An Post Employees' Credit Union Annual Report 2020

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Annual Report and Financial Statements for the year ended 30 September 2020

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REGISTER FOR VIRTUAL AGM SCAN QR CODE ON SMART PHONE TO REGISTER OR EMAIL agm2020@anpostcu.ie

An Post Employees’ Credit Union Limited Annual Report 2020

FAQs for Participants in Virtual AGM REGISTRATION PROCESS: All members will be emailed a registration link which will also be placed on our website. To register for the event, you will need to provide your name, membership number and contact number.

The Credit Union will then verify your information and issue you with a unique link to join the event.

The AGM will be hosted through a third party called AVC. ONCE REGISTERED WILL I RECEIVE THE LINK TO ATTEND REMOTE AGM IMMEDIATELY ?

No, your name will be cross checked against the Credit Unions list of participants first. If your name is on the list, your registration will be accepted, and you will be sent an email with the Link to join the Webinar. It is important to keep this email safe as you will need the Link to join the Webinar. If your name is not on the list, your registration will be declined, and you will receive an email to this effect.

CAN I REGISTER FROM MY PHONE? Yes, you can register from any smart device by clicking on the registration Link.

WHO CAN REGISTER FOR THE REMOTE AGM? Only members of An Post Employees’ Credit Union will be approved to join the meeting.

WHAT PERSONAL DATA WILL BE USED? Participant name and email address are required to attend remote AGM. It is necessary for An Post Employees’ Credit Union Limited to share this data with Zoom/AVC in order to run the webinar. AVC will not share this data with any other party and will be deleted once the AGM takes place.

AGM’s can be recorded on request. Please note that all participants will join the meeting with their cameras off. Only, if requested and approved will they be allowed to turn on their camera.

HOW DO I JOIN THE AGM? Zoom is the platform used by AVC to host the meeting but loading Zoom to your PC, laptop or tablet is not required. All you need to do is click on the link that you will receive after registration which will bring you straight to the event.

CAN I LOG IN SEVERAL TIMES USING MULTIPLE DEVICES? No. The link is unique per member and works only on a “one click” basis – if the link is forwarded to another member it will not work for them.

CAN I USE MY PHONE TO JOIN THE REMOTE AGM? Yes, you can use any smart device to view and participate in the webinar once you have the link. If you do not have a smart device, you can “dial in” to the webinar using a traditional phone. This will be audio only. On your smart device you will only be allowed to mute/un-mute yourself and raise and lower your hand. Please note that you will not be able to participate in the voting/polling during the remote AGM, if you are using a traditional phone.

A GROUP OF US ARE MEETING IN ONE PLACE TO WATCH THE AGM TOGETHER. CAN WE WATCH ON ONE BIG SCREEN? Yes, providing that adequate social distancing measures are in place. However, each delegate should bring a device so they can register individually and so that each participant can cast a vote/poll.

I DON’T HAVE ACCESS TO 3G/4G, OR I HAVE POOR BROADBAND. WHAT SHOULD I DO? You can join the webinar by audio, but functionality is limited. The numbers to dial will be available in the email with the details on how to join the webinar.

HOW DO I VOTE? Voting will be done by Electronic Polling. A poll will appear on your screen, click on your answer and press submit. You will be given sufficient time to cast your vote (the length of time allowed will be advised on the day). The poll will close after that time and the result will be shared to all delegates in due course.

I WISH TO SPEAK AT THE AGM HOW DO I DO THIS? Participants at the meeting can use an inbuilt Q&A function to ask a question of the main speakers and presenters There is a Q&A function on the Zoom platform. You can use this to indicate that you wish to speak.

Apart from providing your name suggested Information a participant may be required to state before speaking such as: • whether you are proposing someone • whether you are seconding someone • speaking for or against a motion • challenging a report or ruling/making a point of order, etc.

Please also indicate if you wish us to connect you to the webcam while you speak.

You will be able to speak at the appropriate time in line with the normal requirements regarding allotment of time for speakers as directed by the Chair of the AGM. We will temporarily unmute you while you speak. Once you have finished speaking, you will be muted again and will be unable to unmute yourself.

We will be using a countdown clock. When a speaker has 30 seconds left, the clock will appear briefly on the screen.

www.anpostcu.ie

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Contents

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48

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16

41

49

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23

44

50

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24

46

51

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25

47

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AGM Agenda

Directors and Other Information

Directors’ Report and Chairperson’s Statement 2020

Directors’ Report

Statement of Directors’ Responsibilities

Statement of Board Oversight Committee’s Responsibilities

Independent Auditor’s Report

Accounting Policies

Income & Expenditure Account

Balance Sheet

Statement of Changes in Reserves

Notes to the Financial Statements

Additional Information

Finance Report

Report of the Board Oversight Committee

Report of the Credit Control Committee

Report of the Membership Officer

Other Credit Union Committees

In Memoriam

Report of the Credit Committee

Cash Flow Statement

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

NOTICE OF ANNUAL GENERAL MEETING (AGM) Notice is hereby given that the 53rd Annual General Meeting (“AGM”) of An Post Employees’ Credit Union Limited will be held virtually via video link on Sunday, 11 April 2021, at 11am.

You are asked to note as follows: 1. The election of five members to the Board of Directors, three members to the Board Oversight Committee and an auditor will take place at the meeting. The closing date for nominations was 20 November 2020.

2. Motions for consideration at the AGM must be submitted in writing to the Secretary at 12-14 The Anchorage, Ringsend Road, Dublin 4 by Friday, 26 March 2021.

3. Members must preregister should they wish to attend the AGM. Paul Dolan Secretary

Agenda

1) Introduction and welcome 2) Determination of quorum 3) Adoption of standing orders 4) Minutes of the 52nd AGM 5) Report of the Board of Directors (page 6) 6) Report of the auditor (page 13) 7) Finance report and consideration of the accounts (page 44) 8) Declaration of dividend, loan interest rebate and other transfers 9) Report of the Board Oversight Committee (page 46) 10) Report of the Credit Committee (page 47) 11) Report of the Credit Control Committee (page 48) 12) Report of the Membership Officer (page 49) 13) Motions and Rule Amendments 14) Report of the Nominations Committee 15) * Confirmation voting is electronic 16) * Elections 17) * Suspension of standing orders 18) * Result of elections 19) Open forum 20) Close of meeting *As the meeting will be conducted virtually, these agenda items may require an alternative approach during the course of the meeting.

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Directors and Other Information Directors Chairperson Vice-chairperson Secretary Board members

Anthony Harmon Mary Harrahill Paul Dolan Charles Sheehan, Tomás Ó Maonaile, Gerard Ryan, Martin Ryan Margaret Fitzpatrick, Teresa Kavanagh, Pauline Fowler-Warren John Donohue (Resigned August 2020), Claire Murphy (Co-opted August 2020)

Board Oversight Committee Chairperson Secretary Committee

Danny Hoare Myles Davoren Jean Hamilton, Daniel Joyce, Brian Martin

CEO Alan Whelan

Internal Auditor Crowleys DFK Chartered Accountants, Lapp’s Quay, Cork, T12 RW7D

Registered Number 87CU

Registered Office 12 - 14 The Anchorage, Charlotte Quay, Ringsend Road, Dublin 4, D04 A718

Independent Auditor FMB Advisory Limited, 4 Ormond Quay Upper, Dublin 7, D07 PF53

Bankers Ulster Bank, 2 - 4 O’ Connell Street, Dublin 1, D01 XH68

Solicitors Ferrys Solicitors, Inn Chambers, 15 Upper Ormond Quay, Dublin 7, D07 YK6A

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

Directors’ Report and Chairperson’s Statement 2020 It is a great pleasure to present the Directors’ Report on behalf of the Board for the Year Ended 30 September 2020.

It has been a very difficult year on many fronts and many of us have lost loved ones. I mention in particular, Frank Hession who passed away on 15 April 2020. Frank was a founder member of the Credit Union in 1968 and was influential in its development and progress over the years. He is greatly missed.

Despite the difficulties the Credit Union has seen a modest growth in lending and I would strongly encourage all members to continue to support and borrow from the Credit Union to ensure it can remain a sustainable and independent entity. The number of members registered for online banking and the number of users of the phone “app” also increased. This is an important area for the Credit Union as the Credit Union has now introduced full online loan applications.

With travel restrictions in place, Noel Cocoman the Development Officer continued to stay in touch with the An Post workplaces on a regular basis by way of phone, email and posters. This has enabled the Credit Union to continue growing its member base. If you feel that your work area has missed out, perhaps you might contact Noel at the office.

DESPITE THE DIFFICULTIES THE CREDIT UNION HAS SEEN AN INCREASE IN LENDING The Credit Union must ensure that it has appropriate reserves in place to meet any unforeseen events. As a consequence of the current uncertainty and following guidelines from the European Central Bank and the Central Bank of Ireland, the Board is not recommending a dividend on shares or a loan interest rebate for the year ended 30 September 2020.

The Credit Union is your Credit Union and again I would encourage all members to continue to support it by making the most of your membership and by choosing it as your first-choice loan provider otherwise this will result in the Credit Union having to make difficult decisions regarding its long-term sustainability. Increasing costs are also a concern and need to be constantly monitored.

The Life Savings and Death Benefit Insurance are costs that are continually rising and the Board of Directors is closely monitoring this area.

Merger activity has increased over the last period and the Central Bank continues to challenge credit unions with an ever-deepening regulatory framework.

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The Annual Report and the AGM provide an opportunity to thank various people who have made a significant contribution to the Credit Union and who are stepping down from their roles. Board member John Donohoe left the Board this year and a big thank you to John for all his work over the past few years. A big thank you also to Charlie Sheehan for all his work over the past few years, who is stepping down from the Board this year. I’m delighted to report that Charlie will remain involved in a voluntary capacity.

