Company Reports

CHAIRMAN'S REPORT 2008
DIRECTORS' REPORT TO MEMBERS

As Chairman of the Board of Directors, I am pleased to advise that 2007/2008 has produced yet another record surplus.

Our after-tax profit increased by 13.11% to $18.16 million, up from $16.05 million for 2006/07.

This result includes a contribution from our captive mortgage insurer, Mortgage Risk Management Pty Ltd, which recorded an after-tax profit of $2.41 million.

Our 25% investment in Financial Technology Securities Pty Ltd, a financial planning company, has also made a significant contribution to our results as it continues to expand and grow its customer base.

Your Board has declared a final fully franked dividend of 33 cents per share to be paid on 3 October 2008, bringing the full dividend for the year to 66 cents.

During the year, our assets increased to $2.278 billion - up from $1.732 billion at 30 June 2007. This figure includes the assets acquired from the takeover of Mackay Permanent Building Society Limited.

Our lending during the year was also strong with $518 million in new advances - a 7% increase over 2006/07. However, it is anticipated that lending will slow this financial year given the current economic market, the tightening of credit and slowing demand in the housing industry.

The majority of these loans are sourced through our retail operations with the amount of broker introduced loans less than 12% of total loans.

We have continued our policy of mortgage insuring all residential housing loans with Mortgage Risk Management Pty Ltd.

At 30 June 2008 our total loans under management amounted to $1.996 billion dollars.

We constantly review our capital requirements. Our capital adequacy of 12.85% at 30 June was above the Australian Prudential Regulatory Authority (APRA) requirements.

Your Board is very pleased with these results which have been achieved in a busy and challenging year.

The most significant achievement was our acquisition of the ASX-listed Mackay Permanent Building Society Ltd with assets approximating $300 million.

Wide Bay Australia was forced to make a hostile takeover offer, when the Mackay Permanent Board recommended acceptance of another offer from the Bank of Queensland Limited.

This resulted in a drawn-out contest in which Wide Bay Australia finally acquired control of Mackay Permanent on 10 January 2008 when we achieved in excess of 90% Mackay Permanent shareholder acceptances in respect of our superior offer.

Since that date, our Management team became heavily involved in the acquisition process and we subsequently transferred Mackay Permanent’s total operations to Wide Bay Australia on 31 May 2008.

This is an excellent achievement, particularly as it was accomplished without any external consultants.

In particular, our Operations & IT Department under the direction of our Manager, Ian Pokarier, achieved an outstanding result by converting operational systems in such a short period using internal resources.

The acquisition has already proven to be a significant benefit and the synergies of the amalgamation will flow on into our annual results in 2008/2009.

The acceptance by a large majority of Mackay Permanent shareholders of our scrip offer was very gratifying to our Directors and we extend our appreciation to those shareholders for the confidence and support they have shown for Wide Bay Australia.

While most of the former Mackay Permanent branches are located in excellent locations, we have identified some branches, particularly in Townsville and Cairns, which we believe would be better relocated to more prominent positions and we intend to address that issue over the next few months.

We constantly review the performance of all our branches and carry out upgrades or relocations in order to ensure we meet both the needs of customers and the viability of the branch.

Our branches in Queensland now extend from Robina Town Centre on the Gold Coast to Cairns - a distance of 1,360 air miles. Our branches in Parramatta in Sydney and Camberwell in Melbourne both continue to show steady growth and in particular provide a solid contribution in respect of our lending portfolio and a focus for our interstate operations.

Management monitors the market in respect of products and service developments and our competitiveness.

We continue to expand our range of products and services in order to meet the needs of our customers.

We are always very mindful of our position in our local communities and aim to be a good corporate citizen. One way we do this is through our significant financial contribution to a broad range of organisations and events throughout our area of operations.

One of the strengths of the Australian banking sector in recent years is the supervision by APRA which develops prudential standards and supervises requirements in respect of the activities of Approved Deposit Taking Institutions (ADI’s) which includes banks, building societies and credit unions. We recognise the importance of that supervision to all ADI’s and the stability and comfort that this brings to our depositors and customers. There are significant costs involved in meeting these requirements, however we support them totally.

At the time of writing this report we are witnessing economic uncertainty and financial problems, particularly in the US markets. Despite this, with the strong Australian economy, the sound supervision within Australia generally and our own commitment to prudential management, we remain very confident going into the year ahead.

We have already indicated to the market our expectations of slower growth in the housing industry, but forecast a very strong year in terms of our profit achievements in 2008/2009.

In February, the Board invited Mr John Humphrey to accept a position as an independent non-executive Director. We are pleased that he was able to accept, as John is a very experienced Solicitor, a Senior Partner in a respected legal firm and also holds several other public company directorships. We are sure he will be an asset and contribute to the overall governance and efficiency of our operations and I welcome him to the Board.

The Directors are very conscious of a unique culture that exists within Wide Bay Australia.

At senior levels this is reflected in the stability and experience of our Management team that is typified by their lengths of service. They are a cohesive unit and their efficiency, commitment and enthusiasm are very much part of the Wide Bay Australia success story. Achieving the Mackay amalgamation without any external costs apart from our initial advisers was a tremendous effort and clearly demonstrates their capabilities.

On behalf of the Wide Bay Australia Board of Directors, I acknowledge all of the staff throughout our network and congratulate them on their commitment to achieving our goals and for all of their individual and joint efforts throughout the year. I also extend a welcome to former Mackay Permanent branch staff and hope you enjoy the benefits of being part of our progressive company.

Finally, I extend my appreciation to my fellow Directors for their individual contributions, for their enthusiasm and commitment in what, at times, is a very demanding role and look forward confidently to the year ahead.

Yours faithfully,

J F PRESSLER
CHAIRMAN
29 September 2008
Bundaberg

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CHAIRMAN'S REPORT 2007
DIRECTORS' REPORT TO MEMBERS

On behalf of the Board of Directors, I am pleased to report that 2006/2007 has produced another record profit of $16.27 million - an increase of 12.38% over that of 2005/2006.

