QR 102

QUARTERLY RETURN 102 WINTER 2016/17

BEAUTIFUL HANDCRAFTS THAT DON’T COST THE EARTH A HARMONIOUS RELATIONSHIP BETWEEN PEOPLE AND PLANET Sustaining a precious relationship in the Peruvian Amazon.

A COMMITMENT WITH NATURE Leading the way in agricultural best practice and high quality production.

WHAT’S UP WITH MAMBO COFFEE? Showcasing speciality coffee in Kenya.

WELCOME Happy New Year to you all and I hope you had a great Christmas. We were delighted to receive such a positive response to our Christmas card, and thank you to everyone who invested further with us over the festive period.

‘Your actions change lives’ is the message for this year’s Fairtrade Fortnight and as Shared Interest investors, you are changing lives every single day.

We hope to see many of you at our AGM, at the Northern Design Centre in Gateshead, on Friday 10th March. Details of the meeting are enclosed with this newsletter.

On the page opposite you can read about our upcoming regional member events, which will take place throughout the year.

This newsletter includes updates on new and longstanding customers. Brazil nut producers, Candela Peru, started their relationship with us in 2001.

You can read more about their progress on pages 4 and 5.

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New customer, Allpa – which means ‘earth’ in Quechua Indian – is a fair trade handcraft producer group in Peru. Read more about their journey on pages 6 and 7.

As part of our continued drive to reduce our paper usage, instead of sending you a full copy of the Annual Review, we have produced a summary of both the Society and Foundation activities over the year, inside this issue of QR. If you would prefer to read the full version, please contact membership@shared-interest.com, or call 0191 233 9103. Alternatively, you can download copies from our website.

Thank you once again for your continued support in 2016, and all the best for the coming year.

I hope you enjoy this issue of QR.

Patricia

Front and back page images: Allpa, handcraft producers in Peru.

SPEAKING OPPORTUNITIES Thank you to all who responded to our call for volunteers to speak in your local area.

We continue to receive enquiries and are working hard to deal with these requests. One invitation came from member Geoffrey Lock, in Bristol, who invited ambassador Chris Fox to speak at the Rotary Club of Clifton’s November lunch meeting. Chris delivered a short presentation, including showing one of our customer films, and answered questions on various topics including customers, risk and regulation.

Geoffrey said the event was a great success as “The talk clearly set out the aims of Shared Interest and was well illustrated with slides.”

Please continue to let us know of opportunities in your area. We need your support to continue to spread the word about Shared Interest and to increase our lending capacity. Please get in touch at volunteers@shared-interest.com or on 0191 233 9103.

QUARTERLY RETURN 102 WINTER 2016/17

In our last edition of QR we announced the date for this year’s AGM. We can now tell you that the event will be held at the Northern Design Centre on the banks of the Tyne.

DATES FOR THE DIARY

We invite you all to join us in our home region on Friday 10th March.

Your voting card and AGM booklet are enclosed.

FAIRTRADE FORTNIGHT

‘MAKE YOUR MONEY COUNT’ EVENT

Monday 27th February Sunday 12th March

On Thursday 3rd November, we invited members to join us in Edinburgh for an ethical investment debate, as part of Good Money Week.

“We need to amplify the voices of marginalised producers as much as ever in 2017”, is the message from the Fairtrade Foundation ahead of this year’s Fairtrade Fortnight.

“When we come together we can change the way people think about trade and the products on our shelves – the Fairtrade movement is made up of ordinary people doing extraordinary things in their communities for Fairtrade. Your actions help shoppers to make choices that change the lives of farmers and workers.”

– Fairtrade Foundation.

Shared Interest is supporting the campaign by encouraging our staff, stakeholders and supporters to put Fairtrade in their break. Our volunteers will also be getting involved, attending a range of events across the UK.

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Building on the success of our joint event in 2015, we held the event in partnership with Rathbone Greenbank, Triodos, Ethical Futures and The Church of Scotland. Almost 100 people listened to guest speakers discussing key issues around ethical investment and how active engagement with companies and policymakers can make a difference.

UPCOMING MEMBER EVENTS This is your chance to meet staff together with members of our Board and Council. We would love to see you at one of the below events.

