po box 8910 st. john’s, nl a1b 3p6 51 reportal

06

AnnuAlReport

PO Box 891050 Duffy PlaceSt. John’s, nl A1B 3P6

Tel: (709) 737-2918

Fax: (709) 737-2937

Toll Free: 1-800-409-2887

www.reddyk.net

REDDY KILOWATT

REDDY KILOWATT

51 s t

51st

Annual General Meeting

REDDY KILO WAT T COOPERATIVE CREDIT SOCIET Y

LIMITED

ANNUAL REPORT

AS AT D ECEMB ER 3 1 , 2 0 0 6

50T H

ANNUAL R EPOR T YEAR ENDING 12/3 1 / 2 00 5

SERVING YOU SINCE 1 9 5 6

Providing a full range of financial services to Employees, Retirees,

and their families, of the Fortis Group of Companies.

51st AnnuAl RepoRt YeAR enDInG 12/31/2006

EDWARD (TED) FRENCH

JUL Y 15 , 1 945 – JA NUA R Y 6, 20 07

It is with great sorrow that we said farewell to a dedicated

Director of Reddy Kilowatt Credit Union. Ted’s sudden passing

left us all shocked and saddened. His knowledge, experience,

vision, wit, and above all else, friendship, will be greatly missed.

TABLE OF CONTENTS

Our Mission ......................................................................................................................................................... 15

Our Values Statement .......................................................................................................................................... 15

Report of the Board of Directors ......................................................................................................................... 16

Report of the Auditor........................................................................................................................................... 18

Report of the General Manager/Treasurer ........................................................................................................... 19

Report of the Credit Committee ......................................................................................................................... 21

Report of the Governance Committee................................................................................................................. 22

Report of the Audit Committee .......................................................................................................................... 23

Report of the Nominating Committee................................................................................................................ 24

Organization for the Year Ended December 31, 2006........................................................................................ 25

Reasons We Believe You Should Refer Your Family Members ..................................................................... 26

Volunteers ........................................................................................................................................................ 24

Services................................................................................................................................................................. 28

1

1

2

4

16

18

19

20

21

22

23

25


24

25


O u r M i s s i o n

Reddy Kilowatt Credit Union is a financial cooperative

committed to providing a full range of quality services

to become the financial centre of choice for all Member-Owners.

O u r Va l u e s S t a t e m e n t

At Reddy Kilowatt Credit Union, we value and respect our Member-Owners, staff, and the

relationship(s) we have with them. We provide service in a professional, friendly, and

courteous manner. We work to maintain the trust of our Member-Owners,

and we value our cooperative heritage and roots of ownership.


R e p o r t o f t h e B o a r d o f D i r e c t o r s

It is my pleasure to present the Report of the Board of Directors to you, the Member-Owners of Reddy KilowattCredit Union, at this 51

stAnnual General Meeting.

In 2006 Reddy Kilowatt celebrated 50 years of successful operation and 2006 was one of the most successful yearsever!

We completed a 3-year business plan in 2006 whereby a goal of 50% increase in Assets was attained and all otherfinancial targets met or exceeded. Collectively, as Member-Owners, we can be very proud of our accomplishments.

Asset growth for the year under review was $1.4 million, or 8% and new members increased by 84. Part of thisgrowth is attributed to our expansion of our bond of association to include the Fortis Group of companies butmost of it is the result of existing Member- Owners utilizing more of the products and services available. Income,

before taxes and rebates, for 2006 was $382,000, an increase of approximately $112,000 or 42% over previous year. Economic factors such as the increase in market interest rates contributed positively to this achievement.

The requirement for capital, as set by our regulators, the Credit Union Deposit Guarantee Corporation, is 5% of Assets. Your Board recognizes the importance of continuing to strengthen our Equity position in order to meet future needs, and, as such we have established a more stringent target for capital that is higher than the regulatory requirement. One of the most pressing issues requiring Board decision this year is our requirement for additional office space. Our location at Duffy Place has served us well in the past and when we renovated 3 years ago we recognized this was a short-term solution. It is becoming more and more challenging to continue to serve Members professionally. Our area is often congested, making privacy difficult and adding to stress levels of our employees. This year your Board is recommending to Member-Owners a rebate of $175,000 (compared to $130,000 2005). The remaining surplus will be added to retained earnings bringing our capital adequacy position to a favourable 7.25%. It is recommended that this rebate be returned to Owners in a similar format as prior years, based on their overall patronage.

Sound and effective Corporate Governance continues to be a priority for your Board. There are five standing committees of the Board of Reddy Kilowatt: Executive, Governance, Audit, Credit and Human Resources. Each committee acts on matters delegated to it by the Board and reports to the full Board at each meeting. Policies are reviewed on a regular basis to ensure compliance with all regulations and to ensure we remain competitive with other financial institutions. The Audit committee is diligent in its responsibilities for the integrity of financial reporting, compliance with regulations and the overseeing of the design and implementation of internal controls. During 2006 internal and external audits were conducted and your Board met with the Directors of the Credit Union Deposit Guarantee Corporation. The results of each audit and of the meeting with our regulators were all positive. The Governance Committee assists the Board in fulfilling its responsibilities and holds Directors and committee members accountable in carrying out their duties. The Governance committee is also responsible for Board and committee nominations. Voting for volunteers is one of the key distinctions between credit unions and other financial institutions. We thank members for exercising their right and taking the time to vote. Your participation is very important in assuring the continued success of your Credit Union.

