40th Annual General Meeting Tuesday 25th September 2018 · Dennis Rolleston presented the...

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Steelsands Credit Union

Annual Report

2018 40th Annual General Meeting

Tuesday 25th September 2018

People helping People

NZCU Steelsands is licensed by the Reserve Bank and is not a registered bank

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Steelsands Credit Union Annual Report 2018

Our Mission

“Grow membership by delivering competitive solutions

which recognise our members as individuals and help them

create wealth through low cost high return products and

services”

Our Vision

To create financial freedom for our members through

personal service based on flexibility, convenience and

trust”

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Table of Contents

Agenda ...........................................................................................................................................................4

AGM Minutes 2017 ........................................................................................................................................5

Our Board .......................................................................................................................................................8

Chairman Report ..........................................................................................................................................10

General Managers Report ............................................................................................................................11

Trustee’s Report ...........................................................................................................................................12

Internal Audit Committee Report ................................................................................................................13

Treasurers Report ........................................................................................................................................14

Board Nominations ......................................................................................................................................15

Financial Statements ....................................................................................................................................16

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40th ANNUAL GENERAL MEETING

STEELSANDS CREDIT UNION

TUESDAY 25TH SEPTEMBER 2018

Held at the Lions Club Rooms, Belgium St Waiuku

Meeting Starts 6 pm

AGENDA

1. Welcome by Chairperson 2. A moment of silence held in respect of members who have passed 3. Apologies 4. Minutes of the previous Annual General meeting 26th September 2017 5. Matters arising from the Minutes of the previous Annual General Meeting 6. Chairperson’s report 7. General Managers report 8. Treasurer’s report 9. Trustees’ report 10. Audit Committee Report 11. General Business 12. Appointment of External Auditors 13. Election of officers 14. Close of AGM Dinner 7 pm

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Steelsands Credit Union Annual Report 2018 Steelsands Credit Union

AGM Minutes 2016 - 2017 Minutes of the 39th Annual General Meeting

Held on Tuesday 26th September 2017 at the Lions Club Rooms, Belgium, Waiuku

Steelsands Credit Union

Meeting started at 6:04 pm

Attendees:

As per Signed Register – 24 qualifying members, 6 Visitors (Total 30)

1. Welcome by Chairperson

Bruce Ross declared the meeting open and welcomed everyone and made everyone aware that the AGM was

being Streamed Live on Facebook and welcomes the special guests.

Bruce Bleakley Board Member Co-op Money NZ Board Andrew Alexander Corporate AV Services Brenden Rolston General Manager Action HQ David Smart CFO Co op Money NZ Ahukona Hatalaf (Kona) General Manager NZCU Employee’s Teresa Davies Chair of NZCU Employee’s Board Rob Collins General Manager NZCU Auckland Doug McLaren Chairman of Board NZCU Auckland

2. Apologies

Sandra Brady, Rhonda Clare, Aileen Cutting-Gardner, Michael Dineen, Gavin Earl, Maree Fleck, Larry Gardner, Susan Gillespie, Gill Goodwin, Craig Hardie, Nicola Hardie, David Hovell, Richard Laker, Bernard Lamusse, Henry Lynch, Lani Mahuika, Clare Matthews, Lauren Morley, Irene Peake, Jenny Phillipson, Dean Ronald, Ivy Tapsell, Todd Fuller, Benjamin Vui and Angela Wedding. Moved B Ross/ C Robbins Carried

3. Housekeeping – exits, toilets and evacuation procedure was explained.

4. A moments silence was held in respect of members who have passed away during the past year.

Peter Harvey Glenbrook Branch Damion Matene Glenbrook Branch Patrick Takiaho Glenbrook Branch John Tautari Alliance Branch Harvey Walters Alliance Branch Moved B Ross/P Eves Carried

5. Minutes of previous AGM 20th September 2016

• Rhonda Clare raised the issue of Independent Directors.

The Board has introduced a New Development Programme, no questions from the floor.

• Rhonda Clare raised the issue of Director’s Remuneration which has been referred to General

Business.

• Questions raised on how the notices for AGM and Dividend were sent out to inform members. AGM

and reports were sent out via email, AGM notices published in local papers and NZME Intranet and

NZCU Steelsands Website were also used.

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Moved minutes be approved B Ross/J Cocks Carried

6. Chairperson’s report

Bruce Ross presented the Chairman’s report

Moved Chairperson’s report be approved B Ross/J Varney Carried Question by J Varney

• Clarification required with relationship with Co-Op Money NZ?