Date

Venue

Location

Fri 10th March

The Design Centre

Gateshead

Fri 12th May

Wales Millennium Centre

Cardiff

Sat 20th May

White Cloth Gallery

Leeds

Thu 8th June

The Old Library at The Custard Factory

Birmingham

Thu 15th June

Philharmonic Music Hall

Liverpool

Fri 30th June

Friends Meeting House, Euston

London 3

A HARMONIOUS RELATIONSHIP BETWEEN PEOPLE AND PLANET For over 25 years, Candela has used Shared Interest finance to sustain a precious relationship in the Peruvian Amazon.

Castañeros are brazil nut gatherers, who live along the Madre de Dios River in the Peruvian rainforest. This area is known for having the greatest diversity of plant and animal species on earth.

In 2003, the government granted a 40-year concession to the Castañeros, allowing them to farm the brazil nut trees in clearly defined locations; securing not only livelihoods but the vested interest of the farmers in managing and protecting the rainforest.

Candela was established to help Castañeros find markets for their brazil nut products. Export of candles, chocolate, and oils, is the key to reaping tangible rewards from this harmonious relationship between people and planet.

4

Candela owns the whole process of production. Members collect nuts during the harvest period and Candela buys the raw and peeled material. The nuts are stored in their warehouse prior to exporting to their buyers. They also have a nut processing plant in Puerto Maldonado and one in Lima, where most of the processing and packaging is done.

Since 2001, Candela has benefitted from three different types of financial support from Shared Interest. All of these facilities have contributed to the growth and sustainability of the organisation and impacted positively on the livelihood of nut producers and harvesters, their families and communities.

Our Monitoring and Evaluation Officer carried out a study with Candela to assess the impact of this support. Results show that Shared Interest investors have played a pivotal role in the growth and sustainability of the organisation.

“Without the support of Shared Interest, Candela would not be able to pre-finance harvest activities and many nut harvesters would have been denied their only source of livelihood.”

Lupe Lanao, General Manager, Candela Candela’s work goes far beyond the nut production process. They have been working tirelessly with fair trade organisations and certification bodies to ensure their farmers receive a fair price for their crop.

They have also provided water and drainage systems for a number of indigenous communities giving them access to clean water.

The graph opposite shows the sales growth of Candela over the last 16 years.

QUARTERLY RETURN 102 WINTER 2016/17

CANDELA SALES GROWTH SINCE BECOMING A CUSTOMER 2004 – Shared Interest increases Candela’s loan threefold.

2007 – Loan received from Shared Interest to upgrade machinery in their processing unit.

2011 – Sales increase from USD 2,839,657 to USD 3,990,916.

2014 – Due to high demand, Candela reach their production capacity.

Candela requests a loan to finance their expansion and technology upgrade project.

USD

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0 2000

2001

2002

2000 – Candela is hit hard by a sudden decline in the world prices of the brazil nut, leading to heavy loss in the business.

SHARED-INTEREST.COM

2003

2004

2005

2006

2005 – Sales increase from USD 991,664 to USD 1,530,339.

2002 – Shared Interest provides Candela with a loan to pre-finance their harvest. Sales increase from USD 143,492 to USD 737,498.

2007

2008

2009

2010

2010 – Candela requests a loan to improve the production processing plant.

2012 – Decline in sales due to a relative price fall of the nuts and a drop in buyer orders.

2011

2012

2013

2014

2015

2013 – Sales recover and Candela experiences a very high demand for the nuts.

2015 – A slight decrease was experienced due to market price volatility.

5

BEAUTIFUL HANDCRAFTS THAT DON’T COST THE EARTH Allpa is a handcraft organisation in Peru that takes its name from a Quechua Indian word meaning ‘earth’.

The organisation came into fruition in 1986. Thirty years later, it employs 27 people and benefits hundreds of handcraft producers throughout Peru, providing marketing assistance, technical help, skills training and tools.

Allpa works with families located in various parts of Peru, including the Shipibo people living in the Amazon

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rainforest area of Pucallpa, where craft production is one of the few sources of income.

With artisans specialising in jewellery, textiles, ceramics, and wood, Allpa has benefitted from an export credit facility from Shared Interest since 2014. As less than 10% of their sales are local, this is a vital facility for the organisation.

