2012/13 annual report - greater bank · 2021. 2. 11. · 2012/13 annual report for the year ended...

Greater Building Society Ltd 2012/13 Annual Report

For the Year Ended 30 June 2013

Head Off ice: 103 Tudor Street Hamilton NSW 2303 PO Box 173 Hamilton NSW 2303 P 1300 651 400 F 02 4921 9112Greater Building Society Ltd. • ABN 88 087 651 956 • AFSL/Australian Credit Licence No. 237476

Chairman’s Report 1

CEO’s Report 2

Taking on the Major Banks 4

Customer Service 6

Our People 8

Our Community 11

Greater Charitable Foundation 15

Financial Statements 30 June 2013 17

Contents

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Greater Building Society Ltd

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I am pleased to announce an increased prof it despite diff icult economic conditions and intense competition. Despite slower growth in lending and deposits we have achieved a prof it of $28.4 million after tax, up 36% on last year.

The results complement our current strategic plan introduced last year which focuses on continued prof itability and sustained growth. The result strengthens our ability to serve our customers – which is the reason we exist – through competitive rates, low fees, and better products and services. For this reason the Board will continue to focus on eff iciency and our ability to adapt to changing market conditions.

Our other key f inancial indicators are also sound. Total assets are now almost $5 billion. Our capital adequacy is well above Australian Prudential Regulation Authority requirements and we have retained our BBB/A2 rating from Standard and Poors.

Stronger prof itability also allows us to give more back to the communities in which we operate. This year the Greater Charitable Foundation committed to an additional $300,000 in funding on top of the $2.5 million allocated in its f irst year of operation. This included support for a new partner, the Australian Children’s Music Foundation. An important part of the Greater Charitable Foundation’s support to its charity partners is providing The Greater’s staff to support the work of those charity partners. I am delighted at the amount of support our staff have provided to these charities and the difference it is making to the lives

of local people as well as those staff members. I also want to thank the Foundation Directors for their good work this year.

The Greater’s funding support of the Greater Charitable Foundation is in addition to the support we provide to other community and sporting organisations. A highlight this year was our support for the Salvation Army’s Red Shield Appeal which included turning our head off ice red to demonstrate our support for this great cause.

The Greater is a member of the newly named Customer-owned Banking Association (COBA) and our CEO is its current Chairman. COBA has continued a campaign to push for an independent inquiry into Australia’s f inancial system. The Greater and other building societies, credit unions and mutual banks need a more level playing f ield to enable them to provide sustained competition to the major banks for the benef it of Australian consumers.

One of the accolades received by The Greater this year was being named Australia’s Best Savings Account Provider as well as a top f ive provider of both home loans and debit cards for the second year in a row in the 2012 Mozo People’s Choice Awards. This is signif icant for two reasons. It reinforces that whilst home lending is a very important part of what we do, The Greater excels in providing a complete range of f inancial services for its customers. The other reason for its signif icance is that this award is determined by customers and is based on important principles such

Front row: L to R Malcolm McDonald, Jayne Drinkwater, Wayne Russell 2nd row: Roger Cracknell, Scott Robinson Back row: Russell Ware

Chairman’s Report

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Annual Report for the Year Ended 30 June 2013

as service, convenience and trust. We aim to provide the best service possible and have our customers know they can trust us with all their banking needs.

Awards such as these are a credit to The Greater’s management and staff, and I would like to thank them for their efforts this year. I am conf ident The Greater will continue to grow as a strong alternative to the major banks as an outstanding provider of f inancial services.

Finally I would like to thank my fellow Directors for their tremendous support, counsel and commitment during the year. They are dedicated to discharging their roles to the highest level in service of The Greater’s staff and customers.

Wayne Russell Chairman

This year the Greater Building Society has achieved a stronger prof it result despite lower growth in lending and deposits compared with the previous year. Our improved prof itability is due to the hard work of our staff in containing costs and working to ensure that we provide more of our customers a broader range of products and services.

The Greater’s prof it of $28.4 million is up 36% on last year. Lending for the year grew by 1.9% while deposits grew by 5%. Assets grew by 1.3%, which means The Greater’s total assets at the end of 2012/13 were just shy of $5 billion. Despite tough competition from the major banks and other f inancial institutions for home loans we continue to maintain our conservative lending criteria, resulting in our ratio of impaired loans remaining very low.

The Greater exists for one reason – to serve its customers, the owners of our building society. We have continued to roll out our sales and service strategy and started implementing our new digital strategy. Both are designed to provide customers with higher levels of service, with even more choice and f lexibility in how they do their banking with us.

Thanks to the good work of our management team and staff we maintained a very high customer satisfaction rating of 95.6% in our annual customer satisfaction survey. This independent survey is conducted for us by the Financial Research Company each year. Our efforts to provide the very best service possible have also been acknowledged in the

CEO, Don MaginChairman, Wayne Russell

CEO’s Report

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Service is one of the key ways we differentiate ourselves from the major banks and to a large degree that comes down to people. Our staff work hard but are also working smarter for our customers. They are also giving their time to support community initiatives including those funded by the Greater Charitable Foundation. I want to thank them for their dedication to our customers and the communities in which we operate.

Two of our staff members highlighted in this report demonstrates the strengths of The Greater’s people. Emma Avery was unanimously recognised by industry judges as an Emerging Leader in the Australian mutual f inancial industry. Sandra Davis retired this year after 40 years of outstanding service. The Greater’s family is blessed to have a combination of young emerging talent and many of our staff who have loyally served us for many years.

We are in a strong position and with the support of our great people we will have continued success for the building society and our customers in the coming years.

Don Magin Chief Executive Off icer

Seated L to R: Greg Taylor, Don Magin, Lisa Presbury, Doug Williams Standing L to R: Chris Hodgins, Bruce White, Scott Morgan, Steve Taylor, Bruce Mackie

monthly Roy Morgan Customer Satisfaction Monitor. The Greater had the highest rating of any building society every month in the f irst six months of 2013. We will continue to streamline our customer processes and systems including our core banking system to make it even more responsive to customers’ requirements.

Our branch network remains a very important part of our service delivery for many customers. This year we continued the roll out of our new branch design to provide customers and staff with better amenity. On the Gold Coast we merged the Elanora branch with nearby branches when the leasing arrangements for this branch’s building changed. The branch was not well utilised by customers and the Gold Coast remains a subdued area for lending and deposits.

Our new marketing campaign helped to underpin our results. It focussed on reminding people that we offer a full range of f inancial services, and not just home loans. We are here to assist customers through all the greater moments in life to help make their lives greater.

Importantly we have used our prof its to ensure we continue to provide low fees and very competitive rates. We continue to have some of the lowest home loan rates particularly when comparison rates are used. The Greater cut home loan rates by more than any other Australian lender in response to the RBA’s cut to off icial interest rates in May 2013.

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And the winner is...The Greater These are just some of the awards The Greater has received this year in recognition of its products, service and value for customers.

2012 Mozo People’s Choice Awards

• Best Savings Account provider

• Top 5 Home Loan provider

• Top 5 Debit Card provider

Australian Home Loan Awards

• Best Credit Union/Building Society for Customer Service

• Best Credit Union/Building Society Loans for First Home Buyers

• Canstar Outstanding Value Home Loans

Money Magazine Awards Cheapest Five–Year Fixed Investment Loan – Non–Bank

2012 Hunter Business Awards Customer Service Award

The Greater continued to take on the major banks to provide much needed competition for Australian consumers.

The Greater’s success in providing great rates, low fees and outstanding service was recognised in a number of awards. The Greater was again the most awarded building society in the Mozo People’s Choice Awards. It was voted by the public as Australia’s best provider of savings accounts and a top f ive provider of both home loans and debit cards for the second year in a row. A number of The Greater’s products were also awarded 5 star ratings by Canstar Cannex.

Passing on rate cutsDespite having higher funding costs than the major banks, The Greater continued to pass on cuts to its already low home loan and credit card rates. In May 2013 The Greater was one of only two major lenders in Australia to pass on more than the Reserve Bank of Australia’s 0.25% in off icial interest rates. The Greater passed on 0.30%, more than any other Australian lender. In June 2013 it also cut its credit card rates by 1%, at a time when many other f inancial institutions have not been cutting card rates. On a number of occasions this year The Greater led the market, offering the lowest f ixed rate home loan in the country.

A study of 23 Australian f inancial institutions conducted by a University of New England academic put The Greater in the top f ive after examining average standard variable rates charged in the period 2000 to 2012.

•Marketleadingratecutsforhomeloanandcreditcardcustomers

•MoreawardsforTheGreater

•MobileBanking

•NewSolicitorTrustAccount

Taking on the Major Banks

2012 Mozo People’s Choice Awards

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New Solicitor Trust AccountThe Greater became the latest f inancial institution approved to hold general trust accounts in New South Wales. There are currently only 11 banks, three building societies and three credit unions with Solicitor Trust accounts. The Greater is the only mutual f inancial institution in the lllawarra and NSW South Coast to operate such an account.

Solicitors often have to hold clients’ funds in the course of the provision of legal services. The account provides easy and convenient access to funds via cheque, EFT transfers, Internet Banking, Mobile Banking or at any branch. The Greater already provided a Real Estate Agent Trust Account.

Digital and Mobile BankingThe Greater developed a new digital strategy this year which it will progressively roll out to continue to enhance its mobile, digital and social capabilities to meet customer’s changing needs and expectations.

This year we have seen month on month growth in Mobile Banking, not only in log–ons, but in the range of transactions being undertaken using mobiles. At the end of June 2013 The Greater’s Mobile Apps (iphone and android) had been downloaded almost 50,000 times. This means that 33% of Internet Banking customers are using the App.

The Greater also refreshed its website this year in line with its new brand roll–out. The refreshed website was named a f inalist in the 2012 NEWi Awards for Digital Excellence.

Account opening through Internet BankingThe Greater made it easier for existing customers to open everyday, savings and investment accounts.

The new service allows customers to open one of four accounts in under 60 seconds through Internet Banking. There is no need to go to a branch, no need to sign anything or provide additional documents.

Opening the following accounts now takes less than a minute through Internet Banking:

• Access Account

• Ultimate Access Account

• Bonus Saver Account

• Term Investment Account.

New customers can apply for a Bonus Saver or Term Investment (Term Deposit) Account online via the internet.

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Customer satisfaction

This year The Greater recorded a record customer satisfaction rating of 95.6% of customers satisf ied. Less than 2% of customers were dissatisf ied in any way. The Greater’s annual customer satisfaction survey is independently conducted by the Financial Research Company. It provides a range of information to help The Greater to improve its products and services to its customers.

The Greater’s provision of outstanding customer service was recognised when it took out the 2012 Hunter Business Award – customer service. On receiving the award, CEO Don Magin paid tribute to The Greater’s staff and said The Greater continued to make signif icant investments in training, staff ing and process improvement to deliver great service through its Sales and Service Strategy.

From July 2012 to June 2013, The Greater had the highest monthly customer satisfaction rating of any Australian building society on eight occasions according to Roy Morgan.

Greater celebrates Nell Strachan’s 100th birthday

Glendale Branch Manager Stuart Williams surprised Ellen (Nell) Strachan from Edgeworth in NSW with f lowers, a card and well wishes from his branch staff as she celebrated her 100th birthday with family and friends at a bowling club she has served for many years.

Mrs Strachan has been a customer with The Greater for almost 20 years. Her daughter Marian, also a Greater customer, helped to organise the visit and the birthday celebrations.

Mrs Strachan is a Life Member of Edgeworth Bowling Club. She was the President from 1970–1975 and the Treasurer from 1994 until 2006.

She has three children, one step child, 14 grandchildren and 35 great grand children, and three great, great grandchildren.

•Highestevercustomersatisfactionresult

•Bigger,betterbranchesandmoreATMs

Glendale Branch Manager, Stuart Williams presents f lowers to long–serving Greater customer Ellen Strachan

The Greater’s CEO Don Magin proudly accepting the 2012 Hunter Business Award for customer service

CustomerService

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Better branches and more ATMs

The Greater continued its relocation and refurbishment of branches to make banking even more convenient and enjoyable for customers. A total of four branches were refurbished this year and all sport the new look branch design that is being progressively rolled out across the network with bright new colours and more sit down counter service and meeting areas to provide better customer and staff amenity. As at the end of June 2013 The Greater had 64 branches, the largest branch network of any Australian building society. The Elanora branch on the Gold Coast was merged with nearby branches because lease arrangements for its premises changed.

The Greater continues to expand its ATM network. This year two new ATMs were installed taking the total number to 105. Customers also have direct charge free access to their savings with a growing number of rediATMs.

In the f irst few months of 2013/14 the Tuggerah branch will be refurbished and the Nowra branch will be relocated to a better main street location with the new look and design.

RefurbishedBranches

Bathurst

Cessnock

Singleton

Stockton

New ATMs

Fletcher (Coles Shopping Centre)

Singleton

New Cessnock BranchNew Bathurst ATM

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Name Yrs of Service

Sandra Davis 40

William Brandon 39

Gail Smith 39

Suzanna Sherman 34

Gaye Pike 34

Greg Taylor 33

Paul Harrison 33

Diane Jones 33

Mirella Liddell 33

Julieanne O’Sullivan 32

John Bailey 31

Wendy Ryan 31

Peter Marquet 31

Chris Hodgins 31

John Wolski 29

Sharon Wicks 28

Wayne Goodchild 28

Glenda Kopp 28

David Smith 28

Christine Mogford 28

Kevin Buckley 28

Lisa Hense 27

Name Yrs of Service

Donna Ryan 27

Kristine Carter 27

Colin Hope 26

Don Magin 26

Wendy Morris 26

Louise Spencer 26

Dawn Gowie 25

Terrence Chandler 25

Robert Lowcock 25

Lauren Tickner 25

Mitchell Johns 25

Sharon White 25

Elizabeth Schneider 25

Stephen Clifford 24

Glenn Mainey 24

Colleen Hodgins 24

Wayne Dean 24

Duncan Coulton 24

Helen OConnor 24

Stephen Goverd 24

Paul Gibson 23

David Bryde 23

Name Yrs of Service

Janelle Haller 23

Yvonne Stone 23

Megan McInnes 23

Glenda Bartrop 22

Janelle Modinger 22

Vicki Rowett 22

Donna Adamson 22

Tracy Gee 22

Stephen Taylor 22

Maria Di Claudio 22

Debra Dwyer 22

Katherine Davis 22

Linda Monahan 22

Wes Lassam 22

Susan Smart 22

Susan Caponecchia 22

Kristine Loadsman 21

Toni Parkinson 21

Richard Penfold 20

Matthew Scully 20

Helen Snape 20

Catherine Jones 20

•Staffrecognisedforlongservice to The Greater and its customers

•MaitlandstaffPeterMarquetandRyan Morgan Jones take out top staff awards

•EmmaAveryanEmergingLeader

Long Service Awards The Greater’s Long Service Awards program recognises staff service at 10, 15, 20, 25, 30, 35 and beyond years of service. The following staff achieved 20 years or more service during the 2012/13 f inancial year. Thanks for your loyal service.