Your Board recognizes the importance and value of attracting youth as volunteers. In 2006 we invited Megan Fitzgerald to sit as a non- voting Director and to attend and participate in all meetings. This has proven to be beneficial and we have invited Megan to continue in this capacity for 2007.

Directors and employees continue to avail of courses, training and conferences to ensure their knowledge keeps pace with the rapidly changing industry. We are represented, when possible, at provincial, regional and national levels.


Community support is important to Reddy Kilowatt and to our philosophy as a cooperative. Donations are madeto charities, sports organizations and schools and support is extended to employees for volunteer activities. Wecontinue to sponsor youth attendance at the Atlantic Cooperative Youth Leadership seminar. Our annualscholarship for 2006 was awarded to Justin Oake, of Stephenville. We wish him all the best in his studies.

Early in 2007 we were saddened to learn of the death of Ted French, one of our Directors and Chairperson of theGovernance Committee. Ted was a long time member and supporter of Reddy Kilowatt and his contribution willbe greatly missed. Please join me in a moment of silence to remember and honour Ted and other members whoare no longer with us.

Thank you to all those who have contributed to the success of 2006- Directors, committee members, employeesand above all, Member- Owners for your patronage and support of Reddy Kilowatt. A special thank you to oursponsor, Newfoundland Power, for its continuing support.

Respectfully submitted,

Robert G. Dicks, President


R e p o r t o f t h e A u d i t o r

Financial Statements of

REDDY KILOWATT CO-OPERATIVE CREDIT SOCIETYLIMITED

REDDY KILOWATT CO-OPERATIVE CREDIT SOCIETY LIMITED

Table of Contents

PAGE

Auditors’ Report 1

Statement of Earnings and Retained Earnings 2

Balance Sheet 3

Statement of Cash Flows 4

Notes to the Financial Statements 5 - 10


6

7

8

9

10-15

Deloitte & Touche LLP 10 Factory Lane Fort William Building St. John's NL A1C 6H5 Canada

Tel: (709) 576-8480 Fax: (709) 576-8460 www.deloitte.ca

Auditors’ Report

To the Members of Reddy Kilowatt Co-operativeCredit Society Limited

We have audited the balance sheet of Reddy Kilowatt Co-operative Credit Society Limited as at December 31, 2006 and the statements of earnings and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Credit Society’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Credit Society as at December 31, 2006 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Chartered Accountants January 22, 2007

51st AnnuAl RepoRt YeAR enDInG 12/31/20066 YeAR enDInG 12/31/2006

REDDY KILOWATT CO-OPERATIVE CREDIT SOCIETY LIMITEDStatement of Earnings and Retained EarningsYear ended December 31, 2006

2006 2005$ $

FINANCIAL REVENUEMembers' loans and mortgages 1,492,435 1,131,975Investments 85,954 93,516

1,578,389 1,225,491COST OF FUNDS

Interest on members' deposits 579,164 437,664

FINANCIAL MARGIN 999,225 787,827

OTHER INCOMECommissions 180,579 209,158 Other 123,755 81,161

1,303,559 1,078,146

OPERATING EXPENSESMembers' security (Note 7) 134,914 88,125 General business (Note 8) 351,816 332,720 Personnel 435,050 387,842

TOTAL OPERATING EXPENSES 921,780 808,687

EARNINGS BEFORE DIVIDENDS AND PATRONAGE REFUNDS 381,779 269,459

DIVIDENDS AND PATRONAGE REFUNDS (Note 6) 175,000 130,000

EARNINGS BEFORE INCOME TAXES 206,779 139,459

INCOME TAXES 32,405 29,187

NET EARNINGS FOR THE YEAR 174,374 110,272

RETAINED EARNINGS, BEGINNING OF YEAR 865,626 755,354

RETAINED EARNINGS, END OF YEAR 1,040,000 865,626

Page 251st AnnuAl RepoRt YeAR enDInG 12/31/2006751st AnnuAl RepoRt

REDDY KILOWATT CO-OPERATIVE CREDIT SOCIETY LIMITEDBalance SheetDecember 31, 2006

2006 2005$ $

Cash and cash equivalents 307,651 38,983 Investments 1,322,506 1,488,438 Loan and mortgages receivable (Note 3) 17,643,120 16,328,433

19,273,277 17,855,854

OTHER ASSETS 45,718 27,077 CAPITAL ASSETS (Note 4) 108,649 133,762

19,427,644 18,016,693

Bank indebtedness (Note 11) - 879,780 Accounts payable and accrued liabilities 134,878 116,566 Income tax payable 3,666 29,707 Members' deposits (Note 5) 18,074,100 15,995,014Dividends and patronage refunds payable (Note 6) 175,000 130,000