Artisans selling under the Allpa name are considered luxury designers, constantly developing new and cutting-edge styles. In return for this expertise, Allpa provides access to the international market providing producers with a reliable source of income.

However, some of the producers are now trading directly with importers after developing under Allpa’s guidance.

Included in Allpa’s list of buyers are Ten Thousand Villages, Traidcraft, and Serrv; all of which are Shared Interest customers.

QUARTERLY RETURN 102 WINTER 2016/17

DANILO A master in stone carving, Danilo extracts the hidden beauty of the stones. He can turn amorphous and opaque rock into a bright and precious jewel.

Many of the local jewellers in San Juan de Lurigancho entrust him with the carving of the stones, which they later use for jewellery that goes to different markets. Allpa has worked with him for 10 years. His skill with stones can be expanded to the carving of other natural materials such as shells and tagua nuts.

CELESTINO A modern weaver in the Andes, Celestino was born in Huancavelica and spent time in different activities and villages. In 2001, he started weaving for Allpa in his backyard with a very rustic loom.

Today he lives on the outskirts of Huancayo and employs many men and women who weave with improved looms. What is more, he makes beautiful finishes with innovative equipment made with the support of Innovate Peru.

Celestino is proud to say that his textiles travel around the world and reach homes in Europe, North America, Japan and Australia.

FERMIN As a descendant of several generations of silversmiths, Fermin has been making handmade silver jewellery for 28 years, and Allpa is his main customer.

Fermin has also trained his workers at his facility; they have become a new generation of jewellers, and some of them have set up their own workshops.

You can find out more about Allpa and their artisans at www.allpaperu.com

SHARED-INTEREST.COM

7

SOCIAL ACCOUNTS

Each year we compile a set of externally audited Social Accounts, which detail our social, economic and environmental impact.

There are three main aims to the accounts, by which we measure our performance:

Impact 2016

Impact 2016 Impact Impact 2016 2016

2016

Aim 1: Provide financial services and business support that make livelihoods and living standards better for people as they trade their way out of poverty.

2015

Impact 2016 2016 2016 2016

2015 2015 2015

Producers Producers Producers Producers borrowing money borrowing money borrowing borrowing money money 163 163 163 163

150 150 150 150

Permanent

Permanent Permanent Permanent employees employees employees employees 6,646 6,646 6,646 6,646 6,039 6,039 6,039 6,039

Activities: • Provide lending directly to Impact 2016 producer businesses

Individuals W

Individuals Individuals Individuals

361,576 361,576 361,576 247,348 247,348 247,348

pr 361,57 247,34

46.2% 46.2% 46.2%

• Enable more producer businesses to access finance by providing 2016 financial2015 services to their buyers and by delivering training Producers Permanent

8.7% 8.7% 8.7%

Beneficiaries of swift project

increase increase increase

10% 10% 10%

increase increase increase

8.7%

46

incr

increase increase increase

10%

increase increaseCollective revenue Women Beneficiaries of swift project Individuals borrowing money employees producers In 2016 we lent money to 163 producer groups with 6,645 permanent employees, representing 36 In In 2016 2016 we we lent lent money money to to 163 163 producer producer groups groups with with 6,645 6,645 permanent permanent employees, employees, representing representing • Build sustainable support Beneficiariesofofswift swiftproject project Beneficiaries for fair trade businesses 163 £250.7m 6,646 343 361,576 106,028 Beneficiaries swift project Beneficiaries ofof swift project

Key 150

In 2016 we lent money 247,348

6,039

£226.3m

93,478

163 producer Beneficiaries of swift project Into2016 we lentgroups money to 163 producer groups with 6,645 permanent employees Male Beneficiaries of SWIFT Project 343 with 6,645 permanent Beneficiaries of swift project Key Female

343 employees, representing 4061343 343 343 3718 361,576 individuals, indirect Male including 106,028 women. beneficiaries 4061 343 Male Impact 2016 46.2% Female Key 4061 Female indirect 4061 3718 343 4061 3718 Female Key Male beneficiaries 4061 indirect 3718 indirect 3718 8.7% beneficiaries 10% Male Female indirect 3718 beneficiaries 2016 2015 4061 beneficiaries Female 4061 indirect 253718 Producers

Key Key Male Key Key Male Female Male Female

indirect beneficiaries

increase

increase

10.8%

7.2%

increase

increase

increase

Permanent

Individuals

beneficiaries indirect 3718 borrowing eneficiaries of swift project moneyManagement employees 25 Impactof ofFinancial Financial Training Management beneficiaries n 2016 we lent money to 163 producer groups with 6,645 permanent employees, representingTraining 361,576 individuals, including 106,028 women.

