HALLIDAYS ACCOUNTANTS LLP Chartered Accountants & Statutory Auditor
Riverside House Kings Reach Business Park
Yew Street Stockport SK4 2HD
MANCHESTER CREDIT UNION LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 SEPTEMBER 2010
FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2010
CONTENTS PAGE
Officers and professional advisers 1
The Committee of Management' report 2
Independent auditor's report to the shareholders 4
Income & Expenditure account 6
Balance sheet 7
Notes to the financial statements 8
The following pages do not form part of the financial statements
Detailed income & expenditure account 14
Notes to the detailed income & expenditure account 15
1
OFFICERS AND PROFESSIONAL ADVISERS
The board of directors
T Presswood - Chairman A McBeath
B James C Davies P Jones C Culley C Moore C Smith The Supervisory committee G Olley
Registered Office Suites 17 & 18, First Floor Building No 2
Universal Square Devonshire Street Manchester M12 6JH
Auditor Hallidays Accountants LLP
Chartered Accountants
& Statutory Auditor Riverside House
Kings Reach Business Park Yew Street
Stockport SK4 2HD
Bankers Co-operative Bank
Delf House
Southway
Skelmersdale
Lancashire
WN8 6NY
2
THE COMMITTEE OF MANAGEMENT REPORT YEAR ENDED 30 SEPTEMBER 2010
The Committee of Management have pleasure in presenting their report and the financial statements of the Credit Union for the year ended 30 September 2010.
PRINCIPAL ACTIVITIES
The principal activity of the credit union during the year was that of the provision of savings and lending facilities for the benefit of its members. The common bond of the Credit Union continued to be that of providing savings and lending facilities to residents and employees of the city of Manchester.
RESULTS AND DIVIDEND
The surplus for the year, after taxation amounted to £21,137. Particulars of dividends paid are detailed in note 3 to the financial statements.
The dividend is calculated at 1% (2009 0%) for the Member Accounts and Junior Accounts. The remainder of the surplus for the year is transferred to the general reserve.
DIRECTORS
The Directors who served the credit union during the year were as follows:
T Presswood
I Nuttall resigned as a director on 1 September 2010
A McBeath
B James
K Fairhurst resigned as a director on 1 July 2010
C Davies
P Jones
C Culley
C Moore
C Smith appointed as a director on 31 August 2010
Supervisory Committee
G Olley
3
THE COMMITTEE OF MANAGEMENT' REPORT
(continued)YEAR ENDED 30 SEPTEMBER 2010
COMMITTEE OF MANAGEMENT' RESPONSIBILITIES
The Committee of Management are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Credit Union law requires the Committee of Management to prepare financial statements for each financial year. Under that law the Committee of Management have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under credit union law the Committee of Management must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the credit union and of the profit or loss of the credit union for that period. In preparing those financial statements, the Committee of Management are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the credit union will continue in business.
The Committee of Management are responsible for keeping adequate accounting records that are sufficient to show and explain the credit union's transactions and disclose with reasonable accuracy at any time the financial position of the credit union and enable them to ensure that the financial statements comply with the Friendly Industrial and Provident Societies Act 1986. They are also responsible for safeguarding the assets of the credit union and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In so far as the directors are aware:
there is no relevant audit information of which the credit union's auditor is unaware; and
the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
AUDITOR
Hallidays Accountants LLP are deemed to be re-appointed under the Friendly Industrial and Provident Sociteies Act 1986.
SMALL CREDIT UNION PROVISIONS
This report has been prepared in accordance with the special provisions for small credit unions under the Friendly Industrial and Provident Societies Act 1986.
Registered office: Signed by order of the Committee of
Management
Suites 17 &18, First Floor Building No 2
Universal Square Devonshire Street
Manchester A McBEATH
M12 6JH Credit Union Secretary
Approved by the directors on ...
4
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF MANCHESTER CREDIT UNION LIMITED
YEAR ENDED 30 SEPTEMBER 2010
We have audited the financial statements of Manchester Credit Union Limited for the year ended 30 September 2010. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the credit union's shareholders, as a body, in accordance with the Friendly Industrial and Provident Societies Act 1986. Our audit work has been undertaken so that we might state to the credit union's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the credit union and the credit union's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF COMMITTEE OF MANAGEMENT AND AUDITOR As explained more fully in the Committee of Management' Responsibilities Statement set out on pages 2 to 3, the Committee of Management are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the credit union's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by Committee of Management; and the overall presentation of the financial statements.