18,387,644 17,151,067

Retained earnings 1,040,000 865,626

19,427,644 18,016,693

ON BEHALF OF THE MEMBERS:

___________________________________ Director

___________________________________ Director

ASSETS

LIABILITIES

MEMBERS' EQUITY

Page 3


REDDY KILOWATT CO-OPERATIVE CREDIT SOCIETY LIMITEDStatement of Cash FlowsYear ended December 31, 2006

2006 2005$ $

OPERATING ACTIVITIESNet earnings for the year 174,374 110,272 Items not affecting cash:

Amortization 32,340 30,356 Provision for impaired loans 56,000 35,750

Changes in non-cash operating activitiesIncrease (decrease) in accounts payable 18,312 (11,353) Increase in other assets (18,641) (5,642) Decrease in income tax receivable - 12,280 Increase (decrease) in income tax payable (26,041) 29,707 Increase in dividends and patronage refunds payable 45,000 -

281,344 201,370

FINANCING ACTIVITIESIncrease (decrease) in bank indebtedness (879,780) 879,780 Increase in members' deposits 2,079,086 2,081,660

1,199,306 2,961,440

INVESTING ACTIVITIESDecrease (increase) in investments 165,932 (163,511) Increase in loans and mortgages (1,370,687) (3,021,272)Additions to capital assets (7,227) (81,864)

(1,211,982) (3,266,647)

INCREASE (DECREASE) IN CASH FOR THE YEAR 268,668 (103,837)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 38,983 142,820

CASH AND CASH EQUIVALENTS, END OF YEAR 307,651 38,983

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONInterest paid 533,661 422,613 Income taxes paid 57,500 (12,800)

Page 4


REDDY KILOWATT CO-OPERATIVE CREDIT SOCIETY LIMITED Notes to the Financial Statements December 31, 2006

Page 5

1. NATURE OF OPERATIONS

Reddy Kilowatt Co-operative Credit Society Limited is a credit union incorporated under the Credit Union Act of Newfoundland & Labrador. The Credit Union has 1,643 members and provides financial services to current and former employees, and their relatives, of the Fortis Group of Companies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and reflect the following significant accounting policies:

Revenue recognition

Interest income on loans and mortgages and investments is recorded on an accrual basis. Other income is recognized when goods or services are provided and collection is reasonably assured.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances with banks, and investments in money market instruments maturing in less than 90 days.

Investments

Investments are recorded at cost plus accrued interest thereon.

Loans and mortgages receivable

Loans and mortgages receivable are recorded at principal amounts plus accrued interest, less an allowance for impairment.

A loan or mortgage is generally classified as impaired when there is reasonable doubt as to the ultimate collectibility of principal or interest or when interest or principal is contractually 90 days past due, unless the loan is fully secured and in the process of collection.

The allowance for impaired loans and mortgages represents specific provisions established as a result of reviews of individual loans and mortgages. This provision reduces the carrying value of the loans and mortgages identified as impaired to their estimated realizable amounts.

Capital assets and amortization

Capital assets are recorded at cost. Amortization is calculated, as set out below, using a straight line method, based on the estimated useful life of the assets.

Furniture and equipment 5 years Computer equipment 3 years Leasehold improvements 10 years



Page 6

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires the Credit Society’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from the estimates made by management.

3. LOANS AND MORTGAGES RECEIVABLE

Details of members’ loans outstanding at December 31 are as follows:

2006 2005 2006 2005$ $

Impaired loans and mortgages 10 9 103,607 65,341 Current loans 1,213 1,148 13,993,141 13,002,417Current mortgages 67 69 3,710,707 3,396,424

Total loans and mortgages receivable 1,290 1,226 17,807,455 16,464,182

Less allowance for impaired loans (164,335) (135,749)

17,643,120 16,328,433

Loans OutstandingNumber of

Loans OutstandingValue of

Current loans and mortgages include lines of credit and personal loans. At December 31, 2006, the Credit Union had authorized lines of credit of $6,390,758 of which $3,033,167 were outstanding.



Page 7

4. CAPITAL ASSETS

2006 2005Accumulated Net Book Net Book

Cost Amortization Value Value $ $ $ $

Furniture and equipment 47,667 28,948 18,719 36,272Computer equipment 114,725 90,811 23,914 20,657Leasehold improvements 108,169 42,153 66,016 76,833

270,561 161,912 108,649 133,762

5. MEMBERS’ DEPOSITS

2006 2005$ $

RRIF's plus accrued interest 1,618,725 1,466,693Share/savings 131,016 92,324Chequing 703,102 547,375Term deposits plus accrued interest 4,366,774 3,470,527Demand deposits 2,015,927 2,147,950Member equity shares 370,830 340,900RRSP's plus accrued interest 8,867,726 7,929,245

18,074,100 15,995,014

The member equity share accounts record the share capital of members which must be maintained as a condition of membership. These accounts also include incentive shares issued by the Credit Society totaling $207,000 for 2006 (2005 - $185,000). These accounts are not insured by the Credit Union Deposit Guarantee Corporation; however, they do qualify as capital for regulatory purposes, notwithstanding their financial statement classification as liabilities.