25 Impact 343

Key

Male

Female

100 100individual artisans 100 trained individual 75 100 100 artisans 100 individual individualtrained artisans individual artisans 1005 trained artisans trained 100 trainedindividual

4061

indirect beneficiaries

individual artisans trained 3718

25

100

individual artisans trained

artisans individual 77 trained artisans

77 72 77 educators trained peer 77 77 educators 77 peer peer trained educators peer educators trained77 educators trained 77 trained peer

peer trained educators trained peer 75

40 5

77

40 40 40 40 4040 40

peer businesses received business educators trained skills training and mentoring

40

6,646 6,039

150

361,576 247,348

25 25 75

7575 5 75 75 55 5

75 Businesses taking8.7% part in increase training and mentoring 5 75

5 5 72

7272 72

educators peer trained educators trained 72 businesses received business skills training and mentoring businesses received business businesses received business skills training and mentoring skills training and mentoring businesses received business businesses received business skills training and mentoring businesses received business skills training and mentoring skills training and mentoring 8 businesses received business skills training mentoring businesses receivedand business skills training and mentoring 72

163

2525 25

W pro

Peru

15

Colombia

10%

increase

10

Malawi 46.2% increase

8

Individuals that In 2016 we lent money to 163 producer permanent employees, 82groups with 6,645 100 47 representing 361 received training Staff members of local

72support networks that received training

72

3

3

256.5

1

hours of training delivered

(28.5 days training x 9 hours per day)

QUARTERLY RETURN 102 WINTER 2016/17

Membership Aim 2: Develop our community of investors, the support of donors and volunteers, and partnerships with those who share our commitment to fair and just trade.

Membership

9,232

share accounts ounts

Activities: • Attract and retain investors, donors and volunteers

Ap

• Act co-operatively, valuing the views of our membership and wider supporters

2,670

• Collaborate and innovate with partners

net increase off 185 on 2015

p li c

a ti o n p r o c e s

s

online

908 both

7,376 postal

Closing Share Capital 2016

OUR OUR VOLUNTEERS VOLUNTEERS

Closing Share Capital 2016

Closing share capital

Share capital (£m) 37

Our Volunteers

£36,431,447

£ 3,142,329 net increase from 2015

35

involved involved in in over over

71

volunteers volunteers

33 31 29

NEW NEW

27 25

09

10

11

12

13

14

15

16

Year

13

new new volunteers volunteers

Recycling

70

awareness awareness raising raising events events

18

training training sessions sessions

Aim 3: Manage our resources in line with our principles of love, justice and stewardship.

Recycling

Recycling Recycling Recycling Recycling

Activities: • Ensure good financial stewardship of our investments and donations • Encourage staff’s talent and commitment in an environment of mutual respect

Staff continue to recycle paper, plastics, and glass.

Staff continue to recycle paper, plastics, glass.

Staff continue to recycle paper, plastics, andand glass.

Staffcontinue continue torecycle recycle paper,plastics, plastics, andglass. glass.

Staff to paper, and

00 ,0 000 66 ,00 66,0 000 66 ,0,00 6666

sh sph she p shpa epea eaep ets paaspheeeeetpser ptsero tesr ous of pe r uts of us uf s f ed r u seof ed ed se d d

SHARED-INTEREST.COM

52% 52% 52% 52%

• Practise good environmental stewardship

This is the number of wheelie bins we could have filled with our paper recycling.

2 2 2 2 5 2 5 5 5 5

decrease in paper used for printing is the number decrease in paper ThisThis is the number of of decrease in Thisisisthe thenumber number of decreaseininpaper paper paper This of decrease wheelie bins we could This is the number of used for printing decrease in paper wheelie bins we could used for printing wheeliebins binswe we could usedfor forprinting printing wheelie could have filled with our used wheelie bins we could have filled with our used for printing have filled with our have filledhave with our paper recycling filled with our paper recycling paperrecycling recycling paper paper recycling

The full document is available to download on our website.

www.shared-interest.com/social-accounts

9

A COMMITMENT WITH NATURE Leading the way in agricultural best practice and high quality production, UES (Union de Ejidos y Comunidades San Fernando, S.P.R. de R.I.) is a group of 1,379 coffee producers from Chiapas estate, South Pacific of Mexico.

