2020 Cara Credit Union Annual Report & Section 130 Pack

annual report 2020

annual rePorts and seCtion 130 PaCK IN RELATION TO THE PROPOSED TRANSFER OF ENGAGEMENTS OF CLANMAURICE CREDIT UNION LTD TO CARA CREDIT UNION LTD

Virtual annual General MeetinGs The 2020 Virtual Annual General Meeting of the members of Cara Credit union liMited will take place via Zoom Webinar on Monday 22nd February 2021 @ 7.30pm.

The 2020 Virtual Annual General Meeting of the members of ClanMauriCe Credit union liMited will take place via Zoom Webinar on Tuesday 23rd February 2021 @ 7.30pm.

CREDIT UN

CLANMAURICE CREDIT UNION

annual report 2020

NOTICE OF VIRTUAL ANNUAL GENERAL MEETINGS AND PROPOSED TRANSFER OF ENGAGEMENTS We are delighted to present to you, the members of Cara Credit union limited and Clanmaurice Credit union limited, the annual reports for both Credit unions and information in relation to the proposed transfer of engagements from Clanmaurice Credit union limited to Cara Credit union limited. You will find further details and information in relation to the proposed transfer of engagements in the third section of this booklet (pages 84 to 93). to summarise, this proposal, if approved by members, will bring the two Credit unions together to form a Credit union with over 50,000 members and in excess of â‚Ź300 million in assets. the decision to come together was made so that we will be stronger as one and we can provide an enhanced range of services for all of our members. the combined Credit union will also be better positioned to meet the ever-increasing regulatory requirements. the Boards of Directors of both Credit unions are confident that the enlarged Credit union will strengthen our position as the most trusted, respected and preferred financial institution for all of our members.

Caroline sugrue, Chair, Cara Credit Union Limited Martina Flynn, Chair, Clanmaurice Credit Union Limited

Notice is hereby given that the 2020 Virtual Annual General Meeting of the members of Cara Credit union liMited will take place via Zoom Webinar on Monday 22nd February 2021 @ 7.30pm.

Notice is hereby given that the 2020 Virtual Annual General Meeting of the members of ClanMauriCe Credit union liMited will take place via Zoom Webinar on Tuesday 23rd February 2021 @ 7.30pm.

CONTENTS Cara Credit Union Annual Report Clanmaurice Credit Union Annual Report Proposed transfer of Engagement Section 130 Notice

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3 48 84

ACCOUNTS

2020

We Support Local Credit unions voted no. 1 for Customer experience in Ireland 6 years in a row.

#SupportingLocal 3

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CARA CREDIT UNION BOARD OF DIRECTORS & BOARD OVERSIGHT COMMITTEE

Caroline Sugrue Chairperson

eddie enright Vice Chairperson

Sean roche

Danny Kerins

richard Bono

tom lawlor

Conor Fitzgerald

lily tangney

randall Wharton

John Welch

patrick o’Brien

ann-Marie Brosnan

Stephen Sullivan

BOARD OVERSIGHT COMMITTEE

John o’Connor

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CONTENTS

richard Bono Hon Secretary

aGM notice agenda Motions Chairperson’s report Board oversight Committee Ceo report Directors’ report Directors’ responsibilities Statement Independent auditor’s report

6 -7 8 9 10-12 13 14-15 16-17 18 19-21

FinanCial stateMents 2019/2020 Income and expenditure account Statement of other Comprehensive Income Balance Sheet Statement of Changes in reserves Statement of Cash Flows notes to Financial Statements information not forming part of the audited financial statements Schedules to the Income and expenditure account unaudited Management accounts nominations and elections

22 22 23 24 25 26-43

44 45 46

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTICE - CARA CREDIT UNION

Virtual aGM to be held on Monday 22nd February 2021 @ 7.30pm notice is hereby given that the 2020 Virtual annual General Meeting of the members of Cara Credit union limited will take place via Zoom Webinar on Monday 22nd February 2021 @ 7.30pm Members wishing to attend the Virtual aGM need to request an invitation to join and apply by visiting www.caracreditunion.ie or emailing agm2020@caracreditunion.ie and include the following: name Member number Member address Member email address

the request for attendance must be received by 5.00pm on thursday 18th February 2021.

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

the following information is pertinent to this notice.

• 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 agm2020@caracreditunion.ie this request must be received by 5.00pm on 18th February 2021. Following the request for invitation the member will receive an invitation before 12.00pm on 22nd February. 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.

• there will be resolutions that require a vote as well as elections for the position of auditor, Board oversight Committee and Board of Directors.

• Voting will be conducted by way of the online poll facility and Members will be asked to vote Yes/no electronically for the resolution or 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, by registering.

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

AGENDA

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

1.

Invocation - Credit union prayer

2.

acceptance of proxies (if any) by the Board of Directors

3.

ascertain that a Quorum is present

4.

adoption of Standing orders

5.

reading and approval of the Minutes of 2019 aGM

6.

appointment of tellers and report of the nomination Committee and election of auditor, Board oversight Committee and Board of Directors

7.

report of the Board of Directors; incorporating the reports of the Credit Committee, Credit Control Committee and Membership Committee

8.

Motions and rule amendments

8.

Consideration of special resolution The members of Cara Credit Union Limited resolve that the Credit Union accepts the Transfer of Engagements of Clanmaurice Credit Union Limited in accordance with the relevant provisions of the Credit Union Act 1997 (as amended).

9.

presentation of annual accounts

10. report of the auditor 11. report of the Board oversight Committee 12. aGM Members Draw 13. announcement of election results 14. any other Business

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

MOTIONS FOR AGM 2020

Motion 1 that this annual General Meeting amends rule 13 (iii) and (iv) of the Standard rules of Cara Credit union as follows: (iii) he has paid an entrance fee of Zero (not more than €1.27) note: the entrance fee was previously set at €1.27 and is effectively to be abolished (iv) he has paid for a minimum of €5.00 share(s) (this minimum to be at least one and not more than ten or such larger number of shares as may be prescribed by the Minister) in the credit union. note: the minimum shares was previously set at €6.35 and is to be reduced to €5.00

Motion 2 that this annual General Meeting amends rule 53(1) of the Standard rules of Cara Credit union relating to the Board oversight Committee as follows: (1) the credit union shall have a board oversight committee which shall consist of 5 members. It shall consist of three or five members. note: this committee previously consisted of 3 members and is to increase to 5.

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CHAIRPERSON’S REPORT 2020 Despite living in unprecedented and uncertain times Cara Credit union has continued to deliver on its strategic priorities during 2020. 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 customer offerings. We continue to grow our loan book and grow our membership. on behalf of your Board of Directors, I am pleased to report that Cara Credit union has had a successful year in 2020 and I invite you to attend our 53rd aGM. 2020 will no doubt go down in the history books for a couple of reasons, but perhaps it will be remembered for Covid-19 and the fundamental changes it made to all our lives. even now, almost 12 months on, we do not know when our lives will be back to normal and what the personal, social and financial fallout from CoVID19 will be.

During this time Cara Credit union was deemed an essential service and following all HSe Guidelines and protocols we continued to keep the doors open and continued to serve our members.

I would like to take this opportunity to thank you, our members for bearing with us during this time, for your understanding when it took a little longer to complete your business due to social distancing, for using hand sanitisers and for wearing your mask.

I would also like to thank the staff and management for keeping Cara Credit union operating and meeting our members needs, in what was and is a difficult and challenging time for all.

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Cara Credit union’s asset size now stands at €248,844,831. We, as a board, together with the executive team have completed our Strategic Vision 2025 and we will implement and develop this Vision for the next 5 years. Due to a number of ongoing difficulties and challenges in the wider market, we understand that our current strategic vision may change during the coming months and years and we as a Board will continue to monitor any changes and adapt and review our objectives to meet our long term vision. Having completed a review of the plan we are satisfied that your Credit union is in a strong financial state and well positioned for any unexpected challenges.

We intend to continue to review and develop the branches in tralee, Castleisland and Killorglin to enhance customer experience and deliver new technology.

Key highlights for 2020 were as follows; • Development of our Member Service Centre • Continued growth in Cara Credit union Debit Card • launch of an improved Cara Credit union Banking app • Development of our online member services • new loan offerings for the farming and business community

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CHAIRPERSON’S REPORT contd.

as a Board we are very pleased at the success of our new Members Service Centre. this was developed to enhance the member journey and to seamlessly engage with our members when they require it. access to the Cara Credit union team has never been easier and they are now available to answer any of your queries in an efficient and timely manner. the response to Cara Credit union's introduction of a debit card continues to grow, with over 2,000 members now actively using this. the debit card and its accompanying current account illustrates Cara Credit union’s commitment to providing new services to our members and we are pleased with the reaction to date.

In october, we were delighted with the launch of our new banking app. the app gives our members instant access to their accounts, their balances and they are able to transact using their accounts from the comfort of their own home.

Due to the impact of Covid-19 we saw our loan Book decrease by 0.09%. We are very much reliant on our loan Book given the current economic climate surrounding the low investment market. the majority of these new loans are put back into the local community in the form of car purchases, home improvements, weddings and education, which helps to strengthen the indigenous economy and keeps jobs local. unfortunately, investment return remains low at less than 1% 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 year end the Board have some very difficult decisions to make and take guidance from the management team in place. this year the Board were faced with even greater challenges than in the past, given the current financial climate, the possible negative impact of Brexit and CoVID-19. as a result the board, taking all matters into consideration are taking the prudent decision of not having a dividend this year, 2020. a key function of the Board is to set the direction of the Credit union while always being mindful of the risks involved. as a Board we must also challenge the financial performance of the Credit union and keep a tight rein on all costs. the 2nd biggest cost to Cara Cu is our Insurance Services, after salaries. the Board made a decision to maintain the same level of Death Benefit cover (€1,950) for another 12 months.

Your Board works diligently throughout the year on your behalf and met a total of 18 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 that fulfil their duties on your board and related committees do so voluntarily.

Increased regulation and understanding of legislation places a significant responsibility on these volunteers in relation to discharging their duties effectively. With

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CHAIRPERSON’S REPORT contd.

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, 2021 will be my last year serving as Chairperson of the Board of Directors. there is no doubt that the coming 12 months are going to be extremely challenging. the uncertainty around CoVID-19 poses a great threat and we do not know how long it will be with us. regardless, many things have changed forever. However, the Board are optimistic for our future. We will continue to grow our loan Book, introduce new products and services and implement new technology that will enhance your interactions with us.

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 2020 and we look forward to further growth in 2021. as we move into 2021 we hope Cara Credit union and Clanmaurice Credit union will join forces.

Both Credit unions have collaborated on a number of initiatives in recent years and now a merger is the obvious way to enhance the strength and capacity of both organisations. the purpose of the proposed merger, which you will vote upon at the aGM, is to secure the future of the Credit union movement in County Kerry and to strengthen the Credit union presence in the community for future generations of members.