6. DIVIDENDS AND PATRONAGE REFUNDS

Dividends and patronage refunds payable of $175,000 will be presented for ratification at the annual general meeting of members to be held March 2007. Dividends and patronage refunds of $128,322 (approved amount $130,000) relating to 2005 were paid out to members in 2006. Any difference between the amount approved and the amount ultimately paid is charged to revenue in the year.



Page 8

7. MEMBERS’ SECURITY 2006 2005

$ $Provision for impaired loans 56,000 35,750Fees and assessments 32,281 13,913Credit Union Deposit Guarantee Corporation 26,793 22,953Bonding and insurance 19,840 15,509

134,914 88,125

8. GENERAL BUSINESS 2006 2005

$ $Data processing 101,333 89,909Training 38,537 27,795Amortization 32,340 30,356Marketing 28,445 40,387Professional fees 27,104 27,026Other 26,466 23,671Meetings 22,576 24,782Stationary and office supplies 18,218 16,572Board honorariums 18,000 15,000Choice rewards 11,604 7,731Telephone 10,508 10,281Travel 7,655 9,674RRSP administration 4,940 4,807Credit bureau fees 4,090 4,729

351,816 332,720

9. FINANCIAL INSTRUMENTS

Fair value

The fair values of cash and cash equivalents and certain other assets and liabilities are equivalent to the respective book values given the short-term nature of the amounts. The fair value of other financial instruments has not been determined since it was not practicable within the constraints of timeliness and cost to determine the fair value with sufficient reliability. A portion of the other financial assets and financial liabilities have either variable rates or are due within one year and their fair values will approximate their book values. For items that mature beyond one year, increases in market interest rates will result in the fair values of assets and liabilities both decreasing; similarly, decreases in market interest rates will result in the fair values of assets and liabilities both increasing.



Page 9

9. FINANCIAL INSTRUMENTS (Continued)

Credit risk

Credit risk arises as a result of providing credit to the Credit Society’s members. Future investment income is affected by the level of credit losses. The Credit Society monitors delinquent accounts on a regular basis and has recorded an allowance for impaired loans and mortgages to cover the risk of underperforming assets.

Interest rate risk

Interest rate risk refers to the potential impact of changes in interest rates on the Credit Society’s income when maturity or repricing dates of its financial liabilities are not matched with the maturities of its financial assets. The Credit Society monitors interest rate risk inherent in its portfolio.

10. RELATED PARTY TRANSACTIONS

At December 31, 2006 the aggregate value of the interest-bearing personal and mortgage loans outstanding to directors and officers totalled $188,646 (2005 - $305,985) and deposits totalled $130,834 (2005 - $112,475). These loans and deposits have been advanced on the same terms and conditions as have been accorded to all members of the Credit Society.

11. OPERATING LINE OF CREDIT

The Credit Society has a $2,000,000 line of credit which bears interest at prime. Security for this facility is a general assignment of book debt. At December 31, 2006, there were no drawings on this facility.

12. INCOME TAXES

The Credit Union’s effective income tax rate differs from the combined basic Canadian rate (federal and provincial). This difference results from the following:

2006 2005% %

Combined federal and provincial income tax rates 36.12 36.12Credit Union deduction/small business deduction (18.00) (18.00)

18.12 18.12



Page 10

13. ASSETS UNDER ADMINISTRATION

Assets under administration, which include mortgages under administration and a mutual fund portfolio, are not the property of the Credit Union and are not reflected in the balance sheet. At December 31, the Credit Union had assets under administration as follows:

2006 2005$ $

Mortgages under administration 6,272,677 5,549,209

Mutual funds 1,388,988 1,441,8067,661,665 6,991,015

14. COMPARATIVE FIGURES

Certain of the comparative figures have been reclassified to conform to the current year’s presentation.



R e p o r t o f t h e G e n e r a l M a n a g e r / T r e a s u r e r

Reddy Kilowatt had one of its best years ever in 2006 with our targets met or exceeded in all capacities. Our mostsignificant accomplishment was our success in attracting new investment money throughout the year andeliminating our usage of our line of credit before year end. This improves our liquidity position and enables us tocontinue to grow and sustain our financial strength in a healthy and manageable manner.

Our financial performance was strong throughout the year. Asset growth was $1.4 million or 7.8%. Member-Owner’s deposits grew by $2.1 million or 13% and loan growth was $1.3 million or 8%. In addition during2006 we referred in excess of $2 million in mortgages to our partner League Savings and Mortgage Company.Most of our growth is attributed to existing members utilizing more of our services and also referring familymembers to Reddy Kilowatt.