Our People

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Emerging Leader – Emma AveryInternal communications specialist Emma Avery represented The Greater and all Australian mutuals when she attended the 2013 World Council of Credit Unions in Canada in July 2013.

Emma was at the congress as the winner of the 2012 Emerging Leader Mutual Industry Award. She was presented with her award and $10,000 for professional development at the 2012 ABACUS (Australian mutual f inancial institution industry association, now called COBA) Convention on the Gold Coast.

Emma was the unanimous choice of the judges from a competitive f ield of young leaders drawn from across Australia’s 116 building societies, credit unions, friendly societies and mutual banks.

A quality of any good leader is their capacity to give to others. Emma this year co–ordinated The Greater’s participation in the Cerebral Palsy Alliance’s Ignition Mentoring program and has been a volunteer mentor in the program for two years.

Long serving Greater employees and executive team at celebratory staff dinner

Emma Avery with her 2012 Emerging Leader Mutual Industry Award

One of The Greater’s longest ever serving employees, Sandra Davis

Long Serving Staff Honoured with Special DinnerStaff with 20 years or more service were honoured at a special dinner in November 2012. Attending the dinner was Sandra Davis, one of The Greater’s longest ever serving employees.

Mrs Davis retired at the end of the f inancial year after 40 years of service. She performed a number of roles for The Greater in human resources and administration. She always went above and beyond the call of duty, none more so than when she allowed her home to become the makeshift headquarters for The Greater after the 1989 Newcastle Earthquake.

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Our People

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Paras ready to ride through Cambodia to raise funds for f inancial literacy

Left: Ian Nelmes presents Rutherford Branch Manager Peter Marquet with his award

Right: Greenhills Lending Manager, Ryan Morgan–Jones was Employee of the Year for 2012

Cycling Challenge improves f inancial literacy in CambodiaThe Greater’s Paras Pappas cycled 325km around Cambodia to help raise funds to improve f inancial literacy among Cambodians.

She was one of nine people selected from Australian credit union and building societies to participate in the 13 day Credit Union Foundation Australia (CUFA) Cambodian Leadership Challenge in June 2013.

The Greater paid for her trip as a development opportunity. Before taking off to Cambodia, Paras raised more than $3,300 to contribute to Cambodian communities through the Children’s Financial Literacy Program.

On her return Paras started 100 hours of voluntary work with charities supported by The Greater as the f inal requirement of the trip.

Outstanding service from Peter and RyanTwo of the Greater’s Maitland–based staff took out its top staff awards this year. Greenhills Lending Manager Ryan Morgan–Jones was named Employee of the Year for 2012. Rutherford Branch Manager Peter Marquet won the Ian Nelmes Award for Outstanding Service.

The Employee of the Year Award is open to all of The Greater’s 800 employees. A winner is announced each quarter and those winners compete for the overall award.

The Ian Nelmes Award is chosen by The Greater’s executive team and recognises the performance and the contribution a person makes in demonstrating and promoting The Greater’s cultural values. It honours former long–serving Director Ian Nelmes.

Mr Morgan–Jones has worked for The Greater for 10 years. Mr Marquet has served The Greater for more than 30 years and was also an inaugural staff elected Board member on the Greater Charitable Foundation.

The awards are one part of The Greater’s staff reward and recognition program.

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As a mutual (customer owned) f inancial institution The Greater does not have the same pressures for shareholder returns as the major banks. It puts its prof its back into offering competitive rates, low fees and support for the communities in which it operates. The Greater has supported a range of organisations and events again this year. Nine other charities have been supported by the Greater Charitable Foundation (see page 15–16).

Some of the other community events and initiatives The Greater and its staff have supported this year include:

• the Country & Regional Living Expo to help promote living in and investing in regional NSW to Sydney–siders

• the Maitland Hospital CozyCot Appeal to raise vital equipment to care for local babies

• the Manning Valley–based “Heart to Heart” initiative to help send 10 disadvantaged young women to go on a life–changing journey to help orphans in Vietnam

• the Port Macquarie Christmas celebrations

• sponsorship of the inaugural Capturing Ability photographic competition run by disability service provider Mai Wel

• sending care packages to make a difference to the lives of Australian troops serving overseas

• funding to Northern Rivers charity The Buttery to run a wilderness trekking therapy program for at risk young people

Shellharbour Branch won the Stockland Shellharbour 2012 Community Involvement Award in particular for the branch staff members’ support of local charity KidzWish. Staff participated in the Great Illawarra Walk for Camp Quality.

•Greatersupportsarangeofcommunityandsportingorganisations

•SupportfornextOlympians

•TurningredforSalvos

Greater turns red for Salvos

The Greater Building Society went red to support the Salvation Army’s Red Shield Appeal in the Hunter.

• The Greater lit up its head off ice in the colour red in May 2013.

• CEO Don Magin and members of The Greater’s executive team led a team of 75 staff who door knocked more than 20,000 homes.

• Greater staff took part in and encouraged other businesses to join them in the inaugural Hunter Red Threads Day. In return for a gold coin donation people wore red clothes to work. The main streets of Hamilton and Lambton as well as the Honeysuckle business district went red for the Salvos.

• The Greater also co–sponsored the business fundraising launch of the Appeal in the Hunter.

• All of The Greater’s 64 branches accepted donations for the Red Shield Appeal.

Our Community

Staff from our Lambton branch supporting Red Threads Day and the Salvos

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Helping Australia’s next Olympians

Last year the world watched the London Olympics and this year The Greater boosted the hopes of 10 Hunter and Manning athletes as they prepare to be selected for the 2014 Sochi Winter Olympic Games and the 2016 Rio Olympic and Paralympic Games.

The Greater Olympic Scholarships are managed for The Greater by the Hunter Academy of Sport. In addition to funding, athletes receive advice from the Academy’s consultants in areas such as sports psychology, nutrition, physical f itness, injury prevention and injury treatment.

In the 20 years the scholarships have been operating, more than $320,000 has been provided to support 90 athletes. Seven members of the Australian team for the London Games had received a scholarship and four medalled. The Greater also supported the Central Coast, Northern Inland and Gold Coast academies of sport this year.

Greater Building Society 2012/13 Olympic Sports Scholarship Winners

Isobel Cootes 17 Football

Taylor Corry 17 Swimming (Paralympian)

Kailani Craine 14 Figure Skating

Brock Griff iths 14 BMX Cycling

Ella Hartcher 17 Archery

Nathan Power 19 Water Polo

Aaron Royle 22 Triathlon

Shaun Swadling 19 Trampoline

Laura Whaler 25 Athletics (Sprints)

Mariah Williams 17 Hockey

Meanwhile The Greater again sponsored the Hunter Track Classic. The Athletics Australia and NSW Athletics organised event brought some of Australia’s top athletes to the Hunter region to compete in February 2013.

Left to Right: Hunter Academy of Sport CEO Ken Clifford, Maria Williams, Ella Hartcher, Taylor Corry, Nathan Power, Aaron Royle, Brock Griff iths, Shaun Swadling and Greater CFO Greg Taylor.

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Our Community

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Greater turns red

to support the Salvation Army’s

Red Shield Appeal in the Hunter.

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New partner, ACMF

The Greater Charitable Foundation aims to make a lasting difference to the life outcomes of families and communities in the areas served by the Greater Building Society and beyond. It is funded from prof its of the building society.

The Foundation allocated an additional $300,000 in funding this year including funding for one new partner, Australian Children’s Music Foundation (ACMF).

The Greater Charitable Foundation has proudly partnered with:

Autism Spectrum Australia (Aspect)

Australian Children’s Music Foundation

Cerebral Palsy Alliance

Heal for Life Foundation

Hunter Institute of Mental Health

Hunter Medical Research Institute (HMRI)

Inspire Foundation

KidzWish Foundation

Starlight Children’s Foundation

TheGreaterCharitableFoundation

120 Greater staff have now

volunteered for charity partners

Additional $300,000 allocated

www.greaterfoundation.org.au

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In 2012/13 $300,000 in funding was allocated

•Hunter Medical Research Institute (HMRI) – Funding for two medical research trials for Stroke. A trial of a new clot busting medication and a trial of interventions to get stroke survivors active in rehabilitation.

•Heal for Life Foundation – Expansion of Eva House residential program to help young women to heal from childhood abuse or trauma.

•CerebralPalsyAlliance – Funds to support a youth support group and the expansion and continued improvement of the effectiveness of current youth mentoring programs.

•Australian Children’s Music Foundation (ACMF) – Expansion of its free music education program to schools in the Manning region.

This additional funding takes the total allocated to almost $3 million since the Foundation was established in 2011.

An important feature of the Foundation is the opportunity it provides for Greater staff to be involved in the work of the charity partners. More than 120 Greater staff have volunteered for those charity partners, providing in excess of 50 days volunteering support.

During the year planning was undertaken in readiness for the 2013 funding round which opened in June and closed in July 2013. Local charities had the opportunity to apply for a share of approximately $1 million in this round.

See the Foundation’s website for details of the successful recipients.

Giving kids the gift of musicGreater Building Society Taree Branch Manager, Jason Potter joined Manning Valley based artist Matt Zarb in June 2013 as he helped to change the lives of kids at Manning Gardens Public School through music.

The school is one of three more local schools to benef it from the Australian Children’s Music Foundation’s (ACMF) free music education program this year thanks to funding from the Greater Charitable Foundation and the Vincent Fairfax Family Foundation. The other two schools are Chatham High School and Taree Public School. The program is well established at Taree High School Education Support Unit and Chatham Primary School.

The music programs are developed in conjunction with school principals and staff and taught by professional musicians. More than 75% of public schools in Australia do not have funds for a specialist music teacher. This was the reason CEO Don Spencer OAM founded ACMF a decade ago.

Mr Potter is a father of three children. He was the f irst of The Greater’s staff from its Taree and Forster branches that will regularly join in to help run the program in local schools.

ACMF is a not–for–prof it organisation that provides music instruments and programs for disadvantaged and Indigenous children and youth in schools, remote communities and juvenile justice centres across Australia. Research has proven that participation in music has a signif icant impact on a child’s mental health and development.

ACMF is the ninth charity partner to be supported by the Greater Charitable Foundation.

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Index

Directors’ Report 18 – 22

Independent Auditor’s Report To The Members 23 – 24

Directors’ Declaration 25

Statements Of Comprehensive Income 26

Balance Sheets 27

Statements Of Changes In Equity 28

Statements Of Cash Flows 29

Notes To And Forming Part Of The Financial Statements 30 – 70

Financial Statements 30 June 2013

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TheDirectorshavemuchpleasureinpresentingtheirreportontheconsolidatedf inancial statements consisting of Greater Building Society Ltd (the Society) and theentitiesitcontrolledattheendof,orduring,theyearended30June2013.

DirectorsThe following persons held off ice as Directors for the whole of the f inancial year and up until the date of this report.WMRussell,B.Comm,CA,GAICD,MIIA(Aust)Mr Russell joined the Board in April 2011. He has extensive experience in providing auditing and assurance services, having worked as an audit and assurance partner at PricewaterhouseCoopers for 20 years. He is currently a partner at accountancy f irm Farrow Wyatt where he leads the audit division. Mr Russell is involved in a number of industry associations and is a member of the executive and past President of the Australian Financial Institutions Auditors Association. Mr Russell has been the Chairman of the Board since his appointment on the 29 November 2011.

Special Responsibilities: Member of the Audit & Risk Management Committee, Member of the Remuneration Committee, Member of the M&A Strategy Committee and Chairman of Succession Planning Committee.DSRobinson,B.Surveying(Hons)MAICDMr Robinson joined the Board in October 2007 and has 30 years experience in surveying, town planning and land development. He is the Managing Director of ADW Johnson, a leading Hunter based consultancy in surveying, town planning, engineering and land development. Mr Robinson has also previously worked as a part–time teacher at TAFE and was a Junior Off icer in the Royal Australian Navy.

Special Responsibilities: Deputy Chairman of the Board, Chairman of the IT Steering Committee, Chairman of Greater Newcastle Land Developments Pty Ltd (a subsidiary of the Greater involved in land development), Member of the M&A Strategy Committee and Member of the Marketing Steering Committee. WRWare,LL.M.(Hons),FAICDMr Ware joined the Board in February 2009. He practised law for 14 years until 1987 when he became a professional Company Director and Business Consultant. He has served on the boards of a number of public companies in diverse industries for over 26 years. He is a co–owner and director of Rosedale Gardens Retirement Living, a retirement village at Cooranbong, south of Newcastle.

Special Responsibilities: Chairman of the Remuneration Committee and Member of the Succession Planning Committee. MLMcDonald,BEc.FCA,GAICDMr McDonald joined the Board in May 2009. He has practiced as a Chartered Accountant for over 30 years, and was a Partner in the Newcastle Off ices of Touché Ross & Co and KPMG Peat Marwick until his resignation in 1994. He has since that date and until recently practised on his own account. He is a Trustee of the Anglican Diocese of Newcastle and has considerable involvement in the Not for Prof it sector at Board and Committee level.

Special Responsibilities: Chairman of the Audit & Risk Management Committee, Member Succession Planning Committee and Member of the Remuneration Committee.VJDrinkwater,BEc.MBA(Withmerit),GAICD,CAHRIMrs Drinkwater joined the Board in October 2010. She has extensive experience as a senior executive in operations, customer service, IT and marketing. Mrs Drinkwater was previously employed as Interim CEO New Zealand, Chief Marketing Off icer and Chief Operating Off icer at nib health funds. She is currently a Principal of local IT f irm, Arion Systems and is also a Trustee of the Anglican Diocese of Newcastle.

Special Responsibilities: Member of the Remuneration Committee, Member of the Succession Planning Committee and Chair of the Marketing Steering Committee.RJCracknell,CPA,FAICDMr Cracknell joined the Board in May 2011. He was Chief Executive of ABS Building Society from 1973 until April 2011 and has over 40 years experience in the Building Society Industry. He has held various executive positions with the Australian Permanent Building Societies (NSW Division) and was a Councillor of AAPBS (National). Mr Cracknell was a partner in the accountancy f irm of Jones, Cracknell & Starr for over 40 years.

Special Responsibilities: Member of the Audit & Risk Management Committee and Chairman of the M&A Strategy Committee.

Directors’ Report

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Company SecretaryFor the whole of the f inancial year the Company Secretary has been Mr B E Mackie B Leg S, LLM, F Fin. Mr Mackie is a qualif ied Lawyer with over 20 years experience in public, private and corporate legal practice, the majority of that time working in large public companies providing f inancial products and services. Mr Mackie joined the Greater Building Society Ltd in 2003.