CHOOSING IT AS YOUR FIRST-CHOICE LOAN PROVIDER The AGM this year is my last as Chairperson of the Credit Union. It has been an interesting and challenging time with return on investments continuing at an all-time low, the challenges, restrictions and pressures presented by Covid-19, the modest growth in the loan book and the need to increase the loan book going forward.

In conclusion, I would like to thank my colleagues on the Board, the members of the Board Oversight Committee and the other volunteers for all their work and enthusiasm over the year. Thanks to our CEO Alan Whelan and staff members Danielle, Karina, Sinéad, Siobhan, Sarah, Noel, Amy, Kathy, Ciaran and Keith for their hard work and help over the past twelve months. A special word of thanks to our representatives around the country and to the staff at the An Post National Payroll Centre for their help and assistance.

Finally, I look forward to seeing as many of you as possible at the AGM. Tony Harmon Chairperson

THE NUMBER OF MEMBERS REGISTERED FOR ONLINE BANKING AND THE NUMBER OF USERS OF THE PHONE “APP” HAS ALSO INCREASED

www.anpostcu.ie

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A 20 GM 19

Hugh Cassidy & Brian McKenna

Tony Black & Paddy Davoren

Frank O’Reilly & Norman O’Connor Serena Gavin & Lauren Reilly

Mary Pakenham & Joe Gavin Charlie Sheehan, Richard & Mary Harrahill 8

Directors’ Report for the Year Ended 30 September 2020 The Directors present their Report and Audited Financial Statements for the Year Ended 30 September 2020.

PRINCIPAL ACTIVITY AND REVIEW OF BUSINESS On review of the Credit Union’s financial results the following Key Performance Indicators were identified: Members Savings movement % Gross Loan movement % Regulatory Reserve % of total assets

2020 +5.14% +3.01% 11.33%

2019 +5.35% +2.36% 11.00%

The Credit Union continued to attract additional Members’ Savings during the financial year with Member Shares having increased from the prior year. Lending activity has been impacted during the Financial Year by the Covid-19 pandemic but despite this the Gross Loan Book has increased by 3.01% from the prior period as a result of strong member demand from July to September 2020. The Credit Union continues to maintain Regulatory Reserves in excess of the regulatory minimum of 10%.

RESULTS FOR THE YEAR AND STATE OF AFFAIRS AT 30 SEPTEMBER 2020 The Income and Expenditure Account and the Balance Sheet for the year ended 30 September 2020 are set out on pages 23 and 24.

PRINCIPAL RISKS AND UNCERTAINTIES The Credit Union, as with many other financial institutions, continues to face uncertainties arising from the general economic conditions. The Board is actively monitoring the effects of these conditions on the daily operations of the Credit Union.

The principal areas currently requiring risk management include: - Credit risk: The risk of financial loss arising from a borrower, issuer, guarantor or counterparty that may fail to meet its obligations in accordance with agreed terms. In order to manage this risk the Board approves the Credit Union’s Lending Policy and any amendments to it.

All loan applications are assessed with reference to the Lending Policy in force at the time.

Consequently, loans are regularly reviewed for any factors that may indicate impairment. The Board approves the Credit Union’s Credit Control and Provisioning Policies and monitors the procedures for the collection of loans in arrears and also the basis for impairment on loans.

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Liquidity risk: The risk that the Credit Union will not be able to fund its current and future expected and unexpected cash outflows as they fall due without incurring significant losses.

This may occur even where the Credit Union is solvent. The Credit Union’s policy is to maintain sufficient funds in liquid form at all times to ensure that it can meet its obligations as they fall due. The objective of the Liquidity Policy is to smooth the timing between maturing assets and liabilities and to provide a degree of protection against any unexpected developments that may arise.

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

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Capital risk: Capital is required to act as a cushion to absorb losses arising from business operations and to allow the Credit Union to remain solvent under challenging conditions.

Capital risk arises mainly as a result of the quality or quantity of capital available, the sensitivity of the Credit Union exposures to external shocks, the level of Capital Planning and the Capital Management process. Capital risk could potentially impair a Credit Union’s ability to meet its obligations in an adverse situation. The Board manages this risk by ensuring that sufficient Reserves are set aside each year to absorb any potential losses.

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Operational risk: The risk of loss (financial or otherwise) resulting from inadequate or failed internal processes or systems of the Credit Union; any failure by persons connected with the Credit Union; legal risk (including exposure to fines, penalties or damages as well as associated legal costs); or external events ; but does not include reputational risk. Examples of operational risks include hardware or software failures, cyber risk, inadequate business continuity plans, misuse of confidential information, data entry errors and natural disasters.

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Interest Rate risk: The Interest Rate risk arises from differences between the interest rate exposures on loans and investments receivable, as offset by the cost of capital, which is typically that of distributions to members, payable in the form of dividends and interest rebates. The Credit Union considers rates of interest receivable when deciding on the appropriation of income and its returns to members. The Board monitors such policy in line with the Credit Union Act, 1997 (as amended) and guidance notes issued by the Central Bank of Ireland.

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Strategy/Business Model risk: This refers to the risk which the Credit Union faces if it cannot compete effectively or operate a viable business model. Strategy/Business Model risk also includes the inherent risk in the Credit Union’s strategy. The Board has developed and approved a detailed Strategic Plan to formulate the short term direction of the Credit Union operations.

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Covid-19 risk: The Credit Union, along with financial institutions and other entities in the marketplace and in the economies worldwide faces significant short-term exposure to the economic effects of Covid-19 which emerged as a viral pandemic in early 2020. The specific conditions associated with restrictions on the movement of people in the Republic of Ireland have resulted in both a decrease in loan demand and an increase in member savings in the period March to June 2020 when compared to prior periods. The Directors confirm that during the period July to September 2020, but acknowledge that future projected movements in the Loan Book are uncertain given the current changing environment of restrictions associated with the pandemic.

The Board of Directors and Management team have taken steps, which include the provision of temporary loan repayment agreement facilities to impacted members and continue to closely monitor overhead expenditure levels to limit the short-term impact on the Credit Union of the risks associated with the current exceptional circumstances. In addition, the Directors continue to actively review overall members saving levels in order to ensure the maintenance of Reserve levels in excess of minimum regulatory requirements.

DIVIDENDS In line with the Central Bank’s expectations the Directors do not recommend payment of a dividend or interest rebate for the year. In 2019 a dividend of 0.15% and an interest rebate of 12% was paid.

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INTERNAL AUDIT FUNCTION In accordance with Section 76K of the Credit Union Act, 1997 (as amended) the Board has appointed an Internal Audit Function to provide for independent internal oversight and to evaluate and improve the effectiveness of the Credit Union’s Risk Management, Internal Controls and Governance process.

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 financial function. The Books of Account of the Credit Union are maintained at the Credit Union’s premises at 12 - 14 The Anchorage, Charlotte Quay, Ringsend Road, Dublin 4.

Approved by the Board on : 9 November 2020 Charles Sheehan Member of the Board of Directors

Tomás Ó Maonaile Member of the Board of Directors

EDUCATION LOAN 5.99% wow what a rate!

4 Rate 5.99% (APR 6.1%)* 4 Payroll deduction

Don’t forget to enter the Education Prize Draw, Closing date 30th October

4 FREE Loan Insurance 4 Approval Rate of 94% Draw includes Additional Prize of €500 Voucher for New PC

4 Qualifies for Loan Interest Rebate *For a loan of €5,000 over 4 years, the weekly repayment will be €27 and the total amount repayable will be €5,624

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

Statement of Directors’ Responsibilities for the Year Ended 30 September 2020 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 the affairs of the Credit Union and of the income and expenditure of the Credit Union for that year. In preparing those Financial Statements the Directors are required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Credit Union will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy the financial position of the Credit Union and which enables them to ensure that the Financial Statements comply with the Credit Union Act, 1997 (as amended). They are also responsible for safeguarding the assets of the Credit Union and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as the Directors are aware: - there is no relevant audit information (information needed by the Credit Union’s auditor in connection with preparing the Auditor’s Report) of which the Credit Union’s auditor is unaware, and - the Directors have taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Credit Union’s auditor is aware of that information.

On behalf of the Credit Union: 9 November 2020 Charles Sheehan Member of the Board of Directors

Tomás Ó Maonaile Member of the Board of Directors

Statement of Board Oversight Committee’s Responsibilities for the Year Ended 30 September 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 IVA and any Regulations made for the purposes of Part IV or Part IVA of the Credit Union Act, 1997 (as amended) and any other matter prescribed by the bank in respect of which they are to have regard to in relation to the Board.

Myles Davoren Member of Board Oversight Committee 12

Independent Auditor’s Report to the members of An Post Employees’ Credit Union Limited Report on the audit of the Financial Statements OPINION We have audited the Financial Statements of An Post Employees’ Credit Union Limited for the Year Ended 30 September 2020 which comprise the Income and Expenditure Account, the Balance Sheet, the Statement of Changes in Reserves, the Cash Flow Statement and notes to the Financial Statements, including the summary of significant accounting policies set out on pages 16 - 22. The financial reporting framework that has been applied in their preparation is Irish Law and FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.

In our opinion the Financial Statements: - give a true and fair view of the assets, liabilities and financial position of the Credit Union as at 30 September 2020 and of its income and expenditure for the year then ended; - have been properly prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’; and - have been properly prepared in accordance 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 below in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Credit Union in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and 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 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.

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

Independent Auditor’s Report to the members of An Post Employees’ Credit Union Limited Report on the audit of the Financial Statements (Continued) OTHER INFORMATION The Directors are responsible for the other information. The other information comprises the information included in the Annual Report other than the financial statements and our Auditor’s Report thereon. 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.