Both Credit unions have engaged in positive discussions and we wish to assure you that these discussions are entirely voluntary. Both Credit 12

unions are financially sound, well-managed and are complying with all current legislative requirements. the Credit union movement throughout Ireland has seen many mergers in recent years. the overriding purpose of these mergers is to provide assurance on the continuation of financial services locally in communities by making credit unions stronger. again, 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 and worked with me in what was a very challenging and unprecedented year. I would like to thank the Board oversight Committee for keeping us on our toes and for their support and guidance.

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

Caroline sugrue Chairperson Cara Credit Union

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

BOARD OVERSIGHT COMMITTEE

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 and a number of the committee 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.

2020 has proved to be a difficult year due to the worldwide Coronavirus pandemic. as a result of this, it has been a challenge to ensure that all branches remain open, while ensuring staff and customer safety at all times. to mitigate the above a number of measures were introduced by Cara Credit union such as staff working from home where possible, without impacting on customer service, as well as additional hygiene and social distancing.

an additional consequence of the pandemic has been excess cashflow for many customers resulting in a decreased borrowing requirement, and increased cash reserves. unfortunately, a saving cap was necessary as a result of this, and a new range of loans were also offered, along with an increased marketing campaign. the investment and regularity environment within which Credit unions operates, continues to be challenging and the Board constantly review its strategic planning to ensure we are prepared for the future. the Board and Credit union staff have been very conscious of the need to keep up with the latest technology and ensure services are available to members, especially during these challenging times.

It is our opinion that the Board and management have taken the appropriate steps ensuring that Cara Credit union 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 Chairman BOC 13

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CEO REPORT 2020

First and foremost, the Management team and I hope you, your families and loved ones all remain safe and well throughout this difficult time. 2020 was a solid performance for your credit union in terms of financial performance and delivering on our strategic priorities.

Covid-19: I want to acknowledge that CoVID-19 brings unprecedented challenges for all of us. the future path of the pandemic, in particular its scale and duration, is unknown, and, as a result, there is considerable uncertainty about both the potential depth of the downturn currently underway, and also the likely timing and speed of an eventual recovery. Cara Cu came into the crisis with a relatively strong financial position in terms of capital and liquidity, albeit with ongoing business model issues for us. It is commendable that we have continued to serve our members’ needs in these difficult circumstances including ensuring continuity in provision of services to members. our focus is to protect both our staff and members while ensuring we have a safe environment where members can transact. We continue to provide a professional and excellent service to all our members online, by telephone and in person. We have a Business Continuity plan in place which has served us well. unfortunately, this will mean that we will be adhering to our current opening hours (Monday to Friday only). this will be reviewed on an ongoing basis.

Financial: at year end our loan Book stood at €90,347,488. We had a decrease of 0.09% on the previous year. Given the impact Covid-19 has had on our local economy, this was a solid performance. our investment income remained steady with a slight increase of 1.83% (€1,310,981), with our overall income increasing by 2.77% to €7,997,375.

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our expenses have increased by 29.77% to €7,976,797 and our net impairment losses on loans was the major contributor increasing by 2,407% to €1,723,878. We also had to reduce the value on our premises by €281,541. our employment costs and other management expenses were managed within budget. the overall, position leaves us with a surplus of €20,578 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. staff: the Credit union sector won the Customer Service award for a 6th year in a row. this is a marvellous achievement given the large organisations we are competing against. I would like to thank all the staff at Cara Credit union for ensuring, you, the member, received the best possible service over the last 12 months. the reason for this is simple, our teams are committed to serving you daily, putting your needs at the heart of everything they do. there were and will be challenging days ahead of us but the team always remain positive and always have a smile on their face and for this I thank them.

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CEO REPORT contd.

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.

Members: I would like to welcome our new members to Cara Cu. 1,417 new members joined during the year. I would like to say thank you to our members who continue to believe in the credit union principles of saving together and lending to each other. I would also like to thank our existing members for their continuous support of Cara Credit union. We are very grateful for this ongoing support.

Corporate social responsibility (‘Csr’): We are committed more than ever to our CSr role to our members and community. this year over €80k was made available in sponsorship, community projects, lauri Healy community awards and our education and Dan Kellegher Memorial awards.

I would like to thank our Chairperson, fellow directors and all my colleagues within Cara Credit union for their ongoing support which allowed me to fulfil my role as Ceo. Finally, I want to thank you, our members, for your ongoing support of your credit union. We will have another difficult 12 months ahead of us; however, we have come through difficult times before and I have no doubt we can do it again with everyone’s support. thank you.

We had some very difficult decisions to make during the year and these decisions are to ensure our Credit union remains strong and viable. the recent savings cap is an example. this will continue to be a challenge for us over the next 12 months.

Pa laide CEO Cara Credit Union

We launched our new Members Service Centre.

We are answering on average 233 calls a day and making on average 92 outbound calls. this centre has been up and running since august and our aim is to expand this service further. technology is evolving daily. as a member, you now have the option to engage with us on-line.

You can now apply for and drawdown a loan as well as joining your credit union all from the comfort of your own home or workplace.

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

the directors present their annual report and the audited financial statements for the financial year ended 30 September 2020.

Principal risks and uncertainties the principal risks and uncertainties faced by the credit union are:

Principal activity the principal activity of the business continues to be the operation of a credit union.

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.

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. dividend the directors are not proposing a dividend in respect of the year ended 30 September 2020 (2019: €19,326 (0.01%)).

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. these risks are managed by the board of directors as follows: Credit risk In order to manage this risk, the board of directors

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

DIRECTORS’ REPORT contd.

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 provide 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. 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 Since the year end the CoVID-19 pandemic has continued to have a direct effect on the credit union, the economy and the general population. the directors and management are closely monitoring the evolution of the pandemic, and while there is no clear indication as to when the impact will be curtailed or eliminated, they will continue to take appropriate actions to mitigate any possible adverse effects on the credit union, on its officers and on its members. auditors In accordance with Section 115 of the Credit union act, 1997 (as amended), the auditors Grant thornton offer themselves for re-election.

Caroline sugrue Chairperson of the board of directors

tom lawlor Member of the board of directors date: 2nd november 2020

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

DIRECTORS’ RESPONSIBILITIES STATEMENT FOR THE FINANCIAL YEAR ENDED 30th SEPTEMBER 2020

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 2020 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 2nd November 2020 and signed on its behalf by:

Caroline sugrue Chairperson of the board of directors

tom lawlor Member of the board of directors 2nd november 2020

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.

This statement was approved by the board oversight committee on 2nd November 2020 and signed on its behalf by: Patrick o’Brien Chairperson of the board oversight committee

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT TO MEMBERS 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 2020, 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 and promulgated by the Institute of Chartered accountants in Ireland 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 2020 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, namely the Irish auditing and accounting Supervisory authority (IaaSa) ethical Standard concerning the integrity, objectivity and independence of the auditor, 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 We have nothing to report in respect of the following matters in relation to which the ISas (Ireland) require us to report to you where: • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the credit union’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 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 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.

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CARA CREDIT UNION LTD | ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT TO MEMBERS contd.

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 20

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 judgement and maintain professional scepticism throughout the audit. the auditor will also: • Identify and assess the risks of material misstatement of the financial statements,

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT TO MEMBERS contd.

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 2nd november, 2020

21

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL YEAR ENDED 30th SEPTEMBER 2020

inCoMe

schedule

Interest on members’ loans other interest income and similar income net interest income other income total income

1 2

exPenditure employment costs other management expenses 3 Depreciation Impairment of premises net impairment losses/(gains) on loans to members (note 5) total expenditure surplus for the financial year

2020 €

2019 €

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

6,365,308 1,287,445 7,652,753 129,102 7,781,855

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

2,672,834 3,298,584 106,851 68,756 6,147,025

20,578

1,634,830

STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30th SEPTEMBER 2020

Surplus for the financial year other comprehensive income total comprehensive income for the financial year

2020 €

2019 €

20,578

1,634,830 1,634,830

20,578

the financial statements were approved, and authorised for issue, by the Board of Directors on the 2nd november 2020 and signed on behalf of the Credit union by: Ceo: Chairperson Board of directors: Chairperson Board oversight Committee:

The notes on pages 26 to 43 form part of these financial statements.

22

patrick laide

2nd nov. 2020

Caroline Sugrue patrick o’Brien

2nd nov. 2020 2nd nov. 2020

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

BALANCE SHEET AS AT 30th SEPTEMBER 2020 2020 assets

notes

€

2019 as restated €

7 7 8 9 14 10 11 12

3,234,527 36,343,217 123,300,969 90,347,488 (7,168,641) 2,075 1,934,256 265,000 585,940 248,844,831

2,722,027 36,778,334 114,969,972 90,426,670 (5,193,392) 2,203,731 265,000 612,629 242,784,971

13 13 14 15 16

208,668,102 174,981 1,683,559 2,015,700 62,508 212,605,850

203,994,620 184,981 2,567 2,309,360 55,938 206,547,466

18 18

26,132,529 1,426,386

25,517,529 1,420,940

18 18

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

9,116,643 182,393 36,237,505

248,844,831

242,784,971

Cash and balances at bank Deposits and investments – cash equivalents Deposits and investments – other loans to members provision for bad debts Members’ current accounts 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 of Directors on the 2nd november 2020 and signed on behalf of the Credit union by: Ceo: Chairperson Board of directors: Chairperson Board oversight Committee:

patrick laide

2nd nov. 2020

Caroline Sugrue patrick o’Brien

2nd nov. 2020 2nd nov. 2020

The notes on pages 26 to 43 form part of these financial statements.

23

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

STATEMENT OF CHANGES IN RESERVES FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

regulatory reserve € as at 1 october 2018 as restated 24,249,234 Surplus for the financial year 1,268,295 Dividends paid transfers between reserves as at 1 october 2019 as restated 25,517,529 Surplus for the financial year Dividends paid transfers between reserves 615,000 as at 30 september 2020 26,132,529

operational risk reserve €

realised unrealised reserve reserves € €

total €

705,000 340,000 375,940

9,292,849 26,266 (18,316) (184,156)

373,908 269 (191,784)

34,620,991 1,634,830 (18,316) -

1,420,940 5,446 1,426,386

9,116,643 (9,034) (19,102) (620,446) 8,468,061

182,393 29,612 212,005

36,237,505 20,578 (19,102) 36,238,981

• the regulatory reserve of the credit union as a percentage of total assets as at 30 September 2020 was 10.50% (2019: 10.51%).

• the operational risk reserve of the credit union as a percentage of total assets as at 30 September 2020 was 0.57% (2019: 0.59%).

The notes on pages 26 to 43 form part of these financial statements.

