause 22 of Schedule 2 of the Securities Regulations 2009 for inclusion in a
prospectus issued by the Credit Union to be dated 18 November 2014 ("the Prospectus").
The Prospectus includes summary financial statements in Appendix One which comprise the
summary statement of financial position as at 30 June 2014, the summary statement of
comprehensive income, the summary statement of changes in equity and the summary
statement of cash flow for the year then ended. The summary financial statements do not
contain all the disclosures required for full financial statements under generally accepted
accounting practice in New Zealand. Reading the summary financial statements, therefore is
not a substitute for reading the audited financial statements of the Credit Union.
This report is made solely to the Directors of the Credit Union in accordance with clause 22 of
Schedule 2 to the Securities Regulations 2009. Our work has been undertaken so that we
might state to the Directors and the Credit Union as a body those matters we are required to
state to them in a report from the auditor and for no other purpose. To the fullest extent
permitted by law and subject to section 61 of the Securities Act 1978, we do not accept or
assume responsibility to anyone other than the Directors and members of the Credit Union,
as a body, for this report, or for the opinions we have formed. In addition, we take no
responsibility for, nor do we report on, any part of the prospectus not specifically mentioned
in our report.
Directors' Responsibilities
The Credit Union's Directors are responsible for the preparation and presentation of:
(a) the financial statements referred to under clause 17 (1) of Schedule 2 of the Securities
Regulations 2009, that comply with and have been registered under the Financial
Reporting Act 1993, and which comply with generally accepted accounting practice in
New Zealand and give a true and fair view of the matters to which they relate, and for
such internal controls as the Directors determine are necessary to enable the
preparation of financial statements that are free from material misstatement, whether
due to fraud or error;
(b) the summary financial statements of the Credit Union for the year ended 31 March
2010, the fifteen months ended 30 June 2011 and the years ended 30 June 2012, 30
June 2013 and 30 June 2014 as required pursuant to clause 8 of Schedule 2 of the
Securities Regulations 2009;
(c) disclosure of acquisitions of businesses or subsidiaries as required pursuant to clause 9
of Schedule 2 of the Securities Regulations 2009; and
PrIcewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: #64 (9) 355 8000, 17: +64 (9) 355 8001, www.pwc,com/nz
(d)
the ranking of securities of the Credit Union as at 30 June 2014 as required pursuant
to clause 13 of Schedule 2 of the Securities Regulations 2009.
Auditors' Responsibilities
Our responsibility is to express an opinion on the financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing (New
Zealand). These standards require that we comply with relevant ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. The scope of our audit of the financial
statements is defined in our engagement letter dated 21July 2014.
We are responsible for reporting, in accordance with clause 22(1)(h) of Schedule 2 of the
Securities Regulations 2009, on the following matters which have been prepared and
presented by the Directors:
(a)
(b)
(c)
the amounts included in the summary financial statements for the year ended 31.
March 2010, the fifteen months ended 30 June 2011 and the years ended 30 June
2012,30 June 2013 and 30 June 2014;
amounts disclosed as required pursuant to clause 9 (2) and (3) of Schedule 2 of the
Securities Regulations 2009 where there has been an acquisition of a business or
subsidiary; and
the amounts included in the ranking of securities as at 30 June 2014, as required
pursuant to clause 13 of Schedule 2 of the Securities Regulations 2009.
We have undertaken procedures pursuant to clause 22(1)(h) of Schedule 2 of the Securities
Regulations 2009. Our engagement has been conducted to provide reasonable assurance
that, in all material respects, the amounts set out in the summary fmancial statements
included in the Prospectus have been correctly taken from the audited financial statements of
the Credit Union.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
We have no relationship with, or interests in, Credit Union South other than in our capacities
as auditors and providing extended assurance services. These services have not impaired our
independence as auditors of the Credit Union.
Opinion on the Financial Statements
Our audit of the financial statements for the year ended 30 June 2014 was completed on 9
September 2014 and our unmodified opinion was issued on that date. We have not
undertaken any additional audit procedures in relation to those financial statements from the
date of the completion of our audit.