Response by B Ross

• Co-Op Money is our provider of our banking services and is owned by Credit Union members,

disagreements are in progress and we are monitoring where to from here. NZACU issues remain.

7. General Mangers report

P Stark presented the first General Manager’s report

Philip stated it was a privilege for the opportunity to address the AGM. Growth within Steelsands is $20 to

$30m and a watershed year. Growth across all facets of the business, growth is due to Deposits and Transfer

of Engagement with the Alliance Group and Retirement Incomes being deposited with us.

Exciting year in the lending market with a new initiative being Home Loans. Growth in this market $0 to $2

million. Still need to find gaps in how we are able to help our members, this is a slow and difficult challenge.

Challenges with growing membership, especially with our current aging membership base.

Partnership with Lifetime Retirement Trust to help assist Members with retirement income and investment.

Investment in technology for future growth with younger members.

There has been a Launch for an updated website so access to accounts becomes easier and able to be done

more remotely. Road shows have been held in local areas of all branches of Steelsands with good feedback.

Philip stated that he would like to acknowledge his team and thank you to members and staff for their

continued support and encouragement.

He thanked the meeting for the opportunity to present his first AGM report.

General Manager’s report approved by P Stark/C Robbins Carried

8. Treasurer’s report

S Marsic gave the Treasurer’s report.

With an operating surplus due mainly to the Alliance Group Transfer of Engagement. Long term members’

growth up by 29%. Growth due to the Transfer of Engagement with the Alliance Group.

Future financial challenge is to increase and maintain growth. Financial expenditure is due, with continued

challenges in regulatory requirements.

Further investment in technology with the replacement of the banking system.

Slavica closed the treasurer’s report by thanking Philip and the staff.

Treasurer’s Report moved by S Marsic/B Batty Carried

9. Trustee’s Report

Dennis Rolleston presented the Trustee’s Report.

This last financial year has seen a 29.01% growth in the loan book mainly due to the transfer of engagement

with Alliance Group and also the entry into the Home Loan market. It has been a tough year at Marsden Point

but new growth is currently being achieved. With new and more services being offered to the Alliance Group

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and NZME there is more scope for growth within these groups. Our bad debt percentage is very very low and

all the trustees are very conservative with their consents on loan requests. The impairment is up by 0.01% for

bad debt recovery.

It is a tough market with government regulations and all the trustees are doing a good job managing the

members’ money. More analysis will be available once the new technology and new banking system are.

• Question Steff Cocks asked a question on bad debt and write off up by $12,000?

Reply from P Stark spoke, the provision and how it will fluctuate year on year. Also the cost of chasing was

often cost prohibitive.

Moved the Trustees Report D Rolleston/S Cocks Carried

10. Audit Committee report

Bhikhu Bhana gave the Audit Committee Report.

Bhikhu acknowledged the team of himself, D Rolleston, C Robbins, K Laker (staff) and P Stark (Manager). The

role of this committee was the oversight and good governance of Steelsands Credit Union. Staff audit

procedures and the Risk Register were reviewed. No new risks are apparent.

Issues within Co-Op Money are being monitored by the Audit Committee. Reserve Bank will undertaken an

Audit on AML (Anti Money Laundering).

Innovation tweaks are being made to the Risk Management framework. Results received were an unqualified

audit by the Prudential Supervisor and BDO our external auditors with no recommendations to be undertaken.

The Steelsands Audit Committee is being used as a role model by other credit unions. Steelsands Credit Union

is offering support to other credit unions to assist them implement their own Risk Management frameworks.

Moved the Audit Committee report B Bhana/C Robbins Carried

11. General Business

In general discussion D Robbins relayed the story that he found the Credit Union card worked in more

counties across Europe than the traditional cards usually taken.

Director’s Remuneration, after discussion is was agreed that the Director’s Remuneration be capped at

$35,000 total per year for all directors.

Moved General Business be approved B Ross/J Varney Carried

No other general business was carried out.

12. Appointment of External auditors

Moved that BDO be engaged as NZCU Steelsands auditors for 2017 -2018.

Moved B Ross /B Batty Carried

13. Election of Officers

Moved that: Bruce Ross, David Hovell, Paul Eves and Slavica Marsic as Directors

Moved B Ross / A Morris Carried

Moved that: Bruce Ross and David Hovell be re-elected as a Trustee.