24

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

2020 €

2019 €

39,500,361

33,873,964

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

34,705,360 (41,633,032) 6,365,308 1,287,445 686,764 129,102 (18,316) 3,228 (661) (5,971,418) 555,175 (3,891,045)

(146,458) (8,330,997) (8,477,455)

(122,215) (265,000) 2,970,430 2,583,215

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

224,343,151 (217,408,924) 6,934,227

77,383

5,626,397

39,577,744

39,500,361

Notes opening cash and cash equivalents 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

8 8

14 14

Cash FloWs FroM inVestinG aCtiVities Fixed asset (purchases)/disposals Investments in associates net cash flow from other investing activities net cash flows from investing activities

11

Cash FloWs FroM FinanCinG aCtiVities Members’ savings received Members’ savings withdrawn net cash flow from financing activities

13 13

net increase/(decrease) in cash and cash equivalents Closing cash and cash equivalents

6

The notes on pages 26 to 43 form part of these financial statements.

25

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

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 Deposit and 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 investments the specific investment products held by the credit union are accounted for as follows: 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 deposits with the Central Bank. these deposits are technically assets of the credit union but to which the credit union has restricted access. the funds on deposit with the Central Bank attract nominal

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

interest and will not ordinarily be returned to the credit union while it is a going concern. the amounts are stated at the amount deposited plus accrued income and 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 eective 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 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2.9 tangible Fixed assets 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.

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 28

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 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

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

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.

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.

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.

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.

a defined benefit pension scheme was previously operated for a number of employees of the credit union. payments made to this scheme were charged annually to the income and expenditure account.

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

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).

29

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

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”.

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.

30

2.25 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 €1,934,256 (2019: €2,203,731).

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

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

requirements. the provision for bad debts in the financial statements at the year end was €7,168,641 (2019: €5,193,392) representing 7.93% (2019: 5.74%) of the total gross loan book. investments in associates the investments in associates represents Cara Credit union limited’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, Cara Credit union limited is deemed to have influence over the operations of this company. therefore the investment has been accounted for as an investment in an associate.

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.

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 €1,426,386 (2019: €1,420,940). adoption of going concern basis for financial statements preparation the directors have prepared projections and cash flows for a period of at least twelve months from the 31

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020

2019

€

€

950,238 61,992 1,012,230

807,936 70,327 878,263

€

€

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

(591,927) (94,837) 345,747 409,773 68,756

€

€

3,234,527 159,644,186

2,722,027 151,748,306

(123,300,969) 39,577,744

(114,969,972) 39,500,361

€

€

36,343,217 36,343,217

36,778,334 36,778,334

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

72,250,000 24,159,405 20,393,966 2,497,598 4,000,000 123,300,969

65,000,000 23,542,537 20,429,784 1,997,651 4,000,000 114,969,972

total deposits and investments

159,644,186

151,748,306

4. KeY ManaGeMent Personnel CoMPensation the directors of the credit union 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 5. net iMPairMent 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 losses on loans to members 6. Cash and Cash equiValents Cash and balances at bank Deposits & investments (note 7) less: Deposit & investment amounts maturing after three months total cash and cash equivalents 7. dePosits and inVestMents deposits and investments – cash equivalents accounts in authorised credit institutions (Irish and non-Irish based) total deposits and investments – cash equivalents

32

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020 8. FinanCial assets – loans to MeMBers

2019

€

€

as at 1 october loans granted during the year loans repaid during the year Gross loans and advances

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

83,908,771 41,633,032 (34,705,360) 90,836,443

Bad debts loans written off during the year as at 30 september

(331,110) 90,347,488

(409,773) 90,426,670

€

€

as at 1 october Movement in bad debts provision during the year as at 30 september

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

4,847,645 345,747 5,193,392

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

7,168,641 7,168,641

5,193,392 5,193,392

9. ProVision For Bad deBts

10. tanGiBle Fixed assets Freehold Premises

Cost 1 october 2019 additions Disposals at 30 september 2020

Fixtures & Fittings

Leasehold Improvement

Computer Equipment

Total

€

€

€

€

€

2,998,591 2,998,591

693,721 64,860 758,581

69,617 8,399 78,016

529,566 73,199 (13,975) 538,790

4,291,495 146,458 (13,975) 4,423,978

dePreCiation 1 october 2019 1,041,003 Charge for year 59,972 Disposals Impairment of premises 281,541 at 30 september 2020 1,382,516

571,531 20,835 592,366

7,788 15,414 23,202

467,442 29,771 (5,575) 491,638

2,087,764 125,992 (5,575) 281,541 2,489,722

net BooK Value 30 september 2020 30 September 2019

166,215 122,190

54,814 61,829

97,152 62,124

1,934,256 2,203,731

1,616,075 1,957,588

The impairment recognised in the income and expenditure account for the year ended 30 September 2020 represents the difference between the previous carrying values for the Tralee premises and Castleisland premises and the market values of same by reference to independent valuations.

33

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

11. inVestMents in assoCiates

€

Cost at 1 october 2019 and 30 September 2020

265,000

aCCuMulated iMPairMent at 1 october 2019 and 30 September 2020

-

net BooK Value 30 september 2020 30 September 2019

265,000 265,000

interests in assoCiate the credit union has interests in the following associate: associate Metacu Management Designated activity Company

type of shares held

Proportion held (%)

net assets €

Profit or loss €

redeemable a ordinary

6.25%

4,128,964

(111,036)

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 at 1 october 2019 Share of other comprehensive income/(loss) at 30 september 2020

€ 265,000 (6,940) 258,060

the above financial information in respect of Metacu Management Designated activity Company was extracted from the audited financial statements for the period ended 31 December 2019.

34

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020

2019

€

€

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

88,468 180,714 343,447 612,629

€

€ as restated

as at 1 october received during the year Withdrawn during the year as at 30 september

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

197,245,374 224,343,151 (217,408,924) 204,179,601

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

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

203,994,620 184,981 204,179,601

€

€

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

3,228 (661) 2,567

12. PrePaYMents and aCCrued inCoMe prepayments loan interest receivable accrued income on investments as at 30 september 13. MeMBers’ saVinGs

14. 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 15. other liaBilities, Creditors, aCCruals & CharGes accruals and other liabilities paYe/prSI Car draw as at 30 september

Balance of accounts €

100 1,584 1

2,075 1,683,559 200

€

€ as restated

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

2,246,797 48,518 14,045 2,309,360

35

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

16. other ProVisions holiday Pay accrual at 1 october Charged to the income and expenditure account at 30 september

17. FinanCial instruMents

2020

2019

€ 55,938 6,570 62,508

€ 45,163 10,775 55,938

2020

2019 as restated

17a. Financial instruments - measured at amortised cost € Financial assets Financial assets measured at amortised cost 247,815,616

€ 245,505,450

Financial liabilities Financial liabilities measured at amortised cost

206,547,466

212,605,850

Financial assets measured at amortised cost comprise cash and balances at bank, deposits and investments, loans, members’ current accounts, investments in associates and accrued income on investments.

Financial liabilities measured at amortised cost comprise member savings, members’ current accounts, other liabilities, creditors, accruals and charges and other provisions.

17b. 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).

36

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

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

total € -

level 1 € -

level 2 € -

level 3 € -

at 30 september 2019 Bank bonds total

there were no fair value adjustments recognised in the income and expenditure account for the year ended 30 September 2020 (2019: €nil).

18. reserVes Balance 1/10/19 As restated

Payment of dividend

Appropriation of current year surplus

Transfers between Reserves

Balance 30/09/20

€

€

€

€

€

25,517,529

-

-

615,000

26,132,529

operational risk reserve

1,420,940

-

-

5,446

1,426,386

other reserves realised General reserve Special reserve: dividends total realised reserves

9,097,317 19,326 9,116,643

(19,102) (19,102)

(9,034) (9,034)

(620,222) (224) (620,446)

8,468,061 8,468,061

unrealised Interest on loans reserve 180,714 Investment income reserve 1,679 total unrealised reserves 182,393 total reserves 36,237,505

(19,102)

28,993 619 29,612 20,578

-

209,707 2,298 212,005 36,238,981

regulatory reserve

37

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

19. 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 %

€

%

67,666,145

74.90%

72,183,232

79.83%

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

1,881,009 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%

1,885,400 14,125,011 937,766 270,730 256,539 270,447 497,545 18,243,438

2.09% 15.61% 1.04% 0.30% 0.28% 0.30% 0.55% 20.17%

total loans

90,347,488

100.00%

90,426,670

100.00%

loans not iMPaired total loans not impaired, not past due

38

2019

€

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020 no. of loans

2019 €

no. of loans

€

20. related PartY transaCtions 20a. loans loans advanced to related parties during the year

10

93,500

18

223,500

total loans outstanding to related parties at the year end

33

432,632

39

549,195

total provision for loans outstanding to related parties

22,566

27,806

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). total loans outstanding to related parties represents 0.48% of the total loans outstanding at 30 September 2020 (2019: 0.61%).

20b. saVinGs the total amount of savings held by related parties at the year end was €559,776 (2019: €616,159).

21. additional FinanCial instruMents disClosures 21a. 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. 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.

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.

39

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

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.

21b. 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.

21c. interest rate risK disClosures the following shows the average interest rates applicable to relevant financial assets and financial liabilities.

2020

Gross loans to members

2019

€

average interest rate %

€

average interest rate %

90,347,488

7.38%

90,426,670

7.46%

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. 22. diVidends the following distributions were paid during the year: % Dividend on shares

2020

0.01%

€

%

19,102

0.01%

2019

€ 18,316

the directors propose the following distributions in respect of the year: % Dividend on shares

40

0.00%

2020

€

%

-

0.01%

2019

€ 19,326

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

23. eVents aFter the end oF the FinanCial Year Since the year end the CoVID-19 pandemic has continued to have a direct effect on the credit union, the economy and the general population. the directors and management are closely monitoring the evolution of the pandemic, and while there is no clear indication as to when the impact will be curtailed or eliminated, they will continue to take appropriate actions to mitigate any possible adverse effects on the credit union, on its officers and on its members.

24. insuranCe aGainst Fraud the credit union has Insurance against fraud in the amount of €5,200,000 (2019: €5,200,000) in compliance with Section 47 of the Credit union act, 1997 (as amended).

25. CaPital CoMMitMents there were no capital commitments at 30 September 2020.

26. 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. the credit union is progressing a review of this matter 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. It is expected that the credit union will finalise its review over the coming months. Consequently it is impracticable at this time to estimate the impact, financial or otherwise, if any, of this matter and whether any net amounts will become payable or not in the future.

27. leasinG CoMMitMents the credit union’s future minimum lease payments at the balance sheet date were as follows: 2020 2019 € € less than 1 year 10,000 10,000 1 to 5 years 20,000 30,000 at 30 september 30,000 40,000 28. CoMParatiVe inForMation Comparative information has been reclassified where necessary to conform to current year presentation.