OPINION ON FINANCIAL STATEMENTS In our opinion the financial statements:
give a true and fair view of the state of the credit union's affairs as at 30 September 2010 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Friendly Industrial and Provident Societies Act 1986.
OPINION ON OTHER MATTERS PRESCRIBED BY THE FRIENDLY INDUSTRIAL AND PROVIDENT SOCITIES ACT 1986
In our opinion the information given in the Committee of Management' Report for the financial year
for which the financial statements are prepared is consistent with the financial statements.
5
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF MANCHESTER CREDIT UNION LIMITED
(continued)YEAR ENDED 30 SEPTEMBER 2010
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters which we are required to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
……… (Senior Statutory Auditor)
Riverside House
Kings Reach Business Park Yew Street
Stockport SK4 2HD ...
For and on behalf of
HALLIDAYS ACCOUNTANTS LLP
Chartered Accountants& Statutory Auditor
6
INCOME AND EXPENDITURE ACCOUNT YEAR ENDED 30 SEPTEMBER 2010
2010 2009
Note £ £
INCOME 681,600 425,487
Administrative expenses 659,676 421,929
────────── ──────────
SURPLUS ON ORDINARY ACTIVITIES BEFORE TAXATION 21,924 3,558
Tax on bank interest received 787 1,654
───────── ───────
SURPLUS FOR THE FINANCIAL YEAR 21,137 1,904
═════════ ═══════
All of the activities of the credit union are classed as continuing.
The credit union has no recognised gains or losses other than the results for the year as set out above.
The notes on pages 8 to 12 form part of these financial statements
7
BALANCE SHEET 30 SEPTEMBER 2010 FIXED ASSETS
Tangible assets 4 32,522 37,065
--- ---
CURRENT ASSETS
Debtors 5 1,942,079 1,313,386
Cash at bank and in hand 976,597 709,255
--- ---
2,918,676 2,022,641 CREDITORS: Amounts falling due within one
year 6 238,219 146,545
--- ---
NET CURRENT ASSETS 2,680,457 1,876,096
--- ---
TOTAL ASSETS LESS CURRENT LIABILITIES 2,712,979 1,913,161
CREDITORS: Amounts falling due after more
than one year 7 – 3,561
Growth Fund Grant in respect of Capital Expenditure 8 80,610 36,694
DWP Growth Fund Capital Grant 9 886,247 550,465
--- ---
1,746,122 1,322,441
============================================== ==============================================
CAPITAL AND RESERVES
Members share capital 11 1,573,201 1,270,657
General Reserves 12 59,374 51,784
Transfer of Growth Fund Capital Reserve 12 100,000 -
Income and expenditure account 13 13,547 –
--- ---
SHAREHOLDERS' FUNDS 14 1,746,122 1,322,441
============================================== ==============================================
These financial statements have been prepared in accordance with the version one provisions for credit unions under the Friendly Industrial and Provident Societies Act 1986.
These financial statements were approved by the Committee of Management and authorised for issue on ..., and are signed on their behalf by:
... ...…
T PRESSWOOD B JAMES
...
A McBEATH
Credit union Registration Number: 213400
The notes on pages 8 to 12 form part of these financial statements
8
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2010 1. ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared under the historical cost convention, and in accordance with applicable UK accounting standards.
Cash flow statement
The Committee of Management have taken advantage of the exemption in Financial Reporting Standard No 1 (Revised 1996) from including a cash flow statement in the financial statements on the grounds that the credit union is small.
Income
Income shown in the income & expenditure account represents amounts receivable in respect of loan interest, bank interest and grants received during the year.
The policy of the credit union is to recognise interest received on a daily basis.
Fixed assets
All fixed assets are initially recorded at cost.
Depreciation
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Fixtures & Fittings - 15% reducing balance basis Equipment - 33% straight line
Deferred DWP Growth Fund Grants
Deferred DWP Growth Fund Grants in respect of capital expenditure are treated as deferred income and are credited to the income and expenditure account over the estimated useful life of the assets to which they relate.
