Corporate & Financial News
2004 Archive
17/11/04 2004 Annual General Meeting Address
We are pleased to report that Wide Bay Australia Ltd is continuing to generate a strong profit performance in the current financial year.
As a result we expect double digit growth in profit for the year.
As forecast in our Annual Report, a substantial contribution to this year’s profit results will be made by our captive mortgage insurer, Mortgage Risk Management, which has produced strong trading results in keeping with our budget forecast.
After-tax profit generated by our captive amounted to $604,000 for the September quarter.
Our Earnings per Share will increase in accordance with our profitability and the Board has resolved to continue a fully-franked dividend payout ratio of 80% to 90%. We can maintain this level given our high capital adequacy which now stands at 16.54% - a percentage which is well above the Australian Prudential Regulatory Authority’s requirements and results from our recently completed $300 million “off-balance sheet” securitisation public issue. This issue generated tremendous interest with over $600 million in subscriptions which were subsequently scaled back – a demonstration of the confidence of the market in our securities.
Based on these results and our current position, we anticipate that dividends paid to shareholders will also increase proportionately this year.
While we note some additional confidence in the market and an increase in immediate lending activity since the Federal Election – it is anticipated that lending will be more competitive this year.
However, even with a contracting housing market overall, the potential market for Wide Bay Australia remains very large and we have the advantage of being very flexible in our approach and responses.
Our branch in Parramatta, Sydney which opened in August this year is now fully operational - accepting loans, retail deposits and offering our full range of personal banking services. The operation is currently making a significant contribution to our overall lending program.
While Parramatta was flagged as the forerunner of our expansion plans - we are currently looking at further strategic moves into the south-east sector of Queensland where strong population and development growth is anticipated in coming years. We are investigating outlets in one of the growth areas of Brisbane as well as another to service the Gold Coast and hinterland. We may also consider additional interstate structures in New South Wales and Victoria in the coming year. We are confident that Wide Bay Australia will be well placed to take advantage of opportunities in these growth areas which will help secure our future lending results.
We are also exploring additional initiatives with lending products which should leave Wide Bay Australia well positioned to take advantage of increased lending opportunities. For example, we will launch a professional package in coming weeks.
We note with interest that some lenders are reviewing their wholesale lending arrangements with brokers and introducers. Wide Bay Australia’s retail lending operations remain the basis for a large percentage of our lending and we have not become overly dependent on brokers. We value the associations that we have formed and can, if desired, develop new relationships to strengthen our lending operation.
In previous reports we have flagged loan retention as a major challenge for the industry. Through the various measures we have put in place to increase communication and our customer relationships, I am pleased to report that we have seen an improvement in this regard. As a result our overall loan book continues to grow steadily.
To manage the approval and processing of loans, we have spent considerable funds and resources on the development and installation of a new electronic loans processing system. We are pleased to report that the first stage of this system is close to being fully operational. This system will achieve significant economies through more efficient management of loan files and processes. It will also allow significant cost savings by allowing a large percentage of our loan mortgage documentation to be prepared in-house. The system will also provide greatly increased means to handle any increased lending volume that we may be able to achieve in the future.
While our operating margins are constantly under pressure - we are continually reviewing our products, structures and systems to maximise our returns.
We are confident that given Wide Bay Australia’s position in the market, our experienced team and our track record of performance that we can maintain our lending, continue to grow our profits and increase returns to shareholders.
25/08/04 Preliminary Final Report to the
Australian Stock Exchange
Wide Bay Australia Ltd has produced a consolidated surplus after income tax for the year of $9,893,735. This result is an increase of 7.6% over the previous year. The chief entity (building society) achieved an increase of 15% for the year.
Mr Ron Hancock, Managing Director said the consolidated results were effected by the application of an accounting standard that reduced the reportable profit from the Wide Bay Australia’s wholly owned mortgage insurance captive, Mortgage Risk Management Pty Ltd - from an anticipated $1.2 million to $432,000.
He said Wide Bay had completed a commutation agreement with the captive’s reinsurer that had terminated all reinsurance agreements as a result of the downgrading of the reinsurer.
He stated that in applying the appropriate Accounting Standard (AASB 1023) that outstanding unearned reinsurance expense was expensed in total, but at the same time the identifiable portion of unearned gross premiums for reinsurance was not able to be bought to account in the current year.