29. the irish leaGue oF Credit unions rePuBliC oF ireland Pension sCheMe During the year ended 30 September 2020 the credit union’s employees transferred from a defined benefit plan operated by the Irish league of Credit unions (IlCu), to a defined contribution scheme. the employees remain as deferred pensioners in the IlCu scheme for accrued benefits up to the date of transfer. the costs of the IlCu scheme are calculated on a scheme wide basis. It is therefore not possible to identify each employer’s share of the assets and liabilities of the plan. any surplus or deficit disclosed

41

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd. in the actuarial valuation is spread across all employers participating in the plan. In accordance with FrS 102, pension costs relating to this scheme, are therefore accounted for on a defined contribution basis. the most recent triennial actuarial valuation of the scheme was carried out as at 1 March 2017 using the projected unit valuation method. It indicated that the actuarial value of the scheme’s liabilities exceeded the value of the scheme’s assets. the actuarial valuation disclosed a past service deficit of €6.4m on the long term funding basis at 1 March 2017. on ceasing participation in the scheme the trustees presented the credit union with a number of options on meeting the cost of maintaining the accrued deferred benefits of its employees. these options were to commit to continue to pay contributions on a yearly basis as requested by the trustees after consultation with the actuary or to pay a once off supplementary contribution as calculated by the actuary. During the year ended 30 September 2020, a once off supplementary contribution was paid and the credit union has fully exited the scheme.

30. Prior Period error During the year ended 30 September 2018, the credit union, following consultations with professional advisers, identified that, in certain circumstances, some members’ consent was not obtained for the deduction, by the credit union, of the members’ designated portion of the DBI premium from members funds. the credit union commenced a review in 2018 and identified the in scope members and intended to engage with these members to seek retrospective consent to the deductions. During the year ended 30 September 2019, following further consideration of the matter, the credit union decided to refund the relevant amounts repayable to the affected members. the credit union is in the process of refunding all affected members. the total refunds amount to €936,769 and is reflected in the financial statements for the year ended 30 September 2020 and associated relevant prior periods. the impact of the prior period error is as follows:

income and expenditure account

expenditure understated € (936,523) (246) (936,769)

Year ended 2017 and pre 2017 Year end 2018 (refer to below) total

Year ended 30 sePteMBer 2018 income and expenditure account

Income expenditure surplus/(deficit)

42

2018 as previously stated

2018 effect of correction

2018 as restated

€ 7,197,653 (5,276,031) 1,921,622

€ (246) (246)

€ 7,197,653 (5,276,277) 1,921,376

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

Balance sheet

liabilities Members’ shares Members’ deposits other liabilities, creditors, accruals & charges other provisions total liabilities reserves regulatory reserve operational risk reserve other reserves - realised reserves - unrealised reserves total reserves total liabilities an reserves Year ended 30 sePteMBer 2019 Balance sheet

liabilities Members’ shares Members’ deposits Members’ current accounts other liabilities, creditors, accruals & charges other provisions total liabilities reserves regulatory reserve operational risk reserve other reserves - realised reserves - unrealised reserves total reserves total liabilities an reserves

2018 as previously stated

2018 effect of correction

2018 as restated

€ 196,264,578 189,992 1,630,014 45,163 198,129,747

€ 790,804 145,965 936,769

€ 197,055,382 189,992 1,775,979 45,163 199,066,576

24,249,234 705,000

-

24,249,234 705,000

10,229,618 373,908 35,557,760

(936,769) (936,769)

9,292,849 373,908 34,620,991

233,687,507

-

233,687,507

2019 as previously stated

2019 effect of correction

2019 as restated

€ 203,203,816 184,981 2,567 2,163,395 55,938 205,610,697

€ 790,804 145,965 936,769

€ 203,994,620 184,981 2,567 2,309,360 55,938 206,547,466

25,517,529 1,420,940

-

25,517,529 1,420,940

10,053,412 182,393 37,174,274

(936,769) (936,769)

9,116,643 182,393 36,237,505

242,784,971

-

242,784,971

31. aPProVal oF FinanCial stateMents the board of directors approved these financial statements for issue on 2nd november 2020.

43

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

SCHEDULES TO THE INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

the following schedules do not form part of the statutory financial statements which are the subject of the Independent auditor’s report on pages 19 to 21. sChedule 1 - other interest inCoMe and siMilar inCoMe 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 and fees entrance fees 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 and professional fees It and systems services Miscellaneous expenses affiliation fees and trade subscriptions regulatory levies loss on sale of asset Member initiatives total per income and expenditure account 44

2020 € 1,310,362 619 1,310,981

2019 € 1,287,176 269 1,287,445

2020 € 41,702 49,515 827 92,044

2019 € 60,250 66,982 1,870 129,102

2020 € 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

2019 € 47,432 43,658 83,219 18,475 41,835 75,460 216,603 15,120 44,358 24,637 161,376 43,745 33,825 72,321 994,689 46,689 23,483 32,115 7,952 195,181 518,092 5,465 57,579 378,425 116,850 3,298,584

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

CARA CREDIT UNION LIMITED UNAUDITED MANAGEMENT ACCOUNTS 31st DECEMBER 2020

inCoMe and exPenditure aCCount

BalanCe sheet as at 31st December 2020

For the period ended 31st December 2020 inCoMe € Interest Income 1,470,414 Investment Income rec'd/receivable within 1 year 326,788 other income 32,053 total income 1,829,255 exPenditure € net loan protection/ life Savings Insurance 269,312 Salaries and related expenses 649,937 Depreciation 31,609 Bad Debts Written off 99,709 Bad Debts recovered (110,944) Bad Debts provision 50,402 other expenses 703,141 total expenditure 1,693,166 Ytd surplus (deficit)

136,089

assets € Cash and Current accounts 7,988,459 Deposits and Investments 158,761,727 loans 90,400,256 less provision for Doubtful loans(7,219,043) Fixed assets less Depreciation 1,912,179 other assets 897,646 total assets 252,741,224 liaBilities Member Shares Member Deposits other liabilities total liabilities net Worth

represented By: reserVes regulatory reserve operational risk reserve other reserves realised unrealised total reserves

€ 214,445,461 154,982 1,765,719 216,366,162 36,375,062

€ 26,132,529 1,426,386 8,604,142 212,005 36,375,062

45

CARA CREDIT UNION LTD | ANNUAL REPORT 2020

NOMINATIONS AND ELECTIONS auditors under rule 107 (2) Cara Credit union ltd. Shall appoint an auditor in accordance with part V11 of the act, Grant thornton being eligible seeks re-election.

Board oF direCtors Directors John o’Connor, John Welch and Danny Kerins, under rule 42 resign, and, being eligible seek re-election.

John o’Connor John has served as a Director of Cara Credit union since February 2014. Currently he is a member of the risk and remuneration Committees.

John is retired. He worked with Kerry County Council in various positions and was Head of Finance there for many years up to his retirement. He has been chairperson/member of a number of national local government finance / personnel committees. He is chairperson of the current audit and risk Committee of the Kerry education and training Board. He is a native of Castleisland and lives in the outskirts of tralee.

John Welch John has served as a Director of Cara Credit union since 2017. recently retired and now living just outside of tralee in the Spa, John brings a wealth of experience and knowledge with him. He originally trained in Civil engineering; however he subsequently moved into the area of project management spending a number years on large projects in africa. John holds a diploma in Business Management and during his 30 year career, he was heavily involved in business integration and acquisitions and mergers.

46

danny Kerins Danny has served as a Director of Cara Credit union since July 2017. He also chairs the audit Committee. Danny works as a Data protection officer and Business Management Consultant. He has held various leadership roles over his career with both Irish and global It Service providers , Financial Services providers, and in the Irish public Sector. Danny holds a Corporate MBa from ul, an MSc from uCC in Management Coaching, and a post graduate diploma in Commercial Management from ICM. He is a certified Coach and Mediator. He is a native of Farranfore.

Board oVersiGht CoMMittee pat o’Brien, under rule 56(3) resigns and, being eligible, seeks re-election to the Board oversight Committee.

Pat o’Brien (Board oversight Committee ) patrick o’Brien joined the Board oversight Committee in 2017, and has been chair of the committee since 2018.

He also previously served on the CCu Credit Control Committee. He is a qualified certified accountant and member of the association of Chartered Certified accountants (aCCa). He is the owner of o’Brien Financial Services, which he set up in 2016. He previously worked as a Financial Controller with the australian embassy and the Irish amateur Boxing association in Dublin.

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47

CLANMAURIC CREDIT UNI

ACCOUNTS

2020

48

CLANMAURICE CREDIT UNION

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

CONTENTS

aGM notice agenda Chairperson’s report Directors’ report Directors’ responsibilities Statement Independent auditor’s report

50 53 54 56 58 59-61

FinanCial stateMents 2019/2020 Income and expenditure account Statement of other Comprehensive Income Balance Sheet Statement of Changes in reserves Statement of Cash Flows notes to Financial Statements information not forming part of the audited financial statements Schedules to the Income and expenditure account unaudited Management accounts nominations and elections

62 62 63 64 65 66-80

81 82 83

49

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTICE - CLANMAURICE CREDIT UNION

Virtual aGM to be held on tuesday 23rd February 2021 @ 7.30pm notice is hereby given that the 2020 Virtual annual General Meeting of the members of Clanmaurice Credit union limited will take place via Zoom Webinar on tuesday 23rd February 2021 @ 7.30pm Members wishing to attend the Virtual aGM need to request an invitation to join and apply via email to: agm2020@clanmauricecreditunion.ie and include the following information in your email: name Member number Member address Member email address

the request for attendance must be received by 5.00pm on thursday 18th February 2021.

50

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

the following information is pertinent to this notice.

• Clanmaurice 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 emailing agm2020@clanmauricecreditunion.ie. this request must be received by 5.00pm on 18th February 2021. Following the request for invitation the member will receive an invitation before 12.00pm on 23rd February. 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.

• there will be resolutions that require a vote as well as elections for the position of auditor, Board oversight Committee and Board of Directors.

• Voting will be conducted by way of the online poll facility and Members will be asked to vote Yes/no electronically for the resolution or for each candidate when instructed by the Chairperson.

• Votes will be tallied electronically, verified by the Internal auditor, 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, by registering.

51

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

CLANMAURICE CREDIT UNION BOARD OF DIRECTORS & BOARD OVERSIGHT COMMITTEE

Clanmaurice Credit union Since its inception, Clanmaurice Credit union has been fortunate with the calibre of volunteers as directors, committee members and volunteer tellers. the current Board of Directors consist of members who have brought a broad range of professional expertise and life skills that have assisted in the governance of the Credit union.

Board of directors Siobhan Barry Seamus Buckley David Butler Martina Flynn

Mary Kearney Clare Lucid Emer McCarthy John O’Regan

Kieran Reilly Sarah Ann Ross Ailish Segal

Board oversight Committee the Board oversight Committee is an independent committee that is vital in monitoring the board to ensure they carry out their governance functions to the best of their ability.

Helen Twomey

52

Kay Keane

Adam Pierse

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

AGENDA

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

1.

