Logan Community Financial Services : Audited Annual Financial Statements - 30 June 2021

Logan

Community Financial Services Limited

ABN: 88 101 148 430

Financial Report

For the year ended 30 June 2021

Logan Community Financial Services Limited

Directors' Report

The directors present their report together with the financial statements of the company for the financial year ended 30 June 2021.

Directors

The directors of the company who held office during the financial year and to the date of this report are:

Jason Paul Luckhardt Non‐executive director

Occupation: National Franchise Manager

Qualifications, experience and expertise: Licensed Real Estate Agent. Licensed Auctioneer. Diploma of Business (Marketing). Member REIQ. Member of Australian Institute of Company Directors. REIQ Commercial & Industrial Committee Board Member, Member of Griffith University (Logan Campus) Development Advisory Board.

Special responsibilities: Board Chair, Member of Governance, Audit & Human Resources Committee.

Interest in shares: 5,250 ordinary shares

Brett Blair Raguse Non‐executive director

Occupation: Company Director ‐ Strategem P/L & MiCasa Realty Holdings Pty Ltd

Qualifications, experience and expertise: BA AdvocT (Hons); Cert IV Real Estate Practice; JP Qualified; Former Member of Parliament of Australia; Chair of Federal Parliamentary Standing Committee on Parliamentary Privilege and Members Interests; Former President of two Chambers of Commerce; Past President and Executive Member of multiple community organisations; Former State and Federal Government Ministerial Adviser; Business Adviser, Teacher; Lecturer.

Special responsibilities: Company Secretary and Member of Governance, Audit & Human Resources Committee

Interest in shares: 13,300 ordinary shares

Robert Leslie Herriott Non‐executive director Occupation: Retired

Qualifications, experience and expertise: Retired from 30+ years in the financial services & commercial banking sector. During the last 20 years involved in various management positions within Metway and Suncorp Commercial Banking including past Director of Suncorp Subsidiary "Medical Commercial Finance" MCF. Rotarian for 15 + years Rotary Club of Logan, including 2 years as President also holding various other board positions including Treasurer, International Services and Vocational Services.

Special responsibilities: Chair Governance, Audit & Human Resources and Member of Marketing and Community Projects Committee.

Interest in shares: 3,250 ordinary shares

Kathleen Robyn Wakeling Non‐executive director

Occupation: Senior Manager ‐ Community

Qualifications, experience and expertise: Kate has been in the Financial Services Industry for more than 25 years & holds a Diploma in Financial Planning from Deakin University. Kate is keen to encourage diversity in the workforce and is a member of Financial Executive Women and WoB Australia (Women on Boards).

Special responsibilities: Member of Governance, Audit and Human Resources Committees & Strategic Planning Committee.

Interest in shares: 2,250 ordinary shares

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Logan Community Financial Services Limited

Directors' Report

Directors (continued)

David William Ekert Non‐executive director Occupation: Consultant

Qualifications, experience and expertise: David is an experienced and flexible Senior Executive Consultant and Teacher with many years' experience in general management, IT and business project management, financial management and accounting, strategic planning and business analysis. He has successfully built business and achieved profit targets in commercial organisations. He has also managed very large project teams implementing financial and logistics systems with multi‐million‐dollar budgets. David has a special interest in innovation, combining system, process and business improvement to achieve better business outcomes and value. David is heavily involved in the Logan community. He has been a member of the Rotary Club of Logan since 2003, having served two terms as President and many other Club Board roles, as well as representing the Club in other community forums. He has also served on the Management Committee of Canefields Clubhouse and is a member of Griffith University's Logan Campus Development Advisory Board.

David holds a Bachelor degree in Accounting, an MBA specialising in Strategic Management and Marketing, is a Certified Practicing Accountant and an Associate Fellow of the Institute of Managers and Leaders.

Special responsibilities: Treasurer, Member of Governance, Audit and Human Resources Committee & Strategic Planning Committee.

Interest in shares: 3,250 ordinary shares

Lachlan Stewart

Non‐executive director

Occupation: Teacher, Business Owner & Personal Trainer

Qualifications, experience and expertise: Lachlan holds a Bachelor of Secondary Education (Information Technology and Physical Education) and a Certificate III & IV Fitness.

Special responsibilities: Chair of Marketing Committee and Representative of the State & National Collaborative Marketing Committees.

Interest in shares: 2,250 ordinary shares

Elvio John Dizane

Non‐executive director Occupation: Retired/Pensioner

Qualifications, experience and expertise: Elvio has held several management positions throughout his career along with becoming a multi‐site franchises holder of Shell Australia (Service Stations) & Barry's The Home Improvers. He was a past member of a variety of networking groups, sporting, body corporate & business committees and is a volunteer for Rosie's ‐ Friends on the Street supporting homeless since 2004. He currently works as a casual employee at Bunnings Capalaba.

Special responsibilities: Member of Marketing & Community Projects Committee.