Moved P Eves/C Robbins Carried

The streaming live was a success with 35 members opting to connect into the AGM meeting.

There being no further business the meeting closed at 6.55 pm followed by dinner supplied by the Waiuku Lions Club.

_____________________________________ Signed B Ross Chairperson

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Our Board

Bhikhu Bhana Director and Audit Committee Member

Appointed to the Board in 2000

CUINZ Member

Retired from New Zealand Steel Ltd and BlueScope Steel in 2012 after 32 years of service

When I read the Credit Union motto and philosophy of " People helping People', I joined the Credit Union movement. I have been a member for over 20 years and on the Board for a number of years. I have been impressed and proud that at

Steelsands we follow that principle. It’s all about people. We give with an open heart and receive with humility.

Bruce Ross Director, Chair and Trustee


CUINZ Member

David Hovell Director and Trustee


Employed at Refining NZ since 2008

I share the values of the Credit Union movement and hope to see it grow in New Zealand.

Dean Ronald Director


Dennis Rolleston Director & Trustee


CUINZ Member

Retired from New Zealand Steel Ltd in March 2010 after 25 years of service

Paul Eves Director & Treasurer


Prior Board Service: 1993 – 1999

CUINZ Member

Former Trustee NZ Credit Union Foundation & Collin Smith Memorial Fund Managers

Retired from New Zealand Steel Ltd

"If I am to dream I dream alone. If we all dream together then we shall achieve..." Princess Te Puea

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Slavica Marsic Director & Secretary


Held Chairperson role 2006 – 2010

CUINZ Member

Employed as IS Principal Engineer at New Zealand Steel Ltd since 1991

I strongly believe in the Credit Union philosophy and with Credit Unions owned by their members it means the

benefits go back into the communities and that is something he is proud to be part of.

Todd Fuller Director


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Chairman Report

I would like to welcome our members, invited guests, staff and Directors to the 2018 NZCU Steelsands CU AGM, it is wonderful to have you here and online. This is the second year we have streamed our AGM and are hoping to reach more and more of our members. This is also our 40th year in operation and we will take time to celebrate later in the year. As a first matter of business I would request us all to take a moment to note those members and staff who have close relatives or friends who may have passed recently. Unlike the previous few years this has been a much busier year for our Credit Union, our staff and board of directors. This heavier workload has given us outcomes we should all be proud of, with the successful completion of Oracle implementation, updates for our FSCU act and improvements to our banking services provider Co Op Money. During this busy period our teams have achieved a balance of financial figures favouring our members with a growth in Loans, managed funds and interest to members and a small decrease in profit. I will leave Paul and Philip to provide you with more detail. The outlook for us in the current year is for another very busy year consolidating Oracle, changes required by the updated FSCU Act and further strengthening our banking service provider Co Op Money. The changes to the FSCU Act & Co Op Money structure will require rules modifications and approval by you our members, so we will need an SGM in the first quarter of next year. At the same time we will take the opportunity to celebrate our success with the Oracle implementation and our 40th year birthday as mentioned above. Our continued strength is in our well performing teams from Invercargill, Whangarei, NZME and Glenbrook working with our local members. We are currently limited in our growth plans by our required ratios and are planning to move to a Credit Rating in

the near future which will position us for further growth and maintenance of our members benefits. Led by Philip, the team is continuing with strong, focused and demanding budgets for this year. The new members of the group have smoothly moved in and helping create a successful team with great results. We continue to maintain our focus on you, our members. This is why we are here and forms the most difficult part of our roles, i.e. to maintain the balance between member benefits and keeping the Credit Union relevant in our changing financial environment. This year has seen Christine Robbins resign for personal reasons and Dennis Rolleston retire as directors, we have been sad to see them both move and wish them both all the best. This has left us with an opportunity to focus on the future of our board and plan to reduce the numbers slightly from 9 to 7 to allow us to develop new directors by using an associate director training program (or scholarship). We look forward to seeing and helping you in the coming year and at our next AGM, Thanks Bruce Ross Chair of NZCU Steelsands Credit Union on behalf of our Board, Paul Eves, Slavica Marsic, Bhikhu Bhana, Dennis Rolleston, Todd Fuller, David Hovell, Dean Ronald.