Invocation - Credit union prayer

2.

acceptance of proxies (if any) by the Board of Directors

3.

ascertain that a Quorum is present

4.

adoption of Standing orders

5.

reading and approval of the Minutes of 2019 aGM

6.

appointment of tellers and report of the nomination Committee and election of auditor, Board oversight Committee and Board of Directors

7.

report of the Board of Directors

8.

Consideration of special resolution The members of Clanmaurice Credit union limited resolve that the Credit union transfers its engagements to Cara Credit union limited in accordance with the relevant provisions of the Credit Union Act 1997 (as amended).

9.

presentation of annual accounts

10. report of the auditor 11. report of the Board oversight Committee 12. aGM Members Draw 13. announcement of election results 14. any other Business

53

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

CHAIRPERSON’S REPORT

Dear Members, Below is a further communication to the letter sent to you December last. the objective of the Board of Clanmaurice Credit union from its founding in 1976 has been the provision of financial services on a cooperative and not for profit basis for all within its common bond (north West Kerry); this was to enable the members and potential members to make the best use of their scarce financial resources and thereby to improve the social and economic wellbeing of the community. over the past forty-four years, this objective has guided the credit union and successive Boards of Directors and the Staff in the development and provision of services for its members and potential members. Clanmaurice Credit union has an excellent record of good governance and compliance with regulatory requirements but is very conscious of the necessity to respond to changing needs and expectations of members.

In this regard, the provision of an expanded range of products and services in line with member demands can only be achieved by merging with another credit union so as to provide the requisite increased scale for the provision of such services. as early as 2013/14, the Board of Clanmaurice Credit union believed that, going forward, it was important to explore the option of sharing services or merging with neighbouring likeminded credit union. over the intervening years successive Boards have examined various options to ascertain the most appropriate option to meet the objectives of the credit union and to address the significant challenges facing the 54

credit union movement generally. these challenges lie in the areas of longer-term financial viability in the provision of member services into the future, increased governance and regulatory requirements with accompanying costs, as well as responding to the changing needs and expectations of members. the Board of Directors decided that the best option was a merger with our neighbours Cara Credit union and both credit unions have been engaged in positive and constructive discussions since then. Both credit unions are financially sound, well-managed and are complying with all current legislative requirements. the purpose of the proposed merger is to secure the future of the credit union movement in our area, to strengthen the credit union presence in the community and to offer an expanded range of services for current and future generations of members. We have engaged with the Central Bank as our regulator and a very detailed due diligence on each credit union has been conducted.

In summary this initiative: • provides assurance on the continuation of credit union services locally in the north West Kerry area with offices in Ballyduff and Causeway; extends the range of services offered to members of Clanmaurice Credit union, including current accounts and Cultivate agricultural loans; • provides our credit unions with the combined strength to meet the very challenging times

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

CHAIRPERSON’S REPORT contd.

ahead. Indeed, the Central Bank has stated that both credit unions are an ‘ideal fit’ for each other; • a Cu that is financially sound and stable with long term viability and sustainability based on rigorous financial, social and economic criteria; • a Cu that will continue to provide a same member focused service delivery as Clanmaurice Cu has for over 40 years and to expand and enhance the range of quality and value driven products and services to meet the developing needs and wants of our members from ‘the cradle to the grave’;

• the merger will provide significant added value to Cara Credit union and will strengthen it financially going forward as well as providing opportunities for further growth. a special word of thanks to the Chief executive officer, and staff who adapted and kept the credit union operational throughout the various CoVID-19 lockdowns and ensured the services of savings and loans were available to members.

Martina Flynn, Chair, Clanmaurice Credit Union

55

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

the directors present their annual report and the audited financial statements for the financial year ended 30 September 2020.

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.

• to act on behalf of a payment institution in providing payment services.

Business review the directors acknowledge the results for the year and the year-end financial position of the credit union. dividends the directors are not proposing a dividend in respect of the year ended 30 September 2020 (2019: €3,792 (0.025%)).

Principal risks and uncertainties the principal risks and uncertainties faced by the credit union are:

56

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. these risks 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 lending policy. all loan applications are assessed with reference to the lending policy in force at the time. Subsequently loans are regularly reviewed for any factors that may indicate that the likelihood of repayment has changed.

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

DIRECTORS’ REPORT contd.

lack of loan demand the credit union provide 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. 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 lacca, Ballyduff, tralee, Co. Kerry. events after the end of the Financial Year a) Since the year end the CoVID-19 pandemic has continued to have a direct effect on the credit union, the economy and the general population. the directors and management are closely monitoring the evolution of the pandemic, and

while there is no clear indication as to when the impact will be curtailed or eliminated, they will continue to take appropriate actions to mitigate any possible adverse effects on the credit union, on its officers and on its members. b) at 30 September 2020 the credit union is at an advanced stage of a proposed transfer of engagements process with Cara Credit union limited. the proposed transfer of engagements process is expected to complete in the coming months. the credit union will exit the Irish league of Credit unions republic of Ireland pension Scheme only on the basis of the transfer of engagements completing, which would thereby result in a liability for the credit union to be recognised in the income and expenditure account. the exact amount of any liability is yet to be determined as it is contingent on future events, however based on the latest available information (obtained in January 2021), it is estimated that such exit costs may be in the region of €246,800 and thereby would have a material adverse impact on the overall reserve position of the credit union. 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 on 29th october 2020 and signed on its behalf by:

Martina Flynn date: 29th october 2020 57

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

DIRECTORS’ RESPONSIBILITIES STATEMENT FOR THE FINANCIAL YEAR ENDED 30th SEPTEMBER 2020

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 2020 58

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 29th October 2020 and signed on its behalf by:

Martina Flynn Chairperson of the board of directors

John o’regan Member of the board of directors 29th october 2020

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.

This statement was approved by the board oversight committee on 29th October 2020 and signed on its behalf by: helen twomey Chairperson of the Board oversight Committee

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT TO MEMBERS opinion We have audited the financial statements of Clanmaurice 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 2020, 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 and promulgated by the Institute of Chartered accountants in Ireland including FrS 102 “the Financial reporting Standard applicable in the uK and republic of Ireland” (Generally accepted accounting practice in Ireland).

In our opinion, Clanmaurice 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 2020 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, namely the Irish auditing and accounting Supervisory authority (IaaSa) ethical Standard concerning the integrity, objectivity and independence of the auditor, 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 We have nothing to report in respect of the following matters in relation to which the ISas (Ireland) require us to report to you where: • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the credit union’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 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 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.

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CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT TO MEMBERS contd.

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, 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; 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 60

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 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

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT TO MEMBERS contd.

•

•

•

•

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 29th october, 2020

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CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL YEAR ENDED 30th SEPTEMBER 2020

inCoMe

schedule

Interest on members’ loans other interest income and similar income net interest income other income total income

1 2

exPenditure employment costs other management expenses 3 Depreciation net impairment losses/(gains) on loans to members (note 5) total expenditure surplus for the financial year

2020 €

2019 €

417,712 111,044 528,756 3,583 532,339

398,306 130,681 528,987 7,067 536,054

€ 161,817 322,629 17,983 28,969 531,398

€ 194,965 336,312 13,105 (91,792) 452,590

941

83,464

STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30th SEPTEMBER 2020

Surplus for the financial year other comprehensive income total comprehensive income for the financial year

2020 €

2019 €

941 941

83,464 83,464

the financial statements were approved and authorised for issue by the Board on 29th october 2020 and signed on behalf of the Credit union by: Ceo: Member of the Board of directors: Member of the Board oversight Committee:

The notes on pages 66 to 80 form part of these financial statements.

62

Donal Scannell 29th oct. 2020 John o’regan 29th oct. 2020 Helen twomey 29th oct. 2020

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

BALANCE SHEET AS AT 30th SEPTEMBER 2020

assets

2020

2019

notes

€

€

7 7 8 9 10 11

307,450 1,777,972 11,977,469 5,318,094 (457,286) 373,200 44,381 19,341,280

201,216 3,836,613 9,111,243 5,368,408 (404,182) 354,289 46,815 18,514,402

€

€

16,612,440 64,982 5,840 16,683,262

15,791,193 57,254 5,124 15,853,571

€

€

16 16

1,978,485 161,896

1,895,683 161,896

16 16

503,307 14,330 2,658,018

586,595 16,657 2,660,831

19,341,280

18,514,402

Cash and balances at bank Deposits and investments – cash equivalents Deposits and investments – other loans to members provision for bad debts tangible fixed assets Debtors, prepayments and accrued income total assets liaBilities Members’ shares other liabilities, creditors, accruals and charges other provisions total liabilities

12 13 14

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 on 29th october 2020 and signed on behalf of the Credit union by: Ceo: Member of the Board of directors: Member of the Board oversight Committee:

Donal Scannell 29th oct. 2020 John o’regan 29th oct. 2020 Helen twomey 29th oct. 2020

The notes on pages 66 to 80 form part of these financial statements.

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CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

STATEMENT OF CHANGES IN RESERVES FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

as at 1 october 2018 Surplus for the financial year Dividends paid transfers between reserves as at 1 october 2019 Surplus for the financial year Dividends paid transfers between reserves as at 30 september 2020

regulatory reserve €

operational risk reserve €

1,785,683 70,000 40,000 1,895,683 82,802 1,978,485

161,896 161,896 161,896

realised unrealised reserve reserves € € 600,831 11,473 (7,046) (18,663) 586,595 941 (3,754) (80,475) 503,307

36,003 1,991 (21,337) 16,657 (2,327) 14,330

total € 2,584,413 83,464 (7,046) 2,660,831 941 (3,754) 2,658,018

• the regulatory reserve of the credit union as a percentage of total assets as at 30 September 2020 was 10.23% (2019: 10.24%).

• the operational risk reserve of the credit union as a percentage of total assets as at 30 September 2020 was 0.84% (2019: 0.87%).

The notes on pages 66 to 80 form part of these financial statements.

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CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

2020 €

2019 €

4,037,829

2,762,593

2,628,449 (2,613,824) 417,712 111,044 59,824 3,583 (3,754) (484,446) 10,878 129,466

2,664,514 (3,182,423) 398,306 130,681 115,731 7,067 (7,046) (531,277) (4,189) (408,636)

Cash FloWs FroM inVestinG aCtiVities

€

€

Fixed asset (purchases)/disposals net cash flow from other investing activities net cash flows from investing activities

(36,894) (2,866,226) (2,903,120)

(4,640) 547,848 543,208

€

€

8,853,133 (8,031,886) 821,247

9,201,197 (8,060,533) 1,140,664

(1,952,407)

1,275,236

2,085,422

4,037,829

Notes opening cash and cash equivalents Cash flows from operating activities loans repaid by members loans granted to members Income on members’ loans other interest income and similar income Bad debts recovered and recoveries other income Dividends paid operating expenses Movement in other assets and liabilities net cash flows from operating activities

8 8

Cash FloWs FroM FinanCinG aCtiVities Members’ savings received Members’ savings withdrawn net cash flow from financing activities

12 12

net (decrease)/increase in cash and cash equivalents Closing cash and cash equivalents

6

The notes on pages 66 to 80 form part of these financial statements.