In 2014 their coffee plantation was affected by Roya disease, causing extensive damage. UES prepared a plan to regenerate their crops with a plantation renewal programme and applied to Shared Interest for help.

“We are very grateful to Shared Interest for believing in our plantation renewal program. The production during the last season increased by 29% thanks to the planned efforts. Our producers now have healthier farms and Roya is finally under control.” Silvia Herrera, Assistant General Manager, UES.

10

Longer term, as well as being able to prevent the spread of Roya, they are also expecting a 48% increase in their coffee production.

UES farmers don’t simply look at how they can improve the production and quality of their coffee. As a social enterprise, they develop community projects to fit with the needs of their producers. They are even working with the Government to help farmers improve their housing conditions.

UES state: “The commitment we have made with nature and love of the countryside drives us to keep in organic production, and not only that, but look for alternatives that allow us to give back a little of everything that the earth has given us. We are in a privileged area, where land, water and climate are supplemented for the production of our coffee.”

ROYA Roya, or Rust, as it translates in English, is a fungus that originated in Ethiopia.

It is thought that the disease, which attacks coffee plants, was first brought to Latin America in the 1970s. During the 1980s the disease was prevalent throughout the continent; however, over the last twenty years it has largely been under control.

The spread of the disease has increased since the beginning of 2013. This has caused major problems for coffee farmers. Experts believe that the disease favours lower temperatures and lower light levels. It is also easily spread during wet weather when raindrops hit infected leaves and bounce to another. As the effects of climate change are increasingly seen and Latin America is faced with frequent, heavy storms, the perfect conditions for Roya are created and maintained.

QUARTERLY RETURN 102 WINTER 2016/17

COUNCIL COMMENT My opportunity to join Shared Interest came through an inheritance I received in 2012.

I wanted to use this money in some way that might benefit others and link me directly with an organisation that assisted people to trade their way out of poverty. Shared Interest was exactly what I was looking for.

WHAT’S UP WITH MAMBO COFFEE? Taking its name from the Swahili slang for “what’s up?”, Mambo Coffee is a wholesaler of specialty grade blended coffee.

They say that the reason behind the brand name is that young farmers in East Africa greet each other with this simple word in the morning before beginning the harvest.

Mambo explain: “In the beginning, we built a little espresso bar to showcase our coffee blends to our wholesale customers. Word of mouth quickly spread through the area, and soon our little space was so crowded every morning with customers, we had to move to a bigger location.”

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According to Mambo, their coffee roasters have “honed their craft to create four blends of Mambo Coffee to suit every palate.”

A Master Roaster travels extensively to different coffee regions. He looks for farms that grow coffee in an organic and sustainable way.

However, the coffee beans must also produce excellent flavour once they are roasted to pass the stringent quality test.

Now based at the foot of Mount Kilimanjaro, Mambo Coffee is run by a team of 80 staff. They will use their Shared Interest loan to buy a processing machine and build a sorting shed. This will help increase productivity and boost sales so that coffee farmers are able to increase their income.

I am a midwife in the NHS and have spent the last 12 months on sabbatical from my job in order to volunteer overseas, to learn and grow as a midwife and human being. I have worked in Uganda, Nepal and a refugee camp in Greece. It has been challenging, especially when faced with maternal death in Uganda, extreme poverty in Nepal and the utter despair that is the life of a refugee in Europe. It has been wonderful to become friends with midwives from all over the world and to meet women and families from very different settings to the UK. Whatever the setting, and no matter how different the needs and disparities are, the most striking thing is that anyone can be vulnerable and in need of assistance at any time. It is easy to highlight the differences between people and instil a fear of strangers, but it is also easy to reach out and acknowledge the plight of our brothers and sisters around the world.

Now is the right time to create communities and be kind to each other as citizens of the world. I really believe that we are doing this by investing with Shared Interest. Let us all spread the mission and values of Shared Interest by encouraging more of our friends and families to become investors too.