Our captive lender's mortgage insurer contributed an after tax profit of $2.23 million. Financial Technology Securities Pty Ltd, a financial planning company in which we hold a 25% interest, continues to expand and grow with full operations commencing in Melbourne and a business acquisition in Mackay. This investment has generated excellent returns on capital.

Our lending for the year was $485.2 million representing a 16.36% increase over the previous year. We continued to develop our commercial loans and introduced margin loans for managed funds. We expect significant increased lending from these areas in the year ahead.

Assets and funds under management showed an increase of 5.25% with our loan portfolio increasing to $1.548 billion - an increase of 8.62%.

Your Board is very pleased with our results achieved across all of Wide Bay Australia's operations and in particular that they have been achieved in a highly competitive market.

A final fully franked dividend of 30 cents per share will be paid on 14 September 2007, taking total fully franked dividends for the 2007 financial year to a record 60 cents per share. Wide Bay's capital adequacy as at 30 June 2007 stood at 13.85% - well above Australian Prudential Regulation Authority (APRA) requirements.

The society continues to expand its operations. Our branches in Sydney and Melbourne have shown steady growth, particularly in lending and two new branches were opened during the year in Queensland at Centro Gympie Shopping Centre and Robina Town Centre on the Gold Coast. Our branches are a very integral part of our operation, generating substantial retail funds and providing the bulk of our loan applications.

In 2007, broker introduced loans accounted for only 8% of total loan approvals. We are looking to expand this percentage and build strategic relationships with some well established associates.

We continue to be supervised by APRA, who develop standards and requirements in respect of the activities of Approved Deposit Taking Institutions. While this need for regulatory compliance is a significant cost, we do recognise the importance of that body and the protection and comfort afforded to our depositors and customers.

This coming year we will see the introduction of Basel II requirements, which will require changes in addressing risk, risk management and capital requirements. We have however identified that this will not create any issues and there will be no additional capital required. Legislation will also be introduced for anti money laundering and this will require additional effort from our computer personnel.

Our IT Department continues to provide significant efficiencies and cost benefits through development of systems. The year has seen the implementation of a computerised loan processing system which provides for a quick and efficient turnaround and settlement of loans. It also provides for increased lending capacity.

We are anticipating significant growth in our lending operations in the year ahead, not only with increased residential lending but with the development of our commercial and margin loans. This will contribute to our results for the year ahead, where we expect to maintain solid growth consistent with the trend of previous years, ultimately producing increased dividends.

The Board is committed to continuous staff training where all staff attend our Head Office in Bundaberg from time to time, to not only ensure that we meet all legislative requirements but maintain their proficiency, knowledge and qualifications.

The Management Team of Wide Bay Australia is recognised as one of our real strengths and a significant contributing factor to our continued growth and performance.

The Directors extend their appreciation and congratulations to not only the Managing Director and the Senior Management Team but to all staff for their efficiency, commitment and enthusiasm.

I would also extend my personal appreciation to my fellow Directors for their enthusiasm and commitment to what is a very responsible and at times, demanding position.

On a final note we were saddened by the passing of our former Chairman Albert (Alby) Keers in Maryborough on 9 May 2007. Alby was a former Director and Chairman of Maryborough Permanent Building Society and became a Director of Wide Bay Capricorn Building Society upon the amalgamation of Maryborough Permanent and the Bundaberg based Burnett Permanent Building Society in 1979. He served as Chairman of Wide Bay Capricorn from September 1982 until his retirement in October 1987. Alby made a significant contribution to our success and we will always appreciate his dedication, commitment and service.

Yours faithfully,

J F PRESSLER
CHAIRMAN
3 September 2007
Bundaberg

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CHAIRMAN'S REPORT 2006
DIRECTORS' REPORT TO MEMBERS

Wide Bay Australia Ltd, together with the society's captive, Mortgage Risk Management Pty Ltd and our investment in Financial Technology Securities Pty Ltd have shown a consolidated after tax profit for the year of $14.478 million. This profit, an increase over 2004/2005 of 16.64%, reflects a further year of strong performance through all areas of the society's operations.

Assets and funds under management again showed a steady increase of 7.87% reaching a figure of $1.65 billion. Loan approvals for the year were $417 million, a decrease from $494.6 million for 2004/2005, which was a direct result of the slowing in the housing market particularly over the second half of the financial year. While loans actually approved were down, the level of churning and payouts also declined, which saw our loan book show a steady growth of 8.24% to $1.425 billion in outstanding loans.

During the year the society resolved to introduce secured commercial loans and is currently developing a specific margin loan product for some of our associated companies. This margin loan product is anticipated to be operational in October 2006 and will provide another diversification in the society's operations. We continue to develop our branch network and during the year upgraded and relocated our Tewantin branch. We have a further relocation of our Noosa Junction branch to Noosa Civic shopping centre scheduled for October 2006. Our agency at Robina is being restructured to incorporate our own branch in the Robina Shopping Centre and a branch will be opened in Gympie at Centro Gympie shopping centre in December 2006. With our own loan representative in Townsville, we will target a branch in that area in the ensuing financial year.

Throughout the year the society has carried out a replacement policy for our old ATM's and has expanded our outlets to now incorporate 23 ATM's and 3 lobby ATM's. A further 5 ATM's are scheduled for installation within the next few months.

While we rely heavily on our branch network for the introduction of loans, it has been resolved that we develop and increase the percentage of our broker processed loans in the 2006/2007 financial year to an amount of up to 25% of total loan approvals. This should see our loan approvals for the year show some increase over 2005/2006. While we will be increasing our use of brokers we will continue our policy of expensing all the loan origination and establishment costs at the time of writing the loan, rather than spreading those costs over the expected life of the loan as adopted by some of our competitors.

Our captive, Mortgage Risk Management Pty Ltd has again enjoyed a strong performance and has contributed an after tax surplus of $2.158 million to the society's consolidated results.

