Offer Information Statement

Offer Information Statement for the issue of Capital Notes to raise up to A$10,000,000 Capital Notes are complex and involve more risks than simple debt or ordinary equity instruments. They are not suitable for all investors and contain features which may make Capital Notes difficult to understand. Warwick strongly recommends that you seek professional advice from a licensed adviser before you make an investment decision. Issuer Warwick Credit Union Limited (ABN 98 087 651 116) 20 October 2017

Contents Page A. Important Notice 2 B. Key dates 5 C. Guidance for investors 6 D. Overview of the Capital Notes 7 E. Overview of the MEIs 13 F. General information about the Capital Notes and MEIs 15 G. Description of Warwick 16 H. Financial Information 22 I. Risks 23 J. Terms of the Capital Notes 28 K. Terms of the MEIs 51 L. Australian Taxation 61 M. Directory 64 N. Application Form 65 O. Annexure Concise Financial Statements of Warwick for the financial year ending 30 June 2017 68 IMPORTANT WARNING: Capital Notes are not: members interests in Warwick; deposits of Warwick; protected accounts for the purposes of the depositor protection provisions of the Banking Act 1959 (Cth) ( Banking Act ) or of the financial claims scheme established under the Banking Act; or guaranteed or insured by the Australian government or any other person. The liabilities of Warwick which are preferred by law to the claim of a holder of a Capital Note may be substantial and the terms of the Capital Notes do not limit the amount of such liabilities which may be incurred by Warwick from time to time. Capital Notes have no maturity date so the principal invested may never be repaid. Distributions are discretionary (which means Warwick has no obligation to pay them). Capital Notes will be converted into mutual equity interests in Warwick ( MEIs ) or written-off altogether if Warwick becomes non-viable. The terms of the Capital Notes are complex. Potential investors should obtain professional investment advice before deciding whether to invest in the Capital Notes. 1

A. Important Notice This Offer Information Statement ( OIS ) relates to the offer by Warwick Credit Union Limited (ABN 98 087 651 116) ( Warwick ) of perpetual, convertible, subordinated debt obligations in the form of unsecured notes ( Capital Notes ) to raise up to A$10,000,000 (the Offer ). Capital Notes are expected to constitute Additional Tier 1 Capital of Warwick under the prudential standards of the Australian Prudential Regulation Authority ( APRA ). Capital Notes will convert into mutual equity interests in Warwick ( MEIs ) or be Written-off on the occurrence of a Non-Viability Trigger Event. The terms of the Capital Notes ( Notes Terms ) are set out in section J Terms of the Capital Notes. The terms of the MEIs are set out in section K Terms of the MEIs ( MEI Terms ) and Warwick s constitution ( Constitution ). The Constitution is available on Warwick s website at http://www.wcu.com.au/about-us.html. Potential investors must refer to (1) the Notes Terms to understand the terms and conditions of the Capital Notes and (2) both the MEI Terms and the Constitution to understand the terms and conditions of MEIs. Unless otherwise defined, capitalised expressions in this OIS have the meanings given to them in the Notes Terms. The Notes Terms and MEI Terms are complex and include features to comply with APRA s requirements in relation to regulatory capital of Warwick. They may not be suitable for all investors and any potential investor should consider the suitability of the investment and obtain professional advice before making a decision to invest in the Capital Notes. About this OIS This OIS is issued pursuant to sections 709(4) and 715 of the Corporations Act 2001 ( Corporations Act ). It has been prepared by, and issued with the authority of, Warwick. THIS OIS IS NOT A PROSPECTUS AND HAS A LOWER LEVEL OF DISCLOSURE REQUIREMENTS THAN A PROSPECTUS. This OIS is dated 20 October 2017 and expires 13 months after that date ( Expiry Date ) and no Capital Notes will be issued on the basis of this OIS after the Expiry Date. This OIS is available online at http://www.wcu.com.au/about-us.html. A copy of this OIS has also been lodged with the Australian Securities and Investments Commission ( ASIC ). ASIC takes no responsibility for the content of this OIS. Exposure period Warwick is prohibited under the Corporations Act from processing applications for Capital Notes in the seven day period after the date of this OIS ( Exposure Period ). The Exposure Period may be extended by ASIC by up to a further seven days. The purpose of the Exposure Period is to enable the OIS to be examined by market participants prior to the raising of funds. No applications for Capital Notes received during the Exposure Period will be accepted until after the expiry of that period. Potential investors should make independent investment decision and obtain tax advice This OIS contains only summary information concerning the Capital Notes and Warwick. The information contained in this OIS is not intended to provide the basis of any credit or other evaluation in respect of Warwick or any Capital Notes and should not be considered or relied upon as a recommendation, report or a statement of opinion (by Warwick or any person involved in the issue of the Capital Notes) that any recipient of this OIS should subscribe for, purchase or otherwise deal in, any Capital Notes or any rights in respect of the Capital Notes. This OIS contains only general information and does not take into account the objectives, financial situation or needs of any potential investor. Investors contemplating subscribing for, purchasing or otherwise dealing in, any Capital Notes or any rights in respect of the Capital Notes should: make and rely upon (and shall be taken to have made and relied upon) their own independent investigation of the terms and conditions of the Capital Notes and the rights and obligations attaching to the Capital Notes and MEIs and of the financial 2