Deferred grants in respect of revenue items are credited to the income and expenditure account to match relevant expenditure. The grants shown in the balance sheet represent total grants receivable to date less the amounts so far credited to the income and expenditure account.
Taxation
UK Corporation tax is calculated on bank interest received during the year.
Provision for doubtful debts
The provision for doubtful debts is made in accordance with guidance issued by the FSA.
Amount of interest
Interest receivable on loans and other investments of the credit union are accounted for on the
accruals basis.
9
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2010 2. OPERATING SURPLUS
Operating surplus is stated after charging:
2010 2009
£ £
Committee of Management' remuneration – –
Depreciation of owned fixed assets 9,502 13,120
Auditor's fees 6,871 7,950
═══════ ═════════
3. DIVIDENDS
Dividends 2010 2009
£ £
Paid during the year:
Dividends on members shares - 7,971
══════════ ══════════
Proposed at the year-end:
Dividends on members shares 13,547 -
══════════ ══════════
4. TANGIBLE FIXED ASSETS
Fixtures &
Fittings
Computer
Equipment Total
£ £ £
COST
At 1 October 2009 38,095 42,294 80,389
Additions 1,459 3,500 4,959
───────── ───────── ─────────
At 30 September 2010 39,554 45,794 85,348
═════════ ═════════ ═════════
DEPRECIATION
At 1 October 2009 5,714 37,610 43,324
Charge for the year 5,076 4,426 9,502
───────── ───────── ─────────
At 30 September 2010 10,790 42,036 52,826
═════════ ═════════ ═════════
NET BOOK VALUE
At 30 September 2010 28,764 3,758 32,522
═════════ ═══════ ═════════
At 30 September 2009 32,381 4,684 37,065
═════════ ═══════ ═════════
10
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2010 5. DEBTORS
2010 2009
£ £
Amounts due from members for loans 1,928,620.46 1,372,230.57
Provision for doubtful debts (56,202) (82,399)
Prepayments & accrued income 57,636 23,554
Other debtors 12,025 -
───────────── ─────────────
1,942,079 1,313,386
═════════════ ═════════════
6. CREDITORS: Amounts falling due within one year
2010 2009
£ £
Juvenile Savings 22,889 27,900
Corporation Tax 668 3,217
Accruals & deferred income 19,106 12,963
Deferred DWP Revenue Grants 153,446 99,680
Credit Union Current Account 41,827 -
Other Creditors 283 2,785
────────── ──────────
238,219 146,545
══════════ ══════════
7. CREDITORS: Amounts falling due after more than one year
2010 2009
£ £
Other creditors – 3,561
════ ═══════
8. DWP AMOUNTS DESIGNATED FOR CAPITAL EXPENDITURE:
2010 2009
£ £
At 1 October 2009 36,694 -
Amounts received during the year 50,000 43,450
Amounts released in respect of depreciation of Capital Expenditure (6,084) (6,756)
────────── ─────────
Net balance at 30 September 2010 80,610 36,694
══════════ ══════════
The balance refers to monies received from the Department of Work and Pensions which have
been designated for Capital Expenditure and will be applied towards depreciation of the capital
expenditure in future periods.
11
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2010
9. DWP GROWTH FUND CAPITAL GRANTS
2010 2009
£ £
Received and receivable:
At 1 October 2009 550,465 519,873
DWP Loan and bank interest recycled 127,693 71,419
Capital received during the year 563,632 115,304
Bad debts written off (43,377) (37,681)
Amounts released in respect of Capital Expenditure (50,000) (43,450) Amounts released in respect of revenue expenditure (162.165) (75,000) Amounts released in respect of transfers to reserves ( 100,000)
────────── ─────────
Net balance at 30 September 2010 886,248 550,465
══════════ ══════════
The DWP Growth Fund Capital grant refers to monies received from the Department of Work and Pensions which will be applied towards capital lending and related expenditure in future periods.
10. RELATED PARTY TRANSACTIONS
No transactions with related parties were undertaken such as are required to be disclosed under Financial Reporting Standard 8.