Elizabeth Murphy Member of Shared Interest Council

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Quarterly Return is the newsletter of Shared Interest Society. Shared Interest Society Ltd is a fair trade lending organisation which is a member of Co-operatives UK. It uses the pooled investments of its members in the UK to affect real and lasting improvements to people’s lives in the developing world.

Shared Interest Society Ltd is registered with the Registrar of Mutual Societies, number 27093R. The Directors decide on what the interest rate payable to members will be. The interest rate since 1 September 2016 has been 0.25%.

CONTACT US Shared Interest Society Ltd Pearl Assurance House 7 New Bridge Street West Newcastle Upon Tyne NE1 8AQ United Kingdom 0191 233 9100 membership@shared-interest.com www.shared-interest.com @SharedInterest

ANNUAL REVIEW SUMMARY

A FAIRER WORLD You can’t have success without challenge and I am delighted to say that, despite the unsettled economic backdrop following the UK’s decision to leave the European Union, 2016 has been a year of achievement for Shared Interest. This year we made payments of £61.7m to 397 organisations.

Shared Interest Foundation continued its focus to help people cultivate resilient

businesses by breaking the cycle of poverty. This year the charity has worked in five countries.

Both the Society and Foundation’s activities were recognised this year by being shortlisted in 15 awards. We won the Social Enterprise category of the UK Private Business Awards, and Social Investment category at the Third Sector Awards. These

awards provide recognition of the hard work of our staff and stakeholders, and showcase the powerful impact we have on producers’ lives with the support of our members, donors and volunteers.

This success would not have been possible without the passion and commitment of our members, staff and volunteers; a huge thank you to everyone involved.

BUKONZO, UGANDA, COFFEE

I AM PROUD TO INTRODUCE OUR ANNUAL REVIEW OF BOTH SHARED INTEREST SOCIETY AND SHARED INTEREST FOUNDATION.

OUR MISSION

OUR VALUES

Our mission is to provide financial services and business support to make livelihoods and living standards better for people as they trade their way out of poverty.

We will conduct our business in a manner which reflects the principles of love, justice and stewardship.

We work collaboratively and innovatively with those who share our commitment to fair and just trade. With a community of investors and the support of donors and volunteers, we seek to contribute to a world where justice is at the heart of trade finance.

In 2016 we lent money to 163 producer groups, representing 361,576 individuals, including 106,028 women

GROUP INVESTOR, ONE WORLD SHOP 02

We will: •

Work co-operatively with our members as we

take and share risk

•

Value and engage our donors and supporters

•

Encourage the commitment, talents and energy of our staff in an environment of mutual respect

•

Work to recognised fair trade standards

•

Respect the diversity of different cultures

•

Place partnership at the heart of what we do

MATA TRADERS (BUYER CUSTOMER), ASIA, HANDCRAFTS

OUR LOYAL INVESTORS

LENDING

2015-16 saw net investment growth of £3.1m, resulting in a share capital total of £36.4m. Member numbers increased over the year following regular promotional activity. For the first time this year members were able to pay funds into their Share Accounts using their debit cards. Our membership continues to diversify and includes faith groups, fair trade partnerships, businesses, schools, community organisations as well as individuals.

Shared Interest Society provides ethical finance; working in parts of the world where other lenders are less keen to operate.

“I was immediately inspired. Here was an organisation that wasn’t a charity and was simply asking me to invest some of my spare money with them until I needed it again.” Tracy

This year, we continued to focus on reaching small farming and handcraft groups in disadvantaged areas, with 76% of customers having a turnover of below $500,000.

We balance the desire for our lending to reach those who need it most, with the need to avoid placing our members’ capital at excessive risk. We control this risk by setting a prudential limit on approved facilities of 135% of our Share Capital and reserves.

In 2016 we made payments to 397 organisations in 59 countries

“We now feel connected to a wider ethical community being an investor.” One World Shop 03

FINANCIAL OVERVIEW The 2015-16 financial year saw total income rise by 8%, with another fall in deposit income outweighed by strong growth in lending income. The amount lent to customers was £30.8m at year-end; the highest value ever, reflecting a good performance throughout the year but also the notably weaker Pound Sterling at the 30 September 2016.