condition and affairs, and their own appraisal of the creditworthiness, of Warwick; determine for themselves the relevance of the information contained in this OIS; consult their own tax advisers concerning the application of any tax laws applicable to their particular situation and consult other appropriate advisers in respect of any other matters upon which they require advice; and base their investment decision solely upon their own independent assessment and such investigation and consultation with advisers and such other investigations as they consider appropriate or necessary. No advice is given in respect of the legal or taxation treatment of investors or purchasers or any other matter in connection with an investment in any Capital Notes or rights in respect of them. Selling restrictions The distribution and use of this OIS, including any advertisement or other offering material, and the offer or sale of the Capital Notes, may be restricted by law in certain jurisdictions and potential investors should inform themselves about those laws and observe any such restrictions. Persons into whose possession this OIS or any Capital Notes come must inform themselves about, and observe, any such restrictions. If you come into possession of the OIS in a jurisdiction outside Australia, you should seek advice on, and observe, any such restrictions. If you fail to comply with such restrictions, that failure may constitute a violation of applicable law. Warwick does not represent that any Capital Notes may be lawfully offered for subscription or purchase or otherwise dealt with in compliance with any applicable registration or other requirements in any jurisdiction outside Australia, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such offering or other dealing. In particular, no action has been taken by Warwick which would permit a public offering of any Capital Notes in any jurisdiction (other than Australia) where action for that purpose is required. A person may not (directly or indirectly) offer for subscription or purchase, or issue an invitation to subscribe for or buy the Capital Notes, or distribute or publish this OIS or any other offering material or advertisement relating to the Capital Notes, except if the offer or invitation, or distribution or publication, complies with all applicable laws, regulations and directives. No registration in the United States Neither the Capital Notes nor the MEIs have been or will be registered under the United States Securities Act of 1933 ( Securities Act ), as amended, or the securities law of any state of the United States. The Capital Notes and MEIs may not be offered, sold, delivered or transferred, at any time, within the United States, its territories or possessions or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. No authorisation No person has been authorised to give any information or make any representations not contained in or consistent with this OIS in connection with Warwick or the issue or sale of the Capital Notes or MEIs and, if given or made, such information or representation must not be relied upon as having been authorised by Warwick. Currency of information The information contained in this OIS is prepared as of its Preparation Date (defined below). Neither the delivery of this OIS nor any offer, issue or sale made in connection with this OIS implies that the information contained in it is correct after the Preparation Date or that any other information supplied in connection with the issue of the Capital Notes is correct after the Preparation Date or that there has been no change (adverse or otherwise) in the financial condition, affairs or creditworthiness of Warwick at any time after the Preparation Date. In this OIS, Preparation Date means: in relation to this OIS, 20 October 2017; in relation to financial reports included in this OIS, the date on which such accounts were finalised; and 3

in relation to any other item of information which is to be read in conjunction with this OIS, the date indicated on its face as being its date of release or effectiveness. References to websites Any website addresses provided in this OIS are for reference only and the content of any such internet site is not incorporated by reference into, and does not form part of, this OIS (unless expressly stated otherwise). Warwick takes no responsibility for the content of any website referred to in this OIS. 4

B. Key dates Lodgement of the OIS with ASIC 20 October 2017 Offer opens 6 November 2017 Offer closes 6 December 2017 Issue Date 15 December 2017 Distribution Payment Dates 1 15 March, 15 June, 15 September and 15 December in each year First Distribution Payment Date 15 March 2018 Optional Redemption Date 2 15 December 2022 1 Holders should be aware that Distributions will only be paid if Warwick decides to pay them, and are subject to no Payment Condition existing at the time payment is scheduled to be made. 2 Holders should be aware that the Capital Notes have no maturity date and may never be repaid. Warwick is under no obligation to exercise its option to redeem the Capital Notes. 5

C. Guidance for investors 1. Read this OIS in full This OIS is important and you should read it in its entirety. In considering whether to apply for the Capital Notes, it is important you consider all risks and other information regarding an investment in the Capital Notes, in light of your particular investment objectives and circumstances, as the Offer and the information in this OIS do not take into account those objectives and circumstances. The Capital Notes are complex and involve more risks than simple debt or ordinary equity instruments. The Capital Notes are not suitable for all investors. 2. Speak to your professional investment adviser The overall complexity of the Capital Notes may make the Notes Terms difficult to understand. Warwick strongly recommends that you seek professional investment advice from a licensed adviser, which takes into account your particular investment objectives and circumstances, before deciding whether to participate in the Offer. ASIC has published guidance on how to choose a licensed adviser on its MoneySmart website. You can also search 'choosing a financial adviser' at www.moneysmart.gov.au. 3. Consider the ASIC guidance for retail investors ASIC has published guidance on hybrid securities on its MoneySmart website which may be relevant to your consideration of the Capital Notes. You can find this guidance by searching hybrid securities at www.moneysmart.gov.au. The guidance includes a series of questions you should ask before you invest in hybrid securities, as well as a short quiz to check your understanding of how hybrids work, their features and risks. 4. Enquiries If you have any questions about Warwick or the Offer, please visit www.wcu.com.au, or call 07 4660 5000. 6