Opinion on the Summary Financial Statements
In our opinion, and pursuant to clause 22(1)(h) of Schedule 2 of the Securities Regulations
2009, the summary financial statements in Appendix One of the Prospectus and taken from
the audited financial statements of the Credit Union for the year ended 31 March 2010, the
fifteen months ended 30 June 2011 and the years ended 30 June 2012, 30 June 2013 and 30
June 2014:
•
•
are consistent, in all material respects, with those audited financial statements; and
have been correctly taken from the audited financial statements of the Credit Union
for those periods from which they were extracted (including the restatement of
certain figures for the 2009 to 2011 periods as referred to in notes 8 and 12 of
Appendix One).
Opinion on the Ranking ofSecurities
In our opinion, and pursuant to clause 22(1)(h) of Schedule 2 of the Securities Regulations
2009, the amounts included in the ranking of securities, on page 18 of the Prospectus, and
taken from the audited financial statements of the Credit Union for the year ended 30 June
2014:
•
•
are consistent, in all material respects, with those audited financial statements; and
have been correctly taken from the audited financial statements of the Credit Union
for the year ended 30 June 2014 from which they were extracted.
Other Matter
Pursuant to clauses 9(2) and 9(3) of Schedule 2 of the Securities Regulations 2009 there are
no disclosures on which to report.
Restriction on Use
This report has been prepared for inclusion in the prospectus for the purpose of clause 22 of
Schedule 2 to the Securities Regulations 2009. We disclaim any responsibility for reliance on
this report or the amounts included in the summary financial statements, for any purpose
other than that for which they were prepared.
Yours faithfully
P. 4
18 November 2014
Auckland
Pwe
The Directors
Credit Union South
PO Box 6294
Dunedin North
Dunedin 9059
18 November 2014
Credit Union South Prospectus dated18 November 2014
Dear Directors
In terms of Regulation i8(1)(c)(ii) of the Securities Regulations 2009, we hereby give consent to
the inclusion in your prospectus to be dated 18 November 2014 of our auditors' report dated 18
November 2014 in the form in which it appears.
We have not made or purported to have made any statement in the prospectus other than in our
audit report and we expressly disclaim responsibility for any other statements inthe prospectus.
We have not been involved in the preparation of any part of the prospectus other than our
auditors' report, and we have not authorised or caused the issue of the prospectus.
Yours faithfully
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwacom/nz
APPENDIX FOUR
SHARE ACCOUNTS
[Paragraph 1.5]
APPENDIX FOUR
SCHEDULE OF SHARE ACCOUNTS
[Paragraph 1.5]
The Directors of the Credit Union reserve the right (subject to any restriction contained in the Act, the Trust Deed,
its Rules, or otherwise at law) to vary the rate of return, the terms and conditions of the account, or the timing of
repayments. Notice of any such variation will be posted to members.
Term Share Accounts
For All Term Share Accounts
Interest Rate (or method of calculation) : Set at commencement of term. Rates set throughout the year according
to market conditions
Interest Payable on maturity unless otherwise stated
Minimum Shareholding: $500
Maximum Shareholding: as fixed from time to time by the Board in accordance with Rule 12
Timing of Repayments: On maturity
Fees and Charges: Break rate (if deposit redeemed before maturity date): 2.0%
Terms and Conditions of Account: As set out in the Rules of the Credit Union
The Directors of the Credit Union reserve the right to accept Term Shares for a term other than those detailed
below.
As at the date of this Prospectus, (or subsequent extension or amendment), the maximum term offered for a
Term Share is 60 months.
Interest Payable Monthly or on maturity
Name:
11 Term Deposit - 1 Month
Name: 13 Term Deposit - 3 Months
Name: 19 Term Deposit -9 Months
Interest Payable monthly, compounded quarterly, or on maturity
Name: 112 Term Deposit 12 Months
APPENDIX FOUR
SCHEDULE OF SHARE ACCOUNTS (Cont.)