11. MEMBERS SHARE CAPITAL
2010 2009
£ £
Balance brought forward 1,270,657 1,066,279
Net (reduction)/increase in members shares 302,544 204,378
────────── ─────────
At 30th September 2010 1,573,201 1,270,657
══════════ ═════════
12. RESERVES 2010 2009
£ £
General reserve balance brought forward: 51,784 49,880
Transfer from /(to) the Income & Expenditure Account 7,590 1,904
───────────── ──────────
Balance carried forward 59,374 51,784
═════════════ ══════════
2010 2009
£ £
Growth Fund Capital Reserve balance brought forward: - -
Transfer from Growth Fund Capital 100,000 -
───────────── ──────────
Balance carried forward 30
thSeptember 2010 100,000 -
═════════════ ══════════
12
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2010
13. INCOME & EXPENDITURE ACCOUNT
2009 2008
£ £
Balance brought forward - 12,601
Surplus for the financial year 21,137 1,904
Equity dividends paid - (7,971)
Surplus recycled to income & expenditure account (7,590) (4,630)
Transfer to general reserve - (1,904)
--- ---
Balance carried forward 13,547 -
========================== ===============================
14. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2010 2009
£ £
Surplus for the financial year 21,137 1,904
New members share capital subscribed 302,544 204,378
Surplus recycled to income and expenditure account (4,630)
Dividends paid (7,971)
Growth Fund Transfer Reserve 100,000 –
────────── ──────────
Net addition to shareholders' funds 423,681 193,681
Opening shareholders' funds 1,322,441 1,128,760
───────────── ─────────────
Closing shareholders' funds 1,746,122 1,322,441
═════════════ ═════════════
15. POST BALANCE SHEET EVENTS
In January 2011 the credit union contracted to pay £150,000 for the upgrade of the IT facilities. Of this amount £52,164 had been paid on account at the time of signing the accounts.
The upgrade is expected to be completed by June 2011.
13
MANCHESTER CREDIT UNION LIMITED
MANAGEMENT INFORMATION YEAR ENDED 30 SEPTEMBER 2010
The following pages do not form part of the statutory financial statements
which are the subject of the independent auditor's report on pages 4 to 5.
14
MANCHESTER CREDIT UNION LIMITED
DETAILED INCOME & EXPENDITURE ACCOUNT YEAR ENDED 30 SEPTEMBER 2010
2010 2009
£ £
INCOME
Loan interest 113,280 101,780
Bank interest received 2,992 4,316
Grant income 439,408 269,681
Bad debts recovered 8,912 8,013
Annual membership fees 11,590 8,603
Other income 76,275 8,132
Money Made Clear Income 29,143 17,462
Barclays marketing contribution – 7,500
────────── ──────────
681,600 425,487
OVERHEADS
Administrative expenses 659,676 421,929
────────── ──────────
SURPLUS ON ORDINARY ACTIVITIES 21,924 3,558
══════════ ══════════
15
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE DETAILED INCOME AND EXPENDITURE ACCOUNT YEAR ENDED 30 SEPTEMBER 2010
2010 2009
£ £ £
ADMINISTRATIVE EXPENSES Personnel costs
Wages and salaries 392,777 271,792
Establishment expenses
Rent, rates and water 30,288 15,055
Light and heat 3,046 1,952
Loan & share insurance 20,047 16,986
ABCUL fees 4,487 4,210
Office Repairs and maintenance 1,316 5,436
Property relocation costs – 1,618
───────── ─────────
59,184 45,257
──────────
General expenses
Training, travel & conferences 14,309 13,087
Telephone 11,528 4,611
Office expenses 6,951 6,234
Printing, stationery 9,050 5,233
Postage 1,788 1,750
Donations 126 –
Advertising & Marketing 2,782 7,499
General expenses 1,863 3,028
Credit agency fees 4,526 2,945
Legal and professional fees 6,292 1,280
CUCA Banking Platform set up fees 71,809 15,748
Accountancy fees 1,860 541
Auditors remuneration 6,871 7,950
Depreciation 9,502 13,120
────────── ─────────
149,257 83,026
──────────
Financial costs
Bad debts written off 84,385 42,871
Provision for doubtful debts (26,198) (21,318)
Bank charges 271 301
───────── ─────────
58,458 21,854
────────── ──────────
659,676 421,929
══════════ ══════════
