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Cara CREDIT UNION

TRALEE | CASTLEISLAND | KILLORGLIN | BALLYDUFF | CAUSEWAY

ACCOUNTS & NOTICE OF AGM 2021

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CARA CREDIT UNION LTD | ANNUAL REPORT 2021

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CONTENTS

Richard Bono Hon Secretary

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AGM Notice

Agenda

Chairperson’s Report

Board Oversight Committee

CEO Report

Directors’ Report

Directors’ Responsibilities Statement

Independent Auditors’ Report

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FiNANCiAL StAtEMENtS 2020/2021

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Income and Expenditure Account

Statement of Other Comprehensive Income

Balance Sheet

NEW NEW NEW

Statement of Changes in Reserves

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Notes to Financial Statements

information not forming part of the audited financial statements

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Schedules to the Income and Expenditure Account

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Nominations and Elections

Statement of Cash Flows

25 26-41

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CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTICE - CARA CREDIT UNION

the following information is pertinent to this notice.

ViRtUAL AGM to be held on Monday 13th December 2021 @ 7.30pm Notice is hereby given that the 2021 Virtual Annual General Meeting of the members of Cara Credit Union Limited will take place via Zoom Webinar on Monday 13th December @ 7.30pm. Members wishing to attend the Virtual AGM need to request an invitation to join and apply by visiting www.caracreditunion.ie You will be asked to complete a form seeking the following information: Name Member Number Member address Member email address

• Cara Credit union will be using Zoom Webinar as the electronic platform for the meeting. • To gain access to the meeting a member must request an invitation to the virtual meeting by visiting our website www.caracreditunion.ie or emailing agm@caracreditunion.ie. This request must be received by 5.00pm on 9th December 2021. Following the request for invitation the member will receive an invitation before 12.00pm on 13th December. This will allow the member to join the meeting. • The information required to request an invitation is your name, member number and address. • The Credit Union will be verifying members details prior to issuing invitations. • In order to register for the Virtual AGM, each member will require a personal email. Please note that a group or general mailbox will not be accepted (e.g., info@club.ie, team1@xyzltd.ie) • All non-presenting participants will have their microphones muted and have their cameras switched oﬀ to allow the smooth running of the meeting. • If a member wishes to submit a question this can be typed to the host by clicking on the ‘chat’ button on the bottom of the screen. • The elections for the position of auditor, Board Oversight Committee and Board of Directors will require a vote.

the request for attendance must be received by 5.00pm on thursday 9th December 2021.

• Voting will be conducted by way of the online poll facility and Members will be asked to vote electronically for each candidate when instructed by the Chairperson. • Votes will be tallied electronically, verified and recorded by the meeting Secretary. • This virtual AGM meeting will be recorded and members who register for the meeting will be agreeing to the recording of the meeting and their participation in it.

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

AGENDA

CARA CREDIT UNION BOARD OF DIRECTORS & BOARD OVERSIGHT COMMITTEE

the agenda for the Virtual Annual General Meeting is as follows:

Invocation - Credit Union Prayer

Acceptance of Proxies (if any) by the Board of Directors

Ascertain that a Quorum is present

Adoption of Standing Orders

Approval of the Minutes of 2020 AGM

Caroline Sugrue Chairperson

Eddie Enright Vice Chairperson

Sean Roche

Danny Kerins

Richard Bono

Tom Lawlor

Conor Fitzgerald

Appointment of Tellers and Report of the Nomination Committee and Election of Auditor, Board Oversight Committee and Board of Directors.

Report of the Board of Directors; incorporating the reports of the Credit

Lily Tangney

John O’Regan

John Welch

Patrick O’Brien

Ann-Marie Brosnan

Stephen Sullivan

Clare Lucid

Seamus Buckley

Committee, Credit Control Committee and Membership Committee 8.

BOARD OVERSIGHT COMMITTEE

Approval of the League Aﬀiliation Fees - €1.00 per member to be automatically deducted from members accounts

Presentation of annual accounts

10. Report of the auditor 11. Report of the Board Oversight Committee John O’Connor

12. AGM Members Draw 13. Announcement of election results 14. Any other Business

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

CHAIRPERSON’S REPORT 2021

While we continue living in unprecedented times, 2021 has also been a time of discovery and growth for Cara Credit Union. We are extremely proud to report that Cara Credit Union has had a successful year, meeting its strategic priorities and injecting over €42 million into the local economy by way of loans for both personal and business needs. On behalf of your Board of Directors, I would like to invite you to attend our 54th AGM. Unfortunately, due to rising Covid-19 numbers we have taken the difficult decision to once again host our AGM virtually. If you have any comments or questions I would love to hear from you. You can submit your questions in advance of the AGM by emailing agm@caracreditunion.ie In March of 2021 we were delighted to welcome our newest members from North Kerry as Cara Credit Union and Clanmaurice Credit Union merged. Together we will build a stronger credit union in our communities of Tralee, Castleisland, Killorglin, Ballyduff and Causeway. We would like to especially thank the members of Clanmaurice Credit Union who have shown Cara Credit Union such support since we merged. We are most grateful. In October, Credit Unions claimed the top position for the best customer experience in Ireland at the CXi awards for the seventh year in a row. This is of little surprise to the Board of Cara Credit Union, the team at Cara Credit Union understand the needs of their members at different stages of their lives and tailor their services accordingly. Best in class customer, or member, experience happens organically with 8

staff not even realising they are ticking all the emotional drivers on which CX is measured. Credit Union values and ethos are not just words, they are put into action on a daily basis by our friendly, understanding and people focused staff. I would like to thank all the Management and Staff for their tireless work each and every day. 2021 has seen Cara Credit Union invest heavily in both product development and services to enhance our members experience, making it easier for our members to transact with Cara Credit Union, from the comfort of their own home or from anywhere in the world. We continue to keep our members at the forefront of all we do and strive to enhance the customer experience and adapt as an organisation through technology and new offerings for you, our members. For the first time ever members can now apply for a loan online or over the phone, sign for the loan online and transfer the funds online. We upgraded our mobile app for an enhanced mobile service, including the ability to transfer funds, pay bills, get a loan or apply for a current account. In line with our strategic vision, we launched an extensive suite of Business Loans, including two loan types from the SBCI (Strategic Banking

CHAIRPERSON’S REPORT contd.

Corporation of Ireland). In fact, Cara Credit Union was one of the first community lenders in Ireland to participate in the Covid-19 Credit Guarantee Scheme. This scheme is designed to assist businesses, including primary producers, impacted by Covid-19 to access credit. More recently, the Brexit Impact Loan Scheme has been introduced. This is a medium-term, lower cost scheme to fund working capital and investments for businesses, including primary producers impacted by Brexit As an organisation, we continue to challenge ourselves to contribute to the sustainability of our planet. Some of you may have received this booklet by email and some of you will receive your statements via your online banking. By signing up for online banking, you are helping us to reduce our carbon footprint, so thank you. To further enhance our vision to become a greener credit union we have partnered with Energia and ‘House 2 Home’ to launch CU Greener Homes, a one-stop-solution for all your home energy efficiency improvements. We have seen that there is a clear demand amongst our members to undertake improvements to maximise the energy efficiency of their homes. The CU Greener Homes initiative is an excellent opportunity for members to get all of their green home improvement needs completed in one go. See our website www.caracreditunion.ie to apply or call our Member Services Centre to find out more. In 2021, we started working with Irish Life. Together we will help our members build better futures, to be better planned, better protected and better off. You can book a time for your FREE financial review by visiting caracreditunion.ie

Due to the investment in new products and services, we are delighted to report Cara Credit Union has had a very successful year. The support we have received from our members has been exceptional. Our loan book now stands at €98.8 million, which is an increase of 9.4% on last year. In the financial year, Cara Credit Union lent €42.1 million to you, our members. The majority of these new loans are put back into the local community in the form of car purchases, home improvements, business loans and education loans, which helps to strengthen the indigenous economy and keeps jobs local. Unfortunately, investment return remains very low and this continues to put pressure on the ‘loan book’ to provide the required income to cover expenses, maintain reserves and pay a dividend. At the end of the year the Board considered their options in relation to the distribution of any surplus. As with every yearend the Board have some very diﬀicult decisions to make and take guidance from the Management team in place. As a result the Board, taking all matters into consideration are taking the prudent decision not to pay a dividend this year. Your Board works diligently throughout the year on your behalf and met virtually a total of 16 times to discharge their regulatory and fiduciary duties. The focus areas for the Board continue to be: Financial Strength, Risk Management, Compliance, Strategy and Sound Governance practice. It is important to remember that the Board and committee members fulfil their duties on a voluntarily basis. Increased regulation and 9

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

CHAIRPERSON’S REPORT contd.