Our investment in Financial Technology Securities Pty Ltd has also provided significant benefits to our lending operations and our overall profitability.

Your Board has declared a final fully franked dividend of 26.5 cents per share payable on 22 September 2006, which brings the total dividend for the year to 51.5 cents per share. (2005 - 42 cents).

The cost of compliance and regulation continues to be a major cost in our operations and the ensuing years will also incorporate Basel II.

We continue our strong staff training schedule to ensure that not only are our staff proficient and capable, but also meet all the legislative requirements in respect of their knowledge and qualifications. We believe our staff training is a very significant feature in the overall efficient operations of our society and is particularly represented in the various performance ratios achieved.

We continue to monitor our capital. Our capital adequacy as at 30 June 2006 stood at 15.77% compared with 14.05% at June 2005.

We continue to develop our computer network which provides another base for our overall efficient operations.

The majority of in-house mortgage documentation and loan processing is now complete and we are expecting to see significant costs and efficiency synergies with the availability of this electronic processing system.

The Australian Prudential Regulation Authority "(APRA)", the industry supervisor and regulatory body, continues to develop their standards and have required institutions to review their business continuity plans and corporate governance. Our Corporate Governance is in place as a requirement of the ASX and the APRA requirements have been addressed in this plan together with our Business Continuity Plan amended as required. While regulatory compliance is a significant cost to overall operations, we recognise the importance of a supervisory body and the protection and comfort that is afforded to society depositors and customers.

During the year, your Directors resolved to broaden the composition of the Board over the next 2 years by appointing up to 2 new directors, who will expand the overall expertise available to the Board. This is a consequence of the society steadily moving away from the traditional home loan lending institution to now incorporate its own mortgage lenders insurance company, equity investments in financial planning, development of commercial loan products, margin lending and no doubt a range of issues that will be added in the next few years.

The Board has adopted a Board Renewal Policy that new directors will be appointed for a period of up to 10 years and that future Chairpersons will be appointed for a maximum term of 7 years.

The ensuing year is anticipated to be another year of solid growth with overall growth similar to that of 2005/2006.

As stated, we will continue to focus on our lending operations, the development and expansion of our branch network, the implementation of new products where considered appropriate and will look at any opportunities that emerge that will provide opportunities and operating synergies for the development of the consolidated group.

The year concluded has again been an exceptional one in our progress and is a reflection of the strength and enthusiasm of our Senior Management Team and staff throughout our total area of operations.

The Directors would particularly congratulate the Managing Director and the Senior Management Team for the society's performance.

To my fellow Directors I also extend my appreciation for their continued commitment, experience and enthusiasm throughout the year.

Yours faithfully,

J F PRESSLER
CHAIRMAN
12 September 2006
Bundaberg

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CHAIRMAN'S REPORT 2005
DIRECTORS' REPORT TO MEMBERS

The initiatives and developments that Board and Management have introduced and implemented over past years continues to provide the basis for further record profits. Our after tax profit for the year was $12,413,428, which represents an increase of 25.46% over the previous year.

Loan approvals for the year were down on the previous twelve months, however with the slowing in the churning of the loan book and the previous years high payout level of existing loans, we have been able to achieve an overall growth in outstanding loans of 12%. Our loan book currently stands at $1,311,548,110. This increase provides an ongoing basis for the expansion of our profit results. We forecast that the current year will show an increase of loan approvals, particularly with the opening of our Upper Mt Gravatt, Brisbane, branch in August and the anticipated opening of our Camberwell branch in Melbourne in October which will increase the volume of lending from those areas. We are forecasting an increase in our loan book consistent with that of last year. 

We continue to insure all of our loans with the society’s wholly owned captive, Mortgage Risk Management Pty Ltd. The captive has enjoyed a strong performance for the year and has contributed an after tax surplus of $2,609,916 to the society’s consolidated results. 

With the expansion of our Sydney and Melbourne operations during the year we have increased our use of brokers, albeit minor, but still continue the policy of expensing all loan origination and establishment costs at the time of writing the loan rather than spreading these costs over the expected life of the loan as happens with some of our competitors. 

Your Board has resolved to pay a final fully-franked dividend for the year of 23 cents per ordinary share, which will bring our total dividend to 42 cents per share fully-franked. 

Our shares continue to trade steadily as evidenced by the graph included with this Report. There is however not a great volume of shares traded, with the majority of our shareholders electing to hold their portfolios. We have continued the Staff Share Plan and that also continues to be well supported and we believe a continuing factor underpinning the strength and commitment of our staff and management.

We have for many years provided lending finance for clients of Financial Technology Securities Pty Ltd, a well established and successful firm of financial planners. After substantial due diligence we completed the acquisition of a 25% interest in that company from the 4 August 2005. We will over the ensuing months be looking at broadening the services we offer in respect of financial planning and wealth generation. At the same time as our acquisition, Aviva also acquired a 25% interest in Financial Technology. Aviva owns Navigator, which is a large investment platform for financial planners throughout Australia. This acquisition will not only ensure that we continue to be one of the principal financiers, but also will provide a very satisfactory yield on our investment.

We continue to monitor our branch network and in addition to the opening of the Upper Mt Gravatt and Camberwell branches referred to previously, have also only recently opened a new branch in the Allenstown Shopping Centre in Rockhampton. 

The cost of compliance and regulation continues to be a major expense in our operations. The enactment last year of the Financial Services Reform legislation is a continuing large expense requiring constant training for our staff. The industry continues to lobby the Government in an endeavour to have some of the onerous requirements which are considered unreasonable reviewed and varied under that legislation. 

The Australian Prudential Regulation Authority (APRA) continues to develop their standards and while we enjoy an excellent relationship with them, their continuing development of standards and compliance places demands on management. Compliance with CLERP 9, the adoption of the International Financial Accounting Reporting Standards, and the implementation of the recommendations of the Basel Committee will continue to require large contributions at significant cost. 