This income would continue to be brought to account in future years in accordance with the captive’s earning pattern.
He said the particular Accounting Standard did not address the normal accepted accounting principle of matching income with expenditure with the resulting decline in this year’s captive results. The on-going effect however, will be that the unearned premiums that were identifiable for reinsurance, will continue to be brought to account over the next 3 to 4 years.
The revised estimate for Mortgage Risk Management Pty Ltd for 2004/2005 is now a minimum of $2.25 million surplus after tax.
Basic earnings per share were 36.24 cents with diluted earnings per share 37.93 cents.
The Board are pleased with Wide Bay Australia’s operating ratios, which are generally substantially more efficient than that of the industry as a whole.
Our capital adequacy as at 30 June, 2004 was 13.72%, which is projected to increase to 16.29% at 31 December 2004 after we finalise a securitisation program in October 2004.
The Board has resolved to pay a final fully franked dividend of 17.5 cents per ordinary share, bringing a total dividend for the year to 34 cents per share. The dividend will be paid on 24 September 2004.
Lending for the year totalled $485,369,944, an increase of 28.53% over 2002/2003. Mr Hancock advised that he expected a continued strong performance for the current year, with Wide Bay Australia having opened a branch at Parramatta in Sydney, and other initiatives that were planned to increase the Society’s penetration in the capital cities.
With the increased lending, Wide Bay had maintained its policy of expensing all loan origination and establishment costs at the time of writing of the loan and continued to have no capitalised establishment costs for future amortisation. He said with the increased lending - the costs for the current year were significantly greater than 2002/2003.
Outstanding loans (including loans under management) now total $1.166 billion, an increase of 15% over the previous year. He said that this was not only as a result of the increased lending but also a slowing in the churning of loans, particularly in the southern capital cities.
Wide Bay Australia continues to use securitisation for a large percentage of the on-going funding of its lending program with a further public issue scheduled for October 2004 approximating $300 million.
During the year the Board proceeded with the development of a full loan electronic processing system including facilities for in-house mortgage documentation. Mr Hancock said a significant part of that development has been completed. We are currently attending to a large percentage of our mortgage documentation effecting substantial savings and are scheduled to be fully operational by the end of October. This will enable us to achieve maximum efficiencies and also to expand our lending program at minimal cost.
The Society’s change of name to Wide Bay Australia Ltd last December, has received significant support from shareholders and customers - with most branches now refurbished with new signage.
It is anticipated that the year ahead will see a small narrowing of margins with increased competition, but that this will be offset with the efficiencies now in place, our electronic loan system and expanded lending outlets.
The Board is confident that 2004/2005 will show continuing satisfactory results, particularly in light of the strong anticipated contribution of Mortgage Risk Management Pty Ltd.
09/08/04 Wide Bay Australia expands with new Paramatta Branch
Wide Bay Australia Ltd opened its first fully serviced retail branch in New South Wales this week.
In a move that underpins national expansion plans, by the Queensland-based financial services provider, Wide Bay Australia has opened a branch in Parramatta, Sydney.
Wide Bay Australia chose 3 Horwood Place in Parramatta’s financial precinct as the location for its first New South Wales branch because it is the largest central business hub in Sydney outside of the central business district.
Wide Bay Australia, which specialises in mortgage lending, previously used mortgage brokers and loans introducers as intermediaries for its successful home lending program in New South Wales.
“While we will continue to use these financial intermediaries, our new branch will increase our local presence and attract additional direct business,” Managing Director, Ron Hancock said.
“The branch will immediately lift our profile in the New South Wales home mortgage market and we expect to attract new customers with our competitive range of products and personalised style of business.”
The Parramatta branch will be the hub of all Wide Bay Australia business in New South Wales with calls to a 1300 number from residents in New South Wales now directed to the Parramatta branch.
“Existing and new clients will have now have a centre to which they can direct their enquiries, and conduct their business and transactions. They will be able to come in and talk about their home loan and discuss any of their other financial services needs,” Mr Hancock said. “A 24 hour ATM has also been installed.”
“As a result, we expect to achieve growth in our home lending and our other products such as deposits, insurance and banking services.”
Mr Hancock said it is significant that, by moving to establish its own branch, Wide Bay Australia reinforced its policy of outsourcing as little of its operations as possible.
