Donore Credit Union Limited
Annual Report 2019 Notice of Annual General Meeting of Donore Credit Union will take place on Thursday 23rd January 2020, at 7.30pm in the Donore Community Centre, Donore Avenue
Donore Credit Union Limited is regulated by the Central Bank of Ireland
donorecu.ie
Ireland’s First Credit Union and the Independent Credit Union of Dublin 8
ANNUAL REPORT 2019
CONTENTS
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10
14
31
38
05
10
15
33
39
06
11
16
35
40
08
13
17
37
41
Chairperson’s Address
Statement of Directors’ Responsibilities
Directors and Statement of Other Information Board Oversight Committee’s Responsibilities
Year in Review
Directors’ Report
Independent Auditor’s Report
Revenue Account
Balance Sheet
Statement of Changes In Reserves
Statement of Cash Flows
Notes to the Financial Statements
Schedules to the Revenue Account
CEO Report
Report of the Credit Committee
Credit Control Committee Report
Notice of Annual General Meeting of Donore Credit Union will take place on Thursday 23rd January 2020, at 7.30pm in the Donore Community Centre, Donore Avenue Refreshments will be served on the night
Report of the Membership Committee
Report of the Board Oversight Committee
Nominations Committee Report
Report of the Audit Risk and Compliance Committee
n Wi rizes t P h
ig sh Ca he N on
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ANNUAL REPORT 2019
INVOCATION Lord, make me an instrument of thy peace, Where there is hatred, let me sow love; Where there is injury, pardon; Where there is doubt, faith; Where there is despair, hope; Where there is darkness, light; And where there is sadness, joy. O divine Master grant that I may Not so much seek to be consoled as To console; to be understood as to Understand; to be loved as to love; For it is in giving that we receive, It is in pardoning that we are pardoned, And it is in dying that we are born to eternal life.
AGENDA • Acceptance of proxies (if any) by the Board of Directors • Ascertaining that a quorum is present and reading of Invocation • Reading and approval (or correction) of minutes of previous A.G.M. • Directors and other information • Adoption of Standing Orders • Chairperson’s Address • Report of the Directors • Statement of Directors Responsibilities • Statement of the Board Oversight Committee Responsibilities • Report of the Auditor (incl consideration of accounts) • Accounting Policies • Notes to the Financial Statements • Report of the Nomination Committee • Report of the Board Oversight Committee • Report of the Credit Committee • Report of the Credit Control Committee • Report of the Membership Committee • Report of the Audit Risk and Compliance Committee • CEO Report • Appointment of Tellers • Any other business • Announcement of election results • Draws – Prizes of €50 vouchers • Adjournment or close of Meeting
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ANNUAL REPORT 2019
Donore Credit Union Limited
Chairperson’s Address for the year ended 30 September 2019 On behalf of the Board of Directors I am pleased to present to you, our members, the Financial Statement and Annual Report at the 61st Annual General Meeting of Donore Credit Union Ltd. This is my final address as I stand down as Chairperson due to terms of office requirements stipulated by Central Bank of Ireland, however, I hope to continue as a Director and Volunteer of the Credit Union Donore Credit Union is again one of the most successful Credit Unions in Ireland. This year we grew our loan book by 25%. This is on top of loan growth of 22% in 2018. I am proud to say we have the best loan book growth in Dublin and 2nd overall in the country. Donore Credit Union is bucking the trend. We are demonstrating that independent mid-size local Credit Unions are financially viable and sustainable. With membership numbers and loan demand increasing we are proof positive that our community wants it’s Credit Union and wants local financial services. We believe there is a place for credit unions like ours, but more importantly it is apparent our members believe that too. Very often credit union members are only aware that their credit union has changed when a new name appears over the door This is Donore Credit Union and we are proud to remain Ireland’s first Credit Union and the independent Credit Union for Dublin 8. We believe strongly that local services are better delivered in local area, and reserves built up over our history should be retained in the area. We are determined to grow our Credit Union in a steady consistent way. We continue to modernise our services and our focus remains on implementing changes needed to ensure we are a modern fit for purpose Credit Union. With the support of fellow Directors, our CEO and staff, Donore Credit Union is thriving and now looking to continue to grow as an independent community owned credit union. The Board of Donore Credit Union understands that our credit union must be financially strong, viable and profitable. However, our credit union contributes to our community in so many ways and is a pillar of this community. We have a presence, an input into the community and member’s lives that is not reflected in purely financial terms. Donore Credit Union has a social responsibility to members, to the community and to the wider area. As such I am proud to announce that Donore Credit Union is the first credit union in Ireland to undertake a “Social Return on Investment project” – in simple terms, we are calculating a numeric value for the social impact we have on our community. This is being done by an independent accredited organisation with experience in this area. Shidan Zhu, Winner of the Brendan Lynch Scholarship
ANNUAL REPORT 2019
For too long conversations on the future of credit unions are from the point of view of profitability alone, we are not a bank, and we don’t believe we should measure ourselves the same way. We are a member owned not for profit cooperative, whose remit is about “people helping people”. We will be sharing the result of this finding with our members when completed. In 2019, Donore Credit Union established it’s very first Youth Committee and I want to thank Hollie, Caitlin and Nick for volunteering. We want to ensure young members have a voice in this credit union where they will can promote the credit union amongst a younger audience, use their social media skills, make suggestions, recommendations and in turn they get exposure and experience on how our business is run and get a chance to impact on their local community. We continue with donations to the sports groups and the clubs. We support our schools, sponsored the Liberties Festival and continue with our member fun competitions. In conjunction with Griffith College we are now into our second student sponsored under the Brendan Lynch scholarship. In 2020 we will launch the Aingil ni Bhroin scholarship which is a competition open to all members who are beginning any third level course. This year we are pleased that we are in a position to propose a dividend of .2% and an interest rebate of 5%, to recognise the support our members continue to give our Credit Union In 2019, the Board agreed a new Strategic Plan for the Credit Union. Our focus is to sustain a measured level of growth while ensuring we stick to core principles. In 2020 we will launch full on line loan application facility and we will launch a green refit loan product along with other credit unions to assist members improve the energy efficiency ratings on their homes. We undertook an organisation review and we will implement internal changes to ensure we have the resources and people in place to continue to achieve our strategic goals. We have managed to delay any changes to our Death Benefit and Share and Loan insurances. To remind members Death Benefit Insurance is a policy the Credit Union pays on behalf of members and comes directly from operating income. Last year our AGM approved a €10 member charge per year, to ensure the preservation of this benefit going forward. However, our commitment remains that this will only be introduced if circumstances dictate. Income from investments remains very poor and will remain so for the foreseeable future. Lending to members remains our primary source of income and we encourage all members to talk to our staff about any borrowing requirements you may have. With loans available from €500 to €150,000 and great insurance and the ability to have different loans at different rates, now has never been a better time to borrow from Donore Credit Union. While additional costs have been incurred, overall our costs are in line with budgets and expectations. In 2019 we made a lot of changes to the front of the building and to the member’s public area. We want our credit union to be a warm welcoming friendly place and the changes made look really very well.