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CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

1. leGal and reGulatorY FraMeWorK Clanmaurice 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 lacca, Ballyduff, 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.

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 Deposit and 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. aCCountinG PoliCies (continued)

the financial statements are presented in euro (€) which is also the functional currency of the credit union.

2.6 investments the specific investment products held by the credit union are accounted for as follows:

the following principal accounting policies have been applied:

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.

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.

66

Central Bank deposits Credit unions are obliged to maintain certain deposits with the Central Bank. these deposits are technically assets of the credit union but to which

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

the credit union has restricted access. the funds on deposit with the Central Bank attract nominal interest and will not ordinarily be returned to the credit union while it is a going concern. the amounts are stated at the amount deposited plus accrued income and 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 eective 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 67

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

charged to the income and expenditure account during the period in which they are incurred.

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.

Depreciation is provided on the following basis: premises 2% straight line per annum equipment, fixtures 20% reducing balance and fittings per annum Computer equipment 33% 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 68

impairment loss been recognised for the asset in prior years. a reversal of an impairment loss is recognised immediately in the income and expenditure account.

2.11 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.

2.12 Financial liabilities - Members’ shares Members’ shares 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.

2.13 other Payables Short term other liabilities, creditors, accruals and charges are measured at the transaction price.

2.14 Pension Costs the credit union participates in an industry-wide pension scheme for employees (the Irish league of Credit unions republic of Ireland pension Scheme). this is a funded defined benefit scheme with assets managed by the Scheme’s trustees. the scheme is a multi-employer scheme and due to the nature of the Scheme it is not possible for the credit union to separately identify its share of the Scheme’s underlying assets and liabilities.

Consequently, it accounts for the scheme as a defined contribution plan.

2.15 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

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

salary cost of the future holiday entitlement so accrued at the balance sheet date.

2.16 derecognition of Financial liabilities Financial liabilities are derecognised when the obligations of the credit union specified in the contract are discharged, cancelled or expired.

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”.

2.17 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.

2.20 distribution Policy Dividends are made from the current year’s surplus or reserves set aside for that purpose. the board’s proposed dividend to members each year is based on the distribution policy of the credit union.

2.18 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 rate of dividend 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.

the directors have considered the requirements of the act and have calculated the operational risk reserve requirement by reference to the predicted impact of operational risk events that may have a material impact on the credit unions business.

For this reason the board will seek to build up its reserves to absorb unexpected shocks and still remain above minimum regulatory requirements.

2.19 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

the credit union accounts for dividends when members ratify such payments at the annual General Meeting.

2.21 taxation the credit union is not subject to income tax or corporation tax on its activities.

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CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

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 €373,200 (2019: €354,289).

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 €457,286 (2019: €404,182) representing 8.60% (2019: 7.53%) of the total gross loan book.

70

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 operational risk reserve of the credit union at the year end was €161,896 (2019: €161,896). adoption of going concern basis for financial statements preparation 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.

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

4. KeY ManaGeMent Personnel CoMPensation

2020

2019

€

€

6,367 697 7,064

47,698 9,030 56,728

the directors of the credit union 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 5. net iMPairMent losses/(Gains) 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 losses on loans to members 6. Cash and Cash equiValents

€

€

(43,204) (16,620) 53,104 35,689 28,969

(102,258) (13,473) 6,230 17,709 (91,792)

€

€

307,450 13,755,441

201,216 12,947,856

(11,977,469) 2,085,422

(9,111,243) 4,037,829

€

€

1,777,972 1,777,972

3,836,613 3,836,613

deposits and investments – other accounts in authorised credit institutions (Irish and non-Irish based) Bank bonds other investments Central Bank deposits total deposits and investments – other

7,031,931 3,538,767 1,326,964 79,807 11,977,469

4,823,042 2,911,819 1,336,875 39,507 9,111,243

total deposits and investments

13,755,441

12,947,856

Cash and balances at bank Deposits & investments (note 7) less: Deposit & investment amounts maturing after three months total cash and cash equivalents 7. dePosits and inVestMents deposits and investments – cash equivalents accounts in authorised credit institutions (Irish and non-Irish based) total deposits and investments – cash equivalents

71

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020 8. FinanCial assets – loans to MeMBers

2019

€

€

as at 1 october loans granted during the year loans repaid during the year Gross loans and advances

5,368,408 2,613,824 (2,628,449) 5,353,783

4,868,208 3,182,423 (2,664,514) 5,386,117

Bad debts loans written off during the year as at 30 september

(35,689) 5,318,094

(17,709) 5,368,408

9. ProVision For Bad deBts

€

€

as at 1 october Movement in bad debts provision during the year as at 30 september

404,182 53,104 457,286

397,952 6,230 404,182

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

457,286 457,286

404,182 404,182

10. tanGiBle Fixed assets Premises

72

Equipment Fixtures & Fittings

Computer Equipment

Total

Cost 1 october 2019 additions at 30 september 2020

€

€

€

€

526,037 526,037

89,659 7,321 96,980

88,599 29,573 118,172

704,295 36,894 741,189

dePreCiation 1 october 2019 Charge for year at 30 september 2020

182,088 10,521 192,609

79,319 2,478 81,797

88,599 4,984 93,583

350,006 17,983 367,989

net BooK Value 30 september 2020 30 September 2019

333,428 343,949

15,183 10,340

24,589 -

373,200 354,289

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020 11. deBtors, PrePaYMents and aCCrued inCoMe prepayments loan interest receivable other debtors as at 30 september 12. MeMBers’ shares as at 1 october received during the year Withdrawn during the year as at 30 september 13. other liaBilities, Creditors, aCCruals & CharGes other liabilities, creditors accruals and charges paYe/prSI as at 30 september 14. other ProVisions at 1 october Charged to the income and expenditure account as at 30 september

2019

€

€

30,051 14,330 44,381

28,636 16,657 1,522 46,815

€

€

15,791,193 8,853,133 (8,031,886) 16,612,440

14,650,529 9,201,197 (8,060,533) 15,791,193

€

€

62,653 2,329 64,982

48,637 8,617 57,254

€

€

5,124 716 5,840

6,051 (927) 5,124

73

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

15. FinanCial instruMents 15a. Financial instruments - measured at amortised cost Financial assets Financial assets measured at amortised cost

2020 € 16,369,701

2019 € 17,717,381

Financial liabilities Financial liabilities measured at amortised cost

16,683,262

15,853,571

Financial assets measured at amortised cost comprise of cash and balances at bank, deposits and investments, loans and other debtors.

Financial liabilities measured at amortised cost comprise of member shares, other liabilities, creditors accruals and charges and other provisions.

15b. 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).

the table below sets out fair value measurements using the fair value hierarchy: at 30 september 2020 accounts in authorised credit institutions total at 30 september 2019 accounts in authorised credit institutions total

€ total

€ level 1

€ level 2

€ level 3

3,011,284 3,011,284

-

3,011,284 3,011,284

-

€ total

€ level 1

€ level 2

€ level 3

801,621 801,621

-

801,621 801,621

-

there were no fair value adjustments recognised in the income and expenditure account for the year ended 30 September 2020 (2019: €nil).

74

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

16. reserVes

regulatory reserve

Balance 1/10/19

Payment of dividend

Appropriation of current year surplus

Transfers between Reserves

Balance 30/09/20

€

€

€

€

€

1,895,683

-

-

82,802

1,978,485

161,896

-

-

-

161,896

577,803

-

941

(75,437)

503,307

3,792 5,000 586,595

(3,754) (3,754)

941

(38) (5,000) (80,475)

503,307

16,657 16,657 2,660,831

(3,754)

941

(2,327) (2,327) -

14,330 14,330 2,658,018

operational risk reserve other reserves realised General reserve Special reserve: proposed dividends Future dividends reserve total realised reserves unrealised Interest on loans reserve total unrealised reserves total reserves

17. 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.

75

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

2020

2019

€

%

€

%

4,221,579

79.38%

4,232,340

78.84%

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

181,722 535,445 109,642 57,531 84,126 13,801 114,248 1,096,515

3.42% 10.07% 2.06% 1.08% 1.58% 0.26% 2.15% 20.62%

117,128 708,564 105,240 17,623 61,548 21,127 104,838 1,136,068

2.18% 13.20% 1.96% 0.33% 1.15% 0.39% 1.95% 21.16%

total loans

5,318,094

100.00%

5,368,408

100.00%

loans not iMPaired total loans not impaired, not past due

2020 no. of loans

2019 €

no. of loans

€

18. related PartY transaCtions 18a. loans loans advanced to related parties during the year

10

56,350

11

64,000

total loans outstanding to related parties at the year end

19

153,622

24

220,407

total provision for loans outstanding to related parties

4,522

6,333

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). total loans outstanding to related parties represents 2.89% of the total loans outstanding at 30 September 2020 (2019: 4.11%).

18b. saVinGs the total amount of shares held by related parties at the year end was €298,094 (2019: €287,071).

76

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

19. additional FinanCial instruMents disClosures 19a. FinanCial risK ManaGeMent the credit union manages its members’ shares 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 lending policy. all loan applications are assessed with reference to the lending policy in force at the time. Subsequently loans are regularly reviewed for any factors that may indicate that the likelihood of repayment has changed.

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. 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.

19b. 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.€ 19c. interest rate risK disClosures the following shows the average interest rates applicable to relevant financial assets and financial liabilities.

2020

Gross loans to members

2019

€

average interest rate %

€

average interest rate %

5,318,094

8.19%

5,368,408

8.17%

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. 77

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

20. diVidends the following distributions were paid during the year: % Dividend on shares

2020

0.025%

€

%

3,754

0.05%

2019

€ 7,046

the directors propose the following distributions in respect of the year: % Dividend on shares

0.00%

2020

€

%

-

0.025%

2019

€ 3,792

21. eVents aFter the end oF the FinanCial Year 21a. Since the year end the CoVID-19 pandemic has continued to have a direct effect on the credit union, the economy and the general population. the directors and management are closely monitoring the evolution of the pandemic, and while there is no clear indication as to when the impact will be curtailed or eliminated, they will continue to take appropriate actions to mitigate any possible adverse effects on the credit union, on its officers and on its members.

21b. at 30 September 2020 the credit union is at an advanced stage of a proposed transfer of engagements process with Cara Credit union limited. the proposed transfer of engagements process is expected to complete in the coming months. the credit union will exit the Irish league of Credit unions republic of Ireland pension Scheme only on the basis of the transfer of engagements completing, which would thereby result in a liability for the credit union to be recognised in the income and expenditure account. the exact amount of any liability is yet to be determined as it is contingent on future events, however based on the latest available information (obtained in January 2021), it is estimated that such exit costs may be in the region of €246,800 and thereby would have a material adverse impact on the overall reserve position of the credit union.

22. insuranCe aGainst Fraud the credit union has Insurance against fraud in the amount of €1,300,000 (2019: €1,300,000) in compliance with Section 47 of the Credit union act, 1997 (as amended).