Finance costs have increased substantially due to high volumes of borrowing currency linked to: high lending levels, the weaker Pound Sterling, the fact that US interest rates increased in the year by 0.25%, and a higher margin charged by the

Co-operative Bank. Operating costs for the Society were very similar to the previous year. Unfortunately we have had to make a high provision for bad and doubtful debts in the accounts this year and this is the reason for the loss of £669k. We are still proposing to pay interest to members and this has been provided for in the sum of £121k. The overall financial position of the Society remains very strong with another good growth in member capital during the year, In addition to specific provisions against doubtful accounts which are cumulatively £3.7m, we have reserves from previous years’ surpluses, totalling almost £1.5m.

In 2016 we made payments of

£61.7m 04

BUKONZO, UGANDA, COFFEE STATEMENT OF 2016 2012 2013 2014 2015 2016 COMPREHENSIVE INCOME £’000 £’000 £’000 £’000 £’000 Credit charges Bank Deposit Interest Other Total Finance Costs Provision for Doubtful Debts Operating Costs Corporation Tax (Refund) Profit/Loss before Members’ Interest and donation Members’ Interest Donation £/$ Exchange Rate at the year-end STATEMENT OF FINANCIAL POSITION 2016 Tangible Fixed Assets Investments Lent to Customers Cash and deposits Debtors Loans owed to the bank Other creditors < 1 year Other creditors > 1 year Total Capital Reserve for Lending Loss Proposed share interest Proposed donation to Shared Interest Foundation Profit and Loss Total

1,797 784 68 2,649

1,611 903 89 2,603

1,799 839 103 2,741

2,164 683 77 2,924

2,653 450 55 3,158

( 126 ) ( 613 ) ( 1,633 ) 11 266 ( 143 ) 1.62

( 77 ) ( 414 ) ( 1,777 ) 47 288 ( 68 ) 1.61

( 79 ) ( 516 ) ( 1,773 ) 50 323 ( 108 ) (50) 1.62

( 252 ) ( 457 ) ( 2,013 ) 5 197 ( 110 ) 1.51

( 513 ) ( 1,212 ) ( 1,985 ) (5) ( 547 ) ( 122 ) 1.29

120 90 18,103 30,499 382 ( 16,868 ) ( 529 ) ( 1,340 ) 30,457

97 93 16,490 32,811 458 ( 16,634 ) ( 544 ) ( 1,34 ) 31,431

57 35 94 95 21,063 24,933 35,891 38,827 362 381 ( 22,135 ) ( 27,125 ) ( 649 ) ( 542 ) ( 975 ) ( 1.340 ) 33,450 35,522

150 118 30,763 41,668 340 ( 34,299 ) ( 739 ) 38,001

28,669 766 143 879 30,457

29,454 766 112 1,099 31,431

31,255 766 115 50 1,264 33,450

33,289 766 116 1,351 35,522

36,432 121 1,448 38,001

The summary of the financial statements above is an extract of the full audited financial statements for the Society, which are available on request from the Company Secretary or can be downloaded from our website. The majority of our lending and overseas payments are made in USD thus the exchange rate with sterling has a significant impact on the year-end figures.

05

GLOBAL REACH This year we made payments totaling £61.7million to 397 organistions in 59 countries Peru

No. 36 Allpa is a Peruvian handcraft organisation whose name means ‘earth’ in Quechua Indian.

The organisation employs 27 people, and benefits hundreds of handcraft producers. With artisans specialising in jewellery, textiles, ceramics, and wood, Allpa has benefited from an export credit facility with Shared Interest since 2014.

Newcastle upon Tyne, UK

Costa Rica Ghana

Guatemala

Peru

UCASA is a honey and sesame seed co-operative in Guatemala.

They are using a Shared Interest credit facility to increase their export volumes and provide a reliable income to farmers, enabling them to support school and churches in their community.

As well as providing training to their beekeepers, they also support the reforestation of their farms with native trees to protect the environment and improve the quality of the honey.

06

Fair trade buyer organisations Producer groups Our offices

Where our Investors’ Funds are Supporting Fair Trade India Mata Traders is based in Chicago and their focus is to support the family businesses of weavers and block printers throughout India and Nepal.