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, 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.

OPINION ON OTHER MATTERS PRESCRIBED 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 we consider necessary for the purposes of our audit.

- In our opinion proper accounting records have been kept by the Credit Union, and - the Financial Statements are in agreement with the accounting records.

Respective responsibilities RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL STATEMENTS As explained more fully in the Directors’ Responsibilities Statement set on page 12, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as they determine is 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 going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Credit Union or to cease operations, or has no realistic alternative but to do so.

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Independent Auditor’s Report to the members of An Post Employees’ Credit Union Limited Report on the audit of the Financial Statements (Continued) AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our 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 our 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.

A further description of our responsibilities for the audit of the financial statements is located on the IAASA’s website at http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_ responsiblities_for_audit.pdf. This description forms part of our Auditor’s Report.

THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES Our 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.

FMB Advisory Limited Chartered Accountants Statutory Audit Firm

4 Ormond Quay Upper Dublin 7 D07 PF53

DATE : 26 November 2020

IN PREPARING THE FINANCIAL STATEMENTS, THE DIRECTORS ARE RESPONSIBLE FOR ASSESSING THE CREDIT UNION

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An Post Employees’ Credit Union Limited Annual Report 2020

Accounting Policies for the Year Ended 30 September 2020 Statement of Compliance The financial statements of the Credit Union for the Year Ended 30 September 2020 have been prepared on the going concern basis and in accordance with generally accepted Accounting principles in Ireland and Irish Statute comprising the Credit Union Act 1997 (as amended) and in accordance with the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland (FRS 102) issued by the Financial Reporting Council.

Basis of Preparation The Financial Statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Credit Union’s Financial Statements.

1. Going Concern The Financial Statements are prepared on the going concern basis. The Directors believe this is appropriate as the Credit Union: - is consistently generating annual surpluses; - is maintaining appropriate levels of liquidity in excess of minimum legislative requirements; and - has reserve levels which are significantly above the minimum requirements of the Central Bank.

2. Income Recognition

Income is recognised to the extent that it is probable that the economic benefits will flow to the Credit Union and the revenue can be reliably measured. Income is measured at the fair value of the consideration received. The following criteria must also be met before revenue is recognised: INTEREST ON MEMBERS’ LOANS Interest on loans to members is recognised using the effective interest method and is calculated and accrued on a daily basis. Loan Interest income from members greater than 26 weeks in arrears is classified as Bad Debts Recovered.

INVESTMENT INCOME The Credit Union uses the effective interest method to recognise Investment income.

OTHER INCOME Other income such as Commissions Receivable on insurance products and foreign exchange services arises in connection to specific transactions. Income relating to individual transactions is recognised when the transaction is completed.

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Accounting Policies for the Year Ended 30 September 2020 (continued) 3. Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand and loans and advances to banks (i.e. cash deposited with banks) with maturity of less than or equal to three months.

4. Basic Financial Assets

Basic financial assets are initially measured at the transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method. Basic financial instruments include the following: LOANS TO MEMBERS Loans to members are financial assets with fixed or determinable payments. Loans are recognised when cash is advanced to members and measured at amortised cost using the effective interest method.

Loans are derecognised when the right to receive cash flows from the asset have expired, usually when all amounts outstanding have been repaid by the member.

INVESTMENTS HELD AT AMORTISED COST Investments designated on initial recognition as held at amortised cost are measured at amortised cost using the effective interest method less impairment. This means that the investment is measured at the amount paid for the investment, minus any repayments of the principal; plus or minus the cumulative amortisation using the effective interest method of any difference between the amount at initial recognition and the maturity amount; minus, in the case of a financial asset, any reduction for impairment or uncollectability. This effectively spreads out the return on such investments over time, but does take account immediately of any impairment in the value of the investment.

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 interest and will not ordinarily be returned to the Credit Union while it is a going concern. In accordance with the direction of the Central Bank the amounts are shown as current assets and are not subject to impairment reviews.

5. De-recognition of Financial Assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Credit Union transfer to another party substantially all the risks and rewards of ownership of the financial asset, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated party.

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

Accounting Policies for the Year Ended 30 September 2020 (continued)

In the case of loans to members, loans are derecognised when the right to receive cash flows from the loans have expired, usually when all amounts outstanding have been repaid by the member.

6. 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.

7. Other Payables

Other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Other payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

8. Tangible Fixed Assets

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Tangible fixed assets comprises items of property, plant and equipment, which are stated at cost, less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

Depreciation is provided to write off the cost of each item of property, plant and equipment, less its estimated residual value, on a straight line basis over its estimated useful life. The categories of property, plant and equipment are depreciated as follows:

Premises Computer equipment Fixtures & fittings Office equipment

- - - -

2% Straight Line 25% Straight Line 25% Straight Line 25% Straight Line

Gains or losses arising on the disposal of an asset are determined as the difference between the sale proceeds and the carrying value of the asset, and are recognised in the Income and Expenditure account.

At each reporting end date, the Credit Union reviews the carrying value of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Credit Union estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

Accounting Policies for the Year Ended 30 September 2020 (continued)

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the Income and Expenditure Account.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying 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.

9. Employee Benefits

PENSION COSTS An Post Employees’ 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 An Post Employees’ 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, An Post Employees’ 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 above 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.

www.anpostcu.ie

19

An Post Employees’ Credit Union Limited Annual Report 2020

Accounting Policies for the Year Ended 30 September 2020 (continued)

20

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 FRS102. 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.

FRS 102 requires a provision to be recognised where an agreement has been entered into with a multi-employer plan that determines how the deficit will be funded. This provision was initially measured based on the contributions payable that arose from the agreement with the multi-employer pension plan to the extent that they relate to the deficit. An Post Employees’ Credit Union Limited has paid the contributions payable under this funding agreement and the resulting provision was subsequently released over the period of the agreement.

On 24 May 2019, the Financial Reporting Council issued amendments to FRS 102 in respect of multi-employer defined benefit plans. These narrow-scope amendments respond to a current financial reporting issue regarding where to present the impact of an employer’s transition from defined contribution accounting to defined benefit accounting; it shall be presented in other comprehensive income. The FRC in their May 2019 publication “Impact Assessment and Feedback Statement Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland Multi-employer defined benefit plans” state that these amendments will only affect entities that participate in multi-employer defined benefit plans, for which sufficient information to apply defined benefit accounting has not been available, but now becomes available. These amendments do not affect the accounting for the defined benefit plan before or after sufficient information becomes available, which is already clear in FRS 102, but only specify the accounting at the date of transition to defined benefit accounting.

An Post Employees’ Credit Union Limited has received correspondences from the Irish League of Credit Unions Republic of Ireland Pension Scheme (“Defined Benefit Scheme”) confirming that the scheme does not have sufficient information available to establish an accurate split of the defined benefit assets and liabilities for individual employers due to: - Use of common contribution rate of 27.5% results in cross-subsidisation between the Employers and is not linked to individual Employer liabilities in respect of their current or former employees; - Scheme Assets are not segregated or tracked by contributing Employers and allocation of assets to individual Employers would be arbitrary and may not represent a reliable basis of allocation.

Accounting Policies for the Year Ended 30 September 2020 (continued)

As a consequence, the Directors are satisfied that as there is no change to the information available to the Defined Benefit Scheme and the various employers at this time, it remains appropriate that the Credit Union continues to apply defined contribution accounting in respect of the Defined Benefit Scheme.

OTHER EMPLOYEE BENEFITS The costs of short-term employee benefits, including holiday pay, are recognised as a liability and as an expense (unless those costs are required to be recognised as part of the cost of fixed assets) over the period they are earned.

10. Impairment of Members Loans The Credit Union assesses, at each Balance Sheet date, if there is objective evidence that any of its loans to members are impaired. 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, during the course of the year, there is objective evidence that any individual loan is impaired, a specific loss will be recognised.

Bad debts/impairment losses are recognised in the Income and Expenditure Account, as the difference between the carrying value of the loan and the net present value of the expected cash flows.

11. Financial Liabilities - Members’ Shares and Deposits

Members’ shareholdings and deposits are redeemable and therefore are classified as financial liabilities. They are initially recognised at the amount of cash deposited and subsequently measured at the nominal amount.

12. De-recognition of Financial Liabilities

Financial liabilities are derecognised only when the obligations of the Credit Union specified in the contract are discharged, cancelled or expired.

13. Dividends and Other Returns to Members

Dividends are made from current year’s surplus or a dividend reserve set aside for that purpose.

The Board’s proposed distribution to members each year is based on the dividend and loan interest rebate policy of the Credit Union.

The rate of dividend and loan interest rebate recommended by the Board will reflect: - the risk profile of the Credit Union, particularly in its loan and investment portfolios; - the Board’s desire to maintain a stable rather than a volatile rate of dividend each year; and - members’ legitimate dividend and loan interest rebate 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.

www.anpostcu.ie

21

An Post Employees’ Credit Union Limited Annual Report 2020

Accounting Policies

for the Year Ended 30 September 2020 (continued)

Final dividends and other returns to members are accounted for as a liability after they are approved by the members in General Meeting.

14. Taxation

The Credit Union is not subject to Income Tax or Corporation Tax on its activities as a Credit Union.

15. Reserves

Retained earnings are the accumulated surpluses to date that have not been declared as dividends returnable to members. The retained earnings 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.

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% 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. This reserve is similar in nature and replaces the Statutory Reserve which was a requirement of previous legislation.

OPERATIONAL RISK RESERVE Section 45(5)(a) of the 1997 Act requires each Credit Union to maintain an additional reserve that it has assessed is required for operational risk having regard to the nature, scale and complexity of the Credit Union. Credit Unions are required to maintain a minimum operational risk reserve having due regard for the sophistication of the business model.