23. CaPital CoMMitMents there were no capital commitments at 30 September 2020.

24. CoMParatiVe inForMation Comparative information has been reclassified where necessary to conform to current year presentation.

78

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

25. the irish leaGue oF Credit unions rePuBliC oF ireland Pension sCheMe Clanmaurice Credit union limited participates in an industry-wide pension scheme for employees (the Irish league of Credit unions republic of Ireland pension Scheme). this is a funded defined benefit scheme with assets managed by the Scheme’s trustees. the scheme is a multi-employer Scheme and due to the nature of the Scheme it is not possible for Clanmaurice Credit union limited to separately identify its share of the Scheme’s underlying assets and liabilities. Consequently, it accounts for the Scheme as a defined contribution plan, in accordance with FrS 102. the pension’s act requires the trustees of the Scheme to assess whether it could meet a certain prescribed standard, known as the Minimum Funding Standard. this assesses whether, if the scheme was wound up on a specified theoretical valuation date, it could satisfy the Funding Standard at that date. Following the Scheme’s actuary certifying a Minimum Funding Standard deficit in the Scheme in 2009, Clanmaurice Credit union limited, the IlCu Group and the other credit unions participating in the Scheme entered into a funding agreement with the Scheme that was designed to ensure that, the Scheme could be reasonably expected to satisfy the Minimum Funding Standard by a specified future date (1 March 2019). this funding plan was approved by the pensions authority. the Scheme exited the funding plan as scheduled on 1 March 2019 meeting its statutory funding obligations on that date. as part of the solvency assessment process, the Scheme actuary must carry out a separate valuation under the Minimum Funding Standard every 3 years and produce a funding certificate for submission to the pensions authority within 9 months of the effective date of the valuation. the purpose of the certificate is to certify whether or not the assets of the scheme at the effective date are sufficient to meet the liabilities of the scheme based on the assumption that the scheme was wound up at that date. the most recent actuarial Funding Certificate was effective as at 1 March 2018 and it certified that the Scheme satisfied the funding standard. an actuarial review of the fund is normally carried out every three years by the Scheme's independent, professionally qualified actuary. the actuarial review considers the past and future liabilities of the scheme. the last completed triennial actuarial review was carried out with an effective date of 1 March 2017 using the projected unit valuation method. the principal actuarial assumption used in the valuation was the investment return would be 1.75% higher than the annual salary increases. the market value of the scheme's assets at 1 March 2017 was €216m. the actuarial valuation disclosed a past service deficit of €6.4m at 1 March 2017 calculated under the ongoing actuarial Valuation method. this valuation method assumes that the Scheme will continue in existence for the foreseeable future. the assumptions used in the actuarial review to determine the past service deficit differ from the assumptions that would be used to determine the liabilities for defined benefit obligations under FrS 102. this actuarial review recommended that the rate agreed under the funding proposal, 27.5% of pensionable salary, continues to be paid. the cost of risk benefits is paid in addition to this rate giving a total contribution rate of 30% of pensionable Salary. the 2020 actuarial review is underway and is expected to be concluded by 30 november 2020.

79

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS contd.

26. ContinGent liaBilities 26a. there is a contingent liability included in the letter of authority held by Bank of Ireland in the amount of â‚Ź50,000.

26b. 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. the credit union is progressing a review of this matter 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. It is expected that the credit union will finalise its review over the coming months. Consequently it is impracticable at this time to estimate the impact, financial or otherwise, if any, of this matter and whether any net amounts will become payable or not in the future.

27. aPProVal oF FinanCial stateMents the board of directors approved these financial statements for issue on 29th october 2020.

80

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

SCHEDULES TO THE INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020

the following schedules do not form part of the statutory financial statements which are the subject of the Independent auditor’s report on pages 59 to 61. sChedule 1 - other interest inCoMe and siMilar inCoMe Investment income received/receivable within 1 year total per income and expenditure account sChedule 2 - other inCoMe Commissions and fees entrance fees total per income and expenditure account sChedule 3 - other ManaGeMent exPenses rent and rates lighting, heating and cleaning repairs and renewals Security printing and stationery postage and telephone Donations and sponsorship Debt collection promotions and advertising Chapter expenses training aGM expenses travel and subsistence Bank charges audit fee General insurance Share and loan insurance legal and professional fees Computer maintenance Death benefit insurance affiliation fees and SpS contributions Central bank levies and charges Saving stamps Foreign exchange Miscellaneous expenses total per income and expenditure account

2020 € 111,044 111,044

2019 € 130,681 130,681

2020 € 3,530 53 3,583

2019 € 7,014 53 7,067

2020 € 4,931 9,860 5,500 5,761 10,602 10,605 2,110 3,023 3,732 3,267 6,991 2,719 7,587 7,260 10,033 54,339 80,714 23,848 17,218 9,249 28,354 1,200 13,726 322,629

2019 € 7,240 7,678 442 9,209 7,325 6,703 2,806 8,083 4,636 2,040 2,945 5,875 5,017 29,134 7,380 9,286 53,219 57,373 19,470 15,110 7,408 29,609 27,643 5,993 4,688 336,312

81

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

CLANMAURICE CREDIT UNION LIMITED UNAUDITED MANAGEMENT ACCOUNTS 31st DECEMBER 2020

inCoMe and exPenditure aCCount

BalanCe sheet as at 31st December 2020

For the period ended 31st December 2020 inCoMe Interest Income Investment Income Bad Debts recovered other income total income exPenditure net loan protection/ life Savings Insurance Salaries and related expenses Bad Debt Written off Bad Debts provision other expenses total expenditure Ytd surplus

€ 105,291 25,643 13,226 187 144,347 € 14,565 37,610 64,438 116,613

assets Cash and balances at bank Minimum reserve

inVestMents accounts in authorised Credit Institutions 5,412,759 Bank Bonds 3,539,375 other 4,751,867 total Investments 13,704,001 loans 5,202,049 less provision for Bad Debts (457,286) Fixed assets less Depreciation 367,370 other assets 28,987 total assets 19,517,605

27,734 liaBilities Members' shares other liabilities total liabilities

82

€ 217,677 454,807

€ 16,801,978 29,874 16,831,852

net Worth

2,685,753

reserVes regulatory reserve operational risk reserve YtD Surplus other reserves realised unrealised reserves Total reserves

€ 2,000,000 161,896 27,734 481,794 14,329 2,685,753

CLANMAURICE CREDIT UNION LTD | ANNUAL REPORT 2020

NOMINATION COMMITTEE REPORT

Board of directors there are three vacancies on the Board of Directors. the nomination Committee in accordance with, and in compliance with, Section 56B of the Credit union act 1997 (as amended) hereby nominates: John o’regan, Kieran reilly and Sarah anne ross to fill these vacancies. all these are existing members of the Board of Directors and are eligible and willing to go forward for election.

Board oversight Committee there is one vacancy on the Board oversight Committee and the nomination Committee in accordance with, and in compliance with, Section 56B of the Credit union act 1997 (as amended) hereby nominates: Helen twomey to fill this vacancy.

Helen is an existing member of the Board oversight Committee and is eligible and willing to go forward for election.

auditor the nomination Committee nominates Denise o’Connell of Grant thornton & Co. limited for the position of auditor for the Financial Year 2020/2021.

83

CLANMAURICE CREDIT UNION

stronger together Section 130 Pack in relation to the proposed Transfer of Engagements of Clanmaurice Credit Union Ltd. to Cara Credit Union Ltd.

CONTENTS

84

Message from Cara Credit Union Limited and Clanmaurice Credit Union Limited

85

Proposed Transfer of Engagements

86

A New Partnership

88

Standing Orders for Annual General Meetings

90

Standing Orders for Virtual Annual General Meetings

92

SECTION 130 PACK | ANNUAL REPORT 2020 SECTION 130 PACK

MESSAGE FROM CARA CREDIT UNION LIMITED AND CLANMAURICE CREDIT UNION LIMITED

Dear Members, We are pleased to inform you, that the Board of Directors of Cara Credit union limited and Clanmaurice Credit union limited are in a position to ask our members to approve the transfer of engagements, of Clanmaurice Credit union limited to Cara Credit union limited. the Special resolutions to approve the transfer of engagements will be voted on at the forthcoming Virtual annual General Meetings. this merger arises from the belief of the Board of Directors of our credit unions that our members can be better served together and we consider it an ideal opportunity to grow and develop our services to members locally. the Boards of both Credit unions are confident that our decision to combine our Credit unions will strengthen our position to be the most trusted, respected and preferred financial services provider for our members, providing good value, modern, accessible and tailored services. on completion of the proposed transfer of engagements, the common bond of Cara Credit union limited will be extended to include all current members of Clanmaurice Credit union limited. the advantages for members are that the enlarged Credit union will: • protect the provision of Credit union services in our community and allow for more investment in our community: • allow access to a broader range of savings and loan services at competitive and sustainable rates: • be a stronger, more viable Credit union with healthy financial reserves: • satisfy member expectations and security of savings and: • provide greater efficiencies through sharing costs resulting in better value for members.

Included in this Section 130 pack, for your information is a statement required under Section 130 of the Credit union act, 1997 (as amended). We would like to take this opportunity to thank you the members for your continued loyalty to your Credit union and look forward to your support at the Virtual annual General Meetings.

Caroline sugrue, Chair Cara Credit union limited

Martina Flynn, Chair Clanmaurice Credit union limited

85

SECTION 130 PACK

PROPOSED TRANSFER OF ENGAGEMENTS Cara Credit union limited the Board of Cara Credit union limited is pleased to present the following Special resolution to the members for consideration at the annual General Meeting: ProPosed sPeCial resolution the members of Cara Credit union limited resolve that the Credit union accepts the transfer of engagements of Clanmaurice Credit union limited in accordance with the relevant provisions of the Credit union act 1997 (as amended).

Richard Bono, Secretary, Cara Credit Union Limited

Cara Credit union limited statement required under section 130 of the Credit union act 1997 (as amended) in respect of Clanmaurice Credit union limited In accordance with Section 130 of the Credit union act, 1997 (as amended), the following matters are required to be stated: 1. the financial position of Cara Credit union limited and of Clanmaurice Credit union limited is set out in the form of the audited annual accounts for Cara Credit union limited as at 30th September 2020 and the most recent unaudited Income & expenditure account and Balance sheet as at 31st December 2020, and the audited annual accounts for Clanmaurice Credit union limited as at 30th September 2020 and the most recent unaudited Income & expenditure account and Balance sheet as at 31st December 2020.

2. no payment is proposed to be made to the members of Clanmaurice Credit union limited or Cara Credit union limited in consideration of the proposed transfer.

3. there will be no change to the terms governing outstanding loans currently held by members in Clanmaurice Credit union limited or Cara Credit union limited.