D. Overview of the Capital Notes The following is a brief summary only and should be read in conjunction with the rest of this OIS including, in particular, the Notes Terms set out in section J Terms of the Capital Notes below. The Notes Terms are complex and include features to comply with APRA s requirements in relation to the regulatory capital of Warwick. The Capital Notes may not be suitable for all investors, so you should obtain professional advice before making a decision to invest in the Capital Notes. Unless otherwise stated, capitalised expressions which are not defined in this section have the meanings given in clause 13.2 of the Notes Terms. Issuer Amount payable for the Capital Notes Purpose of the Offer Fees payable under the Offer Form and title The Capital Notes are perpetual The Capital Notes are not guaranteed or secured The Capital Notes are subordinated Status and ranking of the Capital Notes Warwick Credit Union Limited (ABN 98 087 651 116) ( Warwick ). $100 per Capital Note (which will also be the Face Value of each Capital Note). This is the price you need to pay for each Capital Note if you participate in the Offer. The purpose of the Offer is to raise up to A$10,000,000 in Additional Tier 1 Capital. Warwick intends to use the proceeds of the Offer to fund its capital management requirements. No fees, charges or commissions are payable by you if you participate in the Offer. The Capital Notes are perpetual, convertible, subordinated debt obligations in the form of unsecured notes (i.e. a type of hybrid security). They are expected to constitute eligible Additional Tier 1 Capital of Warwick. These types of instruments are referred to in the Notes Terms as Perpetual Subordinated Instruments. The Capital Notes will take the form of entries in a register. No certificate or other evidence of title will be issued unless Warwick determines that certificates should be available or it is required to do so pursuant to applicable law or directives. Entry of the name of a person in the Register in respect of any Capital Note constitutes the obtaining or passing of title and is conclusive evidence that the person whose name is so entered is the registered owner of that Capital Note. The Capital Notes are perpetual (i.e. they have no fixed maturity date, subject to Conversion into MEIs or Redemption). This means that, unless the Capital Notes are Redeemed in the limited circumstances described in the Notes Terms (including that APRA s prior written approval of any Redemption is required), the Capital Notes could remain on issue indefinitely and the principal invested may never be repaid. Holders should be aware that APRA s approval for a Redemption may not be given. The Capital Notes are not guaranteed or secured. They are not deposits of, or members interests in, Warwick. The Capital Notes are issued fully paid by Warwick on a subordinated basis. This means that they are subordinated to the claims of higher ranking creditors (referred to as Senior Creditors in the Notes Terms) in a winding-up of Warwick. In a winding-up of Warwick, any Capital Notes which remain outstanding will rank: ahead of MEIs, other CET1 Interests and other instruments constituting Common Equity Tier 1 Capital of Warwick; 7

equally among themselves and with all other Equal Ranking Instruments; and (c) behind the claims of all Senior Creditors of Warwick, which would include all depositors (accountholders), senior and unsecured creditors and holders of subordinated debt which, by its terms, ranks ahead of the Capital Notes (including Member Shares and the Tier 2 Capital instruments issued by Warwick in 2012). Holders should be aware that if Warwick is in a winding-up, it is likely that a Non- Viability Trigger Event will already have occurred, which means that the Capital Notes would have been Converted to MEIs or Written-off. See the section entitled Conversion of Capital Notes to MEIs (or Write-off) following a Non-Viability Trigger Event and section E Overview of the MEIs below. The following diagram shows how the Capital Notes would rank in a winding-up of Warwick for repayment of the subscription monies paid (assuming the Capital Notes have not been Converted, Redeemed or Written-off earlier). The ranking diagram also shows how MEIs would rank in a winding-up of Warwick (for repayment of notional subscription monies out of surplus assets). Highest ranking Preferred and secured debt Depositors of Warwick, as well as other liabilities preferred by law (such as employee entitlements) Unsecured and unsubordinated debt Subordinated and unsecured debt Withdrawable member shares in Warwick which are issued to its members Perpetual Subordinated Instruments General creditors of Warwick (such as trade creditors) Tier 2 capital instruments issued by Warwick in 2012 Member Shares * (for repayment of $10 subscription price) The Capital Notes (and other Equal Ranking Instruments) Lowest ranking Equity capital CET1 Interests (including MEIs) (for repayment of notional subscription price and retained earnings) * These are member shares (as referred to in the Principles of Mutuality in the Constitution) and Member Shares (as referred to in the Constitution). You should be aware that the diagram does not include every type of financial product that could be issued by Warwick, or debt that may be incurred by Warwick, in the future. Holders of MEIs are entitled to be repaid the notional subscription price out of surplus assets of Warwick (as stated in the diagram above) after payment of the preferred entitlements to payment on the winding-up (including the subscription price / paid up capital on Member Shares and other Tier 1 Shares). The amount payable to a Holder of an MEI out of surplus assets will be determined by dividing the aggregate notional subscription price paid for the Holder s MEIs by the sum of: (i) the aggregate notional subscription price paid for all MEIs; and (ii) the aggregate subscription price paid for all Member Shares (notwithstanding that an amount equal to that amount may already have been returned to holders of Member Shares as a prior ranking entitlement in the winding-up) but is capped and subject to the Mutual Equity 8