BOARD OVERSIGHT COMMITTEE

understanding of legislation places a significant responsibility on these volunteers in relation to discharging their duties eﬀectively. With continued training and learning, the Board perform their Credit Union roles most eﬀectively and, on your behalf, I thank them all for their time and dedication.

Finally, a special word of thanks to you, our members. Your continued support is key in keeping Cara Credit Union strong and sustainable going into the future. We want to thank you for your unwavering commitment and loyalty in 2021 and we look forward to further growth in 2022.

The AGM on December 13th will be one of my last duties as Chairperson of Cara Credit Union. It has been a pleasure to see Cara Credit Union go from strength to strength, with the name change, merger with Clanmaurice and the launch of a current account and debit card as some of the highlights. Together with the Board of Directors and Management Team we are optimistic for our future. We will continue to grow our loan book, introduce new products, new services and implement new technology that will enhance your interactions with us.

I look forward to addressing you all at our virtual AGM.

I would like to express a very special thanks to the Staﬀ and Management of Cara Credit Union who work so tirelessly every day and with such passion to provide such a personal and dedicated service to all our members. I would especially like to thank all my fellow Directors who have supported me. I would like to thank the Board Oversight Committee for ensuring we are always at our best, protecting our Credit Union for future generations.

Caroline Sugrue Chairperson Cara Credit Union

The Board Oversight Committee (BOC) has the task of ensuring that the Board of Directors function, as laid out by the Credit Union Acts and good corporate governance practice. The BOC considers the overall responsibilities of the Board and the functioning of the Directors. There are a number of responsibilities specified by the Credit Union Act 2012 but the principal three are as follows; Strategy Implementation and Review, Risk Assessment and Management, and Effectiveness of Management and Procedures. These core responsibilities are the foundation of a strong functioning credit union Board and one of the main guidance to the BOC when evaluating and reviewing the board’s performance. Over the past year, at least one member of the BOC has been present/online at all Board meetings. At our request, we have received additional information where required. The BOC held a meeting at least once a month, separately to the Board to review and discuss the Board function and performance. 2021 has again proved to be a difficult year with the ongoing Coronavirus pandemic. Cara Credit Union has again managed this with very little impact on operations. All branches remained open while ensuring the safety of customers and staff. Excess cashflow continues to be an issue with Cara Credit Union. Savings are at record high levels, members have decreased borrowing requirements, and increased cash reserves.

Unfortunately, an additional saving cap was necessary because of this. Cara Credit Union has offered a wider range of loans to grow the loan book. We would like to commend the Board, Management and Staff on the merger with Clanmaurice Credit Union. The process was well managed and completed in a timely manner. The BOC welcomed two new members this year increasing its membership from three to five during 2021. We would like to welcome Seamus Buckley and Clare Lucid to BOC. It is our opinion that the Board and Management have taken the appropriate steps ensuring that CCU are prepared for the challenges that are facing the Credit Union and financial environment in the coming years. We wish to thank the Board, Management and Staff for their support and co-operation during the year.

Patrick O’Brien Chairperson BOC

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

CEO REPORT contd.

CEO REPORT 2021

First and foremost, the Management team and I hope you, your families and loved ones all remain safe and well throughout this diﬀicult time. 2021 was a solid performance for your credit union in terms of financial performance and delivering on our strategic priorities. Members: In March of 2021 we had a successful Transfer of Engagement with our neighbours, Clanmaurice Credit Union. I would like to take this opportunity to extend a warm welcome to these members and thank them for their patience and understanding at the time of the transfer. I would also like to welcome our newest Cara Credit Union members, 1,485 people joined us over the last 12 months. New members are always welcome to join and we ask that you encourage family and friends to join their local credit union. We are stronger together, and growing membership allows us invest in new products and services. I would especially like to welcome our new youth accounts, as they are our future.

However, this is all dependent on our income and the economic outlook. Our Member Services Centre continues to go from strength to strength. More and more of our members are deciding to do their transactions online and by phone. We are answering on average 248 calls a day and 65% of our calls are answered within 60 seconds. This team is just over a year in operation and our priority for the next 12 months is to reduce call waiting times.

Our team: I would like to thank all the team at Cara Credit Union for ensuring, you, the members, received the best possible service over the last 12 months. Our focus is to mind both our staﬀ and members and to ensure we have a safe environment where members can transact while also providing a professional and excellent service to all our members. It is for this commitment to you our members that the Credit Union sector won the Customer Service award for a 7th year in a row. This is a marvellous achievement given the large organisations we are competing against. In May of 2021, our dear friend and colleague, Norma Twomey passed away. Norma is missed by all our team and our members alike. On behalf of the team I would like to thank all the members who contacted us oﬀering their condolences and sharing their heart-warming stories of Norma’s genuine kindness. Norma will never be forgotten by all of us who had the pleasure to know her.

We had some very diﬀicult decisions to make during the year and these decisions are to ensure your Credit Union remains strong and viable. At this time, we must continue with our savings cap of €30,000. Additionally, due to the departure of some of the retail banks from Tralee, Castleisland and Killorglin, and an increase in savings we had to further limit the savings limits for new members. This is necessary to ensure our credit union remains strong.

Technology is evolving daily, and we are conscious that we need to provide you with a hybrid service - member facing and technology. As a member, you now have the option to engage with us online, by phone or in person. For the first time ever, you can apply for a loan online or by phone, send your paperwork by email, sign online and get the funds transferred into any account. Your family and friends can now join Cara Credit Union online. In the last 2 years we have invested heavily to ensure our members can access their credit union 24/7 from the comfort of their own home, their workplace or on the go. If you haven’t already signed up for online banking, now is the time!

In Cara Credit Union, our team and members will miss Martina O’Brien. Martina, well known by many of you, having served with Cara Credit Union for 16 years, was an excellent ambassador for the credit union and worked diligently to serve our members.

The Management Team will continue to review these savings caps. With an increase in lending and members support in moving their Current Account to Cara Credit Union, we hope to ease the savings caps over the coming 12 months.

Finally, I would like to thank our existing members for their continuous support of Cara Credit Union. We are very grateful for this ongoing support and without this support we will struggle to exist.

In Clanmaurice, Shelia Ashe, Helen Quilter, Mary Dowling and Mary Slattery retired over the last 12 months. Each served the members of the Credit Union with distinction, always going the extra mile.

Retirements: This year we saw some of our esteemed colleagues retire from Cara Credit Union and Clanmaurice Credit Union.

On behalf of the Board of Directors, Management and all the Team I would like to thank Martina, Shelia, Helen, Mary Dowling and Mary Slattery for their incredible contributions to our teams. We hope you enjoy your future adventures during your retirement. Financial: At year end our loan book stood at €98.8 million. We had an increase of 9.4% on the previous year. Given the impact Covid-19 has had on our local economy, this was a very solid performance. Our investment income remained steady with an increase of 2.8% to €1,347,270, with our overall income increasing 5.6% to €8,446,229. Our expenses have decreased by 17% to €6,608,166. Our employment costs and other management expenses were managed within budget. The overall, position leaves us with a surplus of €1,838,063 for the year end. As a Management Team, we are satisfied with this performance given the diﬀicult financial environment we currently operate in. Our Balance Sheet is in a strong financial position in terms of capital and liquidity, which will hold us in good stead for another very challenging year ahead of us. Corporate Social Responsibility (‘CSR’): We as an organisation have set ambitious plans to ensure Cara Credit Union will be a ‘Greener’ credit union. We recently launched a Greener Home Loan, working with SEAI, Home2Home and Energia with grants of up to 40% available and loans from as low as 4.9% APR. To reduce our paper consumption, we are asking for your consent to communicate with you via 13

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

CEO REPORT contd.

email. See our website, call us or the next time you are in one of our branches, give us your details. You can also help by signing up for online banking to view your statement, instead of printing. We will have lots more initiatives to make us a ‘Green Credit Union’, so watch this space! As a community-based organisation, we continue to support our communities, clubs and associations within our common bond. Again, this year over €80,000 was made available in sponsorship, community projects, Lauri Healy Community Sponsorship Awards and our Education and Dan Kellegher Memorial Awards. This is only achievable due to the continued support we receive from our members. So, Thank you. Compliance: New regulations are being applied to credit unions and the broader financial services industry at an ever-increasing rate with the requirement to apply increased resources to risk and compliance functions. These regulations are of critical importance with the purpose being to ensure that not only are your savings protected but that also your credit union is a compliant organisation.