Our 3-year strategic business plan was completed in 2006. We can all be proud of many achievements andmilestones during this period and can also be inspired for our future. During this time our membership grew by326, or 25%, Assets grew by approximately $6.5 million or 50% and Retained Earnings reached the $1millionmark- a 48.5% increase since 2003. We’ve strengthened our retained earnings while continuing to pay rebates tomember-owners. Since December 2003 $400K in rebates has been shared by members with an additional $175K,if approved at this meeting, being returned for 2006. In 2007 we will build on our successes of the past andcontinue to deliver on the strategic vision set by our Board of Directors.

To ensure our employees are able to achieve service excellence and keep up to date on our industry we offeropportunities for both internal and external training and conferences and all employees complete privacy trainingannually. Employees continue to avail of courses offered through CUSource, the Credit Union knowledgenetwork. Late in 2005 we received approximately $9K from the Credit Union Deposit Guarantee Corporation.This money was added to our budgeted amount for training and development for 2006 for employees andDirectors.

During 2006 we added $56K to our Allowance for Uncollectable Loans per our Business Plan. Our goal is tocontinue to build our reserve so that we are prepared for any losses that may result from unsecured loans withoutsuch losses having a direct effect on our bottom line in the current year. This past year we saw an increase in thenumber of bankruptcies received and wrote off 4 loans totalling $27,400 for members who were discharged inbankruptcy. As the interest rates have contributed positively to our profitability so too does it result in anincreased number of bankruptcies. Rest assured that Reddy Kilowatt employees follow sound business practices ingranting unsecured credit and delinquency is closely monitored and controlled. Delinquency as a percentage ofAssets remains well below industry standards.

During 2006 we launched our new MemberDirect website. We have received much positive feedback and membersfind the new site more user friendly.

Reddy Kilowatt is part of a larger network of Credit Unions across Canada and we cost share branding fees withother Atlantic credit unions. In 2006 fees and assessments increased by approximately $18K representing ourportion of Credit Union Central of Nova Scotia’s Special Initiatives cost. Our credit union supports theseinitiatives and believes that they are critical to the shared vision of Atlantic credit unions in building our networkin order to meet all of our member’s needs. One of these Initiatives is for standard core products and services. Aswe move forward in implementation of these core products we will be looking at our existing product mix andlooking at chequing packages in particular to determine if Member-Owners are in the right package and ensuringthey are not paying too much based on their needs.

Our audited statement for this year includes a new note relating to the assets that we have under administrationwith system partners. We presently have approximately $7.7 million in mortgages and mutual funds that, thoughnot on our balance sheet, form a significant part of the service that we provide to our Member-Owners.

We have a great group of employees at Reddy Kilowatt and we know that the happier they are the better service they provide. Our employees are valued, treated fairly and respected and their efforts and dedication are recognized and rewarded. 2006 was a busy and sometimes challenging year for us – we shared a lot of fun and also sorrow and showed the true meaning of “Team”. I extend a well deserved thank you to each of you. A special mention to Tina Samson for winning three consecutive sales campaigns with CUETS- our partner for MasterCard credit card services. Tina placed first nationally for all credit unions of our peer group size earning recognition for Reddy Kilowatt as well as herself. Congratulations Tina!

Member-Owners.


We recognize the efforts of long-time employee Judy Williams who in July, 2006 after nearly 18 years of serviceto Reddy Kilowatt, decided to further her education and pursue a different career path. We thank Judy for herdedication and wish her well in her studies and future career.

In June we hired Brenda Holden as our Operations/ Compliance officer. Brenda brings many years of credit unionknowledge and experience and we are delighted to have her as part of our team.

We anticipate that early in 2007 we will achieve another milestone- $20 million in Assets. These achievementswould not be possible without the collective efforts and commitment of a dedicated team of knowledgeable andexperienced employees, Directors, and committee members. We continue to strive for excellence and efficiency- weknow we’re doing well and we are confident that we will do even better! Thank you to Member-Owners forcontinuing to trust us as your financial institution and allowing us the pleasure and privilege of servicing yourfinancial needs. We encourage you to continue to refer your family members to Reddy Kilowatt.

Special thanks to Mr. Karl Smith , Newfoundland Power for your continued support and my personal thanks toour Directors, for your support, guidance and volunteer time.

Respectfully Submitted,

Michelle WardGeneral Manager/Treasurer


R e p o r t o f t h e C r e d i t C o m m i t t e e

The following is a summary of Personal Loan, Line of Credit and Mortgage Loan activity for the period January 1to December 31, 2006. During 2006, the Credit Committee met a total of 10 times and considered 12applications. The Committee approves loan applications for Directors, committee members and employees only.

Following is a summary for all loan activities during 2006. Our method of reporting loan activities includes theusage of automated reports. Amounts reported include any refinanced amounts, with total dollars reported underthe main “purpose” for the loan.