Requirements. Mutual Equity Requirements has the meaning given in the Constitution, i.e. the requirements of APRA s prudential standards for an MEI and the requirements of ASIC for the issue of the MEI not to be an event that triggers the application of clause 29(1) of Part 5 of Schedule 4 to the Corporations Act (except where ASIC has granted an exemption to Warwick) or is a demutualisation for the purposes of section 63 of the Banking Act. Holders of MEIs have no further rights to participate in a winding-up. After the repayment of capital or subscription monies as described above, holders of Member Shares would share in the remaining surplus in accordance with clause 67 of the Constitution. When Distributions will be paid How the Distribution amount will be calculated Distributions are payable at the absolute discretion of Warwick on the Distribution Payment Dates (being 15 March, 15 June, 15 September and 15 December in each year), with the first Distribution to be paid on 15 March 2018, unless Converted, Redeemed or Written-off earlier. Payment of Distributions is discretionary, which means that Warwick may decide not to pay a Distribution on a Distribution Payment Date. If Warwick decides not to pay a Distribution, Warwick has no obligation to pay it at a later date because Distributions are non-cumulative. Payment of a Distribution is also subject to no Payment Condition existing on the relevant Distribution Payment Date. The Payment Conditions are: payment of the Distribution would result in Warwick breaching APRA s capital adequacy requirements applicable to it; the payment would result in Warwick becoming, or being likely to become, insolvent for the purposes of the Corporations Act; or (c) APRA objecting to the payment. Non-payment of a Distribution will not be an event of default there are no events of default under the Capital Notes. If a Distribution is not paid in full on a Distribution Payment Date, Warwick must not without the approval of Holders by a Special Resolution declare, determine to pay or pay a distribution on its MEIs (if any MEIs are then on issue) until and including the next Distribution Payment Date (unless the relevant Distribution is paid in full within 5 Business Days of the relevant Distribution Payment Date). There are certain exclusions from this restriction which are set out in clause 3.8 of the Notes Terms. Holders have no other rights on account of the non-payment. If a Distribution is payable on a Distribution Payment Date, the amount of the Distribution will be calculated in accordance with the following formula: Distribution = Distribution Rate x A$100 (Face Value) x N / 365 The Distribution Rate, which is a floating rate, will be calculated according to the following formula: Distribution Rate = (Market Rate + Margin) x Franking Adjustment Factor The Distribution Rate will be expressed as a percentage per annum. It is a floating rate because it depends on the Market Rate at the start of each Distribution Period, and will also change depending on the Franking Adjustment Factor. The Market Rate is the average mid-rate for prime bank eligible securities having a three month tenor on the Thomson Reuters BBSW page on the first Business Day of each Distribution Period. The Market Rate is a key benchmark interest rate for the Australian money market. It is currently based on an average of rates for a three 9

month term obtained from approved trading venues by the ASX. The Market Rate changes to reflect supply and demand within the cash and currency markets. Warwick will announce the Market Rate to Holders no later than the fourth Business Day of the Distribution Period. The following graph illustrates the movement in the Market Rate over the last 10 years. The rate on 12 October 2017 was 1.7050% per annum. Source: GRAB/Laminar Securities 12 October 2017 The Margin is 3.92%. N means the number of days in the relevant Distribution Period. Franking Distributions are expected to be partially or fully franked. The Franking Adjustment Factor adjusts the Distribution Rate on account of the Franking Rate and affects the amount of any Distribution on Notes and the amount of any franking credit attached to it. The current applicable Franking Rate is 100%. The Franking Rate may vary over time, and Distributions may not be franked at all. The level of franking for a Distribution Period will depend on Warwick s available franking credits at that time. Warwick s available franking credits are affected by a wide range of factors, including its business performance, the applicable Australian corporate tax rate, the assessment of relevant tax authorities and the amount of other frankable payments Warwick pays on other instruments. The greater the rate of franking of the Distribution, the lower the Distribution Rate and the amount of cash Distribution, reflecting the value of the franking credit attached to the Distribution. The ability of Holders to use franking credits will depend on their individual circumstances. Dividend withholding tax at the rate of 30% may be applied to a Distribution which is partially franked. Refer to section L Australian Taxation below for further information. Conversion of Capital Notes to MEIs (or Write-off) following a Non- Viability Trigger Event On the occurrence of a Non-Viability Trigger Event, the Capital Notes will Convert into MEIs or be Written-off. Holders should refer to section E Overview of the MEIs and section K Terms of the MEIs for an understanding of the type of security they will receive on the occurrence of a Non-Viability Trigger Event unless the Capital Notes are Written-off. A Non-Viability Trigger Event occurs upon: 10