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ANNUAL REPORT 2019
We have increased our pool of volunteers and encourage anyone who wishes to volunteer to contact our Nominations Committee. I would like to thank all our Volunteers for their time and support. This is a community organisation and without volunteers we would not be sustainable. We stay committed to providing face to face service in a friendly welcoming environment, offering the same traditional approach in a modern way. Donore Credit Union is the natural locally run home Credit Union for everyone in the Liberties, South Circular Road and Dublin 8 who want the services of a local community credit union. Please remember to encourage your family, neighbours, friends and colleagues to join us. We are open to new members. Non-members may have some preconceptions on credit unions, however, they may be pleasantly surprised to find how different Donore Credit Union is and how practices have changed and modernised while maintaining our ethos. Donore remains an ethical provider of financial services. While challenges remain, growing our active membership, our loan book, maintaining a strong core of volunteers and with the support of the community and our members we will achieve our goals. We know how proud the members of this Credit Union are of the history and status of Donore Credit Union. Members, Volunteers, families and the trust of generations of people is something remarkable, let’s continue with this testament to the strength of your community. Support your Credit Union. IN CONCLUSION May we take a moment to remember all deceased members of the Credit Union who passed away this year May they all Rest In Peace May I take this opportunity to wish directors, volunteers and Board Oversight Committee members no longer seeking re-election well for the future and to thank them for their service I wish to thank the Board of Directors, the Board Oversight Committee, our CEO David and staff for the huge amount of effort they have put in again this year. We are thankful to you, the members for your support, keep saving, keep borrowing and keep letting us know what we can do for you Catherine Massey Chairperson
25%
GROWTH IN OUR LOAN BOOK
€5.7M IN NEW LOANS
ANNUAL REPORT 2019
Donore Credit Union Limited
DIRECTORS AND OTHER INFORMATION DIRECTORS
Catherine Massey (Chairperson) Garrett O’Toole (Vice Chairperson) Hilda Hyland (Secretary) Agnes Heffernan John McDonnell Alice O'Connell Mary Keville Angela Kavanagh Kathleen Kenna
BOARD OVERSIGHT COMMITTEE MEMBERS
Mark Barnes Frances Flanagan Jacqueline Stewart
CREDIT UNION NUMBER
133CU
REGISTERED OFFICE AND BUSINESS ADDRESS
22 Rutledge Terrace South Circular Road Dublin 8
AUDITORS
Whelan Dowling & Associates Chartered Accountants and Statutory Audit Firm Block 1, Units 1 & 4 Northwood Court Santry Dublin 9
BANKERS
Ulster Bank 33 College Green Dublin 2
SOLICITORS
John Gaynor & Co 42/46 Thomas Street Dublin 8
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ANNUAL REPORT 2019
Year in Review
ANNUAL REPORT 2019
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ANNUAL REPORT 2019
Donore Credit Union Limited
DIRECTORS’ REPORT for the year ended 30 September 2019 The directors present their report and the audited financial statements for the year ended 30 September 2019. OBJECTS The principal activity of Donore Credit Union Limited is the provision of savings and loans to members in its common bond. The Credit Union manages its members’ shares, capital and loans to members so that it earns income from the margin between interest receivable and interest payable. Both the level of business and the year end financial position were satisfactory. The directors expect to develop and expand the Credit Union’s current activities and they are confident of its ability to operate successfully in the future. PRINCIPAL RISKS AND UNCERTAINTIES The purpose of the Credit Union is to allow members save together and lend to each other at a fair and reasonable rate of interest. The principal risks and challenges facing this Credit Union are loan default, not lending a sufficient proportion of funds so that too much of the Credit Union’s resources are tied up in investment products and the risk that we will not have sufficient cash resources to meet day to day running costs and repay members savings when demanded (liquidity risk). These risks are managed by the Credit Union board so as to achieve an acceptable balance of growth and security for members’ resources. BUSINESS REVIEW Both the level of business and the year end financial position were in line with financial projections. FUTURE DEVELOPMENTS The directors expect to develop and expand the Credit Unions’ current activities and they are confident of its ability to operate successfully in the future. DIRECTORS AND BOARD OVERSIGHT COMMITTEE MEMBERS The current directors and board oversight committee members are as set out on page 5. AUTHORISATION The Credit Union is authorised to conduct investment business and undertake foreign exchange transactions. It is regulated by the Central Bank of Ireland for these activities. ACCOUNTING RECORDS The directors believe that they comply with the requirements of section 108 of the Credit Union Acts 1997 to 2018 with regard to books of accounts 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 22 Rutledge Terrace, South Circular Road, Dublin 8.
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ANNUAL REPORT 2019
POST BALANCE SHEET EVENTS There have been no significant events affecting the Credit Union since the year-end. AUDITORS The auditors, Whelan Dowling & Associates, have indicated their willingness to continue in office in accordance with Section 115 of the Credit Union Acts 1997 to 2018. Approved by the Board of Directors and signed on its behalf by: Catherine Massey Member of the Board of Directors
Agnes Heffernan Member of the Board of Directors
Date: 19 November 2019
DIAMOND Plus ONE Loan ondE m a Di s ONte Pluan ra lo
7%
Loan Calculator is available at www.donorecu.ie
Sample repayment over 5 year Weekly €68.38
Type of Loan Diamond Plus ONE loan from 7% (7.25% APR) €15,000 5 Years
Total Interest €17,777.28 €2,777.28
APR 7.25%
Fortnightly Total Interest €137.84 €17,787.15 €2,787.15
APR 7.24%
Monthly €297.02
Total Interest APR €17,820.50 €2,820.50 7.23%
All figures are for illustrative proposes only 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. Loans subject to approval. Terms & Conditions Apply. Donore Credit Union Limited is regulated by the Central Bank of Ireland
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ANNUAL REPORT 2019
Donore Credit Union Limited
STATEMENT OF DIRECTORS’ RESPONSIBILITIES for the year ended 30 September 2019 The Credit Union Acts 1997 to 2018 requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Credit Union and of the income and expenditure of the Credit Union for that year. In preparing these 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 confirm that they have complied with the above requirements in preparing the financial statements. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Credit Union and enable them to ensure that the financial statements are prepared in accordance with applicable Irish law and Generally Accepted Accounting Practice in Ireland, including the standards issued by the Financial Reporting Council, and in particular FRS102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. They are 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. Approved by the Board of Directors and signed on its behalf by: Catherine Massey Member of the Board of Directors Date
Agnes Heffernan Member of the Board of Directors
19 November 2019
STATEMENT OF BOARD OVERSIGHT COMMITTEE’S RESPONSIBILITIES The Credit Union Acts 1997 to 2018 requires the appointment of a Board Oversight Committee to assess whether the board of directors has operated in accordance with Part IV, Part IV (a) and any regulations made for the purposes of Part IV or Part IV(a) of the Credit Union Acts 1997 to 2018 and any other matter prescribed by the Central Bank in respect of which they are to have regard in relation to the board. Approved on behalf of the Board Oversight Committee Frances Flanagan Member of the Board Oversight Committee Date: 19 November 2019
Mark Barnes Member of the Board Oversight Committee
ANNUAL REPORT 2019
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Donore Credit Union Limited
INDEPENDENT AUDITOR’S REPORT to the Members of Donore Credit Union Limited Report on the audit of the financial statements OPINION We have audited the financial statements of Donore Credit Union Limited for the year ended 30 September 2019 which comprise the Revenue Account, the Balance Sheet, the Statement of Changes in Reserves, the Statement of Cash Flows and notes to the financial statements, including the summary of significant accounting policies set out in note 2. The financial reporting framework that has been applied in their preparation is Irish law including FRS 102 ‘’The Financial Reporting Standard applicable in the UK and Republic of Ireland’’ and the Credit Union Acts 1997 to 2018. In our opinion the financial statements: • give a true and fair view of the state of the assets, liabilities, and financial position of the Credit Union as at 30 September 2019 and of its surplus 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 Acts 1997 to 2018. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those standards are further described in the 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 IAASA require us to report to you where: • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Credit Union’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. OTHER INFORMATION 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.