Interest in shares: 2,250 ordinary shares

Leanne Nicole Taylor

Non‐executive director (appointed 1 July 2020) Occupation: Registered Migration Agent/Para‐Legal

Qualification, experience and expertise: Lived locally since turning 16. 30 years' experience working within the legal industry in various roles from office junior, legal secretary and through to management level positions. More recently, studied to become a Registered Migration Agent (since 2003) working solely in migration law and most recently (since 2016) also assisting clients with their Total and Permanent Disablement claims after significant injury results in them being unable to work. Long‐standing member of the Migration Institute of Australia and Migration Alliance. Active Board Member of the Beenleigh Yatala Chamber of Commerce.

Special responsibilities: Member of Strategic Planning Committee and Member of Marketing & Community Projects Committee.

Interest in shares: 2,750 ordinary shares

Directors were in office for this entire year unless otherwise stated.

No directors have material interest in contracts or proposed contracts with the company.

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Logan Community Financial Services Limited

Directors' Report

Company Secretary

The company secretary is Brett Raguse. Brett was appointed to the position of secretary on 1 January 2017.

Qualifications, experience and expertise: Brett has had many years experience in managing and leading both private and public sector organisations, as Company Secretary and Managing Director of his own businesses over 21 years. Brett also has extensive experience through various executive roles in both business and community organisations like 'Chambers of Commerce' and 'Community Development Organisations'. Brett has also been an adviser to Queensland State Ministers in various economic portfolios and as a Federal Member of Parliament he chaired 'Standing Committees' responsible for Fiduciary and Financial reporting of Parliamentary Members and their activities related to 'Parliamentary Privilege'.

Principal activity

The principal activity of the company during the financial year was facilitating Community Bank services under management rights of Bendigo and Adelaide Bank Limited (Bendigo Bank).

There have been no significant changes in the nature of these activities during the financial year.

Operating results

The profit of the company for the financial year after provision for income tax was:

Year ended	Year ended
30 June 2021	30 June 2020
$	$
344,354	306,206
Operating and financial review
Overview of the company

The company continues to operate in line with franchise agreement with Bendigo and Adelaide Bank Limited which governs the management of the Community Bank branches at Loganholme, Browns Plains, Springwood and Beenleigh. The company manages the Community Bank branches on behalf of Bendigo Bank.

The franchise agreement provides for three types of revenue earned by the company from Bendigo and Adelaide Bank Limited:

1. A % of monthly gross margin earned on products and services regarded as day to day banking business, known as margin business.
2. Commission on other products and services on specified products including insurance, financial planning, common fund, Sandhurst Select, superannuation, commercial loan referrals, products referred by Rural Bank, leasing referrals, fixed loans and certain term deposits.
3. Proportion of "bank fees and charges" charged to customers.

At 30 June 2021 the level of business on the books was $496M. This is an increase of $20M. The product mix comprises lending of $267M, deposits $214M and other business $15M.

The bank's competitiveness on interest rate remains constant.

The company will continue to be dependent on the franchise agreement to derive its income in future years. Therefore growth in market share for community branches of the company are the drivers of improved revenue.

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Logan Community Financial Services Limited

Directors' Report

Operating and financial review (continued)

Key metrics
Five year summary of performance	Unit	2021	2020	2019	2018	2017
Operating revenue	$	3,775,746	3,779,172	3,821,881	3,638,527	3,790,660
Earnings before interest, tax,	$	830,087	792,292	399,337	328,747	418,437
depreciation, and amortisation
Earnings before interest and tax	$	502,095	473,735	267,590	167,130	222,877
Net profit after tax	$	344,354	306,206	189,204	119,722	153,493
Total assets	$	3,867,248	3,744,414	3,147,329	2,633,298	2,468,333
Total liabilities	$	1,310,030	1,349,748	825,423	357,072	183,829
Total equity	$	2,557,218	2,394,666	2,321,906	2,276,226	2,284,504
Net cash flow from operating activities	$	684,505	708,450	470,270	277,384	346,259
Shareholder returns
Profit attributable to owners of the	$	344,354	306,206	189,204	119,722	153,493
company
Basic earnings per share	₵	10.76	9.57	5.91	3.74	4.80
Dividends paid	₵	181,802	191,370	143,524	128,000	112,000
Dividends per share	₵	5.70	6.00	4.50	4.00	3.50
Net tangible assets per share	₵	0.76	0.70	0.65	0.62	0.68
Price earnings ratio	₵	10.76	9.57	5.91	5.26	6.72

Returns to shareholders increased through both dividends and capital growth. Dividends for 2021 were fully franked and it is expected that dividends in the future years will continue to be fully franked.

Financial position

Assets

Total assets have increased to $3,867,248 during the financial year ended 30 June 2021.

Cash balances have increased by $301,445 as a result of the following:

Cash flows from operations $684,505

Net investment property plant and equipment $12,001

Payment of intangible assets ($53,765)

Lease payments ($159,494)

Payment of dividend ($181,802)

Liabilities

Total liabilities decreased by $39,718 primarily due to repayment of franchise fee instalments.

Equity

Equity has increased by $162,552.

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