the issuance of a notice by APRA to Warwick that the conversion or write-off of capital instruments is necessary because, without that conversion or writeoff, APRA considers that Warwick would become non-viable; or a determination by APRA notified to Warwick that, without a public sector injection of capital into (or equivalent support with respect to) Warwick, APRA considers that Warwick would become non-viable. You should be aware that whether a Non-Viability Trigger Event will occur is at the discretion of APRA and there are currently no precedents for this. APRA has not given any guidance as to how it would determine non-viability and has indicated that it will not publish further guidance on the parameters used to determine nonviability. Non-viability could be expected to include serious impairment of Warwick s financial position and solvency, but may not be confined to solvency measures and capital ratios and may include other matters, such as liquidity. Warwick conservatively and proactively manages its capital, funding and liquidity positions to avoid experiencing financial difficulty. As the Capital Notes are capital instruments, if a Non-Viability Trigger Event occurs, Warwick must immediately Convert some or all of the Capital Notes into MEIs* (if required following the determination by Warwick under clause 4.2 of the Notes Terms). The Capital Notes would be Converted ahead of any Tier 2 capital instruments (if Warwick has any Tier 2 capital instruments convertible into MEIs on issue at the time of Conversion as at the date of this OIS, Warwick has no such instruments on issue). On Conversion, holders of Capital Notes will receive a Conversion Number of MEIs for every Capital Note held. The Conversion Number is calculated using the following formula, such that the aggregate nominal value of the MEIs received by a Holder will not exceed the aggregate Face Value of the Capital Notes Converted: Conversion Number = Face Value Nominal Value of MEI For purposes of this formula, the Nominal Value of a MEI is deemed to be A$100. This means that for every Capital Note held, holders will receive one MEI on Conversion (because the Face Value of each Capital Note is $100). If Conversion does not occur for any reason (including because of an Inability Event) within five Business Days of the date of the Non-Viability Trigger Event, the Capital Notes will be Written-off, which means that all rights of Holders will be immediately and irrevocably terminated on and from the date of the Non-Viability Trigger Event. This would occur if Warwick were prevented from issuing MEIs by circumstances outside its control, for example, if Warwick were prevented by an applicable law or order of any court, or action of any government authority, from issuing MEIs. Your investment will be lost and you will not receive any compensation. * If a public sector injection of capital is required (under paragraph of the definition of Non- Viability Trigger Event above), all Capital Notes will be required to be Converted or Written-off. Redemption of Capital Notes Warwick has the right (but not an obligation) to Redeem the Capital Notes on 15 December 2022. Warwick may also elect to Redeem Notes on the occurrence of a Tax Event or Regulatory Event at any time following the Issue Date. See Tax and Regulatory Events below. The Capital Notes may only be Redeemed with APRA s prior written approval, which may or may not be given. Where Warwick elects to Redeem the Capital Notes, APRA must be satisfied that either: the Capital Notes will be replaced concurrently or beforehand with a 11

capital instrument of the same or better quality, and the replacement must be done under conditions that are sustainable for Warwick s income capacity; or Warwick obtains confirmation from APRA that APRA is satisfied, having regard to the projected capital positions of Warwick and the Warwick Group, that Warwick does not have to replace the Capital Notes. Holders have no right to require Redemption of the Capital Notes. Regulatory treatment of Capital Notes Tax and Regulatory Events Capital Notes will not be quoted on ASX The Capital Notes are expected to constitute eligible Additional Tier 1 Capital of Warwick. These types of instruments are referred to in the Notes Terms as Perpetual Subordinated Instruments. Warwick may elect to Redeem the Capital Notes if a Regulatory Event occurs. See Tax and Regulatory Events below. Tax Event means broadly that the Directors receive advice that, as a result of a change in law or regulation in Australia on or after the Issue Date (which Warwick did not expect on the Issue Date) affecting taxation, there is more than an insubstantial risk which the Directors determine to be unacceptable that any Distribution would not be frankable or Warwick would be exposed to an increase in its costs (which is not insignificant) in relation to the Capital Notes. Regulatory Event means broadly that: as a result of a change in Australian law or regulation on or after the Issue Date (which Warwick did not expect on the Issue Date), additional requirements would be imposed on Warwick in relation to Capital Notes, which the Directors determine to be unacceptable; or following a notification from APRA the Directors determine that the Capital Notes will no longer be eligible as Additional Tier 1 Capital of Warwick. The Capital Notes will not be quoted on ASX or any other exchange, so there is unlikely to be any liquid market for the Capital Notes. Holders of Capital Notes who wish to sell their Capital Notes may be unable to do so at a price acceptable to them, or at all. The market price of the Capital Notes may fluctuate due to various factors, including investor perceptions, Australian and international economic conditions, changes in interest rates, credit margins, foreign exchange rates, credit ratings and capital markets, changes in accounting standards and other factors that may affect Warwick s financial performance and capital position. 12