“I believe we run our business better and more efficiently ourselves and this is evident in our policy of managing our branches directly and our limited use of brokers and agents across our total operations compared to many other lenders.
“Similarly, we run our IT operations internally. We’ve almost completed installation of a full in-house electronic loan processing system which will streamline our processing of new loans.
“The preparation of our mortgage documentation has also largely been brought in-house over recent months - with considerable savings already evident.”
Mr Hancock said Wide Bay Australia aimed to give Parramatta and New South Wales residents an alternative that prides itself on community service and spirit.
“This is Wide Bay Australia’s first bricks and mortar foray into Sydney and we do have plans to further build our networks interstate,” Mr Hancock said.
Wide Bay Australia Ltd with over $1 billion in assets has 30 retail outlets across Queensland and more than 80,000 customers. It conducts mortgage lending and related financial services in New South Wales, Victoria and South Australia.
10/02/04 DIRECTORS REPORT
for the half year ended 31 December 2003
On behalf of the Board of Directors, we are pleased to report to shareholders that the six months to December 2003, has again been a most satisfactory period.
We have not only achieved solid results, but have experienced some major highlights which will have a long-term effect on the positioning of Wide Bay and our future operations.
These highlights included:-
- The change of our name to Wide Bay Australia Ltd. With the Society moving interstate, particularly to include New South Wales, Victoria and South Australia, it was believed the original name was too geographically limiting. The change of name was enthusiastically approved by our shareholders. It has been well received by our many customers and associates.
- The Board approved a restructuring of our lending department which will enable us to electronically process loans from interview to settlement. It also enables us to prepare our own mortgage documentation.
We have already implemented the mortgage portion of the system and are now attending in-house to a significant portion of our mortgage documentation. This system has incurred additional costs during the period, but we anticipate improved efficiencies and substantial savings to loan processing and legal fees.
- We will have the capacity to efficiently take our level of loan approvals to far in excess of our existing volume.
- We completed a securitisation program for $274 million in December. These notes were issued to the investor market and SG Australia Ltd were the lead managers. The issue was well received at satisfactory rates and takes our total on-market securitisation programs to date to $987 million.
- We reviewed our capital requirements during the period and in December placed a further $10 million of subordinated debt, which we anticipate will meet our capital requirements at least for the next two years.
- We have resolved to increase our presence in Sydney and in the next few months will establish a branch facility in Parramatta.
- During the period we have been active in preparing for the introduction of the Financial Sector Reform legislation. Our training personnel have completed an in-house training structure for all of our staff to ensure that we are compliant with the requirements of that legislation.
We have been able to achieve an after tax surplus of the consolidated group of $4.754 million, which is an increase of 2.75% over the previous corresponding period. Our captive mortgage insurer, Mortgage Risk Management Pty Ltd (MRM) continues to perform well and has contributed an after tax surplus of $476,010 to the consolidated figures.
Loans approved for the period totaled $264.75 million, compared to $158.7 million for the previous period, an increase of 66.81%. The impact of this strong lending will take some time to transfer to the operating profit, but we have been able to increase our loan portfolio for the period by 6.83% to $1.08 billion. This increased loan portfolio will have an impact on the balance of this financial year’s result. Importantly we have maintained our policy of writing off all of the Society’s loan establishment costs at the time of establishing the loan
We anticipate with our increased capacity and efficiencies and our spread interstate that we will be able to maintain a strong level of lending over the next six months even if there is some tightening in the housing market.
Your Board has declared a fully franked interim dividend of 16.5 cents per ordinary share which will be paid 12 March, 2004 (2003 – 16 cents).
Wide Bay Australia’s range of products continues to be well supported by our customers. In addition to telephone and internet banking, we became part of the giroPost system enabling our customers access to their deposit and loan accounts at over 2,900 Australia Post outlets across Australia.
There has been considerable press comment over recent weeks in relation to Cashcard Australia and its possibility of being sold. The Directors in the last financial year revalued the investment in Cashcard to $2.88 million. Wide Bay Australia has a shareholding of 1.6% of Cashcard.
Your Board is still enthusiastic about the prospects in the ensuing 12 months as a result of the position that we have adopted, and while there may be a slowing in the housing market, because of this positioning, we believe we will be able to maintain our performance.