The definition of operational risk is the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events. The Directors have considered the requirements of the Act and have considered an approach to calculation of the operational risk reserve based on indicative guidance issued by the Central Bank.

INVESTMENT INCOME RESERVE 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 as a dividend in accordance with the Central Bank direction. All other income is classified as “realised”. A reclassification between unrealised and realised is made as investments come to within 12 months of maturity date.

22

An Post Employees’ Credit Union Limited

Income and Expenditure Account for the year ended 30 September 2020 Schedule INCOME Interest on loans Other interest income and similar income Net Interest Income Other income Other gains Total Income

1 2 3 4

2020 €

2019 €

1,701,683 242,393 1,944,076 927 20,538 1,965,541

1,665,620 276,955 1,942,575 26,126 1,968,701

354,798 956,389 42,951 (23,608) (111,358) 10,824 1,229,996

316,138 880,516 45,779 (10,434) (129,221) 62,993 1,165,771

735,545 735,545

802,930 802,930

EXPENDITURE Salaries Other management expenses Depreciation Bad debts provision Bad debts recovered Bad debts written off Total Expenditure Excess of Income Over Expenditure for the Year Other comprehensive income Total Comprehensive Income

5

On behalf of the Credit Union: 9 November 2020 Charles Sheehan Member of Board of Directors

Myles Davoren Member of the Board Oversight Committee

Alan Whelan CEO

The accompanying notes form part of these Financial Statements

Total Expenditure

2019 2020

11,165,771 11,229,996 www.anpostcu.ie

23

An Post Employees’ Credit Union Limited Annual Report 2020

An Post Employees’ Credit Union Limited

Balance Sheet as at 30 September 2020 Note

ASSETS Cash and cash equivalents Investments Loans Less provision for bad debts Tangible fixed assets Debtors, prepayments and accrued income Total Assets LIABILITIES Members’ shares Members’ deposits Members’ draw account Other liabilities, creditors, accruals and charges Total Liabilities RESERVES Regulatory reserve Operational risk reserve Other reserves Realised reserves Unrealised reserves Total Reserves

2020 €

2019 €

6 7 8 11 12 13

9,636,464 27,729,890 21,109,338 (855,833) 991,893 276,048 58,887,800

10,670,233 24,537,944 20,491,689 (879,441) 1,024,063 239,711 56,084,199

14 15

46,860,659 511,836 103,900 77,113 47,553,508

44,678,127 378,805 94,461 48,283 45,199,676

18 18

6,669,262 772,504

6,169,262 547,529

18 18

3,882,028 10,498 11,334,292 58,887,800

4,130,061 37,671 10,884,523 56,084,199

16

On behalf of the Credit Union: 9 November 2020 Charles Sheehan Member of the Board of Directors

Myles Davoren Member of the Board Oversight Committee

The accompanying notes form part of these Financial Statements

24

Alan Whelan CEO

An Post Employees’ Credit Union Limited rv se Re

ve er

e ec Sp

ve T Re o t a se l rv es

lR ia

m st ve

es

tI en

Cu & al ci

er

nc

ra ltu

se Re d en

id iv

om

e rv

e rv se Re

al er en

lR es

us Su rp l

ed ut ib tr is nd

€

€

€

€

528,513 1,456,283 2,080,831 420,000 19,355

22,000

7,062

10,397,817

€

€

D

U

G

In

5,863,773

So

€ Opening balance at 1 October 2018

O Ri pe s k ra Re t i o se na rv l e

R Re e g se u la r v to e ry

for the Year Ended 30 September 2020

e

Statement of Changes in Reserves

€

€

Total comprehensive income

802,930

802,930

Dividend paid

(104,578)

(104,578)

Interest rebate paid

(202,805)

(202,805)

Transfer between reserves

305,489

19,016

(347,105)

-

-

5,150

6,600

Other Closing balance at 30 September 2019 6,169,262

547,529 1,604,725 2,080,831 420,000 24,505

28,600

-

(10,850)

2,009

2,009

9,071 10,884,523

Total comprehensive income

735,545

735,545

Dividend paid

(65,819)

(65,819)

Interest rebate paid

(204,384)

(204,384)

Transfer between reserves

500,000

224,975

(206,375)

(500,000)

- (7,000) (28,600)

Other Closing balance at 30 September 2020 6,669,262 772,504 1,863,692 1,580,831 420,000 17,505

-

-

(17,000)

1,427

1,427

10,498 11,334,292

The balance on the Regulatory Reserve represents 11.33% of total assets as at 30 September 2020 (11.00% as at 30 September 2019).

On behalf of the Credit Union: 9 November 2020 Charles Sheehan Member of the Board of Directors

Myles Davoren Member of the Board Oversight Committee

Alan Whelan CEO

www.anpostcu.ie

25

An Post Employees’ Credit Union Limited Annual Report 2020

An Post Employees’ Credit Union Limited

Cash Flow Statement for the year ended 30 September 2020 Note

2020 € 10,670,233

2019 € 5,960,123

9,647,350 (10,275,823) 1,690,772 217,455 111,358 (65,819) (204,384) (1,311,187) (190,278)

9,771,695 (10,306,200) 1,663,208 319,942 129,221 (104,578) (202,805) (1,196,654) 73,829

Cash flows from investing activities Fixed assets purchased Net cash flow from investments Other gains

(10,781) (3,191,946) 20,538

(27,738) 2,374,465 -

Net cash flows from investing activities

(3,182,189)

2,346,727

Cash flows from financing activities Members’ shares received Members’ deposits received Members’ shares withdrawn Members’ deposits withdrawn Net cash flows from financing activities

12,596,606 687,241 (10,412,647) (554,210) 2,316,990

11,035,579 651,850 (8,772,665) (624,043) 2,290,721

927 (488) 21,269 21,708 9,636,464

26,126 (4,323) (22,970) (1,167) 10,670,233

Opening cash and cash equivalents Cash flows from operating activities Loans repaid Loans granted Loan interest received Investments interest received Bad debts recovered Dividends paid Interest rebate paid Operating expenses Net cash flows from operating activities

Other Other receipts Decrease/(Increase) in prepayments (Increase)/Decrease in other liabilities Closing cash and cash equivalents

6

On behalf of the Credit Union: 9 November 2020

26

Charles Sheehan

Myles Davoren

Alan Whelan

Member of the Board of Directors

Member of the Board Oversight Committee

CEO

Notes to the Financial Statements for the Year Ended 30 September 2020 1. General Information

An Post Employees’ Credit Union Limited is a credit union incorporated under the Credit Union Act 1997 (as amended) in the Republic of Ireland. An Post Employees’ Credit Union Limited is registered with the Registrar of Credit Unions and is regulated by the Central Bank of Ireland.

The Financial Statements have been presented in Euro (€) which is also the functional currency of the Credit Union.

2. Use of Estimates and Judgements

The preparation of Financial Statements requires the use of certain accounting estimates. It also requires the Directors to exercise judgement in applying the Credit Union’s accounting policies.

The areas requiring a higher degree of judgement, or complexity, and areas where assumptions or estimates are most significant to the financial statements are disclosed below:

BAD DEBTS/IMPAIRMENT LOSSES ON LOANS TO MEMBERS The Credit Union’s Accounting Policy for Impairment of Financial Assets is set out in Accounting Policies on pages 16 - 22 of the Financial Statements. 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.

Credit risk is identified, assessed and measured through the use of rating and scoring tools with emphasis on weeks in arrears and other observable credit risk metrics as identified by the Credit Union. The ratings influence the management of individual loans. The credit rating triggers the impairment assessment and if relevant the raising of specific provisions on individual loans where there is doubt about their recoverability.

Loan loss provisioning is monitored by the Credit Union, and the Credit Union assesses and approves its provisions and provision adequacy on a quarterly basis. Key assumptions underpinning the Credit Union’s estimates of collective provisions for loans with similar credit risk characteristics, and, Incurred But Not Reported provisions (“IBNR”) are based on the historical experiences of the Credit Union allied to the Credit Union’s judgement of relevant conditions in the wider technological, market, economic or legal environment in which the Credit Union currently operates which impact on current lending activity and loan underwriting.

If a loan is impaired, the impairment loss is the difference between the carrying amount of the loan and the present value of the expected cash flows discounted at the asset’s original effective interest rate taking account of pledged shares and other security as appropriate. Assumptions are back tested with the benefit of experience. After a period of time, when it is concluded that there is no real prospect of recovery of loans/part of loans which have been subjected to a specific provision, the Credit Union writes off that amount of the loan deemed irrecoverable against the specific provision held against the loan.

www.anpostcu.ie

27

An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020

IMPAIRMENT OF BUILDINGS The Credit Union’s accounting policy on tangible fixed assets is set out in Accounting Policies on pages 16 - 22 of the Financial Statements. As described in the accounting policy the Credit Union is required to assess at each reporting date whether there is any indication that an asset may be impaired. If an impairment is identified, the Credit Union is required to estimate the recoverable amount of the asset. If there is no indication of impairment, it is not necessary to estimate the recoverable amount.

The recoverable amount of an asset is the higher of its fair value less costs associated with sale and its value in use. In assessing whether the Credit Union’s property is impaired, its current market valuation is considered as being equivalent to its fair value. Where the property’s market valuation is identified as being below its carrying value, this amounts to a key indicator of the existence of impairment and the Credit Union is therefore required to undertake a value in use calculation on its property assets. Value in use is the present value of the future cash flows expected to be derived from the Credit Union’s property. This present value calculation involves the undertaking of the following steps:

(a) Estimating the future cash inflows and outflows to be derived from continuing use of property and from its ultimate disposal, where appropriate; and (b) Applying the appropriate discount factor to those future cashflows.