E. Overview of the MEIs The following is a brief summary only and should be read in conjunction with the rest of this OIS and the terms of the MEIs set out below in section K Terms of the MEIs ( MEI Terms ). Potential investors should also review the terms in relation to MEIs in the Constitution (available at http://www.wcu.com.au/about-us.html). The MEI Terms are complex, and include features to comply with APRA s requirements in relation to regulatory capital of Warwick. You should obtain professional advice before making a decision to invest in the Capital Notes. Unless otherwise stated, capitalised expressions which are not defined in this section Overview of the MEIs have the meanings given in clause 1.1 of the MEI Terms. What are MEIs? Status and Ranking of the MEIs MEIs are mutual equity interests in the capital of Warwick. MEIs are a form of equity capital in Warwick, and must satisfy the requirements of APRA in relation to MEIs and most requirements of APRA in relation to ordinary share capital. They are, therefore, similar to ordinary shares in a company, but different to ordinary shares in some important respects: they do not have an unlimited and variable claim on the residual assets of Warwick on a winding-up the claim of a holder of an MEI is limited to the nominal value of the Additional Tier 1 Capital or Tier 2 Capital instrument which converted into the MEI; they carry no voting rights; and they have a limited entitlement to distributions distributions paid on MEIs (and certain other instruments) cannot exceed 50% of Warwick s net profit for the relevant period after tax and they must be paid out of profits for that period. MEIs will only be issued if the Capital Notes are required to be Converted (or if Warwick issues another Additional Tier 1 Capital or Tier 2 Capital instrument which is required to be converted). MEIs will not be quoted on ASX or any other exchange, so there is unlikely to be any liquid market for MEIs. Holders of MEIs who wish to sell their MEIs may be unable to do so at a price acceptable to them, or at all. MEIs rank equally and proportionately with other CET1 Interests on a going concern basis and in the event of a winding-up or liquidation of Warwick. CET1 Interests are members interests in the capital of Warwick which form part of Warwick s Common Equity Tier 1 Capital (as referred to in paragraph 4 of Attachment K to APS 111) Warwick currently has no CET1 Interests on issue. MEIs rank as the most subordinated claim in the event of a winding-up of Warwick. In a winding-up of Warwick, a Holder of MEIs is entitled to be paid an amount out of the surplus assets of Warwick after the payment, in full, of all Senior Ranking Claimants, such amount being a share of such surplus determined by dividing the aggregate notional subscription price paid for the Holder s MEIs by the sum of: (i) the aggregate notional subscription price paid for all MEIs; and (ii) the aggregate subscription price paid for all Member Shares (notwithstanding that an amount equal to that amount may already have been returned to holders of Member Shares as a prior ranking entitlement in the winding-up). Member Shares means a member share in the capital of Warwick, being member shares referred to in the Principles of Mutuality in the Constitution. After the repayment of capital or subscription monies as described above, holders of 13

Member Shares would share in the remaining surplus in accordance with clause 67 of the Constitution. A holder s claim on Warwick s surplus assets is subject to the Constitution and the aggregate amount paid to the Holder of MEIs not exceeding the aggregate nominal dollar value of the Capital Notes prior to conversion into the Holder s MEIs. Senior Ranking Claimants means all creditors of Warwick (present and future), whose claims are admitted in a winding-up of Warwick. This includes all holders of Warwick s senior or subordinated debt and all holders of shares conferring a prior ranking claim on the surplus assets of Warwick, including Tier 1 Shares (other than Tier 1 Shares which are MEIs), Investor Shares (if any) and Member Shares (in relation to the payment of an amount equal to the subscription price paid for the interests). Please refer to the diagram in section D Overview of the Capital Notes - Status and ranking of the MEIs (above) which shows how MEIs would rank on a winding-up of Warwick. Distributions on MEIs Repurchase of MEIs If Warwick decides to pay a Distribution to Holders of MEIs, the rate of distribution will reflect the Holder s share of Adjusted Distributed Income for the Distribution Period for which the Distribution relates. This will be calculated in accordance with the formula in clause 4.1 of the MEI Terms. No Distribution will be paid to the extent that Distributed Income would exceed 50% of Warwick s net profit after tax for the Financial Year in which the Distribution is made (the Maximum Distributable Amount ). Payments of Distributions on MEIs are in the absolute discretion of Warwick and are non-cumulative, which means that if a Distribution is not paid, Warwick is never obliged to pay it. Non-payment is not an event of default and the MEIs contain no events of default. Payments of Distributions are also subject to no payment condition existing (which are the same as the payment conditions which apply to the Capital Notes see When Distributions will be paid in section D Overview of the Capital Notes ). Warwick has the right (but not an obligation) to purchase MEIs provided that any purchase complies with prudential requirements and applicable law. It may also purchase MEIs if a merger or demutualisation of Warwick occurs, subject to receiving APRA s prior written approval. Holders of MEIs should be aware that APRA s approval for a repurchase may not be given. 14