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General Managers Report

I am pleased to report that the 2017/2018 year has been successful if mainly because of the challenges we have faced, many that were outside our direct control and the fact we have maintained a strong member offer over this period. We have enjoyed significant support from members which is reflected in the strong growth in member deposits. I am encouraged by this and it puts our Credit Union in a strong position to continue to support our members in the future. I am particularly pleased we have been able to sustain a market leading position for our call “Goalsaver” product. This provides members with a great rate of return whilst retaining full access to their funds without penalty. Our challenge remains in attracting new members to replace those who are reaching retirement and leaving those employers who continue to provide such strong support to us. I acknowledge the ongoing assistance from NZ Steel, Refining NZ, NZME and Alliance Group. Our industry is going through significant change. We have seen the introduction of new legislation which has materially changed our

landscape and this has been against a backdrop where Credit Unions have not always been united in their acceptance and management of this change. We have also embarked on the most ambitious change programme in our history. These changes invariably are challenging and indeed this current initiative is no different. We have a very solid platform based on loyal members and committed staff. Your Board has supported Management in looking for ways to grow our business and I am extremely grateful for that endorsement. It would be remiss not to mention the teams at Glenbrook, Marsden Point and Invercargill. We have a passionate group of people who strive very hard to deliver great service to our members and I want to acknowledge their contributions. We all generally believe Credit Unions are all about “people helping people” and we look forward to enhancing that tradition in the year ahead.

Philip Stark

General Manager

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Trustee’s Report

On behalf of my fellow Trustees, Bruce Ross

and David Hovell, I report a 3.88% growth in

Steelsands Credit Union loan book for the

financial year ended 30 June 2018. While

substantially down from last year it is 1.18%

more than New Zealand’s 2.7% GDP to the

year March 2018. We should also remember

that our merger with Alliance Credit Union

contributed significantly to last year’s growth.

While our focus continues to be on personal

loans with 5.01%, 16.55% and 32.57%

increases in personal loans at NZME, Marsden

Point and Alliance Credit Unions a healthy

49.35% increase in home loans has helped

your Credit Union to remain profitable in the

last financial year. A decline of 10.03% in

personal lending at Glenbrook however, needs

more attention.

The previous financial year has been

challenging in terms of personal lending the

change of government offering no relief, yet it

did show the wisdom of the board in

implementing our manager’s recommendation

to enter the home lending market on a limited

scale. As well, legislative changes have not

ceased and the Friendly Society and Credit

Unions (Regulatory Improvements)

Amendment Bill soon to be given the Royal

Seal will ensure that this will be the last

Trustees Annual Report as this bill removes the

requirement for Trustees.

Last year we mentioned the move to a new

financial reporting platform and as you will all

now know, the move has been completed. As

with ALL software projects there is initially the

frustration of learning the new system

however these pitfalls will soon be forgotten

as users gradually learn the nuances of the

new system. For Steelsands

staff/management/board the new system will

present them with an impressive array of tools

to improve the performance of your Credit

Union.

Again, Philip and his team have delivered an

exemplary performance in a challenging

financial sector especially when measured

against documented results from others across

the spectrum of the country’s financial sector.

Thank you all for continuing to support your

credit union and perpetuating the people

helping people philosophy

Dennis Rolleston

Trustee

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Internal Audit Committee Report

The Audit committee consisted of Bhikhu

Bhana (Chair), Christine Robbins, Dennis

Rolleston. The committee was ably supported

by General Manager Philip Stark and

Compliance Officer Katrina Laker.

During the year Christine resigned from the

Board. We would like to thank Christine for all

your efforts on the audit committee.

The Monthly Audit report continues to be a

key agenda item for our monthly meetings and

our work on our Key Risk Register continues

unabated as we continually strive to ensure we

have all current risks, and perceived risks

catered for. Furthermore, that we have the

necessary controls in place to mitigate and

remedy any instance where a non-compliance

occurs.

Last year Steelsands was audited for its Anti-

Money Laundering compliance by the Reserve

Bank. Steelsands received a very

complementary report from the Reserve Bank.

The annual external review with our auditors

PKH in August this year.

In the past year, in addition to the monthly

reports, the entire board would review some

of the risks on a regular basis. The major risk

this year has been the issue around the central

NZACU body, known as Co-op Money. The

successful implementation of the new

computer system Flexcube was completed on

time and within budget. This is a credit to the

cooperation of the Staff, Steelsands Board and

Co Op Money to work together, with sound

Project management and Risk Management

practices.

Steelsands at its annual planning day devoted

an entire session on the future of the NZACU

and consequently the member credit unions,

and made changes to its Product Disclosure

Statement (PDS).

A lot of the issues are being addressed and it is

hoped that Co-op Money and the credit unions

can move forward towards 2019 with a much

brighter future.