The future cash inflows and outflows required for the value in use calculation are taken from financial projections prepared by management and approved by the board of directors. The discount factor applied in the value in use calculation is an assessment of the time value of money applicable to the Credit Union and will take account of previous guidance received from the Central Bank.

3. Employees Number of employees

The average monthly numbers of employees during the year were:

Tellers/Admin

Employment costs Wages and salaries Pension costs

28

2020 Number 8 8

2019 Number 8 8

2020

2019

€

€

354,798 25,199 379,997

316,138 31,783 347,921

Notes to the Financial Statements for the Year Ended 30 September 2020 3.1.Key Management Personnel Compensation

The Directors of An Post Employees’ Credit Union Limited are all unpaid volunteers. The key management team for An Post Employees’ Credit Union Limited would include the Directors, the Credit Union Manager and other senior staff. The number of key management for the Financial Year to 30 September 2020 amount to 16 (2019 - 16).

Short term employee benefits paid to key management Payments to defined contribution pension schemes

2020 € 166,418 11,191 177,609

2019 € 199,606 27,796 227,402

4. Pension Costs Pension costs amounted to €25,199 (2019 - €31,783).

5. Analysis of Investment Income Received during the year Receivable within 12 months Other investment income

2020 € 139,379 141,180 280,559

2019 € 164,904 137,270 6,600 308,774

2020 € 5,599,661 4,036,803 9,636,464

2019 € 5,353,073 5,317,160 10,670,233

6. Cash & Cash Equivalents

Cash and bank balances Short term deposits

Short term deposits are deposits with maturity of less than or equal to three months. All other deposits are included in Investments in the Balance Sheet and disclosed in note 7.

Royal Bank of Scotland has provided the Credit Union with an overdraft facility and holds a legal charge over underlying assets amounting to €300,000.

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29

An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020 7. Investments Investments are classified as follows: Fixed term deposits maturing after 3 months Deposit Protection Account Investment bonds

TOTAL INVESTMENTS FOR 2020

2020 €

2019 €

13,245,015 1,805,604 12,679,271 27,729,890

16,395,338 284,654 7,857,952 24,537,944

TOTAL INVESTMENTS FOR 2019

The cumulative market valuation of the investment bonds held by the credit union at 30 September 2020 amounts to €12,831,237. The Directors have confirmed that they are satisfied that all fixed term investments will be held to maturity and therefore the recognition of an impairment is not required.

The categories of counterparties with whom the investments are held is as follows: -

Credit Ratings A1 Aa3 A2 A3 Ba1 Baa1 Baa2 Baa3

2020 € 16,294,261 420,000 4,728,842 6,981,856 3,341,734 31,766,693

2019 € 6,475,000 3,255,265 8,320,842 4,369,225 2,357,754 1,742,889 3,334,129 29,855,104

The Credit Union’s investments portfolio is categorised above utilising Moody’s credit rating scale.

30

Notes to the Financial Statements for the Year Ended 30 September 2020 8. Loans to Members 2020 €

2019 €

Opening Balance at 1 October Loans granted Loans repaid Loans written off Gross Loan Balance at 30 September

20,491,689 10,275,823 (9,647,350) (10,824) 21,109,338

20,020,177 10,306,200 (9,771,695) (62,993) 20,491,689

Impairment allowances Individual loans Groups of loans Loan provision Net loans as at 30 September

(546,105) (309,728) (855,833) 20,253,505

(623,131) (256,310) (879,441) 19,612,248

9. Analysis of Gross Loans Outstanding 2020

2019

Less than one year Greater than 1 year and less than 3 years Greater than 3 years and less than 5 years Greater than 5 years and less than 10 years Greater than 10 years and less than 25 years

No 458 944 1,019 65 3

1,113,851 6,807,357 11,156,317 1,935,473 96,340

No 607 1,081 839 41 1

1,456,097 8,024,632 9,930,525 1,058,312 22,123

Total Gross Loans

2,489

21,109,338

2,569

20,491,689

€

€

LOANS GRANTED IN 2020

€10,275,823 www.anpostcu.ie

31

An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020 10. Credit Risk Disclosures

An Post Employees’ Credit Union Limited does not offer mortgages and as a result all loans to members are unsecured, except that there are restrictions on the extent to which borrowers may withdraw their savings whilst loans are outstanding. There are maximum amounts set down by the Central Bank in terms of what amount a member can borrow from the Credit Union.

The carrying amount of the loans to members represents the Credit Union’s maximum exposure to credit risk. The following table 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.

Gross Loans Not Impaired Gross Loans Impaired 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 Gross Loans Impairment Allowance Individual loans Collectively assessed loans Loan provision Net loans as at 30 September

2020 €

%

2019 €

%

18,258,484

86.49%

16,637,528

81.19%

2,079,263 194,314 123,644 87,778 83,093 282,762 2,850,854

9.85% 0.92% 0.59% 0.42% 0.39% 1.34% 13.51%

3,256,268 106,918 72,238 60,107 77,090 281,540 3,854,161

15.89% 0.52% 0.35% 0.29% 0.38% 1.37% 18.81%

21,109,338

100.00% 20,491,689

100.00%

(546,105) (309,728) (855,833)

(623,131) (256,310) (879,441)

20,253,505

19,612,248

Factors that are considered in determining whether loans are impaired are discussed in Note 2, dealing with estimates.

GROSS LOANS AS AT 30 SEPTEMBER 2020

121,109,338 32

Notes to the Financial Statements for the Year Ended 30 September 2020 11 Loan Provision Account for Impairment Losses 2020 € 879,441 (12,784) (10,824) 855,833

Opening balance 1 October Net movement during the year Decrease as a result of loan write offs previously provided for Closing provision balance 30 September

2019 € 889,875 21,520 (31,954) 879,441

12. Tangible Fixed Assets Premises Computer Office Fixtures & equipment equipment fittings € € € € Cost At 1 October 2019 Additions At 30 September 2020 Depreciation At 1 October 2019 Charge for the year At 30 September 2020 Net book values At 30 September 2020 At 30 September 2019

Total €

1,350,684 1,350,684

159,874 6,746 166,620

32,282 3,097 35,379

24,510 938 25,448

1,567,350 10,781 1,578,131

354,764 27,816 382,580

136,537 11,569 148,106

27,476 3,331 30,807

24,510 235 24,745

543,287 42,951 586,238

968,104 995,920

18,514 23,337

4,572 4,806

703 -

991,893 1,024,063

An independent valuation of the Credit Union’s premises at 12/14 The Anchorage, Charlotte Quay, Ringsend Road, Dublin 4 was carried out by Colliers International Valuation & Advisory Services, in August 2020. This report placed a valuation of €1,360,000 on the Credit Union’s interest in the premises and as this is in excess of its’ carrying value at 30 September 2020 the Directors have confirmed that they are satisfied that no indication of impairment exists.

13. Prepayments and Accrued Income

Prepayments Accrued investment income Member Loan interest receivable

2020 €

2019 €

74,834 169,780 31,434 276,048

74,346 144,842 20,523 239,711

www.anpostcu.ie

33

An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020 14. Members’ Shares Opening Balance at 1 October Shares paid in Shares withdrawn Other movements Closing Balance at 30 September

2020 € 44,678,127 12,596,606 (10,412,647) (1,427) 46,860,659

2019 € 42,417,222 11,035,579 (8,772,665) (2,009) 44,678,127

Members’ shares are repayable on demand except for shares attached to loans. The breakdown of the shares between attached and unattached is as follows:

Unattached Shares Attached Shares

€

€

37,337,440 9,523,219 46,860,659

34,926,860 9,751,267 44,678,127

2020 € 378,805 687,241 (554,210) 511,836

2019 € 350,998 651,850 (624,043) 378,805

511,836 511,836

378,805 378,805

2020 € 77,113 77,113

2019 € 48,283 48,283

15. Members’ Deposits Opening Balance at 1 October Deposits paid in Deposits withdrawn Closing Balance at 30 September Members’ deposit accounts have the following maturity Less than 1 year Total Term Deposits

16. Other Liabilities and Charges Accruals

34

Notes to the Financial Statements for the Year Ended 30 September 2020 17. Additional Financial Instruments Disclosures

1. FINANCIAL RISK MANAGEMENT An Post Employees’ Credit Union Limited manages its members’ shares and loans to members 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, liquidity risk and interest rate risk. The Board 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 An Post Employees’ Credit Union Limited, resulting in financial loss to the Credit Union. In order to manage this risk the Board approves the Credit Union’s Lending Policy, and all changes to it. 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. The Board have considered the impact of the Covid-19 pandemic on the Credit Union’s membership and Loan Book in conjunction with their review of the Lending Policy during the Financial Year.

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. The Credit Union adheres on an ongoing basis to the minimum liquidity ratio and minimum short term liquidity ratio as set out in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016.

Market risk: Market risk is generally comprised of interest rate risk, currency risk and other price risk. An Post Employees’ Credit Union Limited conducts all its transactions in Euro and does not deal in derivatives or commodity markets. Therefore the Credit Union is not exposed to any form of currency risk or other price risk.

Interest rate risk: The Credit Union’s main interest rate risk arises from differences between the interest rate exposures on the receivables and payables that form an integral part of a Credit Union’s operations. The Credit Union considers rates of interest receivable on investments and members’ loans when deciding on the dividend rate payable on shares and on any loan interest rebate.

Capital Risk - The Credit Union maintains sufficient reserves to buffer against losses on members’ loan and investments. The current Regulatory Reserve is in excess of the minimum level set down by the Central Bank of Ireland, and stands at 11.33% of the total assets of the Credit Union at the Balance Sheet date.

www.anpostcu.ie

35

An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020

2. INTEREST RATE RISK DISCLOSURES The following table shows the average interest rates applicable to relevant financial assets and financial liabilities 2020 Amount Financial Assets Loans to members

€ 21,109,338

2020 Average Interest Rate 8.48%

2019 Amount

2019 Average Interest Rate 8.61%

€ 20,491,689

The Credit Union pay interest on members’ deposits at the rate of 0.10% per annum, payable in November 2020.