I referred last year to the installation of a new software system, which would allow us to carry out a large portion of our mortgage documentation in-house and to streamline loan processing providing us with increased capacity for lending over future years at significant cost savings. This installation is almost complete. A large percentage of our mortgages are now in-house and we have completed training of our loans personnel in the application of the system. Significant cost savings are occurring.

We continue to offer a full range of financial services including telephone and internet banking which are showing a high growth rate. Our relationship with Allianz Australia Insurance Limited, Travelex Ltd and Citibank Pty Limited not only enabled us to provide a wider range of services to our customers but also contributes to overall profit performance. 

The results and achievements of the past year have required significant contributions from our Senior Management team. We are fortunate to have such experienced and committed Senior Managers. To the Managing Director and Senior Managers we extend our appreciation for their continuing contributions. Indeed our total staff throughout our areas of operations are all enthusiastic, committed to our success and play a major role in that regard. 

To my fellow Directors, I extend my personal thanks for their cooperation, enthusiasm and commitment throughout the year.

Our forecast for the coming year is very positive and we are confident of further strong results.

The Board also extends their appreciation and support, not only to our borrowers and investors, but shareholders generally for the confidence they have shown.

Yours faithfully

JF PRESSLER
CHAIRMAN
30 August 2005
Bundaberg

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CHAIRMAN'S REPORT 2004
DIRECTORS' REPORT TO MEMBERS

We continue to achieve excellent results year after year and I am pleased to present another report of record profits for 2003-2004. Wide Bay Australia’s after tax profit was $9,893,735 which represents a 7.6 per cent increase over the previous year.

The result was affected by our captive, Mortgage Risk Management Pty Ltd, terminating a reinsurance agreement as a result of the downgrading of the rating of the reinsurer.

In applying the accounting standard appropriate to insurance business, the captive was required to expense outstanding reinsurance premiums in total, but at the same time, an identifiable proportion of unearned gross premiums for reinsurance was not able to be brought to account in the same year. Those premiums will be brought to account in future years as income in accordance with the captive’s earning pattern.

The ongoing effect will be that the revised estimate for Mortgage Risk Management’s profit for 2004-2005 will be $2.25 million as compared to $432,000 brought to account this year.

A particularly pleasing aspect of the year’s activities was the strong growth in Wide Bay Australia’s loan book which increased to $1.166 billion - an increase of 15 per cent. This increase was not only as a result of the increased lending but a slowing in ‘churning’ of loans particularly in the southern capital areas. This increase will flow through to our trading results for the current year.

Loan approvals for the year were $485,369,944, an increase of 28.53 per cent over 2002-2003. We are confident that we will be able to maintain this level of lending, particularly having regard to our expansion into a full branch operation at Parramatta in Sydney and other initiatives we have taken to develop our penetration in the capital cities.

We have maintained our policy of expensing all the loan origination and establishment costs at the time of writing of the loan, rather than the policy adopted by some of our competitors of spreading these costs over 4 years. The increased lending for the current year resulted in significantly higher loan costs than we occurred in 2002-2003.

Last year I advised that our Board and Management were proceeding with the installation of a software system which will enable the full electronic processing of loan applications and which would achieve significant cost savings internally and enable us to bring back ‘in-house’ a large proportion of our mortgage documentation that was previously out-sourced. At that stage we anticipated installation by March, however this has now been extended to October. However, we are already achieving substantial economies by completing a significant proportion of our mortgage documentation ‘in-house’. It will provide us with a capacity to increase our lending over the future years without any significant difficulty or costs.

We continue to fund our loans expansion through growth in our retail savings and deposits and also the use of securitisation programs with SG. We are currently scheduled for a further public securitisation program in October for approximately $300 million.

The change of name to Wide Bay Australia Ltd has received significant support from shareholders and customers with most branches now refurbished with new signage. The name we believe more truly reflects the future growth and expansion of the Society.

Our branch network continues to operate very satisfactorily. Our new branch at Parramatta in Sydney, providing full banking facilities including a Wide Bay Australia ATM, will become a pivotal point particularly for loans development in that area.

We have also recently increased our staffing levels in Caboolture to service the northern suburbs of Brisbane.

Our shares have traded steadily, although not in a great volume, with the majority of our shareholders electing to hold their portfolios. The staff share plan continues to be well supported and is a continuing factor underpinning the strength and commitment of our staff and management.

The Board has resolved to pay a fully franked final dividend of 17.5 cents per ordinary share bringing the total dividend for the year to 34 cents. The dividend will be paid on 24 September 2004.

During the year, the Financial Sector Reform Legislation (FSRA) was enacted and we have since then complied with all aspects of this legislation including receiving our Australian Financial Services Licence. This required all staff to have competencies at various levels in order to provide our financial services and advice to our customers. In that regard, our Training Department and FSRA sub-committee has operated most efficiently in meeting all of the quite demanding changes.

We continue to enjoy an harmonious relationship with our regulators, the Australian Prudential Regulation Authority (APRA). Your Board believes their involvement is essential to ensure that institutions such as Wide Bay Australia continue to adopt strong principles as laid out in the standards applicable to deposit taking institutions - ensuring comfort and protection for investors.

Our computer personnel have as usual operated in a most efficient manner enabling Wide Bay Australia to maintain a position at the forefront in developing and provision of facilities available to customers. These facilities include our website, telephone and internet banking, BPAY, giroPost and more recently the introduction of BPAY View – a first for a non-bank financial institution in Australia.

We have enjoyed our relationships with our many partners including Allianz Australia Insurance Limited, Travelex Ltd and Citibank Pty Ltd. These partnerships not only contribute to our income but also enable us to provide a wider range of services to our customers.

We enjoy the privilege of having a dedicated efficient management team, many of whom have been with us for many years. Their expertise and enthusiasm we believe is perhaps one of the biggest features in ensuring our ongoing success.

To our Managing Director and to those Senior Managers, we extend our appreciation for their contribution throughout the year.

It is not only our Senior Management who play a major role but also our team generally who have a strong commitment to the success of Wide Bay Australia Ltd.