Purposes for Personal Loans/Mortgages

Purpose Amount

Consolidation 115 $2,824,855

Purchase Vehicle 82 1,974,217

Mortgage 19 1,197,202

Recreation/Vacation 32 270,649

Other 71 514,050

Home Improvements 23 234,075

Investment 14 188,911

Refinanced- no new funds 11 274,151

Education 8 19,350

Subtotal 375 $7,497,460

Personal Lines of Credit 319,802

Tota l $7,817,262

I would like to thank the Committee Members and the lending staff for their cooperation and dedication over thepast year. Their combined roles in the lending process are an important part of your Credit Union’s continuedsuccess.

Respectfully Submitted on Behalf of the Committee,

Wade White, Chairperson


R e p o r t o f t h e G o v e r n a n ce C o m m i t t e e

In order to ensure that the Credit Union performs optimally at all times your Board of Directors has instituted a

measure of self-governance in the form of a Governance Committee. The responsibilities of this committee are as

follows:

a) To ensure that the Board of Directors acts within specified guidelines relating to Stewardship, Independence,Effectiveness Assessment, New Director Orientation, Size of Board and Committees, and DirectorRemuneration;

b) To ensure that the By-Laws of the Credit Union are complete and consistent with The Act and Regulationsand to ensure that the Directors and Credit Union operate within these By-Laws;

c) To ensure that all Policies are in accordance with the By-Laws and are in the best interest of its Member-Owners;

d) To ensure that all Insurance Policies are reviewed for both relevancy and sufficiency;

e) To ensure that there is a viable succession plan for both the Board of Directors and the Management Team;and

f) To ensure that there is an assessment process in place for the Board, the Management and the Credit Unionoverall and that it is conducted on an annual basis.

Respectively submitted on Behalf of the Committee,

Glenn Samms, Interim Chairperson


R e p o r t o f t h e A u d i t C o m m i t t e e

The Audit Committee provides a knowledgeable, well-informed communications bridge between the Board ofDirectors, the various auditors, and Government Examiners. Our role is to assist the Board of Directors infulfilling its supervisory tasks.

The responsibilities of the Audit Committee are set out in the Credit Union Act and Regulations. In addition,the Audit Committee is responsible for other duties as assigned by the Board of Directors.

The Audit Committee has the overall responsibility for monitoring:• The integrity of the financial statements;• Internal accounting and financial controls;• The external and internal auditor’s qualifications and independence;• The performance of the external and internal auditor; and,• Compliance with legal and regulatory requirements.

Since the 2005 Annual General Meeting held on March 20, 2006 the Audit Committee has met on six occasions.The following were the key activities of the Audit Committee:

• Reviewed quarterly and annual financial statements;• Reviewed the 2006 Internal Audit Report and discussed the results with the internal auditor Gardner

Coombs Winsor Coombs;• Met with the external auditor Deloitte to review the 2006 Audit Plan and discuss the results of the 2006

Audit;• Ensured the independence of both the external and internal auditor’s from the Board, management and

staff;• Monitored compliance with respect to legal and regulatory requirements as prescribed in the Credit

Union Regulations under the Credit Union Act;• Implemented the recommendations contained in the Examination Report dated January 2006 completed

by the Credit Union Deposit Guarantee Corporation; and,• Reviewed various management reports including the Asset Liability Management Report, Surprised

Cash Count Report, Delinquency Report, and Report on Remittances to Canada Revenue Agency andManulife.

It is the opinion of the Audit Committee that in 2006 your Credit Union operated in a satisfactory manner and inthe best interest of you, the Member-Owners.


Ronald Crane, Chairperson


R e p o r t o f t h e N o m i n a t i n g C o m m i t t e e

As a sub-committee of the Governance Committee, the task of the Nominating Committee was to receivenominations for the 2007 elections for positions on the Board, Credit Committee and Audit Committee.

There were eight nominations for four vacancies on the Board of Directors:Carl Bishop Robert DillonBlair Clarke Francis ParsonsJeffery Cook Robert PikeRonald Crane Gail Tucker

There were two nominations for two vacancies on the Credit Committee:Anne BallNoel Flynn

There were no nominations received for the one vacancy on the Audit Committee. This position will be filled byan appointment from the Board.

Directors and Committee Members elected will normally serve a three-year term. However, one position on theBoard will be for a two-year term and one position on the Credit Committee will be for a one-year term. This isdue to vacancies occurring part way through an existing term. The elected Director with the lowest number ofvotes will serve for the two-year term and the Credit Committee members’ terms will be determined through adraw by the scrutineer.

A mail-in election was conducted with ballots sent to all Member-Owners ages 19 and over holding a fully paidshare equity account. Ballots were received by Carol Ann Poole and counted by her and Lester Ivany in thepresence of Peggy Mercer. Scrutineers will present results to members following this report.

On behalf of the membership, we wish to thank those individuals who put their name forward for election.