Corporate ObjectivesThe Society’s long term objective is to ensure the f inancial viability of the Society and to provide a range of f inancial services to members that are competitive and meet their needs. Short term objectives involve seeking opportunities to grow the business, either by new products or services or by an expansion of distribution networks. Growth aspirations are however, sought in a prudent and sustainable manner. Current strategies to achieve these objectives are to maintain a network of well presented and convenient locations; to continue to expand the Greater’s branch network into new areas; to expand the range of products and services to meet the demands of members; to continue to provide a superior service level; to strive to enhance the member experience at all points of contact; to be an employer of choice and to provide a challenging and enjoyable workplace; and to continue to build capacity and knowledge with good corporate governance.

The Society measures its performance using a range of f inancial and non–f inancial indicators. The main f inancial indicators are interest margins, cost to income ratio, return on equity, prof it per employee, loan portfolio growth and deposit portfolio growth, while non–f inancial indicators include number of products and services per member, staff and member satisfaction surveys.

Principal ActivitiesThe principal activity during the year of the consolidated entity comprising the Greater Building Society Ltd and the controlled entities consisted of the provision of f inancial services to members in the form of taking deposits and providing f inancial accommodation. Those activities enhanced the f inancial position of the Society and provided the platform to enable the Society to improve the quality of its distribution channels and expand the range of products and services available to members.

Results of the Consolidated Entity 2013 2012

$’000 $’000Prof it after income tax expense 28,410 20,880

Less (Prof it)/Loss attributable to outside equity interests (691) (268)

Prof it attributable to members of the Greater Building Society Ltd 27,719 20,612

Review Of OperationsA review of operations of the consolidated entity is contained in the Chairman’s and Chief Executive Off icer’s Report.

Directors’ MeetingThe persons holding off ice as Directors of the parent entity during the year were; W M Russell, D S Robinson, W R Ware, M L McDonald, V J Drinkwater and R J Cracknell. The number of meetings of the Directors (including meetings of Committees) held during the year and the number of meetings attended by each Director were as follows:

Directors’ Report (continued)

20


Board of Directors

Audit & Risk Management Committee

Remuneration Committee

IT Steering Committee

M & A Strategy Committee

Marketing Steering

Committee

NumberofMeetings 12 8 2 4 4 4

W M Russell 11 / (12) 8 / (8) 2 / (2) – 4 / (4) –

D S Robinson 12 / (12) – – 4 / (4) 4 / (4) 4 / (4)

W R Ware 12 / (12) – 2 / (2) – – –

M L McDonald 12 / (12) 8 / (8) 2 / (2) – – –

V J Drinkwater 12 / (12) – 2 / (2) – – 3 / (4)

R J Cracknell 12 / (12) 8 / (8) – – 4 / (4) –

A meeting was not required for the Succession Planning Committee this year.

Insurance Of Off icersDuring the f inancial year, the Society paid premiums to insure the Directors and senior executive off icers of the Society and its controlled entities.

In accordance with normal commercial practice, disclosure of the total amount of premium payable under, and the nature of the liabilities covered by, the insurance contract is prohibited by a conf identiality clause in the contract.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the off icers in their capacity as off icers of the consolidated entity.

State Of AffairsThere was no signif icant change in the state of affairs of the consolidated entity during the f inancial year.

Member LiabilityThe Society is a Company limited by shares and guarantee. The Society has not issued shares. The guarantee is provided by members of the Society and is limited to $1 per member. The total amount that members of the company are liable to contribute if the company were wound up is $242,953.

After Balance Date EventsThe Directors are not aware of any matters or circumstances that have arisen since 30 June 2013 that have signif icantly affected or may signif icantly affect:

A) The operations of the consolidated entity,

B) The results of those operations, or

C) The state of affairs of the consolidated entity in the f inancial years subsequent to 30 June 2013.

Likely Developments And Expected Results Of OperationsThere are no material likely developments in the operations of the consolidated entity, other than continued prof itable operations, at the date of this report.

Proceedings On Behalf Of The CompanyNo person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Society, or to intervene in any proceedings to which the Society is a party, for the purpose of taking responsibility on behalf of the Society for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Society with leave of the Court under Section 237 of the Corporations Act 2001.


21


Environmental RegulationThe Society or its controlled entities are not subject to any signif icant environmental regulation.

Auditors’ Independence DeclarationA copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 22.

Rounding Of AmountsThe amounts in the f inancial statements have been rounded to the nearest thousand dollars under the option available to the Society under ASIC Class Order 98/100. The Society is an entity to which the Class Order applies.

AuditorPricewaterhouseCoopers continues in off ice in accordance with section 327 of the Corporations Act 2001. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non–audit services provided during the year are disclosed in Note 27.

W M Russell Chairman

Signed at Hamilton this 24th day of September 2013 in accordance with a resolution of the Directors.


22

Annual Report for the Year Ended 30 June 2013Annual Report for the Year Ended 30 June 2013

PricewaterhouseCoopers, ABN 52 780 433 757 PricewaterhouseCoopers Centre, 26 Honeysuckle Drive, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation.

Auditor’s Independence Declaration

As lead auditor for the audit of Greater Building Society Ltd for the year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Greater Building Society Ltd and the entities it controlled during the period.

Darren Turner Newcastle Partner 24 September 2013 PricewaterhouseCoopers









23


PricewaterhouseCoopers, ABN 52 780 433 757 PricewaterhouseCoopers Centre, 26 Honeysuckle Drive, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Independent auditor’s report to the members of Greater Building Society Ltd

Report on the financial report We have audited the accompanying financial report of Greater Building Society Ltd (the Society), which comprises the balance sheet as at 30 June 2013, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for both Greater Building Society Ltd and Greater Building Society Ltd Group (the consolidated entity). The consolidated entity comprises the Society and the entities it controlled at year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report The directors of the Society are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1A, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.









IndependentAuditReporttotheMembers

24

Annual Report for the Year Ended 30 June 2013Annual Report for the Year Ended 30 June 2013

Auditor’s opinion In our opinion:

(a) the financial report of Greater Building Society Ltd is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Society's and consolidated entity's financial position as at 30 June 2013 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1A.

PricewaterhouseCoopers

Darren Turner Newcastle Partner 24 September 2013

IndependentAuditReporttotheMembers (continued)

25


In the Directors’ opinion:A) The f inancial statements and notes set out on pages 26 to 70 are in accordance with the Corporations Act

2001, including:

i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

ii) Giving a true and fair view of the Society’s and consolidated entity’s f inancial position as at 30 June 2013 and of their performance, as represented by the results of their operations, changes in equity and their cash f lows, for the f inancial year ended on that date; and

B) There are reasonable grounds to believe that the Society will be able to pay its debts as and when they become due and payable; and

C) Note 1(a) conf irms that the f inancial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the Directors.

W M Russell Chairman

Signed at Hamilton this 24th day of September 2013.

Directors’ Declaration

26


StatementsOfComprehensiveIncomeDirectors’ Declaration

Consolidated Society

2013 2012 2013 2012

Notes $'000 $'000 $'000 $'000Interest revenue 2 291,043 317,260 291,368 317,623

Interest expense 3 (169,902) (201,927) (172,025) (204,688)

Net interest income 121,141 115,333 119,343 112,935

Non–interest income 4 24,895 20,725 19,743 18,426

146,036 136,058 139,086 131,361

Non–interest expense 5 (106,405) (106,546) (100,966) (102,202)

Prof itbeforeincometax 39,631 29,512 38,120 29,159

Income tax expense 6 (11,221) (8,632) (11,163) (8,853)

Prof it for the year 28,410 20,880 26,957 20,306

Prof itattributableto

Members of Greater Building Society Ltd 27,719 20,612 26,957 20,306

Non–controlling interests 25 691 268 – –

28,410 20,880 26,957 20,306

Othercomprehensiveincome

Items that may be reclassif ied to prof it or loss

Available for sale assets 23 – – – –

Cash f low hedges 23 (2,543) 6,343 (2,543) 6,343

Income tax relating to these items 23 763 (2,035) 763 (2,035)

Items that will not be reclassif ied to prof it or loss

Revaluation of land and buildings 23 7 579 70 240

Fair value assets through other comprehensive income 23 1,101 658 1,101 658

Income tax relating to these items 23 (333) (371) (351) (270)

Total other comprehensive income (1,005) 5,174 (960) 4,936

Totalcomprehensiveincome 27,405 26,054 25,997 25,242

Totalcomprehensiveincomeattributableto

Members of Greater Building Society Ltd 26,714 25,786 25,997 25,242


27,405 26,054 25,997 25,242

The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes.

for the Year Ended 30 June 2013

27


Balance Sheets


2013 2012 2013 2012

Notes $'000 $'000 $'000 $'000

ASSETS

Cash and cash equivalents 7 160,219 300,003 153,583 292,129

Investment securities 8 554,835 424,193 563,463 432,570

Other receivables 9 1,189 1,157 1,879 2,128

Derivative f inancial instruments 10 4,438 7,735 4,438 7,735

Loans and advances 11 4,193,842 4,113,875 4,193,842 4,116,034

Inventories 12 1,535 3,901 – –

Other f inancial assets 13 3,255 2,154 5,526 4,837

Deferred tax assets 14 3,509 3,270 3,650 2,883

Property, plant and equipment 15 29,027 31,674 29,027 30,556

Investment properties 16 4,301 5,281 4,301 5,281

Intangible assets 17 1,398 1,467 1,398 1,467

TOTAL ASSETS 4,957,548 4,894,710 4,961,107 4,895,620

LIABILITIES

Payables and other liabilities 18 9,677 10,382 8,976 10,130

Deposits 19 4,185,057 3,987,622 4,189,675 3,990,089

Current tax liabilities 20 3,532 1,715 3,492 1,569

Derivative f inancial instruments 10 379 273 379 273

Other f inancial liabilities 21 391,609 552,231 395,084 554,489

Provisions 22 9,816 11,382 9,816 11,382

TOTAL LIABILITIES 4,600,070 4,563,605 4,607,422 4,567,932

NET ASSETS 357,478 331,105 353,685 327,688

MEMBERS’ FUNDS

Reserves 23 30,309 30,546 27,656 27,638

Retained prof its 24 326,151 299,467 326,029 300,050

356,460 330,013 353,685 327,688

Non–controlling interests 25 1,018 1,092 – –

TOTAL MEMBERS’ FUNDS 357,478 331,105 353,685 327,688

The above Balance Sheets should be read in conjunction with the accompanying notes.

as at 30 June 2013

28


StatementsOfChangesInEquityBalance Sheets


2013 2012 2013 2012

Notes $'000 $'000 $'000 $'000

TOTAL EQUITY AT THE START OF THE FINANCIAL YEAR

Reserves 23 30,546 24,985 27,638 22,256


Non–controlling interests 25 1,092 824 – –

331,105 305,051 327,688 302,446

TOTAL PROFIT & LOSS FOR THE YEAR



28,410 20,880 26,957 20,306

TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR

Reserves 23 (1,005) 5,174 (961) 4,936

(1,005) 5,174 (961) 4,936

OTHER TRANSACTIONS WITHIN EQUITY FOR THE YEAR

Transfer from retained prof its to reserves 23 768 387 978 446

Transfer from reserves to retained prof its 24 (768) (387) (978) (446)

Minority Interest adjustment 23 (267) – – –

Distributions provided for or paid to minority interest 25 (765) – – –

(1,032) – – –

TOTAL EQUITY AT THE END OF THE FINANCIAL YEAR

Reserves 23 30,309 30,546 27,656 27,638


Non–controlling interests 25 1,018 1,092 – –

357,478 331,105 353,685 327,688

The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.


29


Statements Of Cash Flows


2013 2012 2013 2012

$'000 $'000 $'000 $'000

NotesInf lows/

(Outf lows)Inf lows/



(Outf lows)

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 290,181 319,223 290,499 319,599

Fees and commissions received 17,358 15,999 17,358 15,999

Other income received 7,104 3,200 502 950

Interest paid (176,591) (206,610) (177,195) (208,676)

Operating expenses paid (97,631) (99,333) (94,152) (97,531)

Income taxes paid (9,459) (8,970) (9,459) (8,970)

Net advances and repayments in loans and advances (80,499) (294,238) (81,044) (293,072)

Net placements and redemptions in investment securities (128,930) 55,738 (129,105) 61,104

Net acceptances and payments in deposits 203,137 346,323 205,290 346,300

NET CASH PROVIDED BY OPERATING ACTIVITIES 30 24,670 131,332 22,696 135,703

CASH FLOWS FROM INVESTING ACTIVITIES

Net purchases and sales in other f inancial assets and liabilities

740 (188) 859 (188)

Payments for property, plant and equipment (4,299) (7,375) (4,264) (6,255)

Proceeds from sale of property, plant and equipment 360 372 360 372

Dividends and distributions received 12 9 1,302 9

CASH FLOWS FROM INVESTING ACTIVITIES (3,187) (7,182) (1,743) (6,062)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from commercial notes 261,800 – – –

Repayments of commercial notes (422,397) (77,567) (159,500) –

Net movement in loans from SPE (Special Purpose Entity) – – – (79,706)

Distributions Paid (670) – – –

NET CASH PROVIDED BY FINANCING ACTIVITIES (161,267) (77,567) (159,500) (79,706)

Net increase/(decrease) in cash held (139,784) 46,583 (138,549) 49,935

CASH AT THE BEGINNING OF THE FINANCIAL YEAR 300,003 253,420 292,129 242,194

CASH AT THE END OF THE FINANCIAL YEAR 7 160,219 300,003 153,583 292,129

The above Statements of Cash Flows should be read in conjunction with the accompanying notes.


30


Notes to and Forming Part of The Financial Statements


Statements Of Cash Flows

1. SUMMARY OF SIGNIF ICANT ACCOUNTING POLICIES

A) Basis of PreparationThe f inancial report includes separate f inancial statements for Greater Building Society Ltd as an individual entity (ie the Society) and the consolidated entity consisting of the Society and all its subsidiaries.

The f inancial statements of the Society and the consolidated entity are general purpose f inancial reports prepared in accordance with provisions of Australian Accounting Standards and the Corporations Act 2001 in Australia. The Society’s and consolidated entity’s f inancial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Greater Building Society Ltd is a for–prof it entity for the purposes of preparing f inancial statements.

The f inancial statements of the Society and the consolidated entity are prepared under the historical cost convention, as modif ied by the revaluation of certain f inancial assets and liabilities (including derivative instruments) at fair value, certain classes of property and investment property.

All amounts are expressed in Australian dollar currency.

The signif icant accounting policies adopted in the preparation of these f inancial statements and that of the previous f inancial year are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.

i) Critical account estimates and signif icant judgements

The preparation of the f inancial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the accounting policies. The notes of the f inancial statements set out the areas involving a higher degree of judgement or complexity, or areas where assumptions are signif icant to the Society and its consolidated entity f inancial statements. The most signif icant of these are:

• impairment losses on loans and advances,

• consolidation of special purpose entities, and

• fair valuation estimates.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Management believes the estimates used in preparing the f inancial statements are reasonable. Actual results in the future may differ from those reported.

ii) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2013 reporting periods. The consolidated entity’s assessment of the impact of these new standards and interpretations is set out below.

• AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures and AASB 2011–7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards and AASB 2012–12 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments (effective 1 January 2013)

In August 2011, the AASB issued a suite of f ive new and amended standards which address the accounting for joint arrangements, consolidated f inancial statements and associated disclosures. AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12 Consolidation – Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single def inition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that signif icantly inf luence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns. There is also new guidance on participating and protective rights and on agent/principal relationships. While the consolidated entity does not expect the new standard to have a signif icant impact on its composition, it has yet to perform a detailed analysis of the new guidance in the context of its various investees that may or may not be controlled under the new rules.

31




AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classif ied as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. Parties to a joint operation will account their share of revenues, expenses, assets and liabilities in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share joint control. As the consolidated entity does not have joint venture arrangements, AASB 11 will not have any impact on the amounts recognised in its f inancial statements.

AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by the consolidated entity will not affect any of the amounts recognised in the f inancial statements, but may impact the type of information disclosed in relation to the consolidated entity’s investments. Amendments to AASB 128 provide clarif ication that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a ‘partial disposal’ concept. The consolidated entity is still assessing the impact of these amendments. The consolidated entity does not expect to adopt the new standards before their operative date. They would therefore be f irst applied in the f inancial statements for the annual reporting period ending 30 June 2014.

• AASB 13 Fair Value Measurement and AASB 2011–8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)

AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The consolidated entity has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the f inancial statements. However, application of the new standard will impact the type of information disclosed in the notes to the f inancial statements. The consolidated entity does not intend to adopt the new standard before its operative date, which means that it would be f irst applied in the annual reporting period ending 30 June 2014.

B) Consolidation i) Controlled entities

The consolidated f inancial statements comprise the f inancial statements of the Society and its controlled entities (together, ‘the consolidated entity’). Controlled entities are all those entities (including Special Purpose Entities) over which the Society has the power to govern, directly or indirectly, decision–making in relation to f inancial and operating policies, so as to require that entity to conform with the Society’s objectives. The effects of all transactions between entities in the consolidated entity have been eliminated in full. Non–controlling interest in the results and equity of controlled entities, where the Society owns less than 100% of the issued capital, are shown separately in the consolidated statements of comprehensive income, statements of changes of equity and balance sheets.

Where control of an entity was obtained during the f inancial period, its results have been included in the consolidated statement of comprehensive income from the date on which control commenced. Where control of an entity ceased during the f inancial period, its results are included for that part of the f inancial period during which control existed.

Investments in subsidiaries are accounted for by the Society at cost.

ii) Business combinations

The acquisition method of accounting is used to account for all business combinations. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. Identif iable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

Acquisition–related transaction costs are expensed as incurred.

The excess of the consideration transferred, the amount of any non–controlling interest in the acquiree over the fair value of the net identif iable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identif iable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in prof it or loss as a bargain purchase.

32




Contingent consideration is classif ied either as equity or a f inancial liability. Amounts classif ied as a f inancial liability are subsequently remeasured to fair value with changes in fair value recognised in prof it or loss.

iii) Securitisation

Securitised positions are held through a number of Special Purpose Entities (‘SPEs’). These securitised positions allow the Society to access funding. The Society does not consolidate a SPE entity it does not control. Where it can sometimes be diff icult to determine whether the Society does control the SPE, it makes judgements about its exposure to the risks and rewards as well as about the ability to make operational decisions for the SPE. The Society has consolidated its SPEs. Accordingly their underlying assets, liabilities, revenues and expenses are reported in the Society’s consolidated balance sheets and statements of comprehensive income.

iv) Land development investment

The Society has an equity investment in a controlled entity involved in the development of land for subdivision and subsequent sale as residential lots.

Development properties are classif ied as inventory and carried at the lower of cost and net realisable value. Cost includes expenses incidental to the cost of acquisition, development and holding costs excluding borrowing costs. Costs are allocated on a per lot basis based on direct cost allocation where possible or by an averaging process by applying indirect costs across all relevant lots.

Contracts are generally conditional upon performance of some condition of the contract, sale is recognised upon the satisfaction of the condition which generally is upon settlement of the contract.

C) Segment ReportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identif ied as the Chief Executive Off icer. All operating segments are less than the required quantitative threshold to require separate disclosure.

D) RevenueRecognition i) Interest revenue

Interest income arising from loans and held to maturity investment securities is brought to account using the effective interest rate method. Incremental fees and transaction costs associated with the origination of loans and held to maturity investment securities which are an integral part of the effective interest rate are deferred and recognised in the statement of comprehensive income on a yield basis over the expected life of the f inancial instrument.

The effective interest rate is that rate that exactly discounts estimated future cash f lows throughout the life of the f inancial instrument.

The balance outstanding of the deferred origination income and expense is recognised in the balance sheets as an adjustment to the carrying amount of the loans and held to maturity investment securities outstanding.

ii) Other revenue

Other income, commission and fee income is recognised in the statement of comprehensive income as revenue on an accruals basis when the service has been provided or incurred.

E) Income TaxThe consolidated entity has adopted the balance sheets liability method of tax–effect accounting, which focuses on the tax effects of transactions and other events that affect amounts recognised in either the balance sheets or a tax–based balance sheets.

Deferred tax assets and liabilities are recognised for temporary differences, except where the deferred tax asset/liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting prof it nor taxable prof it or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that the future taxable amounts will be available to utilise those temporary differences and losses.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

33




The Society and certain wholly owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2002. The Australian Taxation Off ice has been notif ied of this decision. As a consequence, Greater Building Society Ltd, as the head entity of the tax consolidated group, recognises current tax liabilities relating to transactions, events and balances of the tax consolidated group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances.

There is no tax sharing arrangement or funding agreement in place between the Society and its tax consolidated entities. As a consequence the amount of current tax benef it or liability recognised by the Society in respect of transactions, events and balances of its tax consolidated entities within the tax consolidated group will be recognised as a contribution to (or distribution from) the tax consolidated entities.

F) Financial InstrumentsThe consolidated entity has elected to apply AASB 9 Financial Instruments and AASB2009–11 Amendments to Australian Accounting Standards arising from AASB 9 from 1 July 2010, because the new accounting standards provide more reliable and relevant information for users to assess the amounts, timing and uncertainty of future cash f lows.

All f inancial instruments (assets and liabilities) are initially recognised at fair value plus, in the case of f inancial assets and liabilities not classif ied as at fair value through prof it or loss, transaction costs that are directly attributable to the acquisition or issue of the f inancial asset or f inancial liability.

Financial instruments are then classif ied into one of the following categories, which in turn determines the subsequent accounting measurement of the item. The categories and measurement treatments are:

i) Debt instruments

A debt instrument is classif ied as at amortised cost only if both of the following criteria are met:

• the asset is held within a business model with the objective to collect the contractual cash f lows, and,

• the contractual terms give rise on specif ied dates to cash f lows that are solely payments of principal and interest on the principal outstanding.

The nature of any derivatives embedded in the debt instrument are considered in determining whether the cash f lows of the instrument are solely payment of principal and interest on the principal outstanding and are not accounted for separately.

A gain or loss on a debt instrument that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in prof it or loss when the f inancial asset is derecognised or impaired and through the amortisation process using the effective interest rate method.

If either of the two criteria above are not met, the debt instrument is classif ied as at fair value through prof it or loss.

A gain or loss on a debt instrument that is subsequently measured at fair value and is not part of a hedging relationship is recognised in prof it or loss and presented net in the income statement within other income or other expenses in the period in which it arises.

ii) Equity investments

All equity investments are measured at fair value.

Equity investments that are held for trading are measured at fair value through prof it or loss. Changes in the fair value of f inancial assets at fair value through prof it or loss are recognised in other income or other expenses in the income statement as applicable. Interest income from these f inancial assets is included in the net gains/(losses). Dividend income is presented as other revenue.

For all other equity investments (ie equity investments other than held for trading) the consolidated entity can make an irrevocable election at initial recognition of each equity investment to recognise changes in fair value through other comprehensive income (OCI) rather than through prof it or loss.

Where management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassif ication of fair value gains and losses to prof it or loss. Dividends from such investments continue to be recognised in prof it or loss as other revenue when the right to receive payments is established and as long as they represent a return on investment.

34




iii) Financial liabilities

Financial liabilities are measured at amortised cost using the effective interest rate method except for derivatives, f inancial liabilities designated as at fair value through prof it and loss, and in other limited circumstances as allowed under AASB 9 Financial Instruments which are subsequently measured at fair value through prof it and loss. All the consolidated entity’s f inancial liabilities are classif ied at amortised cost.

G) CashAndCashEquivalentsCash and cash equivalents includes cash on hand and deposits at call and other short term, highly liquid investments with original maturities of three months or less that are readily convertible to cash and are subject to an insignif icant risk of changes in value.

H) Investments i) Asset recognition

Investment securities are classif ied as debt instruments and are measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity. Any gains or losses from investments are recognised in prof it and loss when the investments are derecognised, on impairment, as well as through the amortisation process.

Equity investments are either nominated by management to present fair value gains and losses in other comprehensive income or otherwise any gains or losses are recognised in prof it or loss.

Equity investments are measured at fair value. Fair values of quoted investments in active markets are based on current bid prices. If the relevant market is not considered active (or the securities are unlisted), the consolidated entity establishes fair value by using valuation techniques, including recent arm’s length transactions, discounted cash f low analysis, option pricing models and other valuation techniques commonly used by market participants. Where equity investments cannot be reliably valued they are recorded at cost.

ii) Revenue recognition

Interest income arising from investment securities is recognised in the statement of comprehensive income using the effective interest rate method (refer Note 1D).

Gains and losses arising from subsequent changes in fair value for fair value assets through other comprehensive income investments are recognised directly in the fair value assets through other comprehensive income reserve in equity, until the asset is derecognised or impaired, at which time the cumulative gain or loss will be transferred to retained prof its.

Dividend income is recognised when the right to receive payment is established.

iii) Investments in associates

Investments in associates are accounted for in the f inancial statements using the equity accounting method. Under this method, the consolidated entity’s share of the post acquisition prof its or losses of associates is recognised in the consolidated statement of comprehensive income, and its share of post acquisition movements in reserves is recognised in consolidated reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the investment. Associates are those entities over which the consolidated entity exercises signif icant inf luence, but not control.

Investments in associates are accounted for by the Society at cost.

I) LoansAndAdvances i) Asset recognition

Loans and advances are classif ied as loans and receivable assets and are recognised when cash is advanced to members. They are carried at amortised cost using the effective interest rate method (refer Note 1F).

35




ii) Revenue recognition

Interest income arising from loans is brought to account using the effective interest rate method (refer Note 1D).

Loan fees received and transaction costs directly attributable to the acquisition of the loan are deferred and included as an adjustment to the interest revenue of the loan on a yield basis over the expected life of the loan using the effective interest rate method. The deferred revenues and costs are included in the balance sheets as part of the value of the loans and advances outstanding.

Other loan fees, commissions and other service fees provided in relation to services are recognised as prof it and loss as other income on an accruals basis.

iii) Loan impairment

All loan assets are subject to regular review and assessment for possible impairment. Allowances for impairment losses on loans are based on an incurred loss model, which recognises an allowance where there is objective evidence of impairment.

Specif ic allowances are raised for losses that may be incurred for loans that are known to be impaired. Estimated losses on these loans are measured at the difference between the loans carrying amount and the present value of the estimated cash f lows discounted at the loans effective interest rate.

Where individual loans are found to not be impaired they are grouped together with loans of similar credit risk characteristics and then assessed collectively for impairment. Any loan that has been individually assessed and considered impaired is excluded from the collective assessment.

Loans that are collectively assessed for impairment are estimated on the basis of historical loss experience adjusted for any current conditions that may have impacted on the historical loss experience.

A credit loss reserve is maintained in equity to cover credit risks inherent in the loan portfolio. Movement in the credit loss reserve is recognised as an appropriation of retained prof its (refer Note 1S).

iv) Restructured loans

A restructured loan is a non–commercial facility where the original contractual terms have been modif ied to provide concessional changes for reasons relating to f inancial diff iculties of the borrower. Where the loan after restructuring remains doubtful and it is not well secured the loan shall be subject to impairment. Loans will only be recognised as restructured once the customer has formally agreed to the new terms.

v) Assets acquired through enforcement of security

Assets acquired through enforcement of security are assets acquired in full or partial settlement of a loan or similar facility through enforcement of security arrangements.

vi) Bad debts written–off

Bad debts are written–off as identif ied by management and the Board of Directors when it is reasonable to expect that the recovery of the debt is unlikely.

Bad debts will be written–off directly to prof it and loss in the period in which they are identif ied. Bad debts can be written–off directly against the allowance for impaired losses only to the extent that the allowance balance includes a specif ic allowance in respect of the debt being written–off.

J) Plant,PropertyAndEquipment i) Asset recognition

Land and buildings are initially recognised at cost and then subsequently carried at fair value less accumulated depreciation.

Plant and equipment are initially recognised at cost and then subsequently carried at cost less accumulated depreciation and less any impairment adjustment. Assets are reviewed for impairment annually.

Cost includes expenditure directly attributable to the acquisition of the asset.

Items of equipment, furniture and f ittings and other small assets, which cost less than $1,000 will be expensed at the time of purchase.

36




ii) Revaluations

Land and buildings are carried at fair value at the date of the revaluation less any subsequent accumulated depreciation of buildings and accumulated impairment losses.

Increases in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in other comprehensive income and accumulated in the property revaluation surplus reserve in equity. To the extent that the increase reverses a decrease previously recognised in prof it or loss, the increase is f irst recognised in prof it or loss. Decreases that reverse previous increases of the same asset are f irst recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to prof it or loss. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation surplus reserve relating to the particular asset being disposed is transferred to retained prof its.

The balances in the asset revaluation surplus reserve for each particular asset are net of any potential capital gains tax liability.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benef its are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in prof it and loss in the year the item is derecognised.

Fair value is determined by reference to market–based evidence, which is the amount which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Annual assessments of the fair value is made by the Directors, supplemented by independent valuations performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ materially from the asset’s fair value at the balance sheets date.

iii) Depreciation

Depreciation is calculated so as to write–off the net cost or revalued amount of each item of property, plant and equipment (excluding land) over its expected useful life. Additions are depreciated from the date of acquisition.

The consolidated entity uses the following rates and methods of depreciation:

Rate Method

Buildings 2.5% straight line

Off ice Furniture 25% reducing balance

Off ice Equipment 25% reducing balance

Motor Vehicles 30% reducing balance

Computer Hardware 40% reducing balance

Cash Dispensing Units 15% straight line

Leasehold improvements are amortised over the shorter of the unexpired period of the lease or the useful life of the leasehold improvements on a prime cost basis.

Useful lives and residual values are reviewed annually and reassessed in light of commercial and technological developments. If an asset’s carrying value is greater than its recoverable amount due to a useful life, residual value or impairment adjustment, the carrying amount is written down immediately to its recoverable amount. Adjustments arising from such restatements and on disposal of f ixed assets are recognised in prof it and loss.