To my Board of Directors, I thank them for their co-operation and contributions throughout the year. It is a pleasure to work with a team with such experience and varied skills.

We have reviewed our projected results for 2004-05 and, particularly with the increased contribution we expect from Mortgage Risk Management Pty Ltd, we are confident that the results will show a steady increase on this year’s performance.

The Board extends our appreciation to not only our many customers but to also our shareholders for their continued support over the last twelve months. 

Yours faithfully,

JF PRESSLER
CHAIRMAN
31 August 2004.
Bundaberg

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CHAIRMAN'S REPORT 2003
DIRECTORS' REPORT TO MEMBERS

On behalf of your Board of Directors, I am pleased to present another report of strong achievements and initiatives for the 2002/2003 year.

Our after tax profit for the year was $9,198,628, which is 4.23% above the previous year’s result. There were two significant features in respect of this result.

During the year, your Board resolved to complete an early wind up of a Research and Development program. This resulted in the write-back of future tax benefits of $261,000 which was a direct reduction from our after-tax profit. 

In addition your Society experienced, particularly in the first half of the year, limited growth in the loan book. This was the result of payouts and churning and was consistent with the industry in general. This slower growth in our loan book also impacted on the final full year’s after tax profit. 

As advised in our Half Year Report, we believe that with our initiatives - such as joining the giroPost network with 3,000 outlets across Australia, an increased product range and customer service enhancements and other in-house initiatives for our existing borrowers - that this issue has been addressed. We are confident our loan book growth for the next 12 months will be satisfactory.

During the year, Wide Bay approved $377.6 million in housing loans which compared to $305.1 million for 2001/2002 is an increase of 23.7%. The last 5 months accounted for $196.4 million of this figure and we anticipate this trend continuing in 2003/2004 - providing your Society with a record year of loan approvals.

With this anticipated increase in our lending program, your Board and Management are proceeding with the installation of a software system which will enable the full electronic processing of loan applications. This will have significant cost savings internally and will enable us to bring back ‘in-house’ a large portion of our mortgage documentation that was previously outsourced. We anticipate the system to be fully installed around March next year.

Our assets, including loans under management through our securitisation program, now total $1.264 billion - an increase over the previous year of 7.37%.

Wide Bay’s wholly owned lenders mortgage insurance company, Mortgage Risk Management Pty Ltd, has had a very successful year producing an after tax profit of $996,755. The captive currently insures exclusively all our new lending. It operates to a Standard and Poor’s “A” model which enables us to obtain the benefits of a 50% risk weighting in respect of our residential mortgages for the purpose of capital adequacy. Mortgage Risk Management is now coming into its 5th year of operation and with the policy of booking premiums over a 10 year cycle we expect further strong results in the coming year. 

Through the year, we entered into a share buy-back structure to acquire up to $7 million of Resetting Convertible Preference Shares (RCP’s). Unfortunately we have only been able to achieve $1,291,874 to date, of which the bulk was only acquired in August 2003. This shortage reflects the strong support of the Society’s paper in the market place. We are going to continue with this share repurchase structure. 

Our funding continues to be a mix of retail from our branches and agencies and securitisation with SG Australia. We are anticipating a public issue of approximately $250 million to $300 million towards the end of the calendar year for this securitisation program.

Our branch network continues to show strong growth and the contribution being made particularly to our lending program from Sydney, Melbourne and Adelaide is significant. This contribution assists with our geographical spread particularly in relation to securitisation. 

Our shares continue to perform well and again the shortage of liquidity reflects in the continuing support from our shareholders who continue to hold their portfolios. The Staff Share Plan continues to be strongly supported by our employees and we believe is a continuing factor to the strength and depth of our staff and management.

Our Customer Relationship Management software “Prosper” has been fully operational over the past 12 months and is beginning to have significant impact on the our distribution network and overall efficiencies. 

Wide Bay is supervised by the Australian Prudential Regulation Authority (APRA) and we are pleased to advise that we enjoy an harmonious relationship with that body. We welcome their involvement as it ensures adherence to strong principles as laid out in the Prudential Standards applicable to Approved Deposit Taking Institutions. 

During the coming year we will be seeking authorisation under the Financial Sector Reform legislation. This will require all staff to hold competencies at various levels in order to provide financial service and advice to our customers. We are prepared for this transition and I am sure our Management Team will handle these requirements without any issues. 

Our investment in Wide Bay Capricorn Mini Lease will, by our predictions, move into a profitable scenario this year and provides another opportunity and range of services for our customers. 

Our Computer Department as usual has operated in a most efficient manner with our website, telephone banking and internet banking showing significantly increasing monthly usage.

The strength of our performances in many respects can be directly attributable to the performance of, not only your Directors, but to the Managing Director, Mr Ron Hancock and his well qualified Management Team, most of whom have been with the Society for many years. Their dedication and enthusiasm is reflected in the results received regularly at Directors’ Meetings. On behalf of the Board I would extend our appreciation not only to the Senior Management, but to all of the Team who form the basis of the success of Wide Bay Capricorn.

One of the strong features of our organisation is our commitment to staff training. This is a continuing process with all of our staff visiting our Head Office in Bundaberg on a regular basis to develop and enhance their skills and understanding.

We have reviewed our projected operations for the next 12 months and your Board is quietly confident of a strong performance. We anticipate the housing demand to continue for some time, particularly in Queensland. With the initiatives we have in place, we believe we will maintain our market share and projections. 

To my Board of Directors, I thank them for their co-operation and their contribution throughout the year. It is a pleasure to work with such a Team. 

To our retiring Director, Mr Kerry McBride, who is not seeking re-election, I also extend our appreciation for his contribution and support over the years. He was a Director of the Society for 16 years and throughout that time showed a continuing interest and desire to be part of the on-going success of Wide Bay Capricorn. We thank him for his efforts and wish him well.

Finally to our many shareholders and customers, we extend our appreciation for your continued support.