F. General information about the Capital Notes and MEIs The following is a brief summary only and should be read in conjunction with the rest of this OIS. No set-off in relation to the Capital Notes or MEIs Transfers of the Capital Notes and MEIs Taxes Stamp duty Withholding tax Listing Deed Poll Governing law Neither Warwick nor any Holder shall be entitled to set-off any amounts, merge accounts or exercise any other rights the effect of which is or may be to reduce any amount payable by Warwick in respect of the Capital Notes or the MEIs held by a Holder (as applicable). The Capital Notes may only be transferred in whole but not in part. A Holder may transfer Capital Notes or MEIs by any proper or sufficient instrument of transfer under applicable law. A general description of the Australian taxation consequences of investing in the Capital Notes and holding MEIs is set out in section L Australian Taxation below. However, investors should obtain their own taxation advice regarding the taxation status of investing in the Capital Notes (or holding MEIs). Any stamp duty incurred at the time of issue of the Capital Notes or MEIs will be for the account of Warwick. Any stamp duty incurred on a transfer of Capital Notes will be for the account of the relevant investors. Any stamp duty payable by the transferor or transferee on a transfer of MEIs will be reimbursed by Warwick. As at the date of this OIS, no Australian stamp duty should be payable on the issue, or transfer, of the Capital Notes or MEIs. If a law requires Warwick to withhold or deduct an amount in respect of Taxes from a payment in respect of the Capital Notes or MEIs, Warwick will deduct the amount for the Taxes. Warwick is not required to pay any additional amounts to holders in these circumstances. See section L Australian Taxation below. Neither the Capital Notes nor the MEIs will be quoted on ASX or any other stock exchange. Holders of Capital Notes will have the benefit of a deed poll executed by Warwick and dated on or around the Issue Date ( Deed Poll ) in relation to the Capital Notes held by them. The Capital Notes, the MEIs and all related documentation will be governed by the laws of Queensland, Australia. 15

G. Description of Warwick Set out below is a brief description of Warwick s business and the industry in which Warwick operates. It is not an exhaustive description of Warwick s business and Warwick is not required by the Corporations Act to include any particular information. Investors must make their own independent assessment of Warwick s business before deciding whether to invest in the Capital Notes. 1 Business Overview 1.1 Introduction Warwick is an unlisted public company limited by shares. It operates as a mutual organisation owned and controlled by its customer shareholders. Warwick was established in 1971 as the Warwick and District Community Credit Union. This was later shortened to Warwick Credit Union. Warwick is an Australian Deposit-taking Institution ( ADI ) which holds a banking licence under the Banking Act 1959 (Cth) ( Banking Act ) and is regulated by APRA. Warwick s head office is in the Queensland regional city of the same name. Warwick provides retail banking services through: wcu.com.au online banking and telephone banking, 24 hours a day, 7 days a week; preferential access to a network of over 3,400 rediatms located around Australia; and a dedicated loans centre, call centre and network of 5 branches. 1.2 Experience and Capability Warwick has demonstrated resilience through challenging operating conditions in the last decade and has recorded many years of profit. In recent years, profitability has been maintained despite the global financial crisis, commodity prices and, in Queensland, drought and two major floods. This has been achieved through a sustained focus on prudent credit risk management and cost efficiency. 1.3 Products Warwick offers a variety of savings, lending and investment products. Through its partners, CGU Insurance and Bridges Financial Services, Warwick offers home, home contents and consumer credit insurance, and financial planning and wealth management products. The following table shows the range of products offered by Warwick, both directly and indirectly. Savings and Investment Loans and Advances Insurance Access accounts Goal Savings Term investments Debit Cards Business transaction accounts Home and Investment mortgages Personal loans Overdrafts Motor Home and Contents Consumer credit insurance Travel Mortgage Banking Services Business Banking Other Services Online and mobile banking App banking Commercial Loans Overdrafts Financial Planning and wealth management including advice 16

BPAY Direct Credit and Debit Telegraphic transfers Eftpos merchant Services Business online banking Payroll and broking 1.4 History and financial performance Warwick commenced business in 1971 with $784 of capital, $25,543 in assets and 1 part time staff member offering simple investment accounts and personal loans to local members. It has grown over the last 45 years of to being an organisation of almost 50 staff, $17,230,094 of capital and $255,475,938 in assets (as at 30 June 2017), providing a full range of retail banking products to local and regional customers. Warwick has demonstrated a steady financial performance over many years. The business has continued to flourish despite uncertain economic conditions. This has been a result of prudent focus on service improvement, loan quality and cost reduction. For more information, see Section H Financial Information below. 1.5 Operating Model Warwick s operating model is to maintain strong capability as an organisation to deliver its core business of deposit-taking, providing access accounts and making loans. Loans are predominantly secured by real property with prudent loan-to-valuation ratios ( LVRs ) and non-lending investments are concentrated in readily marketable investment-grade securities. Warwick s operational infrastructure model is to leverage best in class outsourced offerings in core banking, payment system access, bureau and compliance. External providers are rigorously assessed against APRA prudential standard CPS 231 and are subject to regular disaster recovery testing. 1.6 Business Strategy As a mutual credit union based and operating in local communities where owners are also customers, Warwick s philosophy is to maximise value through competitively priced products, customised service, strong controls and deep community participation. Warwick s strategy combines its philosophy with a strong capability to deliver value through: an overarching focus on being easy to do business with embedded in products, service, processes and having only two levels of structure in the organisation; strong product and service infrastructure to maximise business opportunities. Warwick continues to invest in leveraging technology and continuously simplifying processes that help build the customer; and an ongoing commitment to increasing productivity together with improving productivity and reducing unit costs. Warwick takes a careful and prudent approach to implementing these strategies. A central tenet is the focus on creating long term value over short term risk taking. Warwick has a strong track record of integrating these components to ensure a sound balance sheet and steady growth. 1.7 Business Mix Assets: Warwick s core lending business is focused on low risk residential and commercial mortgages. All lending is through a strict approval and documentation process. 17