Members with current loans in Cara Credit union and Clanmaurice Credit union will continue to repay loans under the existing terms of their credit agreements. new loans issued after the transfer of engagements will be at the then prevailing loan rate in Cara Credit union limited.

4. Sta at Clanmaurice Credit union limited and Cara Credit union limited have been fully appraised of all aspects of the transfer of engagements and are very much involved in the transfer of engagements process. the sta of Clanmaurice Credit union limited will transfer to Cara Credit union limited under the transfer of undertakings (protection of employment) regulations 2006.

86

SECTION 130 PACK

Clanmaurice Credit union limited the Board of Clanmaurice Credit union limited is pleased to present the following Special resolution to the members for consideration at the annual General Meeting: ProPosed sPeCial resolution the members of Clanmaurice Credit union limited resolve that the Credit union transfers its engagements to Cara Credit union limited in accordance with the relevant provisions of the Credit union act 1997 (as amended).

Clare Lucid, Secretary, Clanmaurice Credit Union Limited

Clanmaurice Credit union limited statement required under section 130 of the Credit union act 1997 (as amended) In accordance with Section 130 of the Credit union act, 1997 (as amended), the following matters are required to be stated: 1. the financial position of Cara Credit union limited and of Clanmaurice Credit union limited is set out in the form of the audited annual accounts for Cara Credit union limited as at 30th September 2020 and the most recent unaudited Income & expenditure account and Balance sheet as at 31st December 2020, and the audited annual accounts for Clanmaurice Credit union limited as at 30th September 2020 and the most recent unaudited Income & expenditure account and Balance sheet as at 31st December 2020.

2. no payment is proposed to be made to the members of Clanmaurice Credit union limited or Cara Credit union limited in consideration of the proposed transfer.

3. there will be no change to the terms governing outstanding loans currently held by members in Clanmaurice Credit union limited or Cara Credit union limited.

Members with current loans in Cara Credit union and Clanmaurice Credit union will continue to repay loans under the existing terms of their credit agreements. new loans issued after the transfer of engagements will be at the then prevailing loan rate in Cara Credit union limited.

4. Sta at Clanmaurice Credit union limited and Cara Credit union limited have been fully appraised of all aspects of the transfer of engagements and are very much involved in the transfer of engagements process. the sta of Clanmaurice Credit union limited will transfer to Cara Credit union limited under the transfer of undertakings (protection of employment) regulations 2006.

87

SECTION 130 PACK

A NEW PARTNERSHIP

Why is this necessary? the Board of Clanmaurice Credit union limited has spent considerable time examining how their members could be better served into the future. Being a smaller credit union inevitably restricts the range and access to services that we can offer to members. the decision to seek a transfer of engagements was made in order to offer additional services to the members whilst ensuring compliance with all relevant legislation and regulations. there is also increased financial strength in combining with a larger Credit union.

What does a transfer of engagements mean? a transfer of engagement means that Clanmaurice Credit union limited will transfer their assets and liabilities to Cara Credit union limited. Members in Cara and Clanmaurice can continue in exactly the same way as before with the added advantage of access to all of the services that the combined Credit union can offer.

What will happen next?

We envisage that if the transfer of engagements is approved by the Central Bank, the affairs of Clanmaurice Credit union limited will be transferred to Cara Credit union limited before the end of april 2021. all credit union offices may need to close for one business day in order to facilitate the transfer, and members will be kept informed of developments closer to the time. until then, it is business as usual at both credit unions.

how will this change affect me?

For existing members there will be no noticeable change. the offices in tralee, Castleisland, Killorglin, Ballyduff and Causeway will remain open for members. all members will have the added advantage of being able to transact their business, if it is convenient for them to do so, in all five offices when the transfer takes operational effect.

88

SECTION 130 PACK

• If you are a member of Clanmaurice Credit union limited, you will still continue to be able to conduct your business in the Ballyduff and Causeway offices. In addition, once the transfer takes effect, you will be able to transact your business in the tralee, Castleisland and Killorglin offices also.

• If you are a member of Clanmaurice Credit union limited, a new account number will be issued to you. all of your account balances and information will remain exactly the same.

• Members with current loans in Cara Credit union limited and Clanmaurice Credit union limited will continue to repay loans under the existing terms of their credit agreements. new loans issued after the transfer of engagements will be at the then prevailing loan rate in Cara Credit union limited.

• If you are a member of Clanmaurice Credit union limited, the amount of Death Benefit Insurance cover will increase from €1,000 to €1,950 once the transfer of engagements takes effect.

do i have to do anything?

We do welcome any views that any member may have on the proposed transfer of engagements. Members may write to the secretary of either credit union or email to info@caracreditunion.ie or info@clanmaurice.cumail.ie with any views, comments or queries they may have.

89

SECTION 130 PACK

STANDING ORDERS FOR ANNUAL GENERAL MEETINGS

Motions 1. all motions must be proposed and seconded by members present at the aGM and moved by the proposer.

2. a proposer of a motion may speak for such period as shall be at the discretion of the chair of the meeting and shall have the right of reply before the motion is put to the meeting for a vote.

3. In exercising his/her right of reply, a proposer may not introduce new material.

4. the seconder of a motion shall have such time as shall be allowed by the chair to second the motion.

5. Members are entitled to speak on any such motion and must do so through the chair. all speakers to any motion shall have such time as shall be at the discretion of the chair.

6. the chair shall have the absolute right to decide at any time when a motion has been suiciently discussed and may put the motion to the meeting giving the proposer the right of reply before doing so.

MisCellaneous 7. the chair of the board of directors shall be the chair of any general meeting, except where he/she is not available, in which case it shall be the vice-chair, except where he/she is not available, in which case the board shall decide amongst themselves who shall act as chair of any general meeting.

8. the chair may at his/her discretion, extend the privilege of the floor to any person who is not a member.

9. only matters covered by the agenda at aGM may be considered.

10. the chairman’s decision on any matter relating to these Standing orders or interpretation of same shall be final.

11. no member shall have more than one vote on each question at any general meeting of the credit union or any adjournment thereof irrespective of his/her shareholding or the number of accounts in his/her name in the credit union provided, however, that except in voting at elections, the presiding member shall have a second or casting vote in the event of equality of voting. Voting by proxy shall be allowed only when a member other than a natural person votes through a representative, who is a member of the group, duly authorised in writing for that purpose and accepted as such by the board of directors.

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12. any Special resolution to be decided upon by vote at the aGM shall, unless otherwise expressly provided for by law or the rules, be decided upon by 75% majority of those present and voting by a show of hands.

susPension oF standinG orders 13. any one of these orders or all of these Standing orders may be suspended on a motion to this eect receiving a two-thirds majority of those present and entitled to vote.

alteration oF standinG orders 14. Standing orders may be amended or altered at a general meeting and only if a motion to this eect has received a two-thirds majority of those present and voting.

adJournMents 15. adjournments of the aGM shall take place only in accordance with section 81(1) of the Credit union act, 1997 (as amended).

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STANDING ORDERS FOR VIRTUAL ANNUAL GENERAL MEETING Voting 1. each member shall be entitled to one vote irrespective of his/her shareholding, in accordance with section 82(2) of the Credit union act, 1997 (as amended).

2. as the aGM will be a virtual meeting, voting on motions and elections will be by electronic means. each member registered for and attending the virtual aGM, will be given the opportunity to exercise their vote electronically during the meeting. election Procedure - electronic Voting 3. Following the announcement of nominations, attendees will be given the opportunity to vote electronically ‘Yes’ or ‘no’ for each candidate. those in attendance will be given 30 Seconds to record their vote. the mechanics of the electronic virtual voting process will be explained in more detail at the aGM by the Chair. elections shall be in the following order: a. nominations for auditor b. nominations for members of the board oversight committee c. nominations for directors.

4. the votes will be tallied electronically and verified by our Internal auditor. When all elections have been completed and results become available the chair will announce the results.

Motions 5. In light of the specific difficulties, we are facing in holding an annual General Meeting this year due to Covid-19, the purpose of this year’s aGM is to deal with the essential business of the credit union.

6. the essential business of the credit union includes statutory reporting to members on the financial status of the credit union, elect 92

officers and the passing of the special resolution for the proposed transfer of engagements. there will be no motions from the floor due to the difficulties in managing same remotely.

7. Members will be invited to submit questions to the board via ‘Chat’ button on the toolbar in the Zoom Webinar and the board will address these during the aGM. 8. all motions must be proposed and seconded by members present at the aGM and moved by the proposer.

9. a proposer of a motion may speak for such period as shall be at the discretion of the chair of the meeting and shall have the right of reply before the motion is put to the meeting for a vote.

10.In exercising his/her right of reply, a proposer may not introduce new material.

11.the seconder of a motion shall have such time as shall be allowed by the chair to second the motion.

12.the chair shall have the absolute right to decide at any time when a motion has been sufficiently discussed and may put the motion to the meeting giving the proposer the right of reply before doing so.

Miscellaneous 13.the chair of the board of directors shall be the chair of any general meeting, except where he/she is not available, in which case it shall be the vice-chair, except where he/she is not available, in which case the board shall decide amongst themselves who shall act as chair of any general meeting.

14.the chair may at his/her discretion, extend the privilege of the floor to any person who is not a member.

15.only matters covered by the agenda at aGM may be considered.

SECTION 130 PACK

16.the chairman’s decision on any matter relating to these Standing orders or interpretation of same shall be final.

17.no member shall have more than one vote on each question at any general meeting of the credit union or any adjournment thereof irrespective of his/her shareholding or the number of accounts in his/her name in the credit union provided, however, that except in voting at elections, the presiding member shall have a second or casting vote in the event of equality of voting. Voting by proxy shall be allowed only when a member other than a natural person votes through a representative, who is a member of the group, duly authorised in writing for that purpose and accepted as such by the board of directors.

18.any Special resolution to be decided upon by vote at the aGM shall, unless otherwise expressly provided for by law or the rules, be decided upon by 75% majority of those present and voting.

Virtual Meeting items 22.all non-presenting participants will be muted and have their cameras switched off to allow the smooth running of the meeting.

23.a member shall only address the meeting when called upon by the Chair to do so, when invited to contribute.

24.all members are asked to utilise the ‘chat’ button on the bottom of the toolbar in Zoom Webinar to ask questions.

25.all members are reminded to conduct themselves in a professional manner. please refrain from sharing any explicit, violent or inappropriate content.

26.provision shall be made for the protection of the Chair from vilification (personal abuse) 27.all members are asked to turn their mobile phone on silent as even the vibrate setting can cause disruptions.

28.the aGM meeting will be recorded.

suspension / alteration of standing orders 19.any one of these Standing orders or all of these Standing orders may be suspended on a motion to this effect receiving a two-thirds majority of those present and entitled to vote.

20.Standing orders may be amended or altered at a general meeting and only if a motion to this effect has received a two-thirds majority of those present and voting. adjournments 21.adjournments of the aGM shall take place only in accordance with section 81(1) of the Credit union act, 1997 (as amended)

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NOTES

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