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ANNUAL REPORT 2019
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. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE CREDIT UNION ACTS 1997 TO 2018 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. • 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 Statement of Directors’ Responsibilities as set out on page 10, 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 a going concern, disclosing, as applicable, matters related to the going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Credit Union or to cease operations, or has no realistic alternative but to do so. 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 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: <www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description of auditors responsibilities for audit.pdf.> The 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 Acts 1997 to 2018. 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. WHELAN DOWLING & ASSOCIATES Chartered Accountants and Statutory Audit Firm. Block 1, Unit 1 & 4, Northwood Court, Santry, Dublin 9
Date: 19 November 2019
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ANNUAL REPORT 2019
Donore Credit Union Limited
REVENUE ACCOUNT for the year ended 30 September 2019
Revenue Interest on members’ loans Other interest income and similar income Interest payable on members’ deposits
Notes
2019 €
2018 €
4/Sch 1 5/Sch 2
903,008 395,248
773,709 255,102
6
(6,040)
(6,028)
1,292,216
1,022,783
23,247
13,720
1,315,463
1,036,503
10
461,444 656,220 40,156
385,484 564,265 43,045
11.4
(61,550)
(225,382)
1,096,270
767,412
219,193
269,091
Net interest income Other revenue
7/Sch 3
Total revenue Expenditure Employment costs Other management expenses (Schedule 4) Depreciation Net (recoveries) or losses on loans to members Total expenditure Surplus of expenditure over revenue Other comprehensive income
-
-
Total comprehensive income
219,193
269,091
The financial statements were approved and authorised for issue by the Board of Directors on 19 November 2019 and signed on its behalf by; David Mc Auley Chief Executive Officer
Catherine Massey Member of the Board of Directors
Mark Barnes Member of the Board Oversight Committee
Date: 19 November 2019
Total Revenue for 2019
€1,315,463
27%
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ANNUAL REPORT 2019
Donore Credit Union Limited
BALANCE SHEET for the year ended 30 September 2019 2018
2019 €
Notes Assets Cash and cash equivalents Property, plant and equipment Loans to members Provision for bad debts Prepayments and other debtors
9 10 11.1 11.3 12
€
€
€
5,095,716 398,285 9,799,525 (462,503) 221,850
3,136,246 416,337 7,836,866 (389,042) 176,115
Deposits and investments
21,371,096
23,597,668
Total Assets
36,423,969
34,774,190
22,336,172 7,518,593
20,994,642 7,342,925
Liabilities Members’ shares Members’ deposits
13 14
Trade creditors and accruals
15
Members’ Resources Regulatory Reserve Operational risk reserve
4,199,912 210,000
Other reserves
2,096,394
Total Liabilities
62,898
97,701
29,917,663
28,435,268
4,012,941 210,000 2,115,981 6,506,306
6,338,922
36,423,969
34,774,190
Approved by the Board of Directors and signed on its behalf by: David Mc Auley Chief Executive Officer
Catherine Massey Member of the Board of Directors
Date: 19 November 2019
€36m Total Assets
5%
Mark Barnes Member of the Board Oversight Committee
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ANNUAL REPORT 2019
Donore Credit Union Limited
STATEMENT OF CHANGES IN RESERVES for the year ended 30 September 2019 Regulatory Distribution Operational Reserve reserve risk reserve € At 1 October 2017 Dividends paid during the year Loan interest rebate paid during the year Surplus allocation in year
3,914,526 -
€ (100,162)
€
Other Unrealised reserves income reserve € €
210,000 1,898,499 -
Total
€ 223,420 6,246,445 - (100,162)
(76,451)
(76,451)
98,415
176,613
-
-
-
275,028
-
-
-
174,163
(180,101)
(5,938)
At 30 September 2018
4,012,941
-
210,000 2,072,662
43,319 6,338,922
At 1 October 2018 Dividends paid during the year Surplus allocation in year
4,012,941 -
(51,811)
210,000 2,072,662 -
43,319 6,338,922 (51,811)
186,971
51,811
-
-
-
238,782
-
-
-
23,732
(43,319)
(19,587)
4,199,912
-
Other movement in reserves
Other movement in reserves At 30 September 2019
210,000 2,096,394
- 6,506,306
The Regulatory Reserve of the Credit Union as a % of the total assets as at 30th September 2019 was 11.53% which is more than the Credit Union’s Regulatory Reserve requirement of 10%. In accordance with section 45 of the Credit Union Act 1997 (as amended) Donore Credit Union Limited put in place an Operational Risk Reserve. Following the commencement of Section 13 of the 2012 Act, the requirement for Credit Unions to transfer 10% of their annual surplus to their Statutory Reserve (now known as the Regulatory Reserve) each year has been removed. Notwithstanding this the Board of Donore Credit Union Limited has transferred €186,971 of its current year surplus to its regulatory reserve. Approved by the Board of Directors and signed on its behalf by: David Mc Auley Chief Executive Officer Date: 19 November 2019
Catherine Massey Member of the Board of Directors
Mark Barnes Member of the Board Oversight Committee
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ANNUAL REPORT 2019
Donore Credit Union Limited
STATEMENT OF CASH FLOWS for the year ended 30 September 2019
Notes Opening cash and cash equivalents Cash flows from operating activities Loans repaid Loans granted Loan interest income Interest paid on members’ deposits Investment income Other revenue received Bad debts recovered Dividends paid Loan interest rebate Operating expenses Movement in other assets
2019 €
2018 €
3,136,246
3,315,412
3,800,919 3,599,927 (5,777,250) (5,087,101) 754,278 773,709 (6,028) (6,040) 255,102 395,248 13,720 23,247 185,101 148,685 (51,811) (100,162) (76,451) (1,117,664) (949,749) 35,958 83,564
Movement in other liabilities
(34,803)
Net cash used in operating activities
(20,386)
(1,762,196) (1,395,791)
Cash flows from investing activities Purchase of property, plant and equipment
(22,104)
(45,778)
Net cash flow from other investing activities
2,226,572
484,900
Net cash generated from investing activities
2,204,468
439,122
Cash flows from financing activities Members’ shares received Members’ deposits received Members’ shares withdrawn
4,756,099 4,062,152 6,138,960 5,890,334 (3,414,569) (3,327,531)
Members’ deposits withdrawn
(5,963,292) (5,847,452)
Net cash generated from financing activities
1,517,198
Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at end of financial year
9
777,503
1,959,470
(179,166)
5,095,716
3,136,246
ANNUAL REPORT 2019
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Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 1.