She can be very proud of her achievement over her term which included a name change and a successful Transfer of Engagement with Clanmaurice Credit Union. I am delighted to say that Caroline will be remaining on the Board. I would also like to thank all the Directors and all my colleagues within Cara Credit Union for their ongoing support during the year which allowed me to fulfil my role as CEO. Finally, I want to again thank you, our members, for your ongoing support. We are only as strong as the support we receive, and we are grateful for this. Remember your local credit union is here for the long haul, supporting our members and our communities. Thank you.

FiNANCiAL StAtEMENtS 2020/2021

Pa Laide CEO Cara Credit Union

thank You: I would like to thank our Chairperson, Caroline Sugrue, for her commitment, dedication, and support that she has provided to both myself and to Cara Credit Union over the past 4 years as Chairperson.

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

DIRECTORS’ REPORT contd.

DIRECTORS’ REPORT For the Financial year ended 30 September 2021

The directors present their annual report and the audited financial statements for the financial year ended 30 September 2021. Principal Activity The principal activity of the business continues to be the operation of a credit union. Authorisation The credit union is authorised as follows: • Insurance/reinsurance or ancillary insurance intermediary under the European Union (Insurance Distribution) Regulations, 2018. • Investment Intermediaries (Restricted Activity Investment Product Intermediary) pursuant to Section 26 of the Investment Intermediaries Act, 1995 (as amended). • Entitled under the European Union (Payment Services) Regulations 2018 to provide payment services. Business Review The directors acknowledge the results for the year and the year-end financial position of the credit union. The directors expect to develop and expand the credit union’s current activities and they are confident of its ability to continue to operate successfully in the future. Dividends The directors are not proposing a dividend in respect of the financial year ended 30 September 2021 (2020: The directors did not propose a dividend). Principal Risks and Uncertainties The principal risks and uncertainties faced by the credit union are:

Credit Risk Credit risk is the risk that a borrower will default on their contractual obligations relating to repayments to the credit union, resulting in financial loss. Lack of Loan Demand Lending is the principal activity of the credit union and the credit union is reliant on it for generating income to cover costs and generate a surplus. Market Risk Market risk is the risk that the value of an investment will decrease. This risk can arise from fluctuations in values of, or income from, assets or changes in interest rates. Liquidity Risk Liquidity risk is the risk that the credit union will not have suﬀicient cash resources to meet day to day running costs and repay members’ savings when demanded. Operational Risk Operational risk is the risk of loss resulting from inadequate or failed processes or systems of the credit union, any failure by persons connected with the credit union or from external events. COViD-19 Risk There is an economical and operational risk relating to the uncertainty surrounding the impact of the COVID-19 pandemic.

These risks and uncertainties are managed by the board of directors as follows: Credit Risk In order to manage this risk, the board of directors regularly reviews and approves the credit union’s credit policy. All loan applications are assessed with reference to the credit policy in force at the time. Subsequently loans are regularly reviewed for any factors that may indicate that the likelihood of repayment has changed. Lack of Loan Demand The credit union provides lending products to its members and promote these products through various marketing initiatives. Market Risk The board of directors regularly reviews and approves the credit union’s investment policy and funds are invested in compliance with this policy and regulatory guidance. Liquidity Risk The credit union’s policy is to maintain suﬀicient funds in liquid form at all times to ensure that it can meet its liabilities as they fall due. Operational Risk The operational risk of the credit union is managed through the employment of suitably qualified staﬀ to ensure appropriate processes, procedures and systems are implemented and are further supported with a robust reporting structure. COViD-19 Risk The board of directors and management closely monitor the evolution of the COVID-19 pandemic

and continue to take appropriate actions to mitigate any possible adverse effects on the credit union. Accounting Records The directors believe that they comply with the requirements of Section 108 of the Credit Union Act, 1997 (as amended) with regard to books of account by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The books of account of the credit union are maintained at the credit union's premises at 4547 Ashe Street, Tralee, Co. Kerry. Events after the end of the Financial Year There have been no significant events affecting the credit union since the year end. Auditors In accordance with Section 115 of the Credit Union Act, 1997 (as amended), the auditors Grant Thornton offer themselves for re-election.

This report was approved by the board and signed on its behalf by:

Caroline Sugrue Chairperson of the Board of Directors

tom Lawlor Member of the Board of Directors Date 10th November 2021 17

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

DIRECTORS’ RESPONSIBILITIES STATEMENT For the Financial year ended 30 September 2021

The directors are responsible for preparing the financial statements in accordance with applicable Irish law and regulations. The directors are also responsible for preparing the other information included in the annual report. The Credit Union Act, 1997 (as amended) requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of aﬀairs of the credit union and of the income and expenditure of the credit union for that period. In preparing those financial statements the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether the financial statements have been prepared in accordance with applicable accounting standards, identify those standards, and note the eﬀect and reason for any material departure from those standards; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the credit union will continue in business.

BOARD OVERSiGht COMMittEE'S RESPONSiBiLitiES StAtEMENt For the Financial year ended 30th September 2021 18

The directors are responsible for ensuring that the credit union keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the credit union, enable at any time the assets, liabilities, financial position and income and expenditure of the credit union to be determined with reasonable accuracy, enable them to ensure that the financial statements comply with the Credit Union Act, 1997 (as amended) and enable the financial statements to be audited. 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. This statement was approved by the board on 10th November 2021 and signed on its behalf by:

Caroline Sugrue Chairperson of the Board of Directors

tom Lawlor Member of the Board of Directors 10th November 2021

The Credit Union Act, 1997 (as amended) requires the appointment of a board oversight committee to assess whether the board of directors has operated in accordance with part iv, part iv(a) and any regulations made for the purposes of part iv or part iv(a) of the Credit Union Act, 1997 (as amended) and any other matter prescribed by the Central Bank of Ireland in respect of which they are to have regard to in relation to the board of directors.

Patrick O’Brien Chairperson of the Board Oversight Committee

INDEPENDENT AUDITORS’ REPORT OF CARA CREDIT UNION LIMITED Opinion We have audited the financial statements of Cara Credit Union Limited, which comprise the income and expenditure account, the statement of other comprehensive income, the balance sheet, the statement of changes in reserves and the statement of cash flows for the financial year ended 30 September 2021, and the related notes to the financial statements, including the summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the financial statements is Irish law including the Credit Union Act, 1997 (as amended) and accounting standards issued by the Financial Reporting Council including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (Generally Accepted Accounting Practice in Ireland). In our opinion, Cara Credit Union Limited’s financial statements: • give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland of the state of the credit union’s aﬀairs as at 30 September 2021 and of its income and expenditure and cash flows for the year then ended; and • have been properly prepared so as to conform with the requirements of the Credit Union Act, 1997 (as amended). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (‘ISAs (Ireland)’) and applicable law. Our responsibilities under those standards are further described in the ‘responsibilities of the auditor for the audit of the financial statements’ section of our report. We are independent of the credit

union in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, including the Ethical Standard for Auditors (Ireland) issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the entity. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is suﬀicient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the director’s use of going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the credit union’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Other information Other information comprises information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial 19

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

INDEPENDENT AUDITORS’ REPORT TO MEMBERS contd.

statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Matters on which we are required to report by the Credit Union Act, 1997 (as amended) Based solely on the work undertaken in the course of the audit, we report that: • we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; • in our opinion proper accounting records have been kept by the credit union; • the financial statements are in agreement with the accounting records of the credit union; and • the financial statements contain all primary statements, notes and significant accounting policies required to be included in accordance with section 111(1)(c) of the Act.