The 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.

3. LIQUIDITY RISK DISCLOSURES All of the financial liabilities of the Credit Union are repayable on demand except for some members’ shares attached to loans and members’ deposits which have a fixed maturity date.

4. FAIR VALUE OF FINANCIAL INSTRUMENTS An Post Employees’ Credit Union Limited does not hold any financial instruments at fair value.

18. Total Reserves Balance Dividend and Appropriation Transfers 01/10/19 loan interest of current between rebate paid year surplus reserves € € € € Total Regulatory Reserve 6,169,262 Operational Risk Reserve 547,529 Other Realised Reserves 1,604,725 Undistributed Surplus General reserve 2,080,831 Dividend reserve 420,000 Social and cultural reserve 24,505 Other realised reserves 4,130,061 10,846,852 Total realised reserves Unrealised Reserves 28,600 Investment income reserve Special reserve 9,071 Total unrealised reserves 37,671 Total reserves 10,884,523 36

500,000 224,975 (270,203)

-

Balance 30/09/20 € 6,669,262 772,504

(270,203) (270,203)

529,170 (500,000) 10,000 39,170 764,145

- 1,863,692 - 1,580,831 420,000 (17,000) 17,505 (17,000) 3,882,028 (17,000) 11,323,794

(270,203)

(28,600) (28,600) 735,545

1,427 10,498 1,427 10,498 (15,573) 11,334,292

Notes to the Financial Statements for the Year Ended 30 September 2020

The Credit Union is required to maintain a Regulatory Reserve that support the Credit Union’s operations, provide a base for future growth and protect against the risk of unforeseen losses.

The Credit Union needs to maintain sufficient reserves to ensure continuity and to protect members’ savings. The Central Bank expects that Credit Unions whose total regulatory reserves are currently in excess of 10 per cent of total assets will continue to maintain reserves at existing levels on the basis that these continue to reflect the Board of Directors’ assessment of the appropriate level of reserves for the Credit Union.

The balance on the Regulatory Reserve represents 11.33% of total assets as at 30 September 2020 (11.00% as at 30 September 2019).

The Board of Directors and the management team have undertaken a review of the Credit Union's risk register and risk management procedures in order to determine the adequacy of the Operational Risk Reserve. This review consisted of a consideration of each operational risk area, the various control procedures, outsourcing agreements and insurances in place to mitigate risk and the resultant remaining residual risk. An estimated costing to the Credit Union has been attached to each identified area of residual risk in computing the required operational risk reserve.

The balance on the Operational Risk Reserve represents 1.31% of total assets as at 30 September 2020. Included in this reserve is an amount in respect of the estimated cost of risk posed by a no-deal Brexit to the loan book.

The Special Reserve represents the share balances of members no longer active in the Credit Union. They are held in Special Reserve until such time as they are claimed or can be legally taken to General Reserve.

The balance on the Investment Income Reserve in the prior year represented investment income which was not receivable within 12 months of that Financial Year End. This investment income is now receivable within 12 months of the current financial year and the relevant amount has been transferred back within the Income and Expenditure Account.

19. Dividends, Loan Interest Rebate and Other Returns to Members

The directors recommend the following distributions: 2020 Dividend on shares Loan interest rebate

2019

Rate %

€

Rate %

€

-% -%

-

0.15% 12.00%

65,490 204,383

In accordance with FRS102 “Events after the End of the Reporting Period”, dividends and returns to members are accounted for in the Financial Statements after they are approved by the members in General Meeting.

www.anpostcu.ie

37

An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020

The returns to members paid in the current and prior year periods were as follows:

Dividend paid during the year Dividend rate Loan interest rebate paid during the year Loan interest rebate rate

2020 € 65,819 0.15%

2019 € 104,578 0.25%

204,384 12.00%

202,805 10.00%

20. Rate of Interest Charged on Members’ Loans The Credit Union currently charge interest on outstanding loan balances to members, as follows: Standard Rate

8.90%

Educational/Welcome/Home Improvement loans

5.99%

Secured loan

4.99%

21. Rate of Interest Paid on Members’ Deposits The Credit Union pay interest on members’ deposits at the rate of 0.10% per annum, payable in November 2020.

22. Post Balance Sheet Events

There are no material events after the Balance Sheet date to disclose.

23. Contingent Liabilities

38

All capital invested in fixed term deposit products, accounts in authorised credit institutions and investment bonds are guaranteed only if held to maturity. In the unlikely event of early encashment there may exist early settlement penalties or capital losses. The Directors have confirmed that all such products are to be held until their respective maturity dates.

The Credit Union participates in the Irish League of Credit Unions Republic of Ireland Pension Scheme (the Scheme). As detailed in the Accounting Policies, this is accounted for as if it were a defined contribution scheme, as the Credit Union is unable to identify its share of the underlying assets or liabilities. Following the actuarial review which is expected to be undertaken, any shortfall in assets will result in additional charges to the Credit Union.

Notes to the Financial Statements for the Year Ended 30 September 2020

The Registry of Credit Unions informed Credit Unions in the Republic of Ireland on 17 September 2018 that it had become aware of a potential matter that may impact certain Credit Unions in respect of accrued interest outstanding on loans where additional credit is extended to a member by way of a top-up-loan. The Registry of Credit Unions has requested information from credit unions in this context to assess the potential impact of this matter. A process to establish the potential impact, if any of this matter on An Post Employees’ Credit Union Limited is on-going. This process is not yet complete and therefore, the existence of any liability and any reliable estimate amount of any liability associated with this matter, while possible, remains uncertain along with the timing of same. Consequently, no provision has been made in the Financial Statements to 30th September 2020 for any amount that may become payable by An Post Employees’ Credit Union Limited.

24. Capital Commitments

There were no capital commitments either contracted for or approved by the Board at the Year End.

25. Insurance Against Fraud The Credit Union has insurance against fraud in the amount of €5,200,000 in compliance with Section 47 of the Credit Union Act, 1997 (as amended).

26. Related Party Transactions

The Credit Union has identified the following transactions which are required to be disclosed under the terms of FRS102 ‘Related Party Disclosures’.

The following details relate to officers and related party accounts with the Credit Union. Related parties include the Board of Directors and the management team of the Credit Union, their family members or any business in which the director or management team had a significant shareholding.

No. of loans Total savings held by related parties Total loans outstanding by related parties % of gross loan book Loans advanced to related parties during the year Total provisions for loan outstanding to related parties at year end Total provision charge during the year for loans outstanding to related parties

7 1

2020 €

2019 €

98,913 67,826 0.32% 2,000

110,006 118,790 0.58%

3,415 2,023

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

Notes to the Financial Statements for the Year Ended 30 September 2020 27. Going Concern The Financial Statements have been prepared on the going concern basis which assumes that the Credit Union will continue in operational existence for the foreseeable future with no intention to significantly curtail its activities in the next 12-month period.

During the first quarter of 2020, the Covid-19 virus spread initially from Asia to Europe and has subsequently been confirmed as a worldwide pandemic. The initial economic effect of this has been a worldwide slowdown in economic activity and the loss of jobs across many businesses.

The Republic of Ireland and the majority of worldwide economies, governments have placed restrictions on “non-essential” business activities in measures designed to restrict the movement of people and to slow down the spread of the virus which has resulted in many businesses temporarily closing. The Directors confirm that An Post Employees’ Credit Union Limited continued to operate and actively engage with its members during the Financial Year. While the Credit Union experienced a fall in the level of loans issued to members in the period March to June 2020, as a result of restrictions associated with the Covid-19 pandemic, the Directors have confirmed that activity levels have improved from July 2020 onwards. The Credit Union generated a surplus of €735,545 for the Financial Year and its Reserve to Total Assets level at 30 September 2020 amount to 19.25%, significantly in excess of the 10% legal limit. On this basis the Directors consider it appropriate to prepare the Financial Statements on a going concern basis.

28. Authorisation and Approval of Financial Statements The Board of Directors authorised and approved these Financial Statements for issue on 9 November 2020.

THE CREDIT UNION GENERATED A SURPLUS OF

€735,545 FOR THE FINANCIAL YEAR ITS RESERVE TO TOTAL ASSETS LEVEL AT 30 SEPTEMBER 2020 AMOUNT TO

19.25%

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An Post Employees’ Credit Union Limited

Additional Information (not forming part of the Statutory Audited Financial Statements) for the Year Ended 30 September 2020 Schedule 1. Interest on Loans

2020

Loan interest received Loan interest receivable Total per Income and Expenditure Account

Schedule 2. Other Interest Income and Similar Income Investment income Amortisation of bonds Total per Income and Expenditure Account

Schedule 3. Other Income Entrance fees E.C.C.U. rebate Car draw commission Other income Total per Income and Expenditure Account

Schedule 4. Other Gains Gains on Investments Total per Income and Expenditure Account

2019

€

€

1,690,772 10,911 1,701,683

1,663,208 2,412 1,665,620

2020

2019

€

€

280,559 (38,166) 242,393

308,774 (31,819) 276,955

2020

2019

€

€

377 550 927

390 23,919 1,500 317 26,126

2020

2019

€

€

20,538 20,538

-

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

An Post Employees’ Credit Union Limited

Additional Information (not forming part of the Statutory Audited Financial Statements) for the Year Ended 30 September 2020 Schedule 5. Other Management Expenses Staff pension costs Training costs E.C.C.U. Insurance Death benefit insurance SPS contribution Members’ deposit interest Rates General insurance Light, Heat & Cleaning Repairs and maintenance Security Printing and stationery Promotion and advertising Postage and telephone Computer costs Convention and seminar expenses Travelling and subsistence Entertainment costs AGM expenses Legal and professional Credit reference agencies Audit Bank charges General expenses Affiliation fees Regulatory levy Central Bank Resolution Fund Deposit Protection Scheme Total per Income and Expenditure Account