For taxation purposes the consolidated entity determines an effective life to allow assets to be depreciated. The consolidated entity generally uses the reducing balance method of depreciation for tax purposes.

37




K) InvestmentPropertiesInvestment properties are initially recognised at cost and then subsequently carried at fair value. Cost includes expenditure directly attributable to the acquisition of the asset.

Fair value is determined by reference to market–based evidence, which is the amount which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Annual assessments of the fair value are made by the Directors, supplemented by independent valuations performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ materially from the asset’s fair value at the balance sheets date.

Changes in fair values for investment properties are recognised directly in prof it and loss.

Where the property is used by the consolidated entity for its own occupation the property is classif ied as plant, property and equipment.

L) InventoryNo expenditure is treated as an asset where it has no realisable value or it is insignif icant in size and nature. Items such as printed internal forms, advertising brochures, etc, are not treated as inventory.

All inventories are stated at the lower of cost and net realisable value.

M) IntangibleAssets i) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the consolidated entity’s share of the net identif iable assets of the acquired entity at the date of acquisition. Goodwill on acquisitions of controlled entities is included in intangible assets. Goodwill on acquisitions of associates is included in the carrying value of investments in associates. Goodwill is not amortised but tested for impairment annually, or more frequently if events indicate that it might be impaired. In this event, it is carried at cost less accumulated impairment losses.

ii) Computer software

Directly attributable costs incurred in acquiring computer software is capitalised and amortised at 40% per annum (reducing balance). Costs incurred on software maintenance are expensed as incurred.

N) Members’DepositsMembers’ deposits are measured at amortised cost using the effective interest rate method (refer Note 1F). Interest on deposits is brought to account using the effective interest rate method (refer Note 1D).

O) FinancialLiabilitiesThe consolidated entity has on issue debt securities and instruments which are initially recognised at fair value, net of transaction costs incurred (refer Note 1F). These instruments are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in prof it and loss over the period of the borrowings using the effective interest rate method (refer Note 1D). If the debt security is designated as a hedged item and meets the requirements of hedge accounting, the security is measured at fair value (refer Note 1Q).

P) ProvisionsThe consolidated entity makes provision where it has a present legal or constructive obligation as a result of past events and it is probable that an outf low of resources will be required to settle the obligation.

A provision for promotion and reward scheme costs is recognised when the present obligations arise. The provision is measured as the amount unpaid at the balance date discounted by an estimated rate of non–usage.

38




Q) DerivativeInstruments

The consolidated entity uses derivative f inancial instruments to hedge its exposure to interest rate risks arising from operational, f inancing and investment activities. In accordance with its treasury management policy, the consolidated entity does not hold or issue derivative f inancial instruments for trading purposes.

All derivatives, including those used for balance sheets hedging purposes, are recognised on the balance sheets at fair value and are disclosed as an asset where they have a positive fair value at balance date or as a liability where the fair value at balance date is negative (refer Note 1F).

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently remeasured to their fair value at balance date. Fair values for interest rate swaps is the estimated amount that the Society would receive or pay to terminate the swap at the balance date, taking into account current interest rates and the credit worthiness of the swap counterparties. Movements in the carrying amounts of derivatives are recognised in prof it and loss, unless the derivative is designated as a hedge and meets the requirements for hedge accounting.

i) Cash f low hedges

For a derivative designated as hedging a cash f low exposure arising from a recognised asset or liability (or a highly probable forecast transaction), the gain or loss on the derivative associated with the effective portion of the hedge is initially recognised in equity in the cash f low hedge reserve and reclassif ied into the statement of other comprehensive income when the hedged item is brought to account. The gain or loss relating to the ineffective portion of the hedge is recognised immediately in prof it and loss.

ii) Fair value hedges

For a derivative designated as hedging a fair value exposure arising from a recognised asset or liability (or a f irm commitment), the gain or loss on the derivative is recognised in prof it and loss together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

R) Employee Entitlements i) Wages and salaries and annual leave

Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured at the amounts expected to be paid when the liabilities are settled.

ii) Long service leave

A liability for long service leave is recognised and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outf lows.

iii) Superannuation

Contributions are made by the consolidated entity to an employee’s superannuation fund and are charged as expenses when incurred. The consolidated entity has no legal obligation to cover any shortfall in the funds liability to provide benef its to employees on retirement.

iv) On–costs

On–costs associated with employees, including payroll tax, are recognised as liabilities and expenses when the employment to which they relate has occurred.

39




S) ReservesWith effect from 1 July 2005 the Society has established a reserve for credit losses to cover credit risks inherent but not yet incurred in the loan portfolio (refer Note 1I (iii)). Movement in the credit loss reserve is recognised as an appropriation of retained prof its.

T) GoodsAndServicesTaxWhere capital or expense acquisitions relate to input taxed activities goods and services tax is generally non–recoverable from taxation authorities. Accordingly, where the amount of goods and services tax incurred is not recoverable, the tax is recognised as part of the cost of acquisition of an asset or as part of an item of expense.

For the purposes of the Statements of Cash Flows, receipts and payments from operations are inclusive of goods and services tax.

U) ImpairmentThe carrying amounts of the consolidated entity’s assets are reviewed at least at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Any impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in prof it and loss unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal but only to the extent of the previous revaluation amount.

V) Rounding Of AmountsThe company is of a kind referred to in ASIC Class Order 98/100, issued by Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the f inancial statements. Amounts in the f inancial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

40




Consolidated Society2013 2012 2013 2012$'000 $'000 $'000 $'000

2. INTEREST REVENUE

Cash and cash equivalents 9,491 13,507 9,381 13,281Investment securities 26,500 26,806 26,812 27,212

Loans and advances 255,052 276,947 255,175 277,130291,043 317,260 291,368 317,623

3. INTEREST EXPENSE

Deposits 152,343 171,859 152,372 171,899

Other f inancial liabilities 17,559 30,068 19,653 32,789

169,902 201,927 172,025 204,688

4. NON–INTEREST INCOME

Commission 3,768 3,284 3,768 3,284

Dividend revenue (including revenue on wind up of wholly owned subsidiary) 12 9 12 9

Fee income 13,441 13,046 13,441 13,046

Impaired losses recovered 18 16 18 16

Net gain on f inancial assets at fair value through prof it and loss – 108 – –

Net gain on revaluation of land and buildings – – – 339

Net gain on disposal of investment securities 497 733 497 733

Net gain on disposal of property, plant and equipment 41 52 41 52

Rental revenue 326 365 326 365

Sales revenue from sale of inventory 6,226 2,837 – –

Trust Distributions – – 1,290 –

Other revenue 566 275 350 474

24,895 20,725 19,743 18,426

5. NON–INTEREST EXPENSE

Amortisation of computer software 686 846 686 846Cost of inventory sold 3,860 1,767 – –

Depreciation – buildings 404 399 404 399Depreciation – leasehold improvements 1,388 1,334 1,388 1,334

Depreciation – plant and equipment 2,086 2,432 2,086 2,432Employee related expense 51,192 51,752 51,192 51,752

Net loss on f inancial assets at fair value through prof it and loss 23 – 23 –Net loss on revaluation of investment properties 1,157 – 1,157 –

Net loss on revaluation of land and buildings 1,531 – 449 –Net loss on disposal of investment securities – 262 – 262

Net loss on disposal of property, plant and equipment 353 170 353 170

Operating rental expense 9,360 8,801 9,360 8,801Payment system processing costs 7,411 8,159 7,406 8,154

Other general and administration expenses 26,954 30,624 26,462 28,052106,405 106,546 100,966 102,202

41





2013 2012 2013 2012

Notes $'000 $'000 $'000 $'0006. INCOME TAX EXPENSE

A) Income Tax Expense

Current tax 11,176 9,441 11,540 9,538

Deferred tax 222 (742) (200) (685)

Adjustment to current tax of prior years (177) (67) (177) –

11,221 8,632 11,163 8,853

Income tax expense attributable to

Prof it from operations 11,221 8,632 11,163 8,853

Aggregate income tax expense 11,221 8,632 11,163 8,853

Deferred income tax expense/(revenue) included in income tax expense comprises

Decrease/(increase) in deferred tax assets 14 1,089 (446) 561 (389)

Increase/(decrease) in deferred tax liabilities 14 (867) (296) (761) (296)

222 (742) (200) (685)

B) NumericalReconciliationOfIncomeTaxExpenseToPrimaFacieTaxPayable

Prof it from operations before income tax expense 39,631 29,512 38,120 29,159

Prima facie tax payable at 30% (2012 – 30%) 11,889 8,854 11,436 8,748

Tax effect of amounts which are not deductible (taxable) in calculating taxable income

Non–assessable charitable donations (70) (56) – –

Non–assessable dividend (325) – – –

Entertainment (100) – (100) –

Property fair value adjustment 15 16 15 16

Change in Capital Gains Tax Status of Buildings – 92 – 92

Sundry items (12) (207) (12) (3)

Under/(over) provision prior year (176) (67) (176) –

(668) (222) (273) 105

INCOME TAX EXPENSE 11,221 8,632 11,163 8,853

C) AmountsRecognisedDirectlyInEquity

Aggregate current and deferred tax arising in the reporting period and not recognised in net prof it or loss but directly debited or credited to equity

Current tax – credited directly to equity (57) 197 (182) 197

Net deferred tax – debited/(credited) directly to equity 14 488 (2,348) 594 (2,348)

23 431 (2,151) 412 (2,151)

42





2013 2012 2013 2012

Notes $'000 $'000 $'000 $'0007. CASH AND CASH EQUIVALENTS

Cash on hand 17,892 17,346 17,877 17,361

Financial institution balance 34,774 57,649 28,153 49,760

Short term deposits 107,553 225,008 107,553 225,008

160,219 300,003 153,583 292,129

8. INVESTMENT SECURITIES

Deposits with f inancial institutions 541,076 393,085 542,704 394,462

Investments in other securities 13,759 31,108 20,759 38,108

554,835 424,193 563,463 432,570

Investment securities expected to mature within 12 months 195,554 49,710 195,098 49,698

Investment securities expected to mature after 12 months 359,281 374,483 368,365 382,872

554,835 424,193 563,463 432,570

9. OTHER RECEIVABLES

All other receivables are current assets

Accrued income 253 402 253 402

Prepayments 832 689 813 666

Other receivables 104 66 813 1,060

1,189 1,157 1,879 2,128

10. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative f inancial instrument asset

Interest rate swap contracts – cash f low hedges 4,438 7,721 4,438 7,721

Interest rate swap contracts – at fair value – 14 – 14

4,438 7,735 4,438 7,735

Derivatives expected to mature within 12 months 155 1,162 155 1,162

Derivatives expected to mature after 12 months 4,283 6,573 4,283 6,573

4,438 7,735 4,438 7,735

Derivative f inancial instrument liability

Interest rate swap contracts – cash f low hedges 379 273 379 273

379 273 379 273

Derivatives expected to mature within 12 months 196 273 196 273

Derivatives expected to mature after 12 months 183 – 183 –

379 273 379 273

Cash f low hedge ineffectiveness – gain/(loss) – – – –

43





2013 2012 2013 2012

$'000 $'000 $'000 $'00011. LOANS AND ADVANCES

Overdrafts 144,606 173,142 145,981 175,301

Term loans 4,050,195 3,942,561 4,050,195 3,942,561

Gross loans and advances 4,194,801 4,115,703 4,196,176 4,117,862

Allowance for specif ic impairment losses (959) (1,828) (2,334) (1,828)

Net loan and advances 4,193,842 4,113,875 4,193,842 4,116,034

Loans and advances expected to be paid within 12 months 1,068,919 1,012,183 1,069,270 1,012,714

Loans and advances expected to be paid after 12 months 3,124,923 3,101,692 3,124,572 3,103,320

4,193,842 4,113,875 4,193,842 4,116,034

A) Allowance For Specif ic Impairment Losses

Movement in the allowance for specif ic impairment losses are as follows

Opening balance 1,828 1,219 1,828 1,219

Bad debt write–off (712) (163) (712) (163)

New / (Released) Provision (157) 772 1,218 772

959 1,828 2,334 1,828

B) Impaired Loans

Impaired loans with specif ic provision for impairment 2,633 3,285 4,008 3,285

Less specif ic provision (959) (1,828) (2,334) (1,828)

1,674 1,457 1,674 1,457

Impaired loans will be either assessed individually or grouped together with similar credit risk assets and assessed collectively for impairment. Individual assessment will usually be performed where the risk exposure is either signif icant by amount or of a particular product type. The consolidated entity in assessing individual specif ic impairment will consider the counterparties willingness to meet their contractual arrangements, the counterparties economic circumstances and their future f inancial prospects and the security provided.

Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit.

44





2013 2012 2013 2012

$'000 $'000 $'000 $'000C) AssetsAcquiredThroughTheEnforcementOfSecurity

Net fair value of assets acquired through the enforcement of security still held at the end of the f inancial year

Real estate 235 435 235 435

Other assets 8 – 8 –

243 435 243 435

Assets acquired during the year are disposed of as soon as practically possible with the proceeds used to reduce the outstanding indebtedness. Any residual proceeds after the debt is repaid are returned to the borrower.

There were no assets through the enforcement of security during the year which were used by the Society or the consolidated entity in its operations.

D) Past Due Loans

Analysis of loans that have not met their contractual repayment schedule but are not impaired

Less than 3 months past due 88,267 89,329 88,267 89,329

3 months to less than 6 months past due 1,284 1,714 1,284 1,714

6 months or more past due 2,500 2,929 2,500 2,929

92,051 93,972 92,051 93,972

Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit.

12. INVENTORIES

All Inventories are current assets

Land 1,535 3,901 – –

13. OTHER FINANCIAL ASSETS

All other f inancial assets are non–current assets

Equity investments 3,255 2,154 3,255 2,154

Controlled entities – – 2,271 2,683

3,255 2,154 5,526 4,837

45




Controlled Entities

Name of Entity Class of Share

InvestmentHolding

Nature of Business2013 20122013

$’0002012

$’000

Parkwood Unit Trust Units 63% 63% 1,669 1,669 Land Development

Greater Investment Services Pty Ltd Ordinary 100% 100% 603 580 Management Services

Greater Property Holdings Number 1 Pty Ltd Ordinary 100% 100% – 434Property Development and Investment

Greater Charitable Foundation N/A 100% 100% – – Charitable Foundation

Greater Charitable Foundation Pty Ltd Ordinary 100% 100% – – Trustee

GBS Receivables Trust No 3 N/A N/A N/A – –Mortgage securitisation special purpose entity

GBS Receivables Trust No 4 N/A N/A N/A – –Mortgage securitisation special purpose entity

Waratah GBS Mortgages Trust No 1 N/A N/A N/A – –Mortgage securitisation special purpose entity

Notes:

a) All the above entities are incorporated in Australia.

b) Parkwood Unit Trust owns 100% (2012 100%) of the issued units of Ashtonf ield Unit Trust.

c) The Society has control of GBS Receivables Trust No 3 and 4 and Waratah GBS Mortgages Trust No 1 as the Society is exposed to the majority of the residual risks and rewards associated with these special purpose entities. GBS Receivables Trust No 2 was wound up during the year.

d) The investment holding in Greater Property Holdings Number 1 Pty Ltd was impaired as at 30 June 2013 and written down to nil.