Yours faithfully,

JF PRESSLER
CHAIRMAN
13 August 2003.
Bundaberg

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CHAIRMAN'S REPORT 2002
DIRECTORS' REPORT TO MEMBERS

2001/2002 may well be regarded as one of the most significant years in Wide Bay Capricorn’s long history of continued growth, prosperity and performance.

It has been an important year for both your Board and Management with the culmination of much planning and effort resulting in the issue of $35 million of Resetting Convertible Preference Shares in December 2001.

This was the first major capital raising from the public sector since Wide Bay Capricorn’s original float in 1992. The response to and the demand for this stock exceeded all of our expectations. The issue leaves us in a strong position with the option of reviewing our capital plan in the near future. 

Another highlight of the year was with our wholly owned lenders mortgage insurance company, Mortgage Risk Management Pty Ltd, applying for and receiving reauthorisation –a result of the review of the insurance industry. This company will, we believe, make a significantly increasing contribution to our performance in the short term. 

The other major achievement was our move to take our securitisation program off balance sheet. This was effected on 16 August 2002, when $235 million of Wide Bay Capricorn paper was issued to institutions and investors.

Apart from these significant developments, we have achieved a record surplus of $8.824 million from ordinary activities representing an increase of 26.5% over the previous year. Total loan approvals were $305.1 million representing an increase of 22.43%. 

We continue to develop our lending operations interstate, particularly Sydney, Melbourne and Adelaide and our existing branch and agency structure also plays a major role in these results. Our branch network provides a wide geographical spread. Only recently a further branch was opened at Mt Pleasant Shopping Centre in Mackay and we are currently investigating opportunities in Townsville. Our total area of operations is subject to continual review by our Business Development Team.

Wide Bay Capricorn continues to principally provide finance for loans secured by residential security and where the loan is fully insured with the Society’s registered mortgage insurance company. It is significant that there were no bad debts written off this year. 

The First Home Owners Grant has had a significant impact on loan approvals and indeed payouts during the year, with the mortgage market achieving very large growth particularly in the southern states and the south-east section of Queensland. This growth in activity and competition has also seen an increased level of refinancing in the marketplace - with customers purchasing new or upgrading their homes. The corresponding result is that our loan book for the year increased by 9.7%. Your Board and Management are taking appropriate steps to address this issue having regard to the existing market conditions.

We continue to use a securitisation program with SG Australia Ltd ensuring we have funds available to satisfy our future growth and lending requirements. We have in place a $300 million warehouse facility, which in addition to future funding provides a level of liquidity support for our liquidity operations.

Our assets, including loans under management through our securitisation program, now total $1.177 billion - an increase over the previous year of 15.21%.

Our Management Team has displayed astute management of our operating margin, which has remained constant. This has been achieved in a fiercely competitive environment and we project that we will be able to maintain this margin for the ensuing year. 

Wide Bay Capricorn’s achievements in 2001/2002 have translated themselves into our share price. In August 2001 the price was $4.50 and at the time of writing this Report it has risen to $6.44, reflecting an increase in shareholder benefits and value of approximately $38 million. Your Board has declared a final dividend of 16 cents bringing the total fully franked dividend for the year to 32 cents per ordinary share. This dividend will be paid on 27 September 2002.

To achieve these results it is essential that our products remain attractive and competitive and we are constantly monitoring the market to ensure our range of products and services offer competitive alternatives to our investors, borrowers and the public generally.

Our Website www.widebayaust.com.au is used extensively and smartlink Internet and Telephone banking facilities show ever increasing volumes each month. Other financial services such as our Widecover Insurance, Wealthpath Financial Planning, Travelex Foreign Exchange and Cashcard are widely accepted. Wealthpath, in particular, has operated in a very competitive environment and is now beginning to achieve growth and support. 

While we have adopted the industry standard of charging fees to recover the cost of providing various transactions and services we endeavour to ensure that in the main these are substantially less than our major competitors.

We are very fortunate to have developed such a competent computer systems team, under the guidance of our Operations Manager, Ian Pokarier. Upgrades and developments are occurring continually in respect to our systems. This development and expansion demands continued increased capacity and line speed. We are currently embarking on a major expansion of our network.

This year we have also progressively introduced the ‘Prosper’ customer relationship management software package, enabling staff to manage and market our products and services. We are continuing to develop our facilities to generally meet our customer’s needs to ensure that we are indeed a ‘one-stop’ service providing a full range of personal banking and financial services. 

Wide Bay Capricorn continues to be supervised by the regulatory authority responsible for all financial institutions including banks, building societies and credit unions – the Australian Prudential Regulation Authority (APRA). Your Board and Management welcome this supervision and the regulations that emanate from APRA, in that it provides for strong prudent management and adherence to specific standards - ensuring the ongoing stability of the finance industry and protection of investors. 

We continue to offer a Staff Share Plan - with 122,406 shares allocated to staff in 2001/2002. We believe this is an excellent exercise providing all staff, both new and old, with the ability to hold the Society’s shares and participate in the growth and results that they generate as employees of the company. The Board intends to continue the Staff Share Plan into the foreseeable future. 

Your Board is proud and appreciative of our Management team that has come together over the years. We enjoy a flat management structure with people who are extremely qualified, experienced and committed to the development of the company. The Board considers this stable management structure to be one the main reasons for the continuing strong results achieved from year to year. 

We are committed to a comprehensive, regular training program incorporating all Staff for, in addition to Management, we have a strong commitment from all our Staff in general. On behalf of the Board, I extend our appreciation for all their effort throughout the past year.

The year ahead suggests a slight slowdown in the housing market with a possible interest rate increase and continued competition in the market place. In spite of these prospects, your Board is comfortable with Wide Bay Capricorn’s positioning and looks forward to another year of growth and expansion.

On behalf of the Board, I extend our appreciation for the strong support we have received from our Shareholders and Customers throughout the year.