LEGAL AND REGULATORY FRAMEWORK The Credit Union is registered with the Registrar of Credit Unions and is regulated by the Central Bank of Ireland. The registered office of the credit union is 22 Rutledge Terrace, South Circular Road, Dublin 8.
2.
ACCOUNTING POLICIES The following principal accounting policies have been applied; Statement of compliance and basis of preparation These financial statements have been prepared in accordance with FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland). The financial statements are prepared on the historical cost basis. Currency The financial statements are prepared in Euro (€), which is the functional currency of the Credit Union. Monetary amounts in these financial statements are rounded to the nearest Euro. Going concern After reviewing the Credit Union’s projections, the directors have reasonable expectation that the Credit Union has adequate resources to continue in operational existence for the foreseeable future. The Credit Union therefore continues to adopt the going concern basis in preparing its financial statements. Revenue recognition Revenue 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. Revenue is measured at the fair value of the consideration received. The following criteria must also be met before revenue is recognised: (i) Interest on members’ loans Interest on Member’s loans is recognised on an accruals basis. (ii) Investment income Investment income is recognised when received or irrevocably receivable. Investments are recognised at cost less any permanent diminution in capital value but ignoring any increase in capital value or encashment value until realised in the form of cash or cash equivalents. Investments Fixed-term deposits Term deposits and fixed interest investment bonds with fixed maturity dates are valued at the lower of cost or encashment value and interest is recognised in the income statement when it is received or irrevocably receivable.
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ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) Bonds with guaranteed capital and variable interest rates Interest income is recognised as received. Some bonds pay high rates of interest in early years and lower rates in later years. Paying higher amounts in early years reduces (impairs) the capital value of the bond. The capital value of the bond is tested annually for impairment and impairments losses are taken to the income statement. Impairment gains which reverse a previous impairment loss are taken to the income statement with any gains in excess of the cost of the product ignored until the bond matures. 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 un-collectability. 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. The amounts are stated at the amount deposited plus accrued income and are not subject to impairment reviews. Investments at fair value Investments held for trading and investment in stock market shares (i.e. non-convertible preference shares and non-puttable ordinary shares or preference shares) are included in this category. Financial assets at fair value are classified as held for trading if they are acquired for sale in the short term. They are valued at fair value (market value) at the yearend date and all gains and losses are taken to the income and expenditure account. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market these assets will be carried at cost less impairment. Property, plant and equipment and depreciation Tangible fixed assets are stated at cost or at valuation, less accumulated depreciation. The charge to depreciation is calculated to write off the original cost or valuation of tangible fixed assets, less their estimated residual value, over their expected useful lives as follows: Land and buildings freehold Fixtures, fittings and equipment
4% Straight line 12.5% per annum straight line
ANNUAL REPORT 2019
19
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) Impairment of tangible fixed assets 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. 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, subject 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. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and deposits and investments with a maturity of less than or equal to three months. Basic financial assets Loans to members Loans are financial assets with fixed or determinable payments. Loans are recognised when cash is advanced to members and measured at amortised cost. 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.
20
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) Bad debt provision The estimation of loan losses is inherently uncertain and depends upon many factors, including loan loss trends, credit risk characteristics in loan classes, local & international economic climates, conditions in various sectors of the economy to which the Credit Union is exposed, and, other factors such as legal & 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. 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 a doubt about their recoverability. Loan loss provisioning is monitored by the Credit Union, and the Credit Union assesses and approved its provisions and provision adequacy on a monthly 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 operates. 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 the 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 t a specific provision, the Credit Union writes off that amount of the loan deemed irrecoverable against the specific provision held against the loan. Basic financial liabilities Members’ shares Members’ shares in Donore Credit Union Limited are redeemable and therefore are classified as financial liabilities. They are recognised at the amount of cash deposited. Other creditors Short term Other Liabilities, Creditors, Accruals are measured at the transaction price. Holiday pay A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the Balance Sheet date. Distribution Donore Credit Union Limited’s policy is to pay a reasonable rate of dividend and loan interest rebate subject to covering operating expenses and meeting reserve requirements as set out in the Credit Union’s Reserve Management Policy.
ANNUAL REPORT 2019
21
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) Reserves Regulatory reserve The Credit Union Act, 1997 (Regulatory Requirements) Regulations 2016 requires Credit Unions to establish and maintain a minimum Regulatory Reserve requirement of at least 10 per cent of the assets of the credit union. This Reserve is to be perpetual in nature, freely available to absorb losses, realised financial reserves that are unrestricted and nondistributable. Operational risk reserve Section 45(5)(a) of the Credit Union Act, 1997 (as amended) requires each credit union to maintain an additional reserve that it has assessed is required for operational risk having regard to the nature, scale and complexity of the credit union. Credit Unions are required to maintain a minimum operational risk reserve having due regard for the sophistication of the business model. The definition of operational risk is the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events. The Directors have considered the requirements of the Act and have considered an approach to the calculation of the operational risk reserve. Other reserves Other Reserves are the accumulated surpluses to date and Reserves arising on the Transfer of Engagements that have not been declared as dividends returnable to members. The Other Reserves are subdivided into realised and unrealised. In accordance with the Central Bank Guidance Note for Credit Unions on Matters Relating to Accounting for Investments and Distribution Policy, investment income that has been recognised but will not be received within 12 months of the balance sheet date is classified as “unrealised” and is not distributable. A reclassification between unrealised and realised is made as investments come to within 12 months of maturity date. Interest on Loans receivable at the balance sheet date is also classified as “unrealised” and is not distributable. All other income is classified as “realised”. Distribution Policy In respect of each financial year, the Credit Union will allocate surplus funds to the statutory reserve and other reserves in accordance with the provisions of the Credit Union Act 1997 (as amended) and regulations issued by the Registry of Credit Unions, Central Bank of Ireland. The Board of Directors may also decide to hold reserves in excess of minimum statutory requirements, taking prudent account of the scale and complexity of the Credit Union’s business, its risk profile and prevailing market conditions. The basis of the dividend is the distributable income of the Credit Union after meeting its reserve requirements. It is the policy of the Credit Union to maintain the undistributed surplus in a general reserve that may be used in future years for the payment of dividends.