46





2013 2012 2013 2012

$'000 $'000 $'000 $'00014. DEFERRED TAX ASSETS

Net Deferred tax assets 3,509 3,270 3,650 2,883

A) Composition Of Net Deferred Tax Assets

Deferred tax assets

The balance comprises temporary differences attributable to

Doubtful debts 288 548 700 548

Impaired assets – – 89 –

Employee benef its 3,558 4,023 3,558 4,023

Loan origination costs and fair value adjustments 124 138 124 138

Property, plant and equipment 1,828 1,970 1,828 1,970

Investment securities 96 136 96 136

Creation of deferred tax asset on consolidation – 267 – –

Accruals 467 361 107 241

6,361 7,443 6,502 7,056

Amounts recognised directly in equity

Fair value assets through other comprehensive income – 44 – 44

– 44 – 44

6,361 7,487 6,502 7,100

Deferredtaxliabilities

Less set off of deferred tax liabilities

The balance comprises temporary differences attributable to

Prepayments (46) (45) (46) (45)

Property, plant and equipment (778) (1,357) (778) (1,357)

Investment securities – – – –

Derivatives – (2) – (2)

Loan origination costs (145) (335) (145) (335)

(969) (1,739) (969) (1,739)

Amounts recognised directly in equity

Property revaluation surplus reserve (95) – (95) –

Available for sale investments (592) – (592) –

Fair value assets through other comprehensive income (1,196) (2,478) (1,196) (2,478)

(1,883) (2,478) (1,883) (2,478)

Totalset–offamountofdeferredtaxliabilities (2,852) (4,217) (2,852) (4,217)

47





2013 2012 2013 2012

$'000 $'000 $'000 $'000B) MovementsInNetDeferredTaxAssets

Attributable to deferred tax assets

Opening balance 7,487 6,918 7,100 6,649

Credited/(charged) to the statement of comprehensive income (1,089) 446 (561) 389

Under/(over) provision in prior year (37) 123 (37) 62

6,361 7,487 6,502 7,100

Less off–set of deferred tax liabilities

Attributable to deferred tax liabilities

Opening balance 4,217 2,150 4,217 2,150

Charged/(credited) to the statement of comprehensive income (867) (296) (761) (296)

Charged/(credited) to equity (488) 2,348 (594) 2,348

Under/(over) provision in prior year (10) 15 (10) 15

Totalset–offamountofdeferredtaxliabilities 2,852 4,217 2,852 4,217

NET DEFERRED TAX ASSETS 3,509 3,270 3,650 2,883

C) RecoveryOfDeferredTaxAssets

Attributable to deferred tax assets

Deferred tax assets to be recovered after more than 12 months 2,997 3,824 3,107 3,473

Deferred tax assets to be recovered within 12 months 3,364 3,663 3,395 3,627

6,361 7,487 6,502 7,100

Attributable to deferred tax liabilities

Deferred tax liabilities to be settled after more than 12 months 72 1,477 72 1,477

Deferred tax liabilities to be settled within 12 months 2,780 2,740 2,780 2,740

2,852 4,217 2,852 4,217

NET DEFERRED TAX ASSETS 3,509 3,270 3,650 2,883

48





2013 2012 2013 2012

Notes $'000 $'000 $'000 $'00015. PROPERTY,PLANTANDEQUIPMENT

All property, plant and equipment are non–current assets

Land and buildings 18,572 20,650 18,572 19,532

Less accumulated depreciation – – – –

18,572 20,650 18,572 19,532

Leasehold improvements 13,090 12,040 13,090 12,040

Less accumulated depreciation (8,501) (7,571) (8,501) (7,571)

4,589 4,469 4,589 4,469

Plant and equipment 17,861 19,935 17,861 19,935

Less accumulated depreciation (11,995) (13,380) (11,995) (13,380)

5,866 6,555 5,866 6,555

TOTAL–PROPERTY,PLANTandEQUIPMENT 29,027 31,674 29,027 30,556

A) Valuation Of Land And Buildings

The valuation of land and buildings is on the basis of fair market values based on existing use. An annual assessment is made by the Directors to ensure that the carrying values do not differ materially from the fair value. The Directors assessments are supported by independent valuations. Details of the independent valuations are shown below.

i) June 2013 – the Directors’ valuation considered the independent valuations performed at 30 June 2013 by P Macadam (AAPI), Reg Valuer No. 3784 and H Pawlik (FAPI, CPV), Reg Valuer No. 1192 and B Green (AAPI), Reg Valuer No. 6283

ii) June 2010 – the Directors’ valuation considered the independent valuations performed at 30 June 2010 by P Macadam (AAPI), Reg Valuer No. 3784 and H Pawlik (FAPI, AAVI), Reg Valuer No. 1192.

B) CarryingAmountsThatWouldHaveBeenRecognisedIfLandAndBuildingsWereStatedAtCost

Freehold land and buildings stated on the historical cost basis, would be as follows

Land and buildings

Cost 20,977 20,977 20,977 20,977

Accumulated depreciation (3,640) (3,229) (3,640) (3,229)

Net book amount 17,337 17,748 17,337 17,748

C) MovementInLandAndBuildings

Balance as at start of year 20,650 19,068 19,532 19,058

Additions – 294 – 294

Building in course of construction 27 1,108 – –

Revaluation increment/(decrement) (1,701) 180 (556) 180

Depreciation expense (404) – (404) –

Balance as at end of year 18,572 20,650 18,572 19,532

49





2013 2012 2013 2012

$'000 $'000 $'000 $'000D) MovementInLeaseholdImprovements


Additions 1,686 2,714 1,686 2,714

Disposals (169) (52) (169) (52)

Depreciation expense (1,388) (1,334) (1,388) (1,334)

Transfer to plant & equipment (9) – (9) –


E) MovementInPlantAndEquipment


Additions 1,862 1,881 1,862 1,882

Disposals (474) (433) (474) (433)

Depreciation expense (2,086) (2,432) (2,086) (2,432)

Transfer from leasehold improvements 9 – 9 –


16. INVESTMENT PROPERTIES

All Investment Properties are non–current assets

Investment properties 4,301 5,281 4,301 5,281

A) ValuationOfInvestmentProperties

The valuation of investment properties is on the basis of fair market values based on existing use. An annual assessment is made by the Directors to ensure that the carrying values do not differ materially from fair value. The Directors assessments are supported by independent valuations. Details of the independent valuations are shown below.

i) June 2013 – the Directors’ valuation considered the independent valuations performed at 30 June 2013 by P Macadam (AAPI), Reg Valuer No. 3784 and H Pawlik (FAPI, CPV), Reg Valuer No. 1192 and B Green (AAPI), Reg Valuer No. 6283

ii) June 2012 – the Directors’ valuation considered the independent valuations performed at 30 June 2010 by P Macadam (AAPI), Reg Valuer No. 3784 and H Pawlik (FAPI, AAVI), Reg Valuer No. 1192 and valuations performed for ABS buildings at 1 May 2011 by L Knight (AAPI, DURP), Reg Valuer No. 1366.

B) MovementInInvestmentProperties


Additions – – – –

Revaluation increment/(decrement) (980) – (980) –


50





2013 2012 2013 2012

$'000 $'000 $'000 $'000

C) Leasing Arrangements

The investment properties are leased to tenants under short term operating leases with rentals payable monthly. Minimum lease payments receivable on leases of investment properties are as follows.

Minimum lease payments not recognised in the f inancial statements are receivable as follows.

Within one year 161 301 161 301

Later than one year but before f ive years 252 349 252 349

Balance as at end of year 413 650 413 650

D) Amount Recognised In Prof itAndLossForInvestmentProperties

Rental income 317 383 317 383

Direct operating expenses (6) (12) (6) (12)

311 371 311 371

17. INTANGIBLE ASSETS

All intangible assets are non–current assets

Computer software 5,019 5,225 5,019 5,225

Less accumulated amortisation (3,621) (3,758) (3,621) (3,758)

1,398 1,467 1,398 1,467

A) MovementInSoftwareBalances


Additions 639 787 639 787

Disposals (22) (6) (22) (6)

Amortisation expense (686) (846) (686) (846)


18. PAYABLES AND OTHER LIABILITIES

All Payables and Other Liabilities are expected to be settled within 12 months

Creditors and other accruals 9,677 10,382 8,976 10,130

19. DEPOSITS

Call deposits 1,870,104 1,666,018 1,874,346 1,668,080

Term deposits 2,314,953 2,321,604 2,315,329 2,322,009

4,185,057 3,987,622 4,189,675 3,990,089

20. CURRENT TAX LIABILITIES

Income tax 3,492 1,569 3,492 1,569

Deferred tax liability 40 146 – –

3,532 1,715 3,492 1,569

51





2013 2012 2013 2012

Notes $'000 $'000 $'000 $'00021. OTHER FINANCIAL LIABILITIES

Commercial notes 391,609 552,111 – –

Loans – securitisation SPE – – 395,084 554,489

Loans – other – 120 – –

391,609 552,231 395,084 554,489

Other f inancial liabilities expected to be settled within 12 months 96,267 113,684 95,513 112,748

Other f inancial liabilities expected to be settled after 12 months 295,342 438,547 299,571 441,741

391,609 552,231 395,084 554,489

22. PROVISIONS

Employee benef its 9,708 11,142 9,708 11,142

Other 108 240 108 240

9,816 11,382 9,816 11,382

Provisions expected to be settled within 12 months 4,400 6,463 4,400 6,424

Provisions expected to be settled after 12 months 5,416 4,919 5,416 4,958

9,816 11,382 9,816 11,382

23. RESERVES

Fair value assets through other comprehensive income 2,342 1,571 2,342 1,571

Cash f low hedge reserve 3,398 5,178 3,398 5,178

Credit loss reserve 9,632 8,568 9,632 8,568

Property revaluation surplus reserve 2,781 2,776 221 172

Revaluation on consolidation reserve 93 304 – –

Business combination reserve 10,699 10,699 10,699 10,699

Community support reserve 1,364 1,450 1,364 1,450

30,309 30,546 27,656 27,638

MOVEMENT IN RESERVES

A) FairValueAssetsThroughOtherComprehensiveIncomeReserve

Balance at beginning of year 1,571 1,111 1,571 1,111

Revaluation gross 1,101 658 1,101 658

Deferred tax (330) (198) (330) (198)

2,342 1,571 2,342 1,571

The fair value through other comprehensive income reserve relates to equity investments designated as fair value through other comprehensive income. Fair value movements on these investments are held in equity rather than through prof it and loss as described in Note 1F.

52





2013 2012 2013 2012

Notes $'000 $'000 $'000 $'000B) CashFlowHedgeReserve

Balance at beginning of year 5,178 870 5,178 870

Recognised in equity during the year (2,831) 6,477 (2,831) 6,477

Transferred to prof it and loss during the year 288 (134) 288 (134)

Deferred tax 763 (2,035) 763 (2,035)

3,398 5,178 3,398 5,178

The cash f low hedge reserve represents the future value of hedged instruments which have been designated as effective hedges in accordance with hedge accounting as described in Note 1Q (i).

C) CreditLossReserve


Transfer (to)/from retained prof its 495 1,873 495 1,873

8,568 8,073 8,568 8,073

The credit loss reserve is a requirement of Australian Prudential Regulation Authority Prudential Standards and represents the potential inherent losses in the loans and advances portfolio under a stressed economic environment.

D) PropertyRevaluationSurplusReserve

Balance at beginning of year 2,776 2,370 172 3

Revaluation gross (398) 180 (255) 95

Deferred tax 119 (54) 76 (28)

Depreciation transfer gross 405 399 325 145

Deferred tax (121) (119) (97) (43)

2,781 2,776 221 172

The property revaluation surplus reserve is used to record the unrealised increments and decrements on the revaluation of property as described in Note 1J.

53





2013 2012 2013 2012

$'000 $'000 $'000 $'000E) RevaluationOnConsolidationReserve

Balance at beginning of year 304 362 – –

Transfer (to)/from retained prof its (211) (58) – –

93 304 – –

The revaluation on consolidation reserve recognises the fair value of unrecognised assets acquired as a result of consolidating a subsidiary.

F) BusinessCombinationReserve


10,699 10,699 10,699 10,699

The business combination reserve recognises the net assets acquired on merger.

G) CommunitySupportReserve


Transfer (to)/from retained prof its (86) (50) (86) (50)

1,364 1,450 1,364 1,450

The community support reserve has been set aside to provide services and facilities in the communities in which the Greater Building Society operates.

24. RETAINED PROFITS

Retained prof its 326,151 299,467 326,029 300,050

Movement in retained prof its


Net prof it in the year 27,719 20,612 26,957 20,305

Transfer (to)/from credit loss reserve (1,065) (495) (1,064) (495)

Transfer (to)/from consolidation reserve 211 58 – –

Transfer (to)/from community contribution reserve 86 50 86 50

Transfer to/(from) deferred tax assets (267) – – –

326,151 299,467 326,029 300,050

25. NON–CONTROLLING INTEREST

Reconciliation of non–controlling interest in controlled entities

Balance at beginning of year 1,092 824

Share of operating prof it/(loss) 882 311 – –

Share of net assets of acquired entity (191) (43) – –

Distribution paid or payable (765) – – –

1,018 1,092 – –

54





2013 2012 2013 2012

$ $ $ $26. RELATED PARTIES

A) Controlled Entities

Information in respect of controlled entities is disclosed in Note 13.

B) Key Management Personnel

Key management personnel are the Directors and those senior executives that are responsible for the planning, directing and controlling of the activities of the Society and consolidated entity. Details of changes to the Directors are shown in the Directors’ Report.

i) Compensation paid to key management personnel

Short–term employee benef its 3,509,669 3,998,525 3,485,669 3,975,525

Post employment benef its 306,386 446,666 306,386 446,666

Other long term benef its 330,293 35,609 330,293 35,609

Termination benef its – 104,874 – 104,874

4,146,348 4,585,674 4,122,348 4,562,674

ii) Loans to key management personnel (including related parties)

Loans outstanding at beginning of year 7,283,330 7,179,929 7,283,330 7,179,929

Net balances from changes in personnel – (159,059) – (159,059)

Advances made during the year 1,164,854 1,373,201 1,164,854 1,373,201

Interest and fees charged 350,514 432,050 350,514 432,050

Repayments made during the year (6,244,143) (1,542,791) (6,244,143) (1,542,791)

Loans outstanding at end of year 2,554,555 7,283,330 2,554,555 7,283,330

Loans granted at commercial terms are provided at the same interest rate and terms available to members generally. Security is taken in the majority of cases in accordance with the Society’s normal credit risk policy.