Funding: Warwick raises customer deposits as well as wholesale deposits to fund its business. Customer deposits include transaction, savings and term investment deposits. Wholesale deposits are sourced from professional financial market investors. Detailed liquidity management policies and controls are in place to ensure liquidity remains sufficient to fund commitments. 1.8 Region and Customer Profile Warwick s main areas of operation are in the Southern Darling Downs region of Queensland, with additional representation in Warrego (Dalby) and south eastern Queensland. The Southern Darling Downs is a very productive area characterised by diversified agriculture and services. Its competitive economy is defined by services to agriculture augmented by emerging industries such as warehousing and logistics which gain value from being at a distribution cross roads within two hours of Brisbane. Warwick is not in a mining or oil and gas area. While its industries have gained some benefits from the resources boom, it has not featured the boom and bust of other areas in Queensland. 2 Compliance and Risk Management 2.1 Low Risk Appetite Warwick faces a range of risks reflecting its operation of a banking business. These risks can be significant. They are managed through detailed policies and processes and by emphasising the importance of integrity, intelligent inquiry with detailed monitoring and review. Warwick accepts that it is not possible to eliminate all risk given that it must achieve acceptable cost and profit levels whilst maintaining its prudential capital ratio. However, in pursuing those, Warwick will only accept risks consistent with its circumstances as a provider of savings accounts, lending and transaction products with limited ability to raise capital other than through retained earnings. Warwick has conservative risk settings. 2.2 Compliance Warwick has a strong compliance culture which is embedded in comprehensive risk management systems. Robust processes are in place to identify, measure, evaluate, monitor and report. Their role is to ensure the amount and type of risk that Warwick assumes in order to achieve its strategic objectives is consistent with its low risk appetite at all times. Warwick operates a 3 lines of defence compliance model where the risks are managed through multiple checks and validations. The model defines roles, responsibilities and accountabilities for risk and compliance control decision making and management. 2.3 Corporate Governance Warwick is committed to ensuring that its policies and practices reflect a high standard of governance. The Board of Directors has adopted a comprehensive framework of corporate governance guidelines appropriate to Warwick s circumstances as a credit union which is an ADI and include relevant APRA prudential standards and practice guides, the ASX principles of corporate governance and the principles of mutuality set out in its Constitution. These are design to balance performance with compliance responsibilities. This enables Warwick to undertake, in an effective manner, the prudent risk taking activities which are the basis of its business. 3 Board and Management 3.1 Directors Warwick s board structure is governed by its Constitution and relevant laws. The board presently 18

consists of six experienced directors. Directors undertake their duties through the board itself, the Audit Committee, Risk Management Committee, Nominations Committee and Remuneration Committee. Details of directors are set out below. Mr Alan Olsen, Chairman Mr Olsen is the proprietor of Olsen s Hardware and a well-known successful businessman in Warwick. Mr Olsen holds a CPA. Mr Olsen is an ex-officio member of all board committees. Director since 1988. Mr Bob Hogarth Mr Hogarth is the managing director of his own consulting firm, board member of St Andrews Hospital Toowoomba, a previous senior executive with Heritage Bank with over 25 years experience at an executive level. Mr Hogarth holds a Master of Business Administration and a Diploma of Administration. Mr Paul McMahon, Chair of Audit Committee Mr McMahon manages the Rowe Group, a diversified investment portfolio based in Toowoomba. He is the Treasurer of St Andrews Hospital Toowoomba, member of the Toowoomba diocese finance council and chair of the Southern Downs Economic Advisory Committee. Mr McMahon holds a Master of Business Administration, an accounting degree and is a CPA. Mr Ross Fraser OAM, Deputy Chairman Mr Fraser is Managing Director of Frasers Livestock Transport. Mr Fraser has held numerous positions in the transport industry over many years. Director since 2007. Mrs Pauline Pickering, Chair of the Nominations Committee Mrs Pickering is the principal of Globe Accounting and has numerous local community interests, particularly in professional accounting education. Mrs Pickering is a Certified Public Accountant and has been a Director of the Queensland Practice Committee since 2007. Mr David Thomson, Chair of Risk Committee Mr Thomson is the principal of a Killarney Veterinary practice and is active in several community organisations. Mr Thomson holds a Bachelor of Veterinary Science and a Diploma of Financial Services. Director since 2007. 3.2 Senior Management The senior management team is as follows: Chief Executive Officer Lewis von Stieglitz Bachelor of Arts (Hons), Master of Business Administration 30 years experience in financial services. Chief Financial Officer Paul Noye Chartered Accountant, Bachelor of Business, Graduate Diploma of Advanced Accounting, Masters of Commerce 27 years experience in financial services. Lending Manager Barry McKinnon Head of Lending 42 years experience in financial services. 4 Industry Overview 4.1 The Customer Owned Banking Sector Australia s customer owned banking sector is comprised of over 70 customer-owned banking 19