22
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 3.
CRITICAL ACCOUNTING JUDGEMENT AND ESTIMATES Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include: Determination of depreciation , useful economic life and residual value of tangible assets The annual depreciation charge depends primarily on the estimated lifes of each type of asset and, in certain circumstances, estimates of residual values. The directors regularly review these useful lives and change them if necessary to reflect current conditions. In determining these useful lives, management consider technological change, patterns of consumption, physical condition and expected economic utilisation of the assets. Changes in the useful lives can have a significant impact on the depreciation charge for the financial statements. Impairment of buildings At each reporting date fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is eliminated and compared with its carrying amount. If the estimates recoverable amount is lower, the carrying value is reduced to its estimated recoverable amount, an an impairment loss is recognised immediately in profit or loss. If an impairment loss subsequently reverses, the carry amount of the asset is increased to the revised estimate of the recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment is recognised immediately in the Income and Expenditure Accounts Bad Debt Provision Donore Credit Unions accounting policy for impairment of loans is set out in the accounting policies. 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.
4.
INTEREST ON MEMBERS’ LOANS
903,008 773,709
2018 € 773,709 754,278
(773,709)
(754,278)
903,008
773,709
2019 € Closing accrued interest receivable Loan interest received in year Opening accrued loan interest receivable
23
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 5.
OTHER INTEREST INCOME AND SIMILAR INCOME
Investment income received
203,738
2018 € 144,245
Investment income receivable within 12 months
191,510
110,857
395,248
255,102
2019 €
2018 €
6,040
6,028
2019 €
6.
INTEREST PAYABLE AND DIVIDENDS
Interest payable for the year Dividends and loan interest rebate The following distributions were made during the year:
Dividends on shares
2019 % 0.25
2019 € 51,811
2018 % 0.50
2018 € 100,162
Loan interest rebate
-
-
10.00
76,451 176,613
51,811 The above dividends refer to those paid out in those years from the surplus earned in previous years. Proposed dividends and loan interest rebate
Dividends on shares
2019 % 0.20
2019 € 44,672
2018 % 0.25
2018 € 52,487
Loan interest rebate
5.00
45,150
-
-
89,822
.2% 5%
Dividend Interest rebate
52,487
24
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 7.
OTHER REVENUE 2019 € Other Income Entrance fees
8.
22,978
2018 € 13,525
269
195
23,247
13,720
KEY MANAGEMENT PERSONNEL The directors of Donore Credit Union Limited are all unpaid volunteers. The management personnel compensation is as follows:
128,360
2018 € 126,681
8,131
8,014
136,491
134,695
2019 € Short term employee benefits Payments to pension scheme Total key management personnel compensation
Short term employee benefits include salaries, social security contributions and paid annual leave. 9.
CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of cash on hand and deposits and investments with a maturity of less than or equal to three months.
812,541
2018 € 523,464
4,283,175
2,612,782
5,095,716
3,136,246
2019 € Cash and bank balances Cash equivalents
25
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 10. PROPERTY, PLANT AND EQUIPMENT Land and buildings freehold €
Fixtures, fittings and equipment €
Total
608,384 -
315,414 22,104
923,798 22,104
-
(158,376)
(158,376)
At 30 September 2019
608,384
179,142
787,526
Depreciation At 1 October 2018 Charge for the year
273,458 10,492
234,003 29,664
507,461 40,156
-
(158,376)
(158,376)
283,950
105,291
389,241
At 30 September 2019
324,434
73,851
398,285
At 30 September 2018
334,926
81,411
416,337
Cost At 1 October 2018 Additions Disposals
On disposals At 30 September 2019
€
Net book value
11. LOANS TO MEMBERS - FINANCIAL ASSETS 11.1 LOANS TO MEMBERS
7,836,866 5,895,104 (3,918,773)
2018 € 6,416,050 5,087,101 (3,599,927)
(13,672)
(66,358)
9,799,525
7,836,866
2019 € As at 1 October Advanced during the year Repaid during the year Loans written off Gross loans to members
11.2
26
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 11.2 CREDIT RISK DISCLOSURES 2019 %
2019 €
2018 %
2018 €
9,153,642
93.41
7,127,531
90.95
509,253 61,455 48,616
5.20 0.63 0.50
599,551 64,600 31,761
7.65 0.82 0.41
Gross loans not impaired Not past due Gross loans individually impaired Up to 9 weeks past due Between 10 and 18 weeks past due Between 27 and 39 weeks past due 53 or more weeks past due
26,559
0.26
13,423
0.17
645,883
6.59
709,335
9.05
Total gross loans
9,799,565
100.00
7,836,866
100.00
Impairment allowance Total carrying value
9,799,525
Total
7,836,866
11.3 LOAN PROVISION ACCOUNT FOR IMPAIRMENT LOSSES
389,042 73,461
2018 € 495,681 (106,639)
73,461
(106,639)
462,503
389,042
2019 € (148,685)
2018 € (185,101)
2019 € As at 1 October Allowances reversed during the year Increase/(Decrease) in loan provision during the year As at 30 September 11.4 NET RECOVERIES OR LOSSES RECOGNISED FOR THE YEAR
Bad debts recovered Reduction/Increase Loans written off Net (recoveries)/losses on loans to members recognised for the year
73,461
(106,639)
(75,224)
(291,740)
13,674
66,358
(61,550)
(225,382)
27
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 12 DEBTORS, PREPAYMENTS AND ACCRUED INCOME
8,766 21,574
2018 € 65,248
191,510
110,867
221,850
176,115
2019 €
2019 € Other debtors Prepayments Accrued income
13 MEMBERS’ SHARES - FINANCIAL LIABILITIES
As at 1 October Received during the year
20,994,642 4,756,099
2018 € 20,260,021 4,062,152
Repaid during the year
(3,414,569)
(3,327,531)
As at 30 September
22,336,172
20,994,642
2019 € 7,342,925 (5,963,292)
2018 € 7,300,043 5,890,334
Repaid during the year
6,138,960
(5,847,452)
As at 30 September
7,518,593
7,342,925
14. MEMBERS’ DEPOSITS - FINANCIAL LIABILITIES
As at 1 October Received during the year
15. OTHER CREDITORS AND ACCRUALS
Accruals
2019 €
2018 €
62,898
97,701
Donore Credit Union now participate in a Defined Contribution Scheme with rates of 5% to 7% employer contributions made.