Call Share Accounts
Fees and Charges:
ACCESSCARD
Card Issue
Card Replacement
PIN Replacement
Monthly charge
Credit Union ATM - Withdrawal, enquiry or decline
Bank ATM withdrawal, enquiry or decline
EFTPOS Transaction or decline
Per card
Per card (loss or damage)
Per PIN
Per card
Per transaction
Per transaction
Per transaction
$0.00
$5.00
$0.00
$0.00
$0.00
$1.00
$0.30
Overseas
ATM Transaction
ATM enquiry or decline
EFTPOS transaction
Multi-Currency Conversion fee (applied at
the prevailing buy rate by Mastercard)
ACCESSDEBIT CARD
Card Issue
Card Replacement
PIN Replacement
Credit Union ATM withdrawal or enquiry
Bank ATM withdrawal, enquiry or decline
EFTPOS Transaction or decline
Per transaction
Per transaction
Per transaction
$1.00 + $7.00
$1.00 + $7.00
$0.30 + $0.80
Per transaction
1.10%
Per card
Per card
Per PIN
Per transaction/enquiry
$10.00
$10.00
$0.00
$0.00
$1.00
$0.30
Overseas
ATM withdrawal
$1.00 + $5.00
ATM enquiry or decline
$1.00 + $0.60
EFTPOS transaction
$0.30
Foreign-Currency Conversion fee
(of the $NZ value of the transaction)
2.25%
Telephone and Text/SMS services
Telephone services fee (per call)
First 20 calls per month
$0.00
Further calls in a month (per call)
$0.50
Text services fee (per text)
$0.54
Counter/Administrative transactions
Account establishment fee
Per account
$0.00
Counter cash withdrawal
Per transaction
$1.00
Counter Cheque
Per cheque
$1.00
Manual Transfer fee
Per transaction
$1.00
Personal cheque ex savings accounts
Per cheque
$0.30
Bank cash/cheque handling fee
$2.00
Cash handling fee (over $10,000 oer month)
Per $1,000
$2.50
Success saver withdrawal fee (1 free withdrawal
Per transaction
$2.00
per calendar month)
Loyalty saver early release fee
per withdrawal
$20.00
Automatic payment, direct debit establishment
$3.00
Automatic payment, direct debit and bank transfer
per payment $0.30
Automatic payment alteration
$2.00
Automatic payment rejection
$10.00
Dishonoured payments
Inwards
$10.00
Outwards
$25.00
Honour fee (honoured payment despite insufficient funds) $10.00
Stop payment
$20.00
Special answer
$25.00
Annual account maintenance fee
$5.00
Money management service fee
Per month
$10.00
Monthly Account Fee (term investors only exempt)
$2.00
Dormant account fee
Per annum $15.00
Statement Fee (March and September)
$0.00
Statement Fee (by email)
$0.00
Statement Fee (paper statements per statement)
$1.00
Overdraft
Overdraft application
Per application
$25.00
Overdraft application (savings secured)
Per application
$10.00
Overdraft service fee
Per month
$2.50
Unauthorised overdraft fee
Per month
$25.00
Interest on overdrawn share accounts
15.00%
Terms and Conditions of Account Members over age 18 years (except Term Share only members) are required to
operate a Loyalty Saver (S6) Account and deposit the equivalent of $5.00 per week, otherwise as set out in the
Rules of the Credit Union.
Maximum Shareholding: as fixed from time to time by the Board in accordance with Rule 12
APPENDIX FOUR
SCHEDULE OF SHARE ACCOUNTS (Cont.)
Call Share Accounts cont.
Account Types
Name : Everyday (S1) Account
Interest Rate (and method of calculation):
For Credit Balances:
For Debit (overdrawn) Balances to $10.00
For Debit (overdrawn) Balances over $10.00
Timing of Repayments: On demand
Method of Withdrawal: Accesscard, Cheque withdrawal, Bank Transfer,
Automatic Payment, Direct Debit or Internet Banking.