Schedule 6. Other Losses Total per Income and Expenditure Account 42

2020

2019

€ 25,199 5,626 245,326 131,797 3,873 214 5,268 19,506 24,334 10,541 1,806 51,357 9,759 58,242 76,306 6,972 8,756 4,690 116,301 12,785 16,991 8,428 16,269 33,997 10,761 18,109 33,176 956,389

€ 31,783 7,909 225,860 122,275 4,865 284 9,963 17,854 25,741 12,601 1,570 48,754 6,706 52,676 67,370 912 14,689 7,761 5,267 76,481 10,343 16,733 8,683 15,660 33,035 7,649 20,249 26,843 880,516

2020

2019

€

€

-

-

Car Draw Account for the Year Ended 30 September 2020 (not forming part of the Statutory Audited Financial Statements) € Opening balance 1 Oct 2019 Draw subscriptions received Car prizes won (8) Cash prizes won (120) Closing balance 30 Sept 2020

94,461 262,439 -148,000 -105,000 103,900

Notes: Members of the Car Draw Scheme pay the equivalent of €1.27 per week as a draw subscription.

Following recent Central Bank guidelines, the credit union plans to reduce the balance on the Car Draw Account to as close to nil as possible after the bumper Christmas Car Draw each December.

Membership of the Car Draw Scheme and the awarding of prizes are both subject to the Rules of the Car Draw Scheme, a copy of which is available on request.

www.anpostcu.ie

43

An Post Employees’ Credit Union Limited Annual Report 2020

Finance Report 2020 I am pleased to present the annual accounts for the year ended 30 September 2020.

The Credit Union has two main sources of income, namely interest on members’ loans and investment income. Both are broadly similar to last year. Expenditure is also similar to last year.

Looking in more detail, the income for the year remained strong at €2m. Loan interest income increased by €36k to €1.7m which is reflective of the loan book growth. Achieving a return on investments continues to be a major challenge, particularly with credit unions largely dependent on cash and bonds as investment asset classes. In addition, banks are now charging negative interest rates which is adding further challenges to credit unions.

On the expenditure side, the total expenditure this year was €1.230m, slightly up on the €1.165m in 2019. This relates mainly to increases in member insurance costs, computer costs and professional fees. Funds recovered from previously non-performing loans have remained at an impressive figure of €69k, the extra €42k relates to the change in accounting for interest received on loans in long term arrears. I want to pay tribute to the work of the Credit Control Committee and Credit Control Officer, Ciaran Quinn in this regard.

This is the fifth year in a row where excess provisions for bad and doubtful debts have been released as part of the year-end accounts. As described in the report of the Credit Control Committee, quarterly loan book reviews are conducted to ensure that adequate provisions are in place.

The Credit Union had an excess of Income and expenditure and reported a surplus of €735,545 for the year.

As outlined by the Chairperson in his report, the Board is not recommending a dividend or loan interest rebate following guidance by the Central Bank. To protect the Credit Union from any unforeseen events that may arise from Brexit, the Board had recommended a transfer of €218k from the surplus to the Operational Risk Reserve. The balance of the surplus will be retained as reserves.

The Board of the Credit Union is conscious of the possibility of attracting too much savings into the Credit Union. In this regard, it is necessary to leave the savings cap of €40,000 in place. A number of credit unions appear to have imposed similar, if not lower, caps in order to maintain some form of equilibrium between loans and savings.

Looking more closely at the Balance Sheet, we can see that the loan book has increased by 3.0% while member savings have increased by 5.1%. Total assets have increased by 5% to €58.9m reflecting the increased member savings and reserves on the liability side of the Balance Sheet. The Balance Sheet remains in a healthy position, with reserves as a proportion of assets standing strong at 19.2%.

Finally, I would like to thank the Board of Directors, the Audit & Risk Committee, the Assistant Manager, Danielle and my colleagues on the staff for their assistance and co-operation. I would also like to thank the team at external auditors FMB, particularly Partner David McArdle and his colleagues Brian Burk and Eden Burke, and the staff at internal auditors Crowleys DFK, particularly Partner Vincent Teo and Director Fiona O’Sullivan.

Alan Whelan CEO 44

SPECIAL HOME IMPROVEMENT LOAN 4 Competitive rate of 5.9% 4 Minimum Loan Amount €40,000 4 Maximum Loan Term 10 years 4 FREE Loan Insurance 4 FREE loan Interest Rebate 4 No lump sum Reduction within 1st year

*For a loan of €50,000 over 10 years, the weekly repayment will be €127 and the total amount repayable will be €66,159. Annual rate of interest 5.9%, APR 6.1% All loans are subject to approval, lending terms and conditions.

WARNING: If you do not meet the repayments on your loan, your account will go into arrears.

This may affect your credit rating which may limit your access to credit in the future.

GREAT SERVICE, DELIVERED An Post Employees’ Credit Union. 12 - 14 The Anchorage, Charlotte Quay, Ringsend Road, Dublin 4. D04 A718.

Tel: (01) 6602000 Fax: (01) 6602211 E-mail: info@anpostcu.ie www.anpostcu.ie An Post Employees’ Credit Union Limited is regulated by the Central Bank of Ireland. Reg. No. 87CU

An Post Employees’ Credit Union Limited Annual Report 2020

Report of The Board Oversight Committee 2020 The role of the Committee is to monitor governance standards at the Credit Union and to report back to the members in this regard.

The members of the Committee are Danny Hoare (Chairman), Myles Davoren (Secretary), Jean Hamilton, Dan Joyce and Brian Martin.

At least one member of the committee attended each monthly / special meeting of the Board during the year. In accordance with the relevant legislation, we conducted four review meetings with the Board and after each meeting we provided the Board with a written report of our assessment of its performance.

Members of the committee attended the Data Protection and Anti Money Laundering training courses during the year.

We also attended meetings of the various committees i.e. Credit, Credit Control, Officers, Liquidity & Investment, Audit & Risk, Nomination, Promotion & Development and IT. A member of the Board Oversight Committee together with a member of the Board also attended each of the bimonthly car draws as a witness and the Committee also witnessed the Education Prize Draw.

The Board Oversight Committee meets once a month where we review the meetings attended and arrange for our attendance at future planned meetings of the various committees and relevant training courses.

It is the opinion of the Board Oversight Committee that the Board of Directors had been compliant in their legal and regulatory requirements and have acted in accordance with part 1V and 1VA of the Credit Union Act 1997 (as amended) and other financial services legislation.

The year 2020 has been a most difficult year for everybody and we would like especially to acknowledge the dedication and commitment of the management, staff and the Board of the Credit Union throughout this difficult time.

Danny Hoare Chairman, Board Oversight Committee

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Report of The Credit Committee 2020 I am pleased to report on the activities of the Credit Committee during the year.

The role of the Credit Committee is to oversee the lending process and to ensure that all Credit Union lending complies with the relevant legislation and regulations, with the Credit Union’s own Lending Policy and with good practice generally. Ensuring that there is an appropriate lending culture within the Credit Union is a priority, particularly in relation to respect and fairness among members.

During this Financial Year, 1,836 loans were issued which resulted in total loan book growth of 3% on the previous year. The total value of the loans issued was €10.27m which was a fantastic result for An Post Employees’ Credit Union considering the restrictions imposed by Covid-19.

43 loan applications were refused, but refusals were kept to a minimum.

The Credit Union launched a “Special Home Improvement Loan” for members borrowing a minimum of €40,000. This was launched in August and the rate for this loan is 5.9% (typical APR 6.1%).

Members of An Post Employees Credit Union now also have the option to apply for loans online via the online banking following the launch of this service in October. We look forward to seeing the results of this over the coming year.

The ‘’Welcome Loan’’ which was launched in January 2019 with a rate of 5.99% (typical APR 5.99%) remains popular which was launched for members borrowing for the first time at An Post Employees’ Credit Union. The “loan within shares” at a special, low rate of 4.99% (typical APR 5.1%) continues to be a favoured option which allows members to keep their savings and insurance benefits in place while borrowing at a lower rate. Members often find that it is easier to repay a small loan than to rebuild savings.

As usual, it is worth mentioning that the Credit Union has plenty of funds for lending to members.

You can borrow whatever you need and can afford to repay, taking account of your other borrowings. Key features of a credit union loan, such as loan protection insurance at no direct cost to the member and the ability to clear all or part of the loan without penalty, remain in place.

All applications are subject to a credit check from either the Central Credit Register (operated by the Central Bank) or the Irish Credit Bureau. This is an important part of the due diligence process when assessing a member’s eligibility for a loan.

Unfortunately, following guidance from the Central Bank of Ireland, there will be no dividend or interest rebate paid this year. The Credit Union would be hopeful to see this feature return in the coming years.

Finally, I would like to thank my fellow committee members Frank O’Reilly, Paul Callaghan, Peter McCarthy, and Paul Emmet for their diligence in serving the members. I would also like to thank the staff, particularly the Senior Loans Officer Sinead Baxter who has been heavily involved with the Credit Committee throughout the year.

Tomás Ó Maonaile On behalf of the Credit Committee

www.anpostcu.ie

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An Post Employees’ Credit Union Limited Annual Report 2020

Report of The Credit Control Committee 2020 The function of the Credit Control Committee is to monitor the loan portfolio and to ensure that loans to members are repaid in accordance with the terms of the loan agreements entered into. The committee must ensure that a robust process is in place to follow-up the relatively small number of cases where problems emerge. The committee tries to minimise loan arrears by engaging early with members. The aim is to protect members funds and to limit the individual damage that may be done to a member’s credit rating with both the Central Credit Register and the Irish Credit Bureau.