Responsibilities of directors for the financial statements As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements which give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland, including FRS 102, and for such internal control as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the credit union’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intends to liquidate the credit union or to cease operations, or has no realistic alternative but to do so. Responsibilities of the auditor for the audit of the financial statements The auditor’s objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes their opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs (Ireland), the auditor will exercise professional

INDEPENDENT AUDITORS’ REPORT TO MEMBERS contd.

judgement and maintain professional scepticism throughout the audit. The auditor will also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suﬀicient and appropriate to provide a basis for their opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eﬀectiveness of the credit union’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the credit union’s ability to continue as a going concern. If they conclude that a material uncertainty exists, they are required to draw attention in the auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify their opinion. Their conclusions are based on the audit evidence

obtained up to the date of the auditor’s report. However, future events or conditions may cause the credit union to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. The auditor communicates with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that may be identified during the audit. the purpose of our audit work and to whom we owe our responsibilities This report is made solely to the credit union’s members, as a body, in accordance with section 120 of the Credit Union Act, 1997 (as amended). Our audit work has been undertaken so that we might state to the credit union’s members 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 members as a body, for our audit work, for this report, or for the opinions we have formed. Denise O’Connell FCA for and on behalf of Grant Thornton Chartered Accountants & Statutory Audit Firm Mill House, Henry Street, Limerick 10th November 2021 21

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

INCOME & EXPENDITURE ACCOUNT

BALANCE SHEET

For the Financial year ended 30th September 2021

aS at 30th September 2021

iNCOME

Schedule

Interest on members’ loans Other interest income and similar income NEt iNtERESt iNCOME Other Income tOtAL iNCOME

1 2

2021 €

2020 €

6,752,191 1,347,270 8,099,461 346,768 8,446,229

6,594,350 1,310,981 7,905,331 92,044 7,997,375

2,777,429 3,788,185 146,755 (104,203) 6,608,166

2,518,668 3,326,718 125,992 281,541 1,723,878 7,976,797

1,838,063

20,578

ExPENDitURE Employment costs Other management expenses Depreciation Impairment of premises Net impairment (gains)/losses on loans to members tOtAL ExPENDitURE

SURPLUS FOR thE FiNANCiAL YEAR

STATEMENT OF OTHER COMPREHENSIVE INCOME For the Financial year ended 30th September 2021

Surplus for the financial year Other comprehensive income tOtAL COMPREhENSiVE iNCOME FOR thE FiNANCiAL YEAR

2021 €

2020 €

1,838,063 1,838,063

20,578 20,578

The financial statements were approved and authorised for issue by the Board and signed on behalf of the credit union by: CEO: Chairperson Board of Directors: Chairperson Board Oversight Committee:

The notes on pages 26 to 41 form part of these financial statements. 22

Patrick Laide 10th Nov. 2021 Caroline Sugrue 10th Nov. 2021 Patrick O’Brien 10th Nov. 2021

2021 ASSEtS

2020

Notes

€

8 8 9 10 15 11 12 13

5,675,461 48,576,873 136,900,261 98,824,435 (7,713,548) 7,318 2,196,327 265,000 695,529 285,427,656

3,234,527 36,942,154 122,702,032 90,347,488 (7,168,641) 2,075 1,934,256 265,000 585,940 248,844,831

14 14 15 16 17

240,724,795 199,533 3,149,067 977,079 56,920 245,107,394

208,669,102 174,981 1,683,559 2,015,700 62,508 212,605,850

19 19

28,684,000 1,588,282

26,132,529 1,426,386

19 19

9,837,839 210,141 40,320,262

8,468,061 212,005 36,238,981

285,427,656

248,844,831

Cash and balances at bank Deposits and investments – cash equivalents Deposits and investments – other Loans to members Provision for bad debts Members’ current accounts overdrawn Tangible fixed assets Investments in associates Prepayments and accrued income tOtAL ASSEtS LiABiLitiES Members’ shares Members’ deposits Members’ current accounts Other liabilities, creditors, accruals and charges Other provisions tOtAL LiABiLitiES RESERVES Regulatory reserve Operational risk reserve Other reserves - Realised reserves - Unrealised reserves TOTAL RESERVES TOTAL LIABILITIES AND RESERVES

The financial statements were approved and authorised for issue by the Board and signed on behalf of the credit union by: CEO: Chairperson Board of Directors: Chairperson Board Oversight Committee:

Patrick Laide 10th Nov. 2021 Caroline Sugrue 10th Nov. 2021 Patrick O’Brien 10th Nov. 2021

The notes on pages 26 to 41 form part of these financial statements. 23

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

STATEMENT OF CHANGES IN RESERVES

STATEMENT OF CASH FLOWS

For the Financial year ended 30 September 2021

Regulatory Reserve €

Operational Risk Reserve €

As at 1 October 2019 25,517,529 Surplus for the financial year Dividends paid Transfers between reserves 615,000 As at 1 October 2020 26,132,529 Surplus for the financial year Transfers of engagements 2,000,000 Transfers between reserves 551,471 As at 30 September 2021 28,684,000

1,420,940 5,446 1,426,386 161,896 1,588,282

Realised Unrealised Reserve Reserves € €

2021 €

2020 €

40,176,681

39,500,361

38,414,086 (42,165,338) 6,752,191 1,347,270 745,879 346,768 47,662,303 (46,202,038) (6,565,614) (1,282,171) (946,664)

35,761,790 (36,013,718) 6,594,350 1,310,981 582,481 92,044 (19,102) 15,632,508 (13,953,591) (5,845,386) (252,001) 3,890,356

14,379,829 (47,285) (14,198,229) 134,315

(146,458) (7,732,060) (7,878,518)

187,857,354 (172,969,352) 14,888,002

207,513,233 (202,848,751) 4,664,482

14,075,653

676,320

54,252,334

40,176,681

total

notes

€

OPENiNG CASh AND CASh EqUiVALENtS 9,116,643 (9,034) (19,102) (620,446) 8,468,061 1,830,287 66,993 (527,502) 9,837,839

182,393 29,612 212,005 7,776 14,329 (23,969) 210,141

36,237,505 20,578 (19,102) 36,238,981 1,838,063 2,243,218 40,320,262

• The regulatory reserve of the credit union as a percentage of total assets as at 30 September 2021 was 10.05% (2020: 10.50%). • The operational risk reserve of the credit union as a percentage of total assets as at 30 September 2021 was 0.56% (2020: 0.57%).

The notes on pages 26 to 41 form part of these financial statements.

Cash flows from operating activities Loans repaid by members Loans granted to members Interest on members’ loans Other interest income and similar income Bad debts recovered and recoveries Other income Dividends paid Members' current accounts lodgements Members' current accounts withdrawals Operating expenses Movement in other assets and liabilities Net cash flows from operating activities

9 9

15 15

CASh FLOWS FROM iNVEStiNG ACtiVitiES Cash and investments introduced from transfers of engagements Fixed asset (purchases)/disposals Net cash flow from other investing activities Net cash flows from investing activities CASh FLOWS FROM FiNANCiNG ACtiVitiES Members’ savings received Members’ savings withdrawn Net cash flow from financing activities

14 14

Net increase in cash and cash equivalents CLOSiNG CASh AND CASh EqUiVALENtS

The notes on pages 26 to 41 form part of these financial statements.

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS contd.