28
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 17. FINANCIAL INSTRUMENTS Donore Credit Union Limited manages its members’ shares and loans so that it earns income from the margin between interest receivable and interest payable. The main financial risks arising from Donore Credit Union Limited’s activities are credit risk, market risk, liquidity risk and interest rate risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Financial assets at amortised cost
2019 €
2018 €
36,459,828
34,681,647
29,917,663
28,435,268
Financial liabilities Financial liabilities at amortised cost
Credit Risk: Credit risk is the risk that a borrower will default on their contractual obligations relating to repayments to Donore Credit Union Limited, resulting in financial loss to the Credit Union. In order to manage this risk the Board of Directors approves Donore Credit Union Limited’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. Liquidity Risk: Donore Credit Union Limited’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 objective of the Credit Union’s liquidity policy is to smooth the mismatches between maturing assets and liabilities and to provide a degree of protection against any unexpected developments that may arise. Market Risk: Market risk is generally comprised of interest rate risk, currency risk and other price risk. Donore Credit Union Limited conducts all its transactions in Euro and does not deal in derivatives or commodity markets. Therefore Donore Credit Union Limited is not exposed to any form of currency risk or other price risk. 17.1 LIQUIDITY RISK DISCLOSURE All of the financial liabilities of the Credit Union are repayable on demand except for some members’ shares attached to loans.
29
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 18. RELATED PARTY TRANSACTIONS The Related Party Loans stated above comprise of loans to members of the Board of Directors, the Board Oversight Committee, the Management Team and members of the family of member of the Board of Directors and the Board Oversight Committee and the Management team of Donore Credit Union Limited. Related parties have been identified in line with the definition in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. Total Loans outstanding to Related Parties represents 2.1% of the total loans outstanding at year ended 30 September 2019
Loans advanced to Related Parties during the year Total loans outstanding to Related Parties at the year end
No. of loans 6
2019 € 38,100
13
203,111
There were no provisions against the loans due from the directors and the management team at the current or prior year Balance Sheet Date. There were no other related party transaction identified in the period under review. 19. INSURANCE AGAINST FRAUD The Credit Union has insurance against fraud in the amount of €2,600,000 in compliance with section 47 of the Credit Union Act, 1997 (as amended). 20. CAPITAL COMMITMENTS The Credit Union had no material capital commitments at the year-ended 30 September 2019. 21. POST-BALANCE SHEET EVENTS There have been no known events affecting the credit union since the year end which would require adjustment or disclosure in the financial statements.
Fully Secure Insurance Against Fraud
€2,600,000
Savings up to €100,000 Guaranteed
30
ANNUAL REPORT 2019
Donore Credit Union Limited
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2019 (Continued) 22. CONTINGENT LIABILITIES In September 2018, all Credit Unions received correspondence from the Central Bank on a potential matter relating to accrued interest outstanding on members top up loans, which may have led to a potential over collection of interest. A review to ascertain whether any top up loans to members might be impacted by these circumstances, and to determine what actions may need to be taken, in consultation with the Central Bank is still ongoing. Consequently, it is impracticable at this time to estimate the impact, financial or otherwise, if any, of this matter and whether any net amounts will become payable in the future. There are no contingent liabilities at the year ended 30 September 2019 that would require adjustment or disclosure in the financial statements. 23. ETHICAL STANDARD FOR AUDITORS (IRELAND)ISSUED BY IAASA In common with many other Credit Unions, from time to time, our auditors provide us with advisory and consulting services. 24. PENSION SCHEME Donore Credit Union Limited participate in a Defined Contribution Scheme with rates of 5% to 7% employer contributions made. 25. APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved, and authorised for issue, by the Board of Directors on 19 November 2019.
home do improvement with Great Rates on Large Loans
31
ANNUAL REPORT 2019
Donore Credit Union Limited
SCHEDULES TO THE REVENUE ACCOUNT for the year ended 2019 SCHEDULE 1 - INTEREST ON LOANS 2019 €
2018 €
903,008
773,709
903,008
773,709
2019 €
2018 €
Investment Income Investment Income
203,738
144,245
Investment income receivable within 12 months
191,510
110,857
395,248
255,102
2019 €
2018 €
22,978
13,525
269
195
23,247
13,720
Interest on Loans Interest on members’ loans receivable
SCHEDULE 2 - INVESTMENT INCOME
SCHEDULE 3 - OTHER REVENUE
Other Revenue Other Income Entrance fees
INTEREST ON LOANS
OVER €900K
INCREASING YEAR ON YEAR
DONORE ON-LINE BANKING Sign up through our website, it is simple and straight forward.
32
ANNUAL REPORT 2019
Donore Credit Union Limited
SCHEDULES TO THE REVENUE ACCOUNT for the year ended 2019 SCHEDULE 4 - OTHER MANAGEMENT EXPENSES
Other Management Expenses Training Rent & Rates Share & Loan Insurance General insurance Death Benefit Insurance Central Bank Levies Light, heat and cleaning Repairs & Renewals Chapter expenses Printing and stationery Promotion and Advertising Telephone and postage Computer & Equipment Maintenance Travelling and subsistence AGM & Convention Legal and professional Subscriptions and donations Consultancy fees Outsourced Payroll costs Organisational & Financial Review costs Audit Bank interest and charges Security BOC Expenses General expenses Debt Collection Affiliation fees
2019 €
2018 €
12,303 10,685 123,199 14,341 58,431 44,626 21,014 18,813 389 6,679 34,787 8,724 64,459 6,345 13,481 24,313 4,575 72,385 9,409 23,288 17,251 18,157 5,927 1,509 16,499 17,543
22,156 10,320 106,621 12,183 58,227 31,856 19,980 2,729 220 5,314 29,583 9,535 69,229 6,556 10,593 13,311 6,130 69,842 16,000 13,974 6,974 2,033 9,666 23,358
7,088
7,875
656,220
564,265
Loan Book up 25% Loan income up 16.71%
33
ANNUAL REPORT 2019
CEO Report Dear members Donore Credit Union has undergone significant changes since 2016 and 2019 was again a busy year. We confidently look forward to the future knowing the Credit Union is on a very strong financial footing, our members are engaged and borrowing and we have put in place necessary changes to strengthen us going forward. We have continued to update and add to our IT platforms. Our systems, platforms are protected against security threats, our backup systems and business continuity plans are strong, robust and up to date. Cyber threat for all organisations is a growing risk and we have and continue to put in place safeguards and policies to mitigate this risk. In 2020 we will be launching full on-line loan application process where members can apply for a loan on-line, upload supporting documentation, digitally sign Credit Agreement and have funds sent to them, all from the comfort of their home or office. We continue to improve our internal lending processes to target quick decision making and turnaround of loan applications. Donore Credit Union is committed to being a prudent lender and we will only approve loans where your ability to repay has been evidenced. Increasingly, members are deciding to do side by side loans with us. Members now recognise they can borrow for the larger items and this does not affect them getting their smaller regular loan as usual. The growth in our loan book and lending continued in 2019. We issued €5.7m in new loans, a fantastic amount for a Credit Union of our size. Our loan book grew by 25%, and we are targeting a loan book size of €12m by 2021. With great value in our loan interest rates. members now realise they can save on interest by moving loans to the Credit Union. This increase in loans has taken place against a backdrop of us continuing to minimise bad debts, and maintain excellent recoverability of bad debts. Legal fees have risen this year as we ratcheted up pressure on those who are unwilling to repay and the introduction of the Central Credit Register has helped us collect more bad debts. We make no apology for any action undertaken to recoup monies owed. During the year costs for professional fees rose as new legislative and regulatory items were introduced. The continuing cost of Regulatory levies, requirements for professional advisors and the rollout of new processes all impacted costs. Investment income remains very low and this will be the situation for the foreseeable future. We have somewhat offset this reduction in earnings by increasing our income from loans. It is imperative that Donore Credit Union continues to grow our loan book and we encourage all members to consider their Credit Union for any borrowing they may need.