Glenn Samms, Chairperson

Jeffrey Cook


O r g a n i z a t i o n f o r t h e Ye a r E n d e d D e ce m b e r 3 1 , 2 0 0 6

BOARD OF DIREC TO RS

Robert Dicks, PresidentBrian Walsh, Vice-PresidentGlenn Samms, Corporate SecretaryMichelle Ward, General Manager/TreasurerRon ClarkRonald CraneMegan Fitzgerald, Youth RepresentativeThe Late Ted FrenchBob PikeDana PopeWade WhiteSherry Ryan, Recording Secretary

HUMAN RESOUR CES

COM MITTEE

Brian Walsh, ChairpersonRobert DicksBob PikeDana PopeMichelle Ward, Resource

GOVERNAN CE COMMITTEE

The Late Ted French, ChairpersonGlenn Samms, Interim ChairpersonRobert DicksWade WhiteMichelle Ward, Resource

EMPLOYEES

Michelle Ward, General ManagerUrsula Maloney, Assistant ManagerSheree Barrett, Member Service RepresentativeBrenda Holden, Operations/Compliance OfficerPeggy Mercer, Member Service RepresentativeRosalind Piercey, Member Service RepresentativeSherry Ryan, Marketing CoordinatorTina Samson, Member Service RepresentativeVicki Warren, Member Service Representative

SC RUTINEERS

Lester IvanyCarol Ann Poole

C R EDIT COMMITTEE

Wade White, ChairpersonAnne BallSean BudgellBlair ClarkeDarlene Harris

AUDIT COMMITTEE

Ronald Crane, ChairpersonCarl ChafeDoug GrouchyGreg MurphyDana PopeBoyd Snow


R e a s o n s We B e l i e v e Yo u S h o u l d R e f e r Yo u r

F a m i l y M e m b e r s t o R e d d y K i l o w a t t

You may be asking yourself, “Why ask my family members to switch from their current financial institution to myCredit Union?”

Since 1967, almost $5 million has been returned to members in the form of share dividends and patronage rebates!Profit sharing is the main distinction between credit unions and other financial institutions.

Switch for the bene fits of member-ownershipThere are many other reasons to join the thousands of Canadians who have made the switch to a credit union. Asboth customer and owner, the benefits of choosing your Credit Union for financial services are unique.

Service : Outstanding personal service is our top priority. Credit unions are formed by members to serve members.So as a shareholder in the organization, our commitment to your financial well being comes naturally. In additionto professional advice, you can receive service at over 160 locations in the Atlantic Region and from Credit UnionATMs across Canada. Together, Credit Unions have more locations than any other financial institution.

Range of Products: We offer all of the financial products and services available in the marketplace includingInternet and telephone banking, mortgages, global ATM access, MasterCard™ credit cards and a full range ofinvestment options including mutual funds and on-line trading.

Democratic Voice: As an owner, you can speak directly to the Directors and Managers of your Credit Union byexercising your right to vote in the election of officers and on issues of importance in the operation.

Strengthen your Community: We’re partners in our communities and have a strong commitment to local qualityof life and economic development. Credit unions return profits in the form of common share dividends andpatronage rebates to their member-owners. They invest in their local economies using the services and makingpurchases from local businesses. Credit unions also donate time and money to community projects and charities.

Security: Canada’s credit unions are financially fit – no credit union member has ever lost money. Collectively,they have over $84 billion in system assets, serve 4.8 million member-owners, follow strict guidelines of soundbusiness practices and they have the backing of their respective credit union deposit insurance corporations. Inour province, your deposits are covered up to $250,000 per account type.

Switching to a Credit Union is easyThousands of Canadians make the switch every year and the arrangements are safe, secure and hassle free. We’ll dothe paperwork, and help you select the right services for you, your family or your business.

Join us… Share in the financial success!

Member-Ownership is available to your spouse, children, grandchildren, siblings, parents, in-laws, aunts, uncles,

cousins, nieces and nephews.