For the Financial year ended 30 September 2021

1. LEGAL AND REGULAtORY FRAMEWORk Cara Credit Union Limited is registered with the Registry of Credit Unions and is regulated by the Central Bank of Ireland. The registered oﬀice of the credit union is located at 45-47 Ashe Street, Tralee, Co. Kerry. 2. ACCOUNtiNG POLiCiES 2.1 Basis of Preparation of Financial Statements The financial statements have been prepared in accordance with applicable Irish accounting standards, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and Irish statute comprising of the Credit Union Act, 1997 (as amended). The financial statements have been prepared on the historical cost basis. The financial statements are presented in Euro (€) which is also the functional currency of the credit union. The following principal accounting policies have been applied: 2.2 Statement of Compliance The financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (FRS 102). 2.3 Going Concern After reviewing the credit union’s projections, the directors have reasonable expectation that the credit union has adequate resources to continue in operational existence for the foreseeable future. The credit union therefore continues to adopt the going concern basis in preparing its financial statements. 26

2.4 income interest on Members’ Loans Interest on members’ loans is recognised on an accruals basis using the effective interest method. Deposit and investment income Investment income is recognised on an accruals basis using the effective interest method. Other income Other income is recognised on an accruals basis. 2.5 Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and deposits and investments with a maturity of less than or equal to three months. 2.6 Deposits and investments held at Amortised Cost Investments designated on initial recognition as held at amortised cost are measured at amortised cost using the effective interest method less impairment. This means that the investment is measured at the amount paid for the investment, minus any repayments of the principal; plus or minus the cumulative amortisation using the effective interest method of any difference between the amount at initial recognition and the maturity amount, minus, in the case of a financial asset, any reduction for impairment or uncollectability. Central Bank Deposits Credit unions are obliged to maintain certain minimum deposits with the Central Bank but may also hold an excess over the regulatory minimum. The regulatory minimum deposits are technically assets of the credit union but to which the credit union has restricted access. The regulatory minimum portion will not ordinarily be returned to

the credit union while it is a going concern and is separately identified in note 8, Deposits and investments - other. Funds held with the Central Bank in excess of the regulatory minimum requirements are fully available to the credit union and are therefore treated as cash equivalents and are separately identified in note 8, Deposits and investments - cash equivalents. The amounts held on deposit with the Central Bank are not subject to impairment reviews. investments at Fair Value Investments held for trading and investment in stock market shares (i.e. non-convertible preference shares and non-puttable ordinary shares or preference shares) are included in this category. Financial assets at fair value are classified as held for trading if they are acquired for sale in the short term. They are valued at fair value (market value) at the year-end date and all gains and losses are taken to the income and expenditure account. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market these assets will be carried at cost less impairment. 2.7 Financial Assets - Loans to Members Loans are financial assets with fixed or determinable payments. Loans are recognised when cash is advanced to members and measured at amortised cost using the eﬀective interest method. Loans are derecognised when the right to receive cash flows from the asset has expired, usually when all amounts outstanding have been repaid by the member. 2.8 Provision for Bad Debts The credit union assesses if there is objective evidence that any of its loans are impaired with due

consideration of environmental factors. The loans are assessed collectively in groups that share similar credit risk characteristics. Individually significant loans are assessed on a loan by loan basis. In addition, if there is objective evidence that any individual loan is impaired, a specific loss will be recognised. Bad debt provisioning is monitored by the credit union, and the credit union assesses and approves its provisions and the adequacy of same on a regular basis. Any bad debts/impairment losses are recognised in the income and expenditure account. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the income and expenditure account. 2.9 tangible Fixed Assets Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The credit union adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the credit union. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the income and expenditure account during the period in which they are incurred. 27

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The contributions are recognised as an expense in the income and expenditure account when they fall due. Amounts not paid are shown in accruals as a liability on the balance sheet. The assets of the plan are held separately from the credit union in independently administered funds.

Depreciation is provided on the following basis: Freehold premises 2% straight line per annum Fixtures and fittings 10% straight line per annum Leasehold improvements Over the lesser of the useful economic life and the remaining term of the lease Computer equipment 25% straight line per annum The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘other gains’ or ‘other losses’ in the income and expenditure account. 2.10 impairment of Assets At each reporting date assets are reviewed to determine whether there is any indication that those assets have suﬀered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any aﬀected asset is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in the income and expenditure account. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is 28

recognised immediately in the income and expenditure account. 2.11 investments in Associates Investments in associates are accounted for at cost less impairment. 2.12 Other Receivables Other receivables such as prepayments are initially measured at transaction price including transaction costs and are subsequently measured at amortised cost using the eﬀective interest method. 2.13 Financial liabilities - members’ shares and members’ deposits Members’ shares and members’ deposits are redeemable and therefore are classified as financial liabilities. They are initially recognised at the amount of cash deposited and subsequently measured at amortised cost. 2.14 Members’ Deposits Interest on members’ deposits is recognised on an accruals basis using the eﬀective interest method. 2.15 Members’ Current Accounts The credit union provides Member Personal Current Account Services in accordance with Section 49(3) of the Credit Union Act, 1997 (as amended). 2.16 Other Payables Short term other liabilities, creditors, accruals and charges are measured at the transaction price. 2.17 Pension Costs The credit union operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the credit union pays fixed contributions into a separate entity. Once the contributions have been paid the credit union has no further payments obligations.

2.18 holiday Pay A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date. 2.19 Operating Leases Rentals payable under operating leases are charged to the income and expenditure account on a straight line basis over the lease term. 2.20 Derecognition of Financial Liabilities Financial liabilities are derecognised when the obligations of the credit union specified in the contract are discharged, cancelled or expired. 2.21 Regulatory Reserve The Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 requires credit unions to establish and maintain a minimum regulatory reserve requirement of at least 10 per cent of the assets of the credit union. This reserve is to be perpetual in nature, freely available to absorb losses, realised financial reserves that are unrestricted and non-distributable. 2.22 Operational Risk Reserve Section 45(5)(a) of the Credit Union Act, 1997 (as amended) requires each credit union to maintain an additional reserve that it has assessed is required for operational risk having regard to the nature, scale and complexity of the credit union. Credit unions are required to maintain a minimum

operational risk reserve having due regard for the sophistication of the business model. The definition of operational risk is the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events. The directors have considered the requirements of the Act and have considered an approach to the calculation of the operational risk reserve. The credit union uses the Basic Indicator Approach as set out in the operational risk measurements techniques proposed under Basel II capital adequacy rules for banking institutions in calculating the operational risk reserve. Therefore the credit union will hold an operational risk reserve which will at a minimum equal 15% of the average positive gross income for the previous three years. For any year in which there was a deficit, this will be excluded from the calculation. In addition, the credit union has included in its operational risk reserve a Member Personal Current Account Service operational risk reserve, in accordance with Section 49(3) of the Credit Union Act, 1997 (as amended). 2.23 Other Reserves Other reserves are the accumulated surpluses to date that have not been declared as dividends returnable to members. The other reserves are subdivided into realised and unrealised. In accordance with the Central Bank guidance note for credit unions on matters relating to accounting for investments and distribution policy, investment income that has been recognised but will not be received within 12 months of the balance sheet date is classified as “unrealised” and is not distributable. A reclassification between unrealised and realised is made as investments come to within 12 months of maturity date. The directors have deemed it appropriate that interest on loans receivable at the balance sheet date is also classified as “unrealised” and is not distributable. All other income is classified as “realised”. 29

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

2.24 Distribution Policy Dividends are made from the current year’s surplus or reserves set aside for that purpose. The board’s proposed dividends to members each year is based on the distribution policy of the credit union. The rate of dividends recommended by the board will reflect: • the risk profile of the credit union, particularly in its loan and investments portfolios; • the board’s desire to maintain a stable rather than a volatile rate of dividend each year; and • members’ legitimate dividend expectations; all dominated by prudence and the need to sustain the long-term welfare of the credit union. For this reason the board will seek to build up its reserves to absorb unexpected shocks and still remain above minimum regulatory requirements. The credit union accounts for dividends when members ratify such payments at the Annual General Meeting.

union’s investment in Metacu Management Designated Activity Company. This investment was made for operational purposes. The credit union holds 6.25% Redeemable A Ordinary shares in the company and through the terms of the shareholders agreement agreed between each of the participating credit unions, the credit union is deemed to have influence over the operations of this company. Therefore the investment has been accounted for as an investment in an associate.