Loans granted at non–commercial terms relate to loans provided to Senior Executives in accordance with the concessional staff loan policy. Under this policy, staff are eligible for loans at concessional rates of interest dependent upon their length of employment, their seniority and their salary level.

iii) Deposits made by key management personnel (including related parties)

Deposits outstanding at the beginning of year 2,544,399 4,331,742 2,554,399 4,331,742

Net balances from changes in personnel – (346,088) – (346,088)

Interest paid 120,765 184,632 120,765 184,632

Net movement in deposits during the year (201,162) (1,625,887) (201,162) (1,625,887)

Deposits outstanding at the end of the year 2,464,002 2,544,399 2,464,002 2,544,399

The Society has entered into an Enterprise Agreement with its staff. Under this agreement the Society provides each staff member a deposit account upon which no transaction fees are payable. These amounts are included in the above disclosure.

55




C) Transactions With Other Related Parties

The Society has related party transactions with the following entities:

i) Greater Rollover and Allocated Pension Fund invests funds with the Society. At balance date these deposits totalled $18,652,000 (2012 $21,059,000). The Society acted as Administrator to the Trust until April 2013. The Society provided administration services to the controlled entity for $NIL (2012 $NIL) consideration, these services ceased at April 2013.

ii) Greater Investment Services Pty Ltd invests funds with the Society. At balance date these deposits totalled $1,922,000 (2012 $1,846,000). In support of the entities ASF licence the Society has provided a support agreement including a f inancial support commitment to the entity. The entity acts as the manager for GBS Receivables Trust No 2 (Dissolved, September 2012), GBS Receivables Trust No 3, GBS Receivables Trust No 4 and Waratah GBS Mortgage Trust No 1. The Society provides administration services to the entity for $NIL (2012 $NIL) consideration.

iii) Parkwood Unit Trust invests funds with the Society. At balance date these deposits totalled $1,611,000 (2012 $200). Parkwood Unit Trust has established a secured revolving credit loan facility with the Society. At balance date the loan facility was for a total facility limit of $539,500 (2012 $3,348,100) with a balance outstanding of $NIL (2012 $824,000). The Trust also has unsecured loans on an interest free basis. At balance date the balance outstanding is $NIL (2012 $133,000). The Trust carries out activities of land development within the Hunter Valley Region. The Society provides administration services to the Trust for $NIL (2012 $NIL) consideration.

iv) The Society provides custodian, basis swap, interest rate swap and redraw commitment facilities to GBS Receivables Trust No 2 (Dissolved, September 2012), GBS Receivables Trust No 3 and GBS Receivables Trust No 4 as well as acting as servicer of the securitised mortgages. These trusts are special purpose entities that allow the Society to access funding by securitising mortgage loans. The revenues and fees in relation to these services are part of the funding arrangements, accordingly, they are included in the effective interest rate of the loan facility. The Society holds units in and invests funds with GBS Receivables Trust No 4. At balance date the units had a value of $7,000,000 (2012 $7,000,000) and the deposits totalled $2,083,950 (2012 $2,036,426).

v) Waratah GBS Mortgage Trust No 1 during the year accepted the sale of mortgages from the Society. The Society provides custodian and interest rate swap facilities to the Trust as well as acting as servicer of the securitised mortgages. The trust is a special purpose entity that allows the Society to access funding by securitising mortgage loans. The revenues and fees in relation to these services are part of the funding arrangements, accordingly, they are included in the effective interest rate of the loan facility.

vi) Property Holdings Number 1 Pty Ltd invests funds with the Society. At balance date these deposits totalled $NIL (2012 $NIL). Property Holdings Number 1 Pty Ltd has a secured revolving credit loan facility with the Society. At balance date the loan facility was for a total facility limit of $1,500,000 (2012 $1,500,000) with a balance outstanding of $NIL (2012 $1,215,000). An impairment loss on the loan balance is recognised to the value of $1,375,000 (2012 $NIL). The Entity also has an unsecured loan on an interest free basis. At balance date the loan outstanding is $NIL (2012 $37,000). The Society provides administration services to the entity for $NIL (2012 $NIL) consideration.

vii) Greater Charitable Foundation invests funds with the Society. At balance date these deposits totalled $1,099,000 (2012 $651,000). The Trusts principal activities are the provision of distributions to other entities or persons to advance or promote a charitable purpose. During the year the Society donated $1,200,000 (2012 $1,163,000) to the foundation and provided administration services for $217,000 (2012 $209,000) consideration.

56





2013 2012 2013 2012

$ $ $ $27. REMUNERATION OF AUDITORS

PricewaterhouseCoopers

Income received or due and receivable by the auditors for

Auditing services for the f inancial statements of any entity within the consolidated entity

296,597 285,570 239,667 221,430

Auditing services for prudential regulation reporting 108,403 49,284 108,403 49,284

Other audit related work 35,980 31,273 35,980 31,273

Taxation advisory services 155,435 35,003 152,435 35,003

General advisory services 3,286 2,300 3,286 2,300

599,701 403,430 539,771 339,290


2013 2012 2013 2012

$'000 $'000 $'000 $'00028. COMMITMENTS

The Group leases various ATM locations and Branch off ices under non–cancellable operating leases expiring within two to seven years. The leases have varying terms, escalation clauses and renewal rights.

i) Lease commitments

Within one year 6,871 6,679 6,871 6,679

Later than one year but not later than f ive years 12,509 13,245 12,509 13,245

Later than f ive years 32 248 32 248

19,412 20,172 19,412 20,172

29. SEGMENTAL REPORTING

The consolidated entity’s operations are conf ined to one business segment being the provision of f inancial services and products to members in the form of taking deposits and providing f inancial accommodation as prescribed by the constitution.

57





2013 2012 2013 2012

$'000 $'000 $'000 $'00030. RECONCILIATION OF NET CASH

ProvidedByOperatingActivitiesToOperatingProf it After Income Tax

Operating prof it after income tax 28,410 20,880 26,957 20,306

Depreciation and amortisation 4,563 5,012 4,564 5,012

Impaired losses/(gains) on loans (156) 772 1,219 772

Prof it on sale of investments (497) (733) (497) (733)

Loss on sale of investments – 262 – 262

Prof it on sale property, plant and equipment (41) (52) (41) (52)

Loss on sale of property, plant and equipment 353 170 353 170

Dividend and distributions received from investing activities (12) (9) (1,302) (9)

Fair value movement of land & buildings 386 – 449 (237)

Fair value movement of investment properties 2,301 – 1,156 –

Fair value movement of other f inancial assets – – 296 –

Investment in subsidiary via tax consolidation – – 115 (48)

Income tax attributed directly to equity – – (19) –

Inventory revaluation movement on sales 353 166 – –

Increase/(decrease) in accrued interest payable (6,424) (4,583) (5,143) (3,882)

Decrease/(increase) in accrued interest receivable (863) 1,963 (868) 1,976

Decrease/(increase) in other receivables 149 (332) 149 (332)

Decrease/(increase) in deferred tax assets 857 (568) 597 (451)

Decrease/(increase) in sundry debtors (176) (157) (340) (242)

Decrease/(increase) in inventory 2,013 1,515 – –

Decrease/(increase) in derivatives 307 201 307 201

Increase/(decrease) in income taxes payable 1,923 495 1,923 495

Increase/(decrease) in deferred taxes payable (1,037) (211) (931) (161)

Increase/(decrease) in creditors and accrued expenses 119 (496) 176 (890)

Increase/(decrease) in other provisions (1,566) (786) (1,566) (786)

Decrease/(increase) in loans and advances (80,499) (294,238) (81,044) (293,072)

Decrease/(increase) in investment securities (128,930) 55,738 (129,105) 61,104

Increase/(decrease) in deposits 203,137 346,323 205,291 346,300

NET CASH PROVIDED BY OPERATING ACTIVITIES 24,670 131,332 22,696 135,703

58





2013 2012 2013 2012

$'000 $'000 $'000 $'00031. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

A) FinancialAssetsAndLiabilities

The carrying amount of the following categories of f inancial assets and liabilities are

Financial assets

Financial assets measured at amortised cost 4,911,077 4,841,055 4,915,133 4,844,688

Fair value through other comprehensive income 3,254 2,154 3,254 2,154

Financial assets that are designated hedging instruments 4,438 7,735 4,438 7,735

4,918,769 4,850,944 4,922,825 4,854,577

Financialliabilities

Financial liabilities that are designated hedging instruments 379 273 379 273

Financial liabilities measured at amortised cost 4,586,375 4,550,234 4,593,767 4,554,707

4,586,754 4,550,507 4,594,146 4,554,980

The consolidated entity early adopted AASB 9 Financial Instruments and AASB2009–11 Amendments to Australian Accounting Standards arising from AASB 9 from 1 July 2010. This resulted in a re–classif ication of f inancial instruments in 2012. Further information is provided in Note 1A (ii) and Note 1F.

B) Risk Management Framework

The consolidated entity’s activities are principally related to the use of f inancial instruments. The consolidated entity predominantly accepts deposits from members at both f ixed and f loating rates for various periods and lends to retail borrowers at both f ixed and f loating rates with a range of credit standings. Surplus funding is invested in high quality liquid or investment securities. Accordingly, the consolidated entity’s activities are exposed to the following key f inancial risks: market risk; credit risk; and liquidity risk.

Risks are monitored and managed using an enterprise wide risk management system. This system records all the identif ied risks, the risk controls and risk mitigants used to manage the risks and an assessment of each risk. These risks are formally reviewed by management and presented to the Audit & Risk Management Committee on a quarterly basis.

Risk management is carried out by the Executive Committee, comprising of senior management executives, under policies approved by the Board of Directors (the Board). The Board provides written principles for the overall risk management, as well as written policies covering specif ic areas as required, to meet minimum Prudential Standards requirements issued by the Australian Prudential Regulation Authority (APRA).

These Risk Management Policies identify the consolidated entity’s policies and procedures, processes and controls that comprise its risk management and control systems. These systems address key material risks, f inancial and non–f inancial, likely to be faced by the consolidated entity. The policies and procedures are reviewed annually by senior management and the Board to take account of changing circumstances. In addition, the Chief Executive Off icer annually certif ies to APRA that senior management and the Board have identif ied key risks facing the consolidated entity. The Board has established systems to monitor those risks, including setting and requiring adherence to a series of prudential limits; adequate timely reporting processes; and compliance reporting demonstrating that these risk management systems are operating effectively and are adequate having regard to the risks they are designed to control.

59




C) Market Risk

The predominant market risk the consolidated entity is exposed to is interest rate risk. The consolidated entity is not exposed to foreign exchange or other price risk.

The consolidated entity’s interest rate risk arises from the net difference in cash f lows from long term f ixed rate assets or liabilities which are funded by or invested in f loating rate assets or liabilities. Long term f ixed rate assets include loans advanced to members and other investment securities, while long term f ixed rate liabilities includes deposits raised from members and other wholesale funding arrangements. This exposure creates an interest rate risk because the net balances and cash f lows generated from these assets and liabilities are dependent upon movements in interest rates.

The consolidated entity has established policy limits for the level of interest rate risk. Current policy measures interest rate risk in terms of the net present value of a basis point (PVBP) movement in interest rates. PVBP measures the net effect on the fair value of f inancial instruments for every one basis point (0.01%) change in the interest rate yield curve. The policy has limits for the amount of movement in the fair value of net assets or liabilities exposed to a hypothetical basis point variance before the risk requires active management. The limits are placed for specif ic time periods together with an overall portfolio limit. The risk is managed by, or a combination of, changes to product pricing or product terms to change consumer product purchasing preferences, by the use of interest rate swaps or other derivative instruments, or by the maturity placement of investment securities. When interest rate swaps are used for the above purpose, the consolidated entity may use hedge accounting.

Financial Instruments

Present Value of Basis Point (PVBP) Prof ile 2013 – Consolidated

TotalLess than 3 months 3 to 12 months 1 to 3 years 3 to 5 years Over5years

Net Exposure ($’s) 9,022 4,608 –27,623 9,146 –1,610 –6,457


Present Value of Basis Point (PVBP) Prof ile 2013 – Society


Net Exposure ($’s) 9,022 4,660 –27,355 9,610 –1,610 –5,673


Present Value of Basis Point (PVBP) Prof ile 2012 – Consolidated


Net Exposure ($’s) 8,103 3,267 –16,425 13,098 –6,610 1,433


Present Value of Basis Point (PVBP) Prof ile 2012– Society


Net Exposure ($’s) 8,098 3,318 –16,299 13,319 –6,610 1,826

D) Credit Risk

The consolidated entity’s credit risk predominantly arises from the risk that counterparties will not meet their contractual obligations with the consolidated entity. The main exposure to credit risk for the consolidated entity is either loans provided to members or investments made for prudential liquidity needs.

Credit risk exposure for loans is minimised by prudent assessment of each individual loan applicant, obtaining security for the majority of loans made and where credit risk warrants undertaking credit insurance.

The credit risk policy assesses the credit worthiness of the applicant considering not only the ability to service the loan but also other factors such as length and stability of employment, asset accumulation and stability of residency. To facilitate this, a credit risk grading system is used which scores or grades loan applicants based on the above criteria. Security still remains an important consideration in assessing the granting of credit. The pricing offered to loan applicants is dependent upon a combination of the loan applicant’s credit risk grade, the security provided and the reason or purpose for the credit request.

60




The consolidated entity minimises concentration of credit risk in relation to loans by dealing with a relatively large number of individual members of the consolidated entity. Exposure to credit risk is limited to the market area that the consolidated entity participates in. The consolidated entity is active in the retail f inance markets of Newcastle, Hunter Valley, Central Coast, Sydney, South Coast, Central West and North Coast of New South Wales and South East Queensland. The Society imposes portfolio limits for each loan product and for each credit risk grade. These portfolio limits seek to limit the consolidated entities exposure to certain products which represent a specif ic credit exposure and also to ensure the portfolio is not concentrated in a specif ic category of credit risk grade loan applicants.

Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit. Where appropriate, guarantees are also sought from related parties to a loan. No security is taken for loans via credit cards and some personal loans. Credit risk also arises in relation to f inancial guarantees given to certain parties. Such guarantees are secured by a registered mortgage over real estate property or by a charge over funds held on deposit.

The Society has entered into a number of residential mortgage backed securitisation arrangements. Loans are equitability assigned to special purpose vehicles. These special purpose vehicles issue commercial notes to note holders secured by the cash f lows arising from the loans. A substantial component of the credit risk has been transferred to the unit holders. The Society still retains the market risk, operational risk and some credit risk from these loans. Due to the retention of substantially all the risks and rewards of these loans, the Society and the consolidated entity continue to recognise these assets as ‘loans and advances’.

The following sets out the carrying value of loans and the associated liabilities. The fair value of the transferred assets and associated liabilities approximates their carrying value.