Plans for the 2019 year are to consolidate all

the Risk Management frameworks documents

and present this to the Board. Our Prudential

Supervisor Covenant, do regard Steelsands risk

management system as a role model amongst

the smaller Credit Unions.

Bhikhu Bhana

Internal Audit Committee Chairperson

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Treasurers Report

I am pleased to present the audited annual

financial statements of Steelsands Credit

Union trading as NZCU Steelsands, for the year

ended 30 June 2018. Our audited financial

statements are in accordance with Public

Benefit Entity Standards (“PBE Standards”)

issued by the New Zealand Accounting

Standards Board.

I would firstly like to pay tribute to my

predecessor, Slavica Marsic who not only

carried out the role superbly, but also set a

high standard to follow; and secondly, I would

especially like to thank Philip and his team,

whose help and guidance has made my task so

much easier; and finally, to my fellow Board

members, I thank them for their patience and

understanding as I continue to navigate my

way through a challenging academic

programme.

2018 has, without doubt, been a very

challenging year for us on a number of

different fronts, not the least of which has

been the successful transition to a new core

banking system, Oracle™. This new platform,

to use an analogy, is like moving from a 1968

Morris 1300 to a 2018 BMW Series 5; while the

plus side of the ledger is that the new banking

system brings us well and truly into the 21st

Century, the negative side is that it has not

been cheap to install, and as with all new

systems, there is the inevitable learning cycle

as our staff become used to using the new

system.

From a trading point of view we have

continued, thanks largely to Philip and his

team, to perform reasonably well in what has

been a very challenging space. I am pleased to

report that our Credit Union achieved another

operating surplus of $98,323 compared to

$102,492 (-4%) in the corresponding period

last year. Total funds under management

(member deposits) increased by $2.198M (8%)

and loans to members by a modest $587k

(4%).

Total income increased by $182k (9%) and at

the same time interest paid to members rose

by $96.5k (13%). Loan impairment expenses

increased to $28,718, due to an increase in the

allowance for impaired loans; however, given

that loans to members are currently sitting

around $15.2m, your Board is confident that

we are managing this aspect of our operations

as well as can be expected in the current

economic climate.

Looking ahead, I would expect the

implementation of our new core banking

system to deliver on our commitment to

making it easier for our Members to do

business with us, wherever they may be.

In summary: we continue to maintain a

reasonable level of profitability, we have a

very strong Balance Sheet overall; and we

remain committed to seeking out new and

innovative products and services in order to

continue to provide benefits that offer real

value to you, our Members.

Paul Eves Treasurer

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BOARD NOMINATIONS

AGM 2018

Directors

3 Re-elections, 0 New

Nominee Status Nominator Seconder

Bhikhu Bhana Re-election

Dean Ronald Re-election

Todd Fuller Re-election

Trustees

0 Re-election, 1 New

Nominee Status Nominator Seconder

Bhikhu Bhana New

Directors not up for re-election

Trustees not up for re-election

Bruce Ross

David Hovell

Paul Eves

Slavica Marsic

Bruce Ross

David Hovell

Resignations

Dennis Rolleston

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Financial Statements


FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

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DIRECTORY


Board of Directors Chairman B Ross

24 September 2015

Treasurer P Eves

24 September 2015

Secretary S Marsic

24 September 2015

Directors D Rolleston

18 September 2014

D Hovell

24 September 2015

B Bhana

18 September 2014

T Fuller

20 September 2016

D Ronald

20 September 2016

Trustees B Ross

29 September 2015

D Hovell

29 September 2015

D Rolleston

29 September 2015

Trustee Supervisors Covenant Trustee Services Ltd

Staff P Stark

A Morris

J Wootten

K Laker

N Hardie

L Morley

I Peake

S Brady

S Gillespie

L Mahuika

M Fleck

R Stenhouse

C Jamieson

Auditors PKF Hamilton Audit Ltd

Bankers Co-op Money NZ

Kiwibank

Westpac Bank Australia

Solicitors Michael Dineen Law

Affiliations Co-op Money NZ

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CONTENTS OF FINANCIAL STATEMENTS


Statement of Comprehensive Revenue & Expense

Page 1

Statement of Changes in Net Assets/Equity

Page 2

Statement of Financial Position

Page 3

Statement of Cash Flows

Page 4

Notes to the Financial Statements

Page 5 - 25

Independent Auditors' Report

Page 26-28

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