1.50% Minimum Monthly Balance
0.00% Daily Balance
15.00% Daily Balance
Name : Billpay (S2) Account and Autopay (S3) Account
For Debit (overdrawn) Balances
Method of Withdrawal: Cheque withdrawal, Bank Transfer or Accesscard following transfer to Everyday Account
Name : Goal Saver (S5) Account
Name : Success Saver (S10) Account
3.50% Daily Balance
Notice of Withdrawal Accounts
Name : Loyalty Saver (S6) Account
Up to $5000
$5001 and over
Timing of Repayments: 14 Days Notice
Name : Christmas Saver (S7) Account
Timing of Repayments: Withdrawal only available between 20 November and 31 January or in case of severe hardship
Name Money Management (S11) Account
Name : Seasonal Saver (S12) Account
APPENDIX FIVE
PRUDENTIAL SUPERVISOR'S STATEMENT
[Paragraph 8.2]
Trustees Executors
Level 12 45 Queen Street PO Box 4197 Auckland New Zealand
TBL 09 308 7100 DM 09 308 7118 FAX 09 308 7101
Email; ehahazad,contrastorQtrustees.co.nz
18 November 2014
The Directors
Credit Union South
26 Fllieu! Street
DUNEDIN 9016
CREDIT UNION SOUTH
Clause 14(3) of Schedule 2 to the Securities Regulations 2009 requires us to confirm that
the offer of securities (in this Statement referred to generally as 'Shares") set out in this
Prospectus complies with any relevant provisions of the Trust Deed. These provisions are
those which:
(I)
(II)
entitle Credit Union South to constitute and issue under or with the benefit of the
Trust Deed (as the case may be) the Shares offered in the Prospectus;
impose restrictions on the right of Credit Union South to offer the Shares;
and are described in the summary of the Trust Deed In the Prospectus.
The Prudential Supervisor's statement does not refer to any financial information or to any
other material in the Prospectus which does not relate to the Trust Deed.
The Prudential Supervisor confirms that the offer of Shares set out in the Prospectus
complies with any relevant provisions of the Trust Deed. We have given confirmation on the
basis set out above.
The inclusion of this Prudential Supervisor's statement in the Prospectus should not be
taken to Imply that the Prudential Supervisor has responsibility for the material other than
the Prudential Supervisor's statement.
The Prudential Supervisor does not guarantee or provide any assurances as to the
repayment of the Shares or the payment of interest thereon.
Yours faithfully
TRUSTEES EXECUTORS LIMITED
$h1bazad Contractor
CORPORATE BUSINESS MANAGER
CORPORATE TRUST
Trustees Executers Limited Financial Protection since 1881
www.trustees.co,nz
APPENDIX SIX
DIRECTORATE
[Paragraph 3.1]
APPENDIX SIX
DIRECTORATE
Directors of Credit Union South
Full Name and Address
Position/Title
Occupation
Qualifications
Anthony Robert DUNSTAN
131 Doan Street
Waverley
DUNEDIN 9013
Elected Director
Chair
Trustee
Consultant
MBA (Dist.)
MinstD
loD Certified Company
Director
Janice Evelyn FREDRIC
31 Scarborough Road
Scarborough
CHRISTCHURCH 8081
Elected Director
Deputy Chair
Treasurer
Company Director
B Comm., CA
MBA (Dist.)
CMinstD, FNZIM,
John Marriott SHEARD
9 Fernbrook Place
Marsden Heights
GREYMOUTH 7805
Elected Director
Trustee
Reg. Medical Laboratory Scientist COP Med. Lab. Tech.
Peter Anthony BOOTH
21 Belmont Lane
Musselburgh
DUNEDIN 9013
Elected Director
Trustee
Company Director
BSc (Hons),
Cert. Ed.
Grad.Dip. (Bus),
Dip. (Design)
Peter Len McKNIGHT
115 Gala Street
Queens Park
INVERCARGILL 9810
Appointed Director
Secretary
Repairable Spares Co-ordinator
Electrician
Trade Cert.
APPENDIX SEVEN
DIRECTOR AND EXECUTIVE OFFICER DISCLOSURES
Paragraph 3.1]
APPENDIX SEVEN DIRECTORS AND EXECUTIVE OFFICERS' DISCLOSURE
Director or Officer
Role
I
A R Dunstan
Director, Trustee &
Chair
I
J E Fredric
Director, Treasurer &
Deputy Chair
J M Sheard
PA Booth
[ P L McKnight I
T E Dickle
C W Taylor
Director & Trustee
Director & Trustee
Director & Secretary
CEO
Acting CFO
I
I
Expertise
Qualifications
MBA
B Comm., CA, MBA
(DIST.),CMInstD,
FNZIM
COP - Medical
Laboratory
Technology
NZACU Cert. In
BSc (1-ions), Cert.