Seven loans have been non-performing this year, a total of €10,824. This is a decrease of €52,169 on last year. Recoveries of previously non-performing loans amounted to €68,784, a decrease of €20,446 over last year.

We continue to use Cabot Financial and Pierse & Fitzgibbon Solicitors to help us to recover certain previously non-performing loans where the person refuses to engage. Similarly, there are a number of previously non-performing loans where people have moved house and it is difficult to contact them. To this end, Aserve, a tracing agency, is used to help the committee to locate them. In August this year following consideration by the Board, the Credit Union appointed a full time Credit Controller, Ciaran Quinn, who now manages the day to day arrears loan book and performance. The job of the Credit Controller initially is to review the existing processes in place within Credit Control and make the necessary adjustments to the procedures by reporting directly to the CEO and the Credit Control Committee.

The Credit Control Committee meets every month with the Credit Controller (due to Covid-19 restrictions the majority of these meetings have been by conference call) to monitor the arrears movement and take an update from the Credit Controller on all matters. As the Credit Controller monitors the loan portfolio in greater detail and in consultation with the CEO ensures that our accounting provision against bad and doubtful debts is adequate and is compatible with Accounting Standards. Following a loan book review after 30 September 2020, the provision for the year end now totals €855,833 a slight reduction from the previous year’s figure of €879,441.

I would appeal to members who find themselves in financial difficulties to contact the Credit Union as soon as possible so that we can help to resolve matters. We will always try to be understanding and to work with the member to come to a fair agreement within which they can manage according to their means.

Finally, I would like to thank my colleagues on the Credit Control Committee, Brian McKenna, Jimmy Doyle and Charlie Sheehan for their conscientious work and my thanks also to the staff for their help, co-operation and support during the year.

Christopher Fitzgerald Chairman, Credit Control Committee

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Report of The Membership Officer 2020 I am very pleased to present the Membership Officer’s report for 2020.

The role of the Membership Officer is to check and approve all new member applications, to issue a welcome pack to new members and to report to the Board every month.

At 30 September 2020, the membership has grown to 6,976 compared to 6,739 last year, an increase of 237. This is a fantastic outcome considering the limitations imposed by Covid-19 which resulted in An Post Employees’ Credit Union ceasing the onboarding of new members for many weeks.

Due to travel restrictions throughout the year, Noel Cocoman was unable to make his usual visits to the Mail Centers and Delivery Offices, however, in spite of this, interest in becoming a member of An Post Employees’ Credit Union remained strong. This was achieved by keeping in close contact with the Reps and Volunteers throughout the country via other communication channels such as social media as well as providing the Reps with an abundance of application forms to see them through the pandemic.

Membership of An Post Employees’ Credit Union is open to those who have made their livelihood from the postal service, and their wider families. This means current employees of An Post, former employees, An Post pensioners, and in relation to all three groups their spouses, sons, daughters, grandchildren, brothers, sisters and parents once they live on the island of Ireland.

Membership is also open to Postmasters and their post office assistants and to employees of companies where An Post has a shareholding, including Post Insurance, PCI, Premier National Lotteries, Data Ireland and PrintPost.

It is worth remembering that members who take a package, retire from or leave An Post remain within the “common bond” of the Credit Union. They can continue as members, paying electronically through the bank or using the BillPay card at any Post Office, and remain eligible for the free insurance benefits currently provided by the Credit Union. If members subsequently start to draw down a pension from An Post, the pension deduction facility is as efficient as the payroll facility.

At An Post Employees’ Credit Union, we look forward to continued growth in membership applications and believe that becoming a member makes more sense now than ever before. With payroll deductions, online loan applications, competitive interest rates, electronic payments, education prize draws and the popular car draw, membership of this Credit Union is a great benefit for those associated in any way with An Post.

As I reach the end of my report, I wish to give a big thank you to Sarah Comerford, Siobhan Duffin & Noel Cocoman who undertake much of the work in the office in relation to new members.

Michael Farrell Membership Officer

NUMBER OF MEMBERS 2020

6,976

INCREASE

237 www.anpostcu.ie

49

An Post Employees’ Credit Union Limited Annual Report 2020

Other Credit Union Committees 2020 Officers Committee Chaired by credit union Chairman Tony Harmon, this committee acts as a sounding board for management and prepares for the monthly Board meetings to help make them more effective. This committee also assists in relation to policy development, HR issues and complaints. Other members are Paul Dolan and Mary Harrahill. During the year, the Officers Committee met in advance of the Board meeting each month.

Liquidity & Investments Committee Chaired by Martin Ryan, this committee oversees the Credit Union’s liquidity and its portfolio of cash and investments, some €31.9M at year-end. Other members are Paul Dolan, Tony Cashell, Peter McCarthy, Pauline Fowler Warren and Gerry Ryan. The committee has a very challenging role, given the difficulty in achieving a reasonable return from bank deposits or government/ bank bonds, effectively the only means by which credit unions are allowed to invest. The committee is assisted by Goodbody Stockbrokers.

Audit & Risk Committee This committee always has a busy agenda because of the weight of audit, regulatory, risk and compliance requirements on credit unions. Chaired by Gerry Ryan, the other committee members are Teresa Kavanagh and Tómas Ó Maonaile. Michael Carrick attended the meetings as a volunteer. The committee supports the Risk Officer, John Grehan, in relation to the risk register/ testing of controls and managing the relationships with the external auditor and the internal auditor are priorities.

Nomination Committee Chaired by Charlie Sheehan, this committee is charged with ensuring that there are sufficient candidates for elections. The role of the committee has expanded significantly in recent years and now includes reporting on the composition of the Board, attracting new volunteers, preparing a succession plan, preparing a training needs analysis/ training plan and managing the Central Bank fitness and probity requirements. Other committee members this year were Martin Ryan and Margaret Fitzpatrick. The Committee meets as often as necessary.

Promotions & Development Committee The P&D Committee is concerned with developing member services, communicating with members regarding any new developments and assisting the work of Development Officer Noel Cocoman.

The committee also co-ordinates the network of representatives around the country and is involved in planning events such as the AGM and the regular car draws. The chairman is Tony Harmon and committee members are Christine Mitchell, Sharon Nannery, Joe Bowden, Eamonn Walsh, Donal Mullane, Pauline Fowler-Warren, Joe Boland and Noel Mullaney.

Development Committee This committee was set up during the year to review and assess how best to improve the Credit Union and the products provided by the credit union. The committee lays the foundations for the strategic development of the Credit Union which in turn is reviewed by the Board. Committee members are Paul Dolan, Teresa Kavanagh, Tómas Ó Maonaile, Alan Whelan, Danielle Forman and Sinéad Baxter.

IT Committee Chaired by Margaret Fitzpatrick, the IT Committee monitors the credit union’s computer systems and, in particular, any proposed developments. Other relevant areas include IT contracts, data security issues, penetration testing, disaster recovery planning, data and telephone communications.

Other committee members are John Donohoe, Brian McKenna and Alan Whelan.

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In Memoriam Maureen Shaw Eoin Boylan Richard Hannigan Colm Leech Paul Kehoe Edward P. Dowling Carmel Owens Martin Dunne Declan Small James O’Keeffe Sean Scanlon Patrick Sweetman Patrick Owens Mary Shanny Daniel Stapleton Laurence O’Brien

Michael Richard Brady Concepta Phelan Richard Carrick Alice McCarthy Ita Kennedy James Bishop Maureen Murphy Francis Hession Carmel Conroy Pauline O’Connor Edward Williams Mary Woods Marie Cahill Carmel Geraghty Noel Vaughan Philip Scallan

Cathal Lynch Alan Smyth David McHale Michael Kelly George Crowther Frank Duff Thomas Dixon Breda O’Sullivan Joseph Davin Noel Lynch Dermot McDermott Gabriel Travers Thomas Martin Ciara Hughes

The late Frank Hession with fellow Director Paul Dolan.

www.anpostcu.ie

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Car Draw & Cash Prizes

An Post Employees’ Credit Union Limited Annual Report 2020

Some day this could be you!!

Congratulations to all the winners of cars and cash prizes over the past year.

Bursary Award Winners Sebastian Wolfe

Julie Murray, Moycullen, Co Galway winner of a Ford Fiesta

Jimmy Finlay, Ballymun winner of a Ford Fiesta

Caelan O’Meara

Megan Kenny

Karl Higgins, Edenderry, Co Offaly winner of a Ford Fiesta

Christmas Prize Draw Winner Congratulations to Thomas Kennedy, Artane, BMW318D Winner

52

Sinead O’ Boyle

Andrew Richardson

Stephen Aherne

You can now apply for

LOANS ONLINE

What could be easier ! www.anpostcu.ie/ online-loan-application

GREAT SERVICE, DELIVERED An Post Employees’ Credit Union. 12 - 14 The Anchorage, Charlotte Quay, Ringsend Road, Dublin 4. D04 A718.

Tel: (01) 6602000 Fax: (01) 6602211 E-mail: info@anpostcu.ie www.anpostcu.ie An Post Employees’ Credit Union Limited is regulated by the Central Bank of Ireland. Reg. No. 87CU

An Post Employees’ Credit Union 12 - 14 The Anchorage, Charlotte Quay, Ringsend Road, Dublin 4. D04 A718.

Tel: (01) 6602000 Fax: (01) 6602211 E-mail: info@anpostcu.ie

www.anpostcu.ie

An Post Employees’ Credit Union Limited is regulated by the Central Bank of Ireland