V O L U N T E E R S 1 9 5 6 - 2 0 0 6

Abbott, Raymond Colford, Robert Hapgood, A. Mouland, Lillian Toner, Kathy

Adams, Charlie Collins, Peter Harris, Darlene Murdoch, Robert Trask, William

Adams, George Collins, R. Harvey, Gerard Murphy, Dick Tremblett, Don

Ainsworth, Scott Conway, Richard Henderson, John Murphy, Greg Tulk, Jeff

Ainsworth, Verne Coombs, Kevin Henderson, Lorne Murphy, John Tulk, Zeta

Alteen, Peter Corbett, J Hennessey, Clara Murphy, Robert Underhay, Robert

Anstey, Gerry Crane, Ronald Henry, C.W. Nickerson, Bruce Vincent, Blair

Antle, Austin Crewe, Carol Anne Henry, Charles Nurse, Richard Vincent, Peter

Ball, Anne Critch, Theresa Hoffe, Dennis O’Brien, Maurice Warr, Kevin

Banfield, Ester Cumby, Eric Howell, Baxter O’Leary, Sean Warren, Elroy

Barnes, Diane Curtis, Gerard Humby, Gary O’Neill, Ronald Walsh, Brian

Barrett, Kelvin DaSilva, Tony Hunt, R.P. O’Reilly, Albert E Walsh, Gerry

Batstone, Dale Dawe, Ron Hynes, Hubert Peters, Brendan Walsh, Ken

Benger, G. Delahunty, Brian Hynes, Remi Piercey, William Walsh. Michele

Bennett, Sharon Dicks, Robert Ivany, Lawrence Pike, Robert White, Anthony

Beresford, Kevin Dodd, R. Ivany, Lester Pittman, Fred White, Cluny

Birmingham, Llewellyn Duke, Nora Jamieson, Alex Pollett, Beverly White, Wade

Birmingham, Tony Dymond, B. Janes, Elaina Pollett, Graham Whittle, Brian

Bishop, Carl Earles, Joseph Jardine, Mike Poole, Carol Ann Whittle, Maureen

Bishop, Chari Emberly, Ches Joy, Anna Pope, Dana

Bishop, Noel Evans, Barbara Keough, John Pope, Mike

Bonnell, Aubrey Evans, John Keough, Robert Press, Fred

Bragg, Don Fitzgerald, Megan Kielley, J.S. Roberts, Derek

Brennan, Rose Flynn, Noel King, Les Rockwood, S.

Briffett, Kirk Follett, Doug King, R. Rodway, Wayne

Broderick, Don French,Frank Knight, Alex Rowe, Linda

Bruce, Christie French, Rod Knight, Steve Russell, Don

Budgell, Sean French, Ted Kohout, Doug Ryan, Aiden

Butt, Darryl Gaye, Cavell Lane, Frank Ryan, Bernie

Butt, Wayne Gladden, M. Learning, Walter Ryan, Patrick

Canning, Tom Goodridge, Eileen Legge, Gerald Samms, Glenn

Carpenter, T. Green, Wayne Lester, Crosbie Schofield, Ray

Casey, Jack Greenland, Lewis Ludlow, Earl Sheppard, Graham

Chafe, Carl Griffin, Joe MacDonald, Stan Simms, Lloyd

Chafe, Doug Hall, Ewart Mandeville, George Slaney, Bill

Chancey, Roy Grouchy, Doug Mahar, Kevin Stack, Marilyn

Chaulk, Frank Hall, Fred Manning, Elizabeth Snow, Boyd

Christie, Bruce Halliday, Peter Marshall, Stan Stewart, Cyril

Clark, Gwen Hancock, Karen Martin, James Styles, Albert

Clark, Jeff Hancock, Scott McLeod, Neil Taylor, Leah

Clark, Ron Hann, Chesley Meaney, Jennifer Templeton, David

Clarke, Blair Hannaford, Pat Mowbray, Lynn Thompson, Lorne

Clarke, D. Hanrahan, John Moores, Henley Tilley, Barry

* T h i s i n f o r m a t i o n w a s c o m p i l e d f r o m a v a i l a b l e h i s t o r i c a l d o c u m e n t sa n d m a y n o t i n c l u d e a l l v o l u n t e e r s . To a n y w e m a y h a v ei n a d v e r t e n t l y o m i t t e d , t h a n k y o u f o r y o u r t i m e a n d c o m m i t m e n t t oR e d d y K i l o w a t t a n d i t M e m b e r - O w n e r s .

This information was compiled from available historical documents and may not include all volunteers. To any we may have inadvertently omitted, thank you for your time and commitment to Reddy Kilowatt and it Member-Owners.

Clarke, D. Hanrahan, John Moores, Henley Tilley, Barry


28 YEAR ENDING 12/3 1 / 2 00 6

S e r v i c e s

Power Plus SavingsYouth SavingsMonthly Savings PlanTrust AccountsTerm DepositsRRSP/RRIF/RESPEthical Funds®Index Linked DepositsIncentive Shares

Personal LoansMortgage LoansPersonal Line of CreditStudent LoansOverdraft ProtectionRRSP and Investment LoansRRSP Line of Credit

MemberDirect™ Integrated -Online BankingTeleService™Credential Direct™On-line Trading

Wealth Management ServicesTrust Services

RKCU Scholarship

Personal ChequingBusiness ChequingStudent ChequingUS Chequing

MasterCard® Credit CardMasterCard® Global Payment CardChoice Rewards™ Points ProgramMember Card™ Debit CardPurchase Protection &Extended Warranty Plan

Term Life InsuranceCredit Life & Disability InsuranceMortgage InsuranceHome/Auto Group InsuranceTravel Insurance

Payroll DeductionFinancial CounsellingTravellers’ ChequesForeign ExchangeCanadian/Foreign Money OrdersBill PaymentSafety Deposit Box RentalsLegal Witnessing

Small Business Merchant Services

709-737-29181-800-409-2887www.reddyk.net

REDDY KILOWATT

06

AnnuAlReport

PO Box 891050 Duffy PlaceSt. John’s, nl A1B 3P6

Tel: (709) 737-2918

Fax: (709) 737-2937

Toll Free: 1-800-409-2887

www.reddyk.net

REDDY KILOWATT

REDDY KILOWATT

51 s t

po box 8910 st. john’s, nl a1b 3p6 51 reportal

Documents