2.25 transfer of engagements Transfer of engagements are accounted for using the acquisition method of accounting. This involves recognising identifiable assets and liabilities of the acquired credit union at fair value. In applying the acquisition method of accounting for these business combinations, the member interests transferred by the credit union represents the consideration transferred for the net assets acquired. This consideration has been estimated as equivalent to the acquisition date fair value of the members’ interests in the transferor credit union (the fair value of the transferor credit union) at the date of the transfer, and is reflected as an adjustment in reserves. 2.26 taxation The credit union is not subject to income tax or corporation tax on its activities

3. JUDGEMENtS iN APPLYiNG ACCOUNtiNG POLiCiES AND kEY SOURCE OF EStiMAtiON UNCERtAiNtY Preparation of the financial statements requires the directors to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include: Determination of depreciation, useful economic life and residual value of tangible assets The annual depreciation charge depends primarily on the estimated lives of each type of asset and, in certain circumstances, estimates of residual values. The directors regularly review these useful lives and change them if necessary to reflect current conditions. In determining these useful lives management consider technological change, patterns of consumption, physical condition and expected economic utilisation of the assets. Changes in the useful lives can have a significant impact on the depreciation charge for the financial year. The net book value of tangible fixed assets subject to depreciation at the year end was €2,196,327 (2020: €1,934,256). Provision for bad debts The credit union’s accounting policy for impairment of loans is set out in the accounting policy in note 2.8. The estimation of loan losses is inherently uncertain and depends upon many factors, including loan loss trends, credit risk characteristics in loan classes, local and international economic climates, conditions in various sectors of the economy to which the credit union is exposed, and, other external factors such as legal and regulatory requirements. The provision for bad debts in the financial statements at the year end was €7,713,548 (2020: €7,168,641) representing 7.81% (2020: 7.93%) of the total gross loan book. investments in Associates The investments in associates represents the credit

Operational risk reserve The directors have considered the requirements of the Credit Union Act, 1997 (as amended) and have developed an approach to the calculation of the operational risk reserve. The credit union uses the basic indicator approach as set out in the operational risk measurements techniques proposed under Basel II capital adequacy rules for banking institutions in calculating the minimum operational risk reserve. In addition, the credit union has included in its operational risk reserve a Member Personal Current Account Service operational risk reserve, in accordance with Section 49(3) of the Credit Union Act, 1997 (as amended). The operational risk reserve of the credit union at the year end was €1,588,282 (2020: €1,426,386). Adoption of going concern basis for financial statements preparation The credit union continue to closely monitor the evolution of the COVID-19 pandemic. The directors have prepared projections and cash flows for a period of at least twelve months from the date of the approval of the financial statements which demonstrate that there is no material uncertainty regarding the credit union’s ability to meet its liabilities as they fall due, and to continue as a going concern. On this basis, the directors consider it appropriate to prepare the financial statements on a going concern basis. Accordingly, these financial statements do not include any adjustments to the

carrying amounts and classification of assets and liabilities that may arise if the credit union was unable to continue as a going concern. 4. tRANSFER OF ENGAGEMENtS On 19 March 2021 Cara Credit Union Limited (‘CCU’) accepted the transfer of Clanmaurice Credit Union Limited (‘CCUL’). The assets and liabilities of CCUL at the date of transfer were incorporated into the balance sheet of CCU at that date. CCU did not pay any consideration in respect of the Transfer of Engagements. On the date of transfer, the members of the transferor credit union became members of CCU, and thereby became entitled to member interest associated with such membership. In applying the acquisition method of accounting for this business combination, the members’ interests transferred by CCU represents the consideration transferred for the net assets acquired. This consideration has been estimated as equivalent to the acquisition date fair value of the members’ interests in the transferor credit union (the fair value of the transferor credit union) at the date of transfer, and is reflected as an adjustment in reserves in note 19 on page 37. The fair values of the net assets acquired are detailed below: Fair value of CCUL assets and liabilities acquired by CCU

€

Cash on hand and at bank 238,702 Deposits and investments 14,141,127 Loans to members 5,233,570 Provision for bad debts (411,106) Tangible fixed assets 361,541 Debtors, prepayments & accrued income 53,590 Members’ shares (17,192,243) Other liabilities, creditors, accruals and charges (181,963) 2,243,218 31

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

NOTES TO THE FINANCIAL STATEMENTS contd. € 2021

5. kEY MANAGEMENt PERSONNEL COMPENSAtiON The directors of Cara Credit Union Limited are all unpaid volunteers. The key management personnel compensation is as follows: Short term employee benefits paid to key management Payments to pension schemes total key management personnel compensation

970,847 71,119 1,041,966

950,238 61,992 1,012,230

6. NEt iMPAiRMENt (GAiNS)/LOSSES ON LOANS tO MEMBERS Bad debts recovered Impairment of loan interest reclassed as bad debt recoveries Movement in bad debts provision during the year Loans written oﬀ during the year Net impairment (gains)/losses on loans to members

(609,446) (136,433) 133,801 507,875 (104,203)

(491,832) (90,649) 1,975,249 331,110 1,723,878

7. CASh AND CASh EqUiVALENtS Cash and balances at bank Deposits and investments - cash equivalents (note 8) total cash and cash equivalents

5,675,461 48,576,873 54,252,334

€ 2021

€ 2020

9. FiNANCiAL ASSEtS – LOANS tO MEMBERS As at 1 October Loans arising on transfer of engagements Loans granted during the year Loans repaid during the year Gross loans and advances

90,347,488 5,233,570 42,165,338 (38,414,086) 99,332,310

90,426,670 36,013,718 (35,761,790) 90,678,598

Bad debts Loans written oﬀ during the year As at 30 September

(507,875) 98,824,435

(331,110) 90,347,488

10. PROViSiON FOR BAD DEBtS As at 1 October Provision arising on transfer of engagements Movement in bad debts provision during the year As at 30 September

7,168,641 411,106 133,801 7,713,548

5,193,392 1,975,249 7,168,641

The provision for bad debts is analysed as follows: Grouped assessed loans Provision for bad debts

7,713,548 7,713,548

7,168,641 7,168,641

€ 2020

3,234,527 36,942,154 40,176,68

11. tANGiBLE FixED ASSEtS € Freehold premises

€ Fixtures & Fittings

€ leasehold improvement

€ computer equipment

€ total

COSt 1 October 2020 2,998,591 On transfer of engagements 328,165 Additions At 30 September 2021 3,326,756

758,581 13,665 44,367 816,613

78,016 78,016

588,790 19,711 2,918 611,419

4,423,978 361,541 47,285 4,832,804

DEPRECiAtiON 1 October 2020 Charge for the year At 30 September 2021

1,382,516 65,665 1,448,181

592,366 33,163 625,529

23,202 15,561 38,763

491,638 32,366 524,004

2,489,722 146,755 2,636,477

NEt BOOk VALUE 30 September 2021 30 September 2020

1,878,575 1,616,075

191,084 166,215

39,253 54,814

87,415 97,152

2,196,327 1,934,256

8. DEPOSitS AND iNVEStMENtS Deposits and investments - cash equivalents Accounts in authorised credit institutions (Irish and non-Irish based) Central Bank deposits total deposits and investments - cash equivalents

22,272,883 26,303,990 48,576,873

36,343,217 598,937 36,942,154

Deposits and investments - other Accounts in authorised credit institutions (Irish and non-Irish based) Bank bonds Irish and EEA state securities Central Bank deposits Other investments total deposits and investments - other

73,067,892 38,419,422 20,357,006 2,230,757 2,825,184 136,900,261

72,250,000 24,159,405 20,393,966 1,898,661 4,000,000 122,702,032

tOtAL DEPOSitS AND iNVEStMENtS

185,477,134

159,644,186

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

12. iNVEStMENtS iN ASSOCiAtES

NOTES TO THE FINANCIAL STATEMENTS contd.