During the year 396 new members joined
Membership up by
6%
34
ANNUAL REPORT 2019
CEO Report (Continued) In 2019 we continued to heavily promote our Credit Union and the response from members has been excellent. We have put the Credit Union back at the heart of the community and our message as the independent credit union of Dublin 8, has really resonated with members and new members. We have significantly increased our social media presence and we have very active Facebook and Instagram. We like to keep our website refreshed and informative, while our Newsletter and press releases are well received by our members. We believe that members and prospective members are attracted to organisations in which they feel they have a real say. We will continue to push this message. People do not want to be part of large faceless financial institutions and at Donore Credit Union we want to preserve the unique friendly face to face service we are known for. Donore Credit Union is not a profit or cost centre, this remains and always will be a people centre. Staff of the Credit Union worked exceptionally hard to meet these challenges. We will continue to face new challenges. I am confident that these will be overcome because of the reaction of our members to their Credit Union. Credit Unions are judged on their viability on financial figures and I am delighted our figures and projections are very strong. We plan to increase our members numbers. Donore common bond area is a growing thriving area of Dublin and new residents are potential Credit union members. We will be aiming to grow our membership and we feel this can be achieved by working with local schools, community organisations, college and sports clubs. Equally we are reliant on you the member to promote and canvass for your credit union. Whether it be a new neighbour, work colleague, family member please encourage them to join Donore Credit Union. I look forward to challenges ahead and I am confident obstacles will be overcome and we can deliver the success your Credit Union deserves. Thank you for your support. David McAuley CEO
5k in donations and sponsorship to local group
ANNUAL REPORT 2019
35
Report of the Credit Committee Dear Member The Committee’s main role is to oversee the lending function and ensure policies and underwriting standards are being adhered to. The Committee is also responsible for monitoring the performance of the loan book and the proposal of new loan products. The Committee meets at least twice monthly and reports monthly to the Board on its findings. The Credit Union assesses risks and members ability to repay – these are the overriding concerns on all lending decisions. The majority of our loans are assessed by our experienced Loan Officers and on receipt of all required documents, loans can be issued immediately and with our EFT arrangements will be in your bank on the same or next day. In 2019 the Committee oversaw the introduction of new loan products • The Diamond Loan Plus • The Dream Bigger loan • The Student Loan These were introduced as a direct response of the member’s comments regarding loan rates who are now looking to borrow more from the Credit Union. In particular with the Dream Bigger loan and Diamond Plus Loan, we recognised there is a significant body of our members who want to borrow larger amounts at competitive interest rates. Donore Credit Union has put in place a structure by which members can hold multiple loans. Members can borrow larger amounts over a longer period, while still being able to borrow for the smaller things in life such as holidays, emergencies, unforeseen expenses, Christmas and family occasions. The Credit Committee review loans to ensure underwriting standards are maintained. The Credit Committee recognises the risks of poor lending and as such monitors the loan book to ensure lending is prudent and in line with the members ability to repay. Our current low loan arrears and bad debts signifies our determination to be a prudent lender Lending is the core function of our credit union. The Committee are aware we face challenges, however, we will continue to proactively make changes to ensure we offer our members value and good service.
95% of Loans Approved • Loans Approved and Issued on the spot • Free Loan Insurance
36
ANNUAL REPORT 2019
Report of the Credit Committee (Continued) For over 60 years this Credit Union has provided loans to our members, the financial stability of this Credit Union is testament to the loyalty of our members. We must continue to ensure this loyalty is met with great services and great value. This Credit Union has significant resources to lend so we encourage our members to talk face to face with our Loan officers to discuss any loans regarding how big or small. Over the past year a total of 1,530 loans were issued to the amount of €5.777m up from €5m in 2018, an increase of over €770k. The Credit Committee is delighted that Donore Credit Union has the highest loan growth of all Credit Unions in Dublin. Our members realise we can lend bigger amounts at very competitive interest rates. Our loan book has grown by 25% and at year end loans stood at €9.8m. Donore Credit Union is focused on growing the loan book in line with our risk appetite. Finally, this Credit Union is proud of it’s history as a prudent lender. We will never push unaffordable loans on members and we will strive to offer credit to members who can demonstrate an ability to repay. You may be pleasantly surprised at how competitive your Credit Union is and with versatile repayment schemes, no hidden charges and new loan products, there has never been a better time to contact your credit union. Angela Kavanagh On behalf of the Credit Committee
do education with CREDIT UNION CR
ANNUAL REPORT 2019
37
Credit Control Report for AGM 2019 The function of the Credit Control Committee is to ensure that all loans are paid back in line with the loan agreement signed at time of issue. The Committee meets monthly to review all loans that have fallen into arrears and to keep track of the overall pattern of loan repayments. Furthermore, the Committee liaises with Lending Officers and Credit Committee if patterns or behaviours are identified. Once a loan falls into arrears members are contacted as are guarantors if such are in place. A member who acts as guarantor for another member becomes responsible for all monies owed by that member and will have their savings secured against that loan. 2019 saw the introduction of the Central Credit Register. This has helped with recoveries as loan defaults are shown and attempts to get new loans elsewhere are hampered as new lenders see loan all default history. The Committee accepts that any member can get into difficulty from time to time and when this happens it is important to contact our Credit Controller immediately to discuss a solution to the arrears problem. It is the Board’s policy to do everything possible to assist the member, however, where the Committee determine there is an unwillingness to repay or an unreasonableness with regards to proposals, all options will be invoked to ensure return of monies. The Board of Donore Credit Union is very aware we are lending member’s money. We treat delinquency as a serious matter. We will use all available means to ensure we get repaid including debt recovery agents and all legal avenues. With regards to the term “written off”, this refers to the accounting treatment of a loan and arrears in the financial accounts and not how the Credit Union views an outstanding debt. This Credit Union will continue to actively pursue any outstanding debt. There were 7 members accounts written off during the year totalling €13,672 compared to 17 for €66k last year. In addition to aged debts, the Committee monitor early arrears. The Committee positively note that our arrears remain very low and despite our loan book increasing we are satisfied that loan underwriting standards are very high and Credit Risk is being assessed during loan applications. Recovery of bad debts was €146k compared to €185k last year. We continue to target aged bad debts while monitoring of early missed payments ensures our Bad Debt position is showing a continuing improvement. The Committee continues to target historic non-payers, initiate legal action and seek judgements where we view assets are available to meet outstanding loan obligations. This is our commitment to you our member. Hilda Hyland On behalf of the Credit Control Committee.