Yours faithfully,

JF Pressler
Chairman
5 September 2002
Bundaberg 

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CHAIRMAN'S REPORT 2001
DIRECTORS' REPORT TO MEMBERS

It is indeed a pleasure to present the 2000/2001 Report on behalf of the Board of Directors. The Society has experienced further records and has developed products and services that enable us to compete with other financial institutions and play a major role in our areas of operation. We offer local communities a full range of professional and competitive financial services.

As with any organisation an important measure of our strength is not only our ability to compete and offer services, but to generate a level of profitability and size. This is particularly relevant in the recent tight environment ensuring our financial strength for all of our customers and shareholders.

This aspect is reflected in an after tax profit from ordinary activities of $7,017,082, which represents an increase of 41.3%. After taking to account a distribution from the Queensland Building Societies Fund of $1,782,800, that attracted $606,152 of taxation, our net profit attributable to shareholders of the company was $8,150,768 - representing an increase of 66.7%. 

Under the provisions of the Harmonised Standards, that came into effect on 1 July 2001 administered by the Australian Prudential Regulation Authority (APRA), the Society was required to generate a general provision for doubtful debts of up to 0.5% of the Society’s risk weighted assets. This general provision is classified under the Standards as Upper Tier 2 capital. Your Board has decided to allocate a full amount of 0.5% to this provision, even though our (provision for) bad debts over the years has been insignificant and with all loans insured, little likelihood of major write offs. This amount has been created as an appropriation from retained profits, with an amount of $2,297,081 being allocated to comply with this Standard. The actual amount written off for the year for bad and doubtful debt expense was $994.

Lending activities for the first six months of the financial year were relatively subdued and we believe a direct result of the activity prior to the introduction of GST. Our lending for the first six months was $111.5 million with total lending for the year $249.2 million. We are anticipating a stronger result this year, particularly with the introduction of the $14,000 First Home Owners Grant in respect of new dwellings. We have already seen a significant increase in applications for new homes. 

The Society uses a securitisation structure to provide additional funding for the growth in our loan book and loans funded through this program have this year been excluded from the assets. Total assets under management and on balance sheet represent $1.022 billion, an increase of 10.54% over the previous year. 

Accessing funding through our securitisation programme with SG Australia Ltd, has enabled us to expand our lending operations to Sydney, Melbourne and Adelaide where there has been strong growth in not only actual loans but in real estate values, particularly Sydney. While we have expanded into these areas, our principal focus remains on our retail base throughout provincial Queensland, where we are committed to the development and expansion of these facilities providing a full range of banking and financial services for our local communities. 

Your Board has declared a final fully franked dividend of 15 cents, bringing the total dividend for the year to 27.5 cents. The dividend will be paid on 5 October 2001. 

Our licensed lenders mortgage insurance captive, Mortgage Risk Management Pty Ltd, has now been operating in excess of 2 years and has shown strong results and contributed to the Society’s overall figures. Its performance in the area of claims has to date been most satisfactory and overall the Society enjoys a very strong arrears position. All new loans are now insured through this captive.

During the year we introduced our web site, www.widebayaust.com.au and Internet Banking. These facilities together with Telephone Banking introduced towards the close of last financial year, have proven very popular and have received many accolades from our users - particularly in regard to Internet Banking. Our computer personnel are currently developing a range of lending products to be available on our website and we will in a very short period be able to accept detailed loan applications on the Internet. 

As part of our extension of our range of facilities, we are currently developing a margin lending product which will be available for our customers, in particular those using our financial planning company’s plans and products. With respect to our financial planners we now have four full time advisers and anticipate this figure increasing during the year. There has been strong support for this service.

The introduction of the Society’s MasterCard facility during the year has also received strong support. 

As stated in our previous reports, we have adopted a range of fees and charges for services for those customers using these facilities. We have endeavoured at all times to contain these costs to a minimum and certainly lesser than that of our major banking competitors.

Our Management Team has been able to maintain our operating margin throughout the year, an excellent achievement in the current competitive environment. 

During the year we saw the collapse of HIH Insurance, with our Widecover Insurance products underwritten by CIC Insurance - a subsidiary of that company. I am pleased to advise that all of our customers have been covered and transferred to the Allianz group. While the impact of the HIH problem provided some concerns for our insurance department, these issues have all been addressed and Widecover Insurance continues to be very popular.

As advised previously, the control and regulation of the financial services industry, particularly Approved Deposit Taking institutions (ADI’s) has been transferred to APRA and recent changes have seen the introduction of the new harmonised standards to apply to all ADI’s. We particularly welcome the supervision and regulation that emanates from APRA, as it provides for strong prudent management and adherence to specific standards, that provide not only stability for the industry but investor protection and comfort. 

Our shares have continued to trade steadily on the market, with an increasing share price as evidenced by the graph included with this Report. Over the past year we have seen our share price increase by approximately $1 adding substantial value for our shareholders. The Society has currently 20,003,632 fixed shares on issue. 

We are currently looking at an instrument to raise additional tier 1 and tier 2 capital, which will eliminate the need to issue further fixed shares for some years. 

The Society has currently $25 million in subordinated debt, which is now classified as lower tier 2 capital. The additional capital raised will be used to increase our capital adequacy and clear this subordinated debt. 

Since the year end, our Society acquired a 51% interest in a small lease/rental company and we are using this as an opportunity to establish the opportunities and operations of that market and if considered desirable we will look at expanding this area of lending and financing. This again will assist our policy of extending the range of services and products available to our customers and our local communities.

We continue to maintain our staff share plan, with all staff having the opportunity to acquire shares on attractive terms and conditions and it is pleasing to note the high take up rate of staff participating in this staff share plan. 

An organisation such as ours could not achieve the results we have without the performance, competence, dedication and enthusiasm of our Management Team, which includes not only our Senior Management but also all of our staff. On behalf of the Board I extend our appreciation for their efforts.

We believe we have appropriate structures, products and plans in place that will ensure that the year ahead, while again not going to be any less difficult, will see your Society continue to go from strength to strength.

On behalf of the Board I extend our appreciation for the strong support we have received from shareholders and customers throughout the year.