2013 2012 2013 2012

$'000 $'000 $'000 $'000

Carrying amount of transferred assets

Loans and advances 419,991 568,776 419,991 568,776

Carryingamountofassociatedliabilitiestothetransferredassets

Commercial notes 416,516 566,398 423,516 573,398

Credit risk exposure for treasury transactions (i.e. investment securities, cash and derivative transactions) to counterparties is minimised by limiting transactions to pre–approved f inancial institutions. The consolidated entity also has policies that limit the amount of credit exposure to individual counterparties and limit portfolio exposures based on external credit rating agency bands.

The maximum exposure to credit risk at balance date in relation to each class of recognised f inancial assets is the carrying amount of these indicated in the balance sheets except for loans and advances. For loans and advances the maximum credit risk exposure for the consolidated entity is $3,778M (2012 $3,545M) and for the Society is $3,778M (2012 $3,547M). For loans that are securitised, credit risk is transferred to a special purpose vehicle (refer Note 1B). This maximum exposure does not take into account the value of any security.

The credit quality of f inancial assets that are neither past due nor impaired can be assessed by reference to the external credit rating (if available) or the security provided. The following table provides an analysis of credit risk for f inancial assets that are neither past due or impaired by either external credit rating or type of security.

61





2013 2012 2013 2012

$'000 $'000 $'000 $'000

Financial assets that are neither past due nor impaired

Cash on hand 17,892 17,346 17,877 17,361

Cash & cash equivalents – by external credit rating (S&P)

– A1+/AAA 25,740 77,863 19,119 69,973

– A1/AA+/AA/AA– 9,034 19,878 9,034 19,878

– A2/A+/A/A– 107,554 179,921 107,553 179,921

– A3 – 4,997 – 4,997

– Unrated – – – –

Investment securities – by external credit rating (S&P)

– A1+/AAA 43,978 31,108 53,062 40,148

– A1/AA+/AA/AA– 280,044 255,981 279,588 255,318

– A2/A+/A/A– 208,480 116,895 208,480 116,895

– Unrated 22,333 20,209 22,333 20,209

Other receivables (unsecured) 1,189 1,157 1,879 2,128

Derivative f inancial instruments

– A1+/AAA 4,438 7,735 4,438 7,735

Loans and advances

– mortgage over residential property security 3,584,937 3,344,800 3,584,937 3,344,800

– mortgage over other property 29,062 37,679 29,062 39,839

– other security 52,672 50,767 52,672 50,767

– no security 15,565 17,909 15,565 17,909

Other f inancial assets (unsecured) 3,255 2,154 3,255 2,154

4,408,507 4,186,399 4,411,188 4,190,032

Effectofcollateral–allloanswheretheconsolidatedentitybearsthecreditrisk

For loans where the consolidated entity bears the credit risk, the carrying value of the loans and the degree of credit risk involved is shown in the table below. Loans classed as ‘Fully Secured’ are residentially secured loans with either full mortgage insurance or with a loan to valuation ratio of 80% or less. Loans classed as secured are residentially secured loans with either partial or no mortgage insurance or a loan to valuation ratio of more than 80% plus commercial loans secured by non–residential property plus secured consumer loans and secured guarantees. Loans with no security are unsecured consumer loans or credit cards.

All Loans Where Entity Bears The Credit Risk 2013 – Consolidated

LOANS Fully Secured $’000

Secured $’000

No Security $’000

Total $’000

Mortgage Over Residential Property 3,575,102 99,140 – 3,674,242

Mortgage Over Other Property – 31,478 – 31,478

Other Security – 52,951 – 52,951

No Security – – 19,646 19,646

Total 3,575,102 183,569 19,646 3,778,317

62




All Loans Where Entity Bears The Credit Risk 2012 – Consolidated


Secured $’000

No Security $’000

Total $’000




No Security – – 16,948 16,948

Total 3,328,905 205,703 16,948 3,551,556

All Loans Where Entity Bears The Credit Risk 2013 – Society


Secured $’000

No Security $’000

Total $’000




No Security – – 19,646 19,646

Total 3,575,102 183,569 19,646 3,778,317

All Loans Where Entity Bears The Credit Risk 2012 – Society


Secured $’000

No Security $’000

Total $’000




No Security – – 18,283 18,283

Total 3,328,905 206,527 18,283 3,553,715

Loansthatarepastduebutnotimpaired

An age analysis of loans that are past due but not impaired is set out in the table below. A loan is considered to be past due when any payment under contractual terms has been missed. The amount included is the carrying value, rather than the overdue amount.

Loans – Past Due But Not Impaired 2013 – Consolidated

LOANSLess than 3

months $’000

3 to 6 months

$’000

6 months or more

$’000

Total

$’000

Mortgage Over Residential Property 85,521 1,284 2,500 89,305

Mortgage Over Other Property 134 – – 134

Other Security 225 – – 225

No Security 2,409 – – 2,409

Total 88,289 1,284 2,500 92,073

63




Loans – Past Due But Not Impaired 2012 – Consolidated

LOANSLess than 3

months $’000

3 to 6 months

$’000

6 months or more

$’000

Total

$’000



Other Security 170 4 – 174

No Security 1,731 – – 1,731

Total 89,329 1,714 2,929 93,972

Loans – Past Due But Not Impaired 2013 – Society

LOANSLess than 3

months $’000

3 to 6 months

$’000

6 months or more

$’000

Total

$’000



Other Security 225 – – 225

No Security 2,409 – – 2,409

Total 88,289 1,284 2,500 92,073

Loans – Past Due But Not Impaired 2012 – Society

LOANSLess than 3

months $’000

3 to 6 months

$’000

6 months or more

$’000

Total

$’000



Other Security 170 4 – 174

No Security 1,731 – – 1,731

Total 89,329 1,714 2,929 93,972

The coverage provided by collateral held in support of loans that are past due but not impaired is shown in the table below. The estimated realisable value of collateral held is based on a combination of formal valuations currently held in respect of such collateral and management’s assessment of the estimated realisable value of collateral held given its experience with similar types of loans in similar situations and the circumstances peculiar to the subject collateral.

A loan is deemed ‘Fully Secured’ when it is residentially secured with either full mortgage insurance or with a loan to valuation ratio of 80% or less. ‘Partially Secured’ includes other residentially secured loans not considered ‘Fully Secured’ and other loans that have a non–residential property security. A loan is classed as ‘Unsecured’ if there is no security or if the security value is less than the loan carrying amount.

64




Effect of Collateral – Past Due But Not Impaired 2013 – Consolidated

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property 73,666 15,639 – 89,305

Mortgage Over Other Property – 134 – 134

Other Security – 225 – 225

No Security – – 2,409 2,409

Total 73,666 15,998 2,409 92,073

Effect of Collateral – Past Due But Not Impaired 2012 – Consolidated

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000




No Security – – 1,731 1,731

Total 76,971 15,270 1,731 93,972

Effect of Collateral – Past Due But Not Impaired 2013 – Society

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000




No Security – – 2,409 2,409

Total 73,666 15,998 2,409 92,073

Effect of Collateral – Past Due But Not Impaired 2012 – Society

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000




No Security – – 1,731 1,731

Total 76,971 15,270 1,731 93,972

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Loans that are impaired

The following table shows the gross amount of impaired loans, along with the provision for impairment and assessment of the coverage provided by collateral held in support of impaired loans. The classif ication of a loan as ‘Fully Secured’, ‘Partially Secured’ and ‘Unsecured’ is on the same basis as the loans past due but not impaired.

Effect of Collateral – Impaired Loans 2013 – Consolidated

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property – – – –

Mortgage Over Other Property – 1,849 433 2,282


No Security – – 297 297

Total – 1,903 730 2,633

ImpairmentProvision – (332) (627) (959)

Carrying Amount – 1,571 103 1,674

Effect of Collateral – Impaired Loans 2012 – Consolidated

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property – 213 826 1,039




Total – 1,678 1,607 3,285

ImpairmentProvision – (519) (1,309) (1,828)


Effect of Collateral – Impaired Loans 2013 – Society

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property – – – –



No Security – – 1,672 1,672

Total – 1,903 2,105 4,008



66




Effect of Collateral – Impaired Loans 2012 – Society

LOANSFully

Secured $’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property – 213 826 1,039




Total – 1,678 1,607 3,285



E) LiquidityRisk

The consolidated entity’s liquidity risk arises from the risk that the consolidated entity will encounter diff iculties in f inancing its obligations associated with f inancial liabilities.

The consolidated entity manages liquidity risk by maintaining suff icient cash and highly marketable securities to not only respond to expected cash f low events but also to provide for a range of unexpected cash f low events. The consolidated entity has established policy limits around the minimum level of liquidity and the quality of liquid assets that it holds for liquidity management purposes.

The following tables show the contractual maturity of f inancial liabilities.

FINANCIAL LIABILITIES

FinancialLiabilitiesContractualMaturityProf ile 2013 – Consolidated EntityLess than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000

Over5 years $’000

Total $’000

Payables and other accruals 9,677 – – – – 9,677

Deposits 3,317,721 641,247 192,647 33,443 – 4,185,058

Derivatives 120 124 94 41 – 379

Other f inancial liabilities 7,876 225,314 59,627 37,026 61,766 391,609

TOTAL 3,335,394 866,685 252,368 70,510 61,766 4,586,723

Unrecognised loan commitments 56,950 – – – – 56,950


FinancialLiabilitiesContractualMaturityProf ile 2012 – Consolidated EntityLess than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000

Over5 years $’000

Total $’000


Deposits 2,982,603 863,499 95,705 45,815 – 3,987,622

Derivatives 118 155 – – – 273


TOTAL 3,065,195 1,140,944 168,784 92,658 82,927 4,550,508


67





FinancialLiabilitiesContractualMaturityProf ile 2013 – SocietyLess than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000

Over5 years $’000

Total $’000


Deposits 3,322,339 641,247 192,647 33,443 – 4,189,676

Derivatives 120 124 94 41 – 379


TOTAL 3,342,786 866,685 252,368 70,510 61,766 4,594,115



FinancialLiabilitiesContractualMaturityProf ile 2012 – SocietyLess than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000

Over5 years $’000

Total $’000


Deposits 2,985,070 863,499 95,705 45,815 – 3,990,089

Derivatives 118 155 – – – 273


TOTAL 3,069,787 1,140,944 168,784 92,539 82,927 4,554,981


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F) Fair Value Measurements

The following tables present the consolidated and the Society’s assets and liabilities measured and recognised at fair value as at the reporting date.

FinancialAssetsandLiabilities–ConsolidatedEntity

FAIR VALUE MEASUREMENTS Consolidated 2013

$’000

Consolidated 2012

$’000

Society 2013

$’000

Society 2012

$’000

ASSETS

LEVEL 1

Interest rate swap contracts – cash f low hedges – – – –

Interest rate swap contracts – at fair value – – – –

Equity investments 2,934 1,834 2,934 1,834

LEVEL 2

Interest rate swap contracts – cash f low hedges 4,438 7,721 4,438 7,721

Interest rate swap contracts – at fair value – 14 – 14

Equity investments – – – –

LEVEL 3



Equity investments 320 320 320 320

TOTAL ASSETS 7,692 9,889 7,692 9,889

LIABILITIES

LEVEL 1



LEVEL 2

Interest rate swap contracts – cash f low hedges 379 273 379 273


LEVEL 3



TOTAL LIABILITIES 379 273 379 273

69




The fair value of f inancial instruments traded in active markets (such as publicly traded equity investments) is based on quoted market prices at the end of the reporting period. The quoted market price used for f inancial assets held by the consolidated entity is the current bid price. These instruments are included in level 1.

The fair value of f inancial instruments that are not traded in an active market (for example over–the–counter derivatives) is determined using valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. The fair value of interest rate swaps is calculated as the present value of estimated future cash f lows. These instruments are included in level 2.

During the f inancial reporting period no assets or liabilities were transferred between categories.

Level 3 instruments are investments in non–listed entities. These investments are illiquid and non–traded shares, and there are no reliable inputs that can be used to estimate a fair value. The Society therefore measures these investments at cost which is supported by the net tangible assets of the entities invested in exceeding the cost value of the shares. The carrying value of level 3 instruments has not changed during the f inancial year.

32. CAPITAL MANAGEMENT

The consolidated entity has established a Capital Management Policy and Internal Capital Adequacy Assessment Process (ICAAP) Summary Statement. Their objectives are to ensure that the consolidated entity and the Society both maintain a level of capital that is:

• consistent and appropriate to the risks the consolidated entity and the Society is exposed to from its activities;

• suff icient to provide a buffer to absorb any unanticipated losses from its activities and, in the event of any major problem, enable it to continue operating while the problem is being addressed; and

• suff icient to provide depositors and creditors conf idence that the consolidated entity and the Society will continue to honour its obligations to them.

The above policies are consistent with the requirements of the Prudential Standards issued by the Australian Prudential Regulation Authority (APRA).

The consolidated entity and the Society are required by APRA to measure and report capital on a risk weighted basis in accordance with the requirements of the Prudential Standards (known as ‘capital adequacy’). APRA requires the consolidated entity and Society to maintain minimum levels of capital to risk weighted assets. The consolidated entity and Society have met the capital requirements imposed by the Prudential Standards throughout the current and previous f inancial year. The Board has a policy of imposing an additional level of capital above the minimum required by APRA.

Capital adequacy is measured as a ratio of capital to risk weighted assets. Capital is split into two tiers. Common Equity Tier 1 is generally retained earnings, a portion of the property reserves, reserve balances available for general use and other regulatory adjustments relating to items that are included in equity but are treated differently for capital adequacy purposes. It excludes the fair value assets through other comprehensive income reserve. Tier 2 capital includes qualifying subordinated liabilities and the credit loss reserve.

The Society and consolidated entity has adopted the standardised approach for measuring credit and operational risk. Credit risk is measured based on allocating weightings to assets that seek to ref lect the varying levels of risk associated to on balance sheets assets and off balance sheets exposures. Operational risk is measured based on risk weighting the investment and lending portfolios, plus each signif icant non–interest income source.

70




Level2 Level1

2013 2012 2013 2012

$'000 $'000 $'000 $'000

Common Equity Tier 1 Capital 332,298 306,237 327,967 303,240

Tier 2 Capital 7,985 7,317 7,985 6,179

Total Capital 340,283 313,554 335,952 309,419

Capitalrequirements(intermsofriskweightedassets)

Credit Risk 1,782,970 1,706,621 1,781,693 1,703,624

Operational Risk 272,250 252,319 266,897 251,265

Total risk weighted assets 2,055,220 1,958,940 2,048,590 1,954,889

CapitaladequacyratioasreportedtoAPRA

Ratio as at reporting date 16.6% 16.0% 16.4% 15.8%

33. COMPANY DETAILS

Greater Building Society Ltd is a company limited by shares and guarantee, incorporated and domiciled in Australia. The registered off ice and principal place of business is:

Greater Building Society Ltd 103 Tudor Street Hamilton NSW 2303

The f inancial report was authorised for issue by the Directors on 24th day of September 2013. The Directors have the power to amend and reissue the f inancial report.

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2012/13 annual report - greater bank · 2021. 2. 11. · 2012/13 annual report for the year ended...

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