Ed. Grad, Dip. (Bus), Director
Dip. (Design)
Development,
AICUD Cert. In Risk
Management (AU),
NZ Quality College
Cert. In Internal
Audit, Electricians
Trade Cert.
B.BusIness Studies
(Marketing &
Management)
Expertise
Commercial
Governance,
Business & Finance
Clinical Biochemistry,
Information
Technology and
Credit Union
Governance
Finance, Real Estate,
Property, Design,
Information
Technology
Credit Union
Governance, Audit &
Risk and
Understanding of
Members'
Expectations
Sales & Marketing,
Banking, Finance and
Consumer Finance, Structured Products
Investment Services
and Process
improvement
Relevant Skills
Strategic Business
Development,
Service Delivery
Governance,
Business & Finance
Governance,
Strategic Planning, IT
Systems
Implementation and
Risk Assessment
Business Strategy,
Financial Services,
Technology &
Information
Management,
Strategic Marketing,
Sales, Mergers &
Acquisitions and
Asset
Management/Real
Estate
Auditing Experience
and Credit Union
Governance
Sales & Marketing,
Risk Management,
Consumer Finance, Accountancy and IT
investment Services
and Process
Improvement
Experience
35 years in related
fields
Governance,
Executive,
Management &
Accountancy
Credit Union Director
since 1996 Including
terms as Chair of
Trustees and Vice
Chair
25 years in
Management roles
within the financial
services industry
20 years post
qualification
Other Appointments - last 5 years
Director - Asset
Directorships & Other
Management
Positions Held
Solutions Ltd,
Director - Pacific
Trust Otago,
Director - Clutha
Community Health
Company
None
Conflicts of Interest
Suppliers to the Credit Ut None
Independence
Shares held (19 Mar 15) $17,097
Loan Balance (19 Mar 15 $0
_
20 years as a Credit Strategic
Union Director
Management,
Including Chair and
Information
Trustee of CU
Technology and
Westland pre merger Finance Industry
B Comm. CA
NZ Family Planning Council Member &
Deputy President,
Moore Stephens
Markhams Wairapa
Ltd - Director 8,
Chairman, Pivot
Group - Chairman of
Advisory Board, The
IT Team Ltd Advisory Board,
Hairy Lemon Ltd Advisory Beard,
University of
Canterbury
Foundation - Trustee,
Hurunui Tourism
Board - Chairman,
Duncan Cotterill
Investment Advisors
Ltd - Director,
Duncan CotterIll
Lawyers - Board
Member & CEO,
CPI Foundation Trustee
Member of National
Executive NZ Medical
Laboratory Workers
Union
Director - Bayleys
Manager,
Real Estate - Vector Washington VC
Real Estate Ltd,
Syndicate
Director - Vale Haden
Enterprises Ltd
Director - DIxee
Holdings Ltd and
Director - Gydick
Investments Ltd
No Directorships held
None
None
None
None
None
None
None
None
None
None
None
None
$83
$0
$1,390
$64,095
$17,694
$1,675.00
$0
$0
$0
$0
Note Director
No
No
No
$0
No
No
$0.00
Not a Director
Remuneration other
than Directors' Fees
or Salary
Remuneration other
or Salary
Remuneration other
or Salary
Remuneration other
or Salary
Remuneration other
or Salary
Remuneration other
or Salary
Remuneration other
or Salary
Honesty/Character
Nothing adverse to
disclose
None
Nothing adverse to
disclose
None
Nothing adverse to
disclose
None
Nothing adverse to
disclose
None
Nothing adverse to
disclose
None
Nothing adverse to
disclose
Legal or Disciplinary
Action
Nothing adverse to
disclose
None
None
Insolvent Companies
or failed Businesses
None
None
None
None
None
None
None
Independent Director
Remuneration other
than Directors' Foes or
Salary

credit union south prospectus

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