COSt At 1 October 2020 and 30 September 2021

265,000

ACCUMULAtED iMPAiRMENt At 1 October 2020 and 30 September 2021

NEt BOOk VALUE At 30 September 2021 At 30 September 2020

Metacu Management Designated Activity Company

type of shares held

Proportion held (%)

Net Assets €

Profit or loss €

Redeemable A Ordinary

6.25%

4,025,400

(103,564)

Registered Address: 14 Ely Place, Dublin 2, Ireland The above financial information in respect of Metacu Management Designated Activity Company was extracted from the audited financial statements for the year ended 31 December 2020. The eﬀect of including this investment as if it had been accounted for using the equity method would be as follows: € Share of net assets

217,555 200,067 277,907 695,529

36,814 209,707 339,419 585,940

As at 1 October Members' savings arising on transfer of engagements Received during the year Withdrawn during the year As at 30 September

208,844,083 17,192,243 187,857,354 (172,969,352) 240,924,328

204,179,601 207,513,233 (202,848,751) 208,844,083

Members’ savings are analysed as follows: Members’ shares Members’ deposits total members’ savings

240,724,795 199,533 240,924,328

208,669,102 174,981 208,844,083

1,681,484 47,662,303 (46,202,038) 3,141,749

2,567 15,632,508 (13,953,591) 1,681,484

14. MEMBERS’ SAViNGS

265,000 265,000

At 1 October 2020 Share of profit/(loss) for the financial year after tax At 30 September 2020

€ 2020

Prepayments Loan interest receivable Accrued income on investments As at 30 September

iNtEREStS iN ASSOCiAtE The credit union has interests in the following associate: Associate

€ 2021 13. PREPAYMENtS AND ACCRUED iNCOME

€

258,060 (6,473) 251,587

15. MEMBERS’ CURRENt ACCOUNtS As at 1 October Lodgements during the year Withdrawals during the year As at 30 September

No. of Accounts Debit Credit Permitted overdrafts

Balance of Accounts €

234 2,805 18

7,318 3,149,067 6,600

906,847 70,232 977,079

1,966,262 49,438 2,015,700

16. OthER LiABiLitiES, CREDitORS, ACCRUALS & ChARGES Accruals and other liabilities PAYE/PRSI As at 30 September

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

€ 2021

€ 2020 the table below sets out fair value measurements using the fair value hierarchy:

17. OthER PROViSiONS holiday Pay Accrual At 1 October Charged to the income and expenditure account At 30 September

62,508 (5,588) 56,920

55,938 6,570 62,508

18. FiNANCiAL iNStRUMENtS 18a. Financial instruments - measured at amortised cost Financial assets Financial assets measured at amortised cost

€ 2021

€ 2020

283,204,869

247,815,616

Financial liabilities Financial liabilities measured at amortised cost

245,107,394

212,605,850

At 30 September 2021 Bank bonds total

€ total 7,322,386 7,322,386

€ Level 1 -

€ Level 2 7,322,386 7,322,386

€ Level 3 -

At 30 September 2020 Bank bonds total

€ total 6,017,079 6,017,079

€ Level 1 -

€ Level 2 6,017,079 6,017,079

€ Level 3 -

There were no fair value adjustments recognised in the income and expenditure account for the year ended 30 September 2021 (2020: €nil).

19. RESERVES Financial assets measured at amortised cost comprise of cash and balances at bank, deposits and investments, loans, members’ current accounts overdrawn, investments in associates and accrued income on investments. Financial liabilities measured at amortised cost comprise of member savings, members’ current accounts, other liabilities, creditors, accruals and charges and other provisions.

18b. Financial instruments - Fair Value Measurements FRS 102 requires fair value measurements to be disclosed by the source of inputs, using a three level hierarchy: • Quoted prices for identical instruments in active market (level 1); • Prices of recent transactions for identical instruments and valuation techniques using observable market data (level 2), and • Valuation techniques using unobservable market data (level 3).

balance 1/10/20

arising on toe

appropriation of current year surplus

transfers between reserves

balance 30/09/21

€

26,132,529

2,000,000

551,471

28,684,000

Operational risk reserve

1,426,386

161,896

1,588,282

Other Reserves Realised General reserve total realised reserves

8,468,061 8,468,061

66,993 66,993

1,830,287 1,830,287

(527,502) (527,502)

9,837,839 9,837,839

Unrealised Interest on loans reserve 209,707 Investment income reserve 2,298 total unrealised reserves 212,005 total reserves 36,238,981

14,329 14,329 2,243,218

7,776 7,776 1,838,063

(23,969) (23,969) -

200,067 10,074 210,141 40,320,262

Regulatory reserve

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

2021 No. of Loans

20. CREDit RiSk DiSCLOSURES In line with regulatory requirements, the credit union: • restricts the concentration of lending by the credit union within certain sectors or to connected persons or groups (concentration limits); • restricts the absolute amount of lending to certain sectors to a set percentages of the regulatory reserve (large exposure limit) • restricts the loan duration of certain loans to specified limits (maturity limits) • requires specified lending practices to be in place where loans are made to certain sectors such as business loans, community loans or loans to another credit union. The carrying amount of the loans to members represents the credit union’s maximum exposure to credit risk. The following provides information on the credit quality of loan repayments. Where loans are not impaired it is expected that the amounts repayable will be received in full.

2020 €

No. of Loans

€

21. RELAtED PARtY tRANSACtiONS 21a. LOANS Loans advanced to related parties during the year

330,736

93,500

Total loans outstanding to related parties at the year end

613,079

432,632

Total provision for loans outstanding to related parties

30,122

22,566

The related party loans stated above comprise of loans outstanding to directors and the management team (to include their family members or any business in which the directors or management team had a significant shareholding). 2021 %

€

76,775,445

77.69%

67,666,145

74.90%

iMPAiRED LOANS: Not past due Up to 9 weeks past due Between 10 and 18 weeks past due Between 19 and 26 weeks past due Between 27 and 39 weeks past due Between 40 and 52 weeks past due 53 or more weeks past due total impaired loans

1,682,958 15,901,763 1,614,247 785,566 825,151 401,807 837,498 22,048,990

1.70% 16.09% 1.63% 0.80% 0.83% 0.41% 0.85% 22.31%

1,881,009 15,889,443 2,095,788 1,263,978 782,405 204,235 564,485 22,681,343

2.08% 17.59% 2.32% 1.40% 0.86% 0.23% 0.62% 25.10%

tOtAL LOANS

98,824,435

100.00%

90,347,488

100.00%

LOANS NOt iMPAiRED Total loans not impaired, not past due

2020

€

Total loans outstanding to related parties represents 0.62% of the total loans outstanding at 30 September 2021 (2020: 0.48%). 21b. SAViNGS The total amount of savings held by related parties at the year end was €828,755 (2020: €559,776). 22. ADDitiONAL FiNANCiAL iNStRUMENtS DiSCLOSURES 22a. FiNANCiAL RiSk MANAGEMENt The credit union manages its members’ savings and loans so that it earns income from the margin between interest receivable and interest payable. The main financial risks arising from the credit union’s activities are credit risk, market risk, liquidity risk and interest rate risk. The board of directors reviews and agrees policies for managing each of these risks, which are summarised below. Credit risk: Credit risk is the risk that a borrower will default on their contractual obligations relating to repayments to the credit union, resulting in financial loss. In order to manage, this risk the board of directors regularly reviews and approves the credit union’s credit policy. Credit risk mitigation may include the requirement to obtain collateral as set out in the credit union’s loan policy. Where collateral or guarantees are required, they are usually taken as a secondary source of repayment in the event of the borrower’s default. The credit union maintains policies which detail the acceptability of specific classes of collateral. The principal collateral types for loans are: an attachment over members’ pledged shares; personal guarantees; and charges over assets. The nature and level of collateral required depends on a number of factors such as the term of the loan and the amount of exposure. All loan applications are assessed with reference to the credit policy in force at the time. Subsequently loans are regularly reviewed for any factors that may indicate that the likelihood of repayment has changed.

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS contd.

Market risk: Market risk is the risk that the value of an investment will decrease. This risk can arise from fluctuations in values of, or income from, assets or changes in interest rates. The board of directors regularly reviews and approves the credit union’s investment policy and funds are invested in compliance with this policy and regulatory guidance.€

24. EVENtS AFtER thE END OF thE FiNANCiAL YEAR There have been no significant events aﬀecting the credit union since the year end.

Liquidity risk: Liquidity risk is the risk that the credit union will not have sufficient cash resources to meet day to day running costs and repay members’ savings when demanded. The credit union’s policy is to maintain sufficient funds in liquid form at all times to ensure that it can meet its liabilities as they fall due. interest rate risk: The credit union’s main interest rate risk arises from adverse movements in interest rates receivable which would affect investment income. The credit union reviews any potential new investment product carefully to ensure that minimum funds are locked in low yielding long term investments yet at the same time maximising investment income receivable. 22b. LiqUiDitY RiSk DiSCLOSURES The credit union’s policy is to maintain sufficient funds in liquid form at all times to ensure that it can meet its liabilities as they fall due. The credit union adheres on an ongoing basis to the minimum liquidity ratio and minimum short term liquidity ratio as set out in regulatory requirements. 22c. iNtERESt RAtE RiSk DiSCLOSURES The following shows the average interest rates applicable to relevant financial assets and financial liabilities. 2021

Gross loans to members

26. CAPitAL COMMitMENtS The credit union had capital commitments as follows: Committed for but not provided in these financial statements As at 30 September

Average interest rate %

€

Average interest rate %

98,824,435

7.30%

90,347,488

7.38%

2021 €

2020 €

114,611 114,611

27. CONtiNGENt LiABiLitiES In September 2018, the Registry of Credit Unions advised all credit unions of a potential matter in relation to accrued interest outstanding on certain top-up loans which may have led to a potential over-collection of interest. Following this, the credit union undertook a review to ascertain whether any top-up loans made to members might be impacted by these circumstances, and if so, to determine what actions may need to be taken. The credit union has concluded its review and is satisfied that no over-collection of interest has occurred. 28. LEASiNG COMMitMENtS The credit union’s future minimum lease payments at the balance sheet date were as follows:

2020

€

Any dividend payable is at the discretion of the directors and is therefore not a financial liability of the credit union until declared and approved at the AGM.