Arrears Down
Bad Debts Recovered €146K
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ANNUAL REPORT 2019
Report of the Membership Committee Dear Member The Committee’s main functions to review membership applications in compliance with the Criminal Justice Act 2010 (as amended) and to encourage growth in membership numbers. The active membership as on the 30th September 2019 was 4,776. During the year 396 new members joined. We remain focused on increasing our membership numbers. It is important to ensure these new members are active members and will consider the credit union for any borrowing need they may have. The common bond of Donore Credit Union is a vibrant, growing, changing area of Dublin city. As the only independent, locally owned Credit Union in Dublin 8, with a focus on personal service, community needs and active involvement in local issues, we are attractive to residents who want a democratic, ethical financial cooperative. New residents moving into the area will want to develop attachments to local community whether that be through schools, clubs or the Credit Union. Donore Credit Union does not subscribe to notion that credit unions must be bigger. We want our members to be front and centre of their Credit Union. We believe our credit union must be the best for it’s members. We welcome all new members. While we will always offer personal service, we recognise that some members prefer to conduct business remotely, so in 2020 we expect to roll out full on-line membership applications in addition to straight through loan application, approval and funds issue. In 2019, we delivered direct debit repayment option and increasing numbers of members are now opting for electronic funds transfer option. Our phone app and on-line access is increasingly popular with members. Members whether from home, work of college want to be able to download a statement, transfer monies to other accounts or between credit union accounts. Donore Credit Union has that service available at no charge to members. We would encourage members to register for on-line access Our membership drive this year, has involved us; • Attending Community events and meetings • Supporting local clubs and societies through donations • Visiting local College and engaging with students • Visiting local schools to give advice on saving and money management • Setting up a refer a new member scheme with local sports groups and schools • Having open nights for new members to come in and meet us We ask members to refer their neighbours and families to us. The loss of local credit unions, the continuing closure of bank branches, means Donore Credit Union is now more relevant than ever. Our commitment to face to face service, the provision of on-line banking facilities and our understanding of members needs continues to drive your Credit Union forward. Thank You Agnes Heffernan On behalf of the Membership Committee
ANNUAL REPORT 2019
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Report of the Board Oversight Committee For the year ended 30th September 2018 The Board Oversight Committee has performed its function and is pleased to submit our annual report to the members of the Donore Credit Union. The primary function of the BOC is to attend monthly Board meetings to protect the interest of the members. We can report that in our opinion the Board has been compliant in their legal regulatory requirements and have dealt with any risk and compliance issues which have risen during the year. The BOC held our monthly meetings following the Board meeting to review the content of the Board meetings. The results were presented to the Board on a quarterly basis. We would like to thank the Chair and the Board for the courtesy extended to us and their acceptance of the issues we raised. We have undertaken training which has enabled us to carry out our function in a more efficient manner. Our committee can report that there is a good working relationship between the BOC, Management, Staff, and Board and we thank them for their co-operation during the year. Jacqueline Stewart, Francis Flanagan, Mark Barnes.
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Competitive loan rates Independent, locally owned, local decision making No penalties for early encashment Free savings & loan protection insurance Death benefit insurance Quick simple loan process – quick decisions
CREDIT UNION
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ANNUAL REPORT 2019
Nomination Committee report for AGM January 23rd 2020 The Nomination Committee is a Committee with a statutory role as per section 56B of the Credit Union Act. One of the functions is to ensure that there is at least one candidate nominated for each vacancy at the AGM. To this end the committee has recruited 2 new volunteers to date this year. These candidates will go forward for election at AGM 2017. The committee has ensured that all candidates and volunteers meet the standards of Fitness & Probity set out by the CBI and have been subjected to due diligence checking and all have agreed, in writing, to abide by these standards should they be elected/re-elected. There are 5 current board members due for re-election at AGM in January 2020. Candidates are; (in alphabetical order) Agnes Heffernan Board member since 2012. Hilda Hyland Board member since 2015. Kathleen Kenna Board Member since 2015. Catherine Massey Current Chair. Board member since 2012. Garrett O’Toole Current vice Chair. Board member since 2019. Ann Bradley Phyliss Masterson Niall Reilly Kevin Higgins
New nominee New nominee New Nominee New Nominee
A vacancy has arisen as one of our board members standing down due to family reasons and we thank John Mc Donnell for his contribution to the board during 2019. There are 2 vacancies on the board oversight Board Oversight Committee due to two current members not going forward for re-election. We wish to thank both Jaqueline Stewart and Frances Flanagan for their hard work and diligence during 2019. Nominees for Board Oversight Committee to follow. Due Diligence has been performed on all nominees. The Board are proposing Jason Dowling of Whelan Dowling & Associates for the position of auditors for the coming year. The Nomination committee is required to determine if it is satisfied that there is competent skill-set on the board and that Board members are equipped to contribute and participate in decision making. The Committee’s viewpoint is that this is being done. Finally, the Committee request any members who are interested in volunteering to contact us. The success of this Credit Union is reliant on volunteers. If you are not interested in being a Director there are a number of committees where volunteers are needed. Hilda Hyland On behalf of the Nomination Committee.
ANNUAL REPORT 2019
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Report of the Audit Risk and Compliance Committee Dear Member This Committee is responsible for ensuring that the Credit Union complies with all regulatory and legal requirements as per section 76c of the Credit Union handbook and for identifying and monitoring all risks facing the organisation ensuring that both internal and external audits are conducted and all findings and recommendations are actioned upon. It is the aim of this Committee to ensure a culture of risk awareness filters throughout the organisation as we face internal and external challenges. To insure Risk mitigation, strategic planning and detailed business analysis are in place and functioning across all areas of the Credit Union. This Committee ensures Internal Audit, External Audit and Risk and Compliance programs are in place, testing is conducted, reports and findings are presented to Board and recommendations and improvements are made. Our Risk and Compliance Officers (RBK Accountants) are responsible for ensuring the Credit Union is compliant with Regulatory and legal obligations. They also monitor risks in the organisation, identifying potential issues and recommending remedial actions to take place. RBK have tested all key areas of the organisation and the Committee is satisfied that risks have been assessed and recommendations implemented. We are satisfied that we are compliant with our legal and regulatory requirements
The work of the Committee has increased as new legislative and regulatory requirements are introduced, however, we are satisfied that we have the capacity and skills to ensure Donore Credit Union remains a robust, secure and financially sound Credit Union. Angela Kavanagh On behalf of the Audit Risk and Compliance Committee
Ireland’s First Credit Union is also
Dublin’s Fastest Growning Credit Union ok n Bo Loap 25% u
Donore Credit Union 22 Rutledge Terrace South Circular Road Dublin 8 01 453 0844 info@donorecu.ie
www.donorecu.ie donorecu.ie
The Independent Credit Union of the Liberties