Yours faithfully,

J F Pressler
Chairman
11th September 2001
Bundaberg

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CHAIRMAN'S REPORT 2000
DIRECTORS' REPORT TO MEMBERS

The year just concluded has been one of major achievement and development, which, in a period of intense competition, will have long term ramifications for the future performance and direction of the Society.

Our profit result, reflecting the Society's ability to compete and progress, of $4.889 million after-tax represents an increase of 10.97% over the previous year.

Our lending was consistent throughout the year with total loans approved amounting to $257.28 million - an increase of 46.91% over the previous year. This strong lending performance was referred to in last year's report as a trend that developed in the later six months of that year and it is now transferring benefits to our operating results.

The Society has, for some time, actively funded a percentage of its growth and lending portfolio through the use of securitisation programmes and this year has seen a further expansion of that funding. Our total assets including our on balance sheet securitisation programmes, as per our consolidated accounts, have grown to $923.9 million - an increase of 24.63% over the previous year.

These achievements have been made without heavy branch distribution expenditure and in fact your Board, where appropriate, has decided not to continue with some branches and agencies where their cost and performance could not be justified.

Even with an increasing move to securitisation to provide funding for our loan book and some rationalisation of operations, we remain conscious and committed to the development and expansion of services in our retail network and customer base - particularly throughout provincial Queensland. We will continue that commitment whereby we can well be regarded as the local community bank - providing a full range of banking and financial services.

Our interstate operations, particularly in Melbourne, continue to show strong growth and together with Sydney, Adelaide and our traditional Queensland operations, provide a broad geographical spread for the Society's activities.

Our licensed lender's mortgage insurance captive, Mortgage Risk Management Pty Ltd, has performed well throughout the year and as insurance premium earnings are brought to account increasingly over the next few years, will make a substantial contribution to our overall results. Its performance in the area of claims experience has to date been exceptional, with a very strong arrears position. Throughout the year, we have used this subsidiary exclusively to insure our lending products.

Our Year 2000 planning ensured a successful roll over with no difficulties being experienced. Unfortunately, there was a significant cost attached to our Y2K planning and these have been absorbed in the trading results for the year. Consistent with the technological era that we are entering - the Society is developing financial e-commerce and internet products providing a range of benefits and services. Within the next few weeks our internet site will be fully operational, allowing a range of internet banking applications.

Our telephone banking introduced during the year is showing strong support from our shareholders and customers. Plans are also well advanced to introduce a MasterCard, currently scheduled for launch prior to the end of this calender year. Within the next month, we are also planning to have B-Pay available. Our network has also been upgraded to enable all of these facilities to be available through individual branches and agencies.

We have now introduced financial planning services through a joint venture with Financial Technologies Securities Pty Ltd, who have been associated with the Society for many years. Our "Wealthpath" products are already receiving strong support and acceptance from investors. As this product expands over the next few years, it will also significantly contribute to the Society's annual performance.

Our general insurance facilities, "Widecover Insurance" continues to go from strength to strength and is a major part of our operations.

Your Board has also been conscious of the impact of costs and has constantly reviewed our operations. Where appropriate, we have introduced charges for services, albeit at a much lesser scale than our major banking competitors. These reflect the "user-pays" principle - particularly in relation to high volume accounts. Operating margins in respect of loans continue to be strained through competitive forces and these charges help offset the reduced margins being experienced throughout the industry as a whole.

As mentioned in our previous annual report, our industry was being transferred to the supervision of the Australian Prudential Regulation Authority (APRA), which supervises and controls the standards, management and operations of approved deposit-taking institutions. This transfer provided for a transitional period up to December 2000 and we have already satisfied and meet the requirements for that transfer.

At a Special General Meeting of members and shareholders held on 9 May 2000, where notice was forwarded to every member, the adoption of a new constitution and voting structure was approved. This change to our constitution now places us on an identical basis to the major companies throughout Australia. We are now required to meet the same reporting and accountancy requirements as all companies registered under the Australian Corporations Law which provides for one vote per share in respect of fixed shares on issue.

Throughout the year we reviewed our investment in Fincom Pty Ltd, a subsidiary of the Society, which holds an interest in the shares of QSI Payments, Inc. The Society increased its shareholding, following a placement by QSI, and currently has a direct shareholding of 4.36% in the current shares on issue of that company. QSI has developed an e-commerce product that is being used by major banks and financial distributors throughout the world. The company has announced that one of its major shareholders is now Goldman Sachs and that they will be considering a listing on the NASDAQ within the next twelve months. The product being developed by QSI uses part of the software developed in-house by our Society, and given the knowledge of that product, we are confident that if a listing goes ahead there will be some reasonable future benefits to the Society.

Perhaps our major achievement was the recent placement in August of a Wide Bay Capricorn Building Society public issue amounting to $197.2 million, where Wide Bay Capricorn paper was taken up by institutions in the general market, with the Class A notes carrying a 'AAA' rating. In particular this issue stood out in respect of high Loan to Valuation Ratio (LVR) loans and in size was a milestone in the financial sector.

Our fixed shares have traded steadily on the Australian Stock Exchange although the number of available shares for trade, have at times been limited. The Board has declared a fully franked final dividend of 11 cents per share to be paid on 3rd October 2000 - bringing our total dividend for the year to 22 cents. The Directors have also resolved to suspend the Dividend Reinvestment Plan.

Throughout the year, our Management Team has continued to apply competence, dedication and enthusiasm. These factors contributed greatly to the progress of the Society. On behalf of the Board, I extend our appreciation for their efforts.

The year ahead is not going to be any less difficult or competitive.

We believe however that with the structures and products we now have in place and the initiatives that have been taken in respect of our securitisation programme and development of our lending operations, that your Society will continue to grow from strength to strength.

On behalf of the Board, I extend our appreciation for the strong support from shareholders and customers throughout the year.

Yours faithfully,

JF Pressler
Chairman
7th September 2000
Bundaberg

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