Less than 1 year 1 to 5 years At 30 September

€ 2021

€ 2020

10,000 10,000 20,000

10,000 20,000 30,000

29. COMPARAtiVE iNFORMAtiON Comparative information has been reclassified where necessary to conform to current year presentation.

30. APPROVAL OF FiNANCiAL StAtEMENtS

23. DiViDENDS

The Board of Directors approved these financial statements for issue on 10th November 2021.

The following distributions were paid during the year: % Dividend on shares

25. iNSURANCE AGAiNSt FRAUD The credit union has Insurance against fraud in the amount of €5,200,000 (2020: €5,200,000) in compliance with Section 47 of the Credit Union Act, 1997 (as amended).

0.00%

2021

€

0.01%

2020

€ 19,102

The directors are not proposing a dividend in respect of the financial year ended 30 September 2021 (2020: The directors did not propose a dividend).

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

SCHEDULES TO THE INCOME & EXPENDITURE ACCOUNT

NOMINATIONS AND ELECTIONS

For the Financial year ended 30 September 2021 The following schedules do not form part of the statutory financial statements which are the subject of the Independent Auditors’ Report on pages 19 - 21.

AUDitORS

SChEDULE 1 - OthER iNtERESt iNCOME AND SiMiLAR iNCOME

part V11 of the act, Grant Thornton being eligible seeks re-election.

Investment income received/receivable within 1 year Investment income receivable outside of 1 year total per income and expenditure account SChEDULE 2 - OthER iNCOME Sundry income Commissions Entrance fees MPCAS fees ECCU rebate total per income and expenditure account SChEDULE 3 - OthER MANAGEMENt ExPENSES Rent and rates Light and heat Repairs, maintenance and cleaning Security costs Printing and stationery Postage and telephone Marketing and sponsorship Chapter dues AGM and convention expenses Travel and subsistence Bank charges Irish credit bureau costs Audit fee General insurance Share and loan insurance and DBI Office expenses Board expenses Staff training Professional body membership Legal, professional fees and repayment costs Computer maintenance, technology and IT costs Miscellaneous expenses Affiliation fees and trade subscriptions Regulatory levies Loss on sale of asset Member initiatives total per income and expenditure account 42

€ 2021

€ 2020

1,339,494 7,776 1,347,270

1,310,362 619 1,310,981

€ 2021

€ 2020

33,487 28,923 120,843 163,515 346,768

41,702 49,515 827 92,044

€ 2021

€ 2020

51,342 45,245 108,065 48,350 55,579 93,143 262,912 9,540 65,590 9,178 171,862 59,364 33,825 94,813 1,095,794 57,315 791 41,116 9,270 131,441 653,822 6,640 21,818 422,870 238,500 3,788,185

51,764 44,360 165,323 32,365 65,868 87,463 160,642 17,176 39,394 23,289 150,879 60,622 33,275 79,854 993,029 53,404 12,054 18,490 11,036 256,203 474,248 3,012 28,065 365,403 8,400 91,100 3,326,718

Under Rule 107 (2) Cara Credit Union Ltd. Shall appoint an auditor in accordance with

BOARD OF DiRECtORS Directors Lily Tangney, Caroline Sugrue, Sean Roche and John O’Regan, under Rule 42 resign, and, being eligible seek re-election.

Lily tangney Lily has served as a Director of Cara Credit union since June 2018 and currently serves on the Risk and Nomination Committees. Originally from Tramore, Lily is a retired RGN. She has particular interest in environmental protection and green issues. She has been a committed community contributor for many years, serving as Secretary with the Ballyseedy Wood Action Group and a member of Páirc an Phiarsaigh and Save the Green. A published writer, Lily is an active member of Tralee Toastmasters and Secretary of Churchill Probus Group. She also volunteers seasonally at the Tourist Information Kiosk in Tralee.

Sean Roche Seán has served as a Director of Cara Credit Union since April 2015 and currently serves on the Credit Control, Membership and Marketing Committees. A former Director with Killorglin CU, Seán is a retired public servant and works tirelessly on a voluntary basis with many community projects. A keen golfer, Seán resides in Glenbeigh.

Caroline Sugrue Caroline has served as a Director of Cara Credit Union since August 2015 and was appointed as Chair in December 2017. She is currently Managing Director with TICCbox, an operational and compliance management solutions company, and has over 20 years’ experience at board level, overseeing operations and finance. She resides with her family in the Spa.

John O’Regan John has served as a Director of Cara Credit union since April 2021. Previously, founder member, director and oﬀicer of Clanmaurice Credit Union over many years. John has presented Seminars for the ILCU and lectured on many modules of the UCC Diploma in Credit Union & Mutual Studies. He has made and continues to make, a significant contribution to the activities of Chapter 23, Former Treasurer, Vice-President and President of the Irish League of Credit Unions and is current Parliamentarian for all General Meetings of the ILCU.

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOMINATIONS AND ELECTIONS contd.

NOTES

BOARD OVERSiGht COMMittEE Ann-Marie Brosnan, Seamus Buckley and Clare Lucid, under Rule 56(3) resigns and seek re-election to the Board Oversight Committee.

Ann-Marie Brosnan Ann Marie joined the Board Oversight Committee in June 2018. Now working as a Certified Public Accountant with T. Nolan & Sons Ltd. in Castleisland. She resides in the Ballymac area.

Seamus Buckley Seamus joined the Board Oversight Committee in April 2021. He previously served as a Director of Clanmaurice Credit Union, where he served on the Investment and Audit Committees.

Clare Lucid Clare joined the Board Oversight Committee of Cara Credit Union in March 2021. She began her involvement in Credit Union activities as a volunteer Teller and later became a member of the Board of Directors of Clanmaurice Credit Union. In latter years she was a most eﬀective and eﬀicient Secretary of Clanmaurice Credit Union. Clare holds an honours degree in Information Technology and works in a key executive position with a large and busy Concrete Products Company. Clare resides in Lerrig, Ardfert.

Seamus is a qualified Certified Public Accountant (FCPA), working as an accountant with Hayes Daly & Co. Accountants, in Castleisland. Seamus is native of Rathmore and now lives in Causeway

CARA CREDIT UNION LTD | ANNUAL REPORT 2021

NOTES

Cara Credit Union

SUPPORTING OUR LOCAL COMMUNITIES How it Works:

One

You Borrow, Save & Bank

Three

Two

We Set Aside Funds

Your Community Benefits

Four

Everyone’s a Winner

Altogether we contributed almost €80,000 towards local groups, charities and organisations.

TRALEE

45-47 Ashe Street V92 XY06

CASTLEISLAND 67 Main Street V92 F981

KILLORGLIN Mill Road V93 TP65

BALLYDUFF Main Street V92 WN72

CAUSEWAY

Causeway Village V92 P220

Tel: 066 712 2373 | Email: info@caracreditunion.ie | www.caracreditunion.ie Phone a Loan: 066 712 2373 (Dial 1 for Loans) | Email: loans@caracreditunion.ie 46

TRALEE

45-47 Ashe Street V92 XY06

CASTLEISLAND 67 Main Street V92 F981

KILLORGLIN Mill Road V93 TP65

BALLYDUFF Main Street V92 WN72

CAUSEWAY

Causeway Village V92 P220

Tel: 066 712 2373 | Email: info@caracreditunion.ie | www.caracreditunion.ie