Working with member-owned women’s co-operatives and artisan groups that follow fair trade principles, the organisation has been a Shared Interest customer since 2010.

Founder of Mata Traders, Maureen Dunn Fetscher, said: “My love affair with India has evolved into Mata Traders – a design-driven, fair trade brand helping to end global poverty and inspire ethical companies and consumers to change the fashion industry.”

Burkina Faso Kenya

Uganda Bukonzo Co-operative started out as a group of six farmers who revolutionised coffee production in Uganda.

UGF/CDN (Union des Groupements Feminins Ce Dwane Nyee) is a shea butter co-operative located in Reo, Burkina Faso.

They have used Shared Interest finance to buy a truck, two coffee roasters and an electric washer. Although these changes sound fairly small, the impact on the organisation has been significant.

Co-ordinator Bationon Bahiomé said: “As well as transporting shea butter, the truck also serves the activities of the whole community.

We want to say a big thank you to Shared Interest because today the loan has over 3,000 direct beneficiaries. Thank you so very much!”

They inspired others to embrace organic methods such as using goat manure instead of artificial fertilisers.

Kabugho Josinta said: “The loan from Shared Interest has allowed us to double our coffee sales and pay the farmers on time. “With the increased income from coffee sales, people have been able to educate their children, which was not a possibility before.”

07

Shared Interest Foundation changes lives across the globe by helping people to cultivate resilient businesses and break the cycle of poverty.

HELPING BUSINESSES GROW LATIN AMERICA

MALAWI

For a decade, Shared Interest Foundation has been providing financial skills support to fair trade businesses. In 2013, we began a programme with an in-country partner to deliver training and mentoring to fair trade businesses in Africa.

Last year we developed a bespoke programme of Access to Finance training specifically for tea and sugar farmers in Malawi.

Eight co-operatives were identified as needing support. Thanks to the Malawi Fairtrade Network we were able to help.

Building on the success of the African project, this year we delivered two training and mentoring programmes in Latin America.

This year, we evaluated the impact of the project to see if our aims had been met. This included ensuring farmers were managing their financial record-keeping at the level required to reach Fairtrade certification.

Together with Shared Interest Society, we provide a vital combination of business training and fair finance. Using a donation of £50,000 from Shared Interest Society, plus the support of other funders, we helped small businesses in Columbia and Peru to improve their financial awareness.

08 COOBAMAG,

LATIN AMERICA, BANANAS

“Financial statements are now prepared on a monthly basis. This has led to farmers knowing the financial standing of the organisation. If our association is successful, it translates to sustainability, our children will be able to benefit from the co-op too.” EASTERN OUTGROWERS TRUST

A SAMPLE OF THOLAKELE’S HAND KNITTED GOODS

BUILDING STRONG NETWORKS With the support of Comic Relief, we began working in Swaziland in 2010, providing business training for the handcraft sector.

Tholakele Sibindi runs her own business. She designs and creates hand knitted and crocheted garments, accessories and home decor.

We helped establish a business support network known as SWIFT (Swaziland Fair Trade), which has a board of experienced business leaders from the local community.

“My life has changed since the training, my business is now in good hands and has a bright future. I want to express my deep gratitude, thank you for giving us such a great opportunity.”

This project came to a close in 2013. However, last year we were granted new funding from Comic Relief to help SWIFT further develop, and improve livelihoods of the farmers and crafts people involved.

09

USING MONEY WISELY

Shared Interest Foundation receives grants from donor organisations such as Comic Relief and the Commonwealth Foundation, which enable us to deliver our larger projects. Over the last six years these funds account for around half of our income, with the balance coming from the generous donations of individuals, groups, and legacies. These donations are vital as they allow us to develop and grow new projects based on robust needs analysis.

In 2016, we received support from the following trusts and would like to thank them for their contribution to our achievements this year: Souter Charitable Trust

Allan and Nesta Ferguson Charitable Trust Ashworth Charitable Trust

C.B. & H.H. Taylor 1984 Charitable Trust St Mary’s Charitable Trust Madeline Mabey Trust Dorema Charitable Trust Rothley Trust Tisbury Telegraph Trust Fitzer Lacy Trust

No. 43

Nelson New Forest Foundation

USING MONEY WISELY Year ended 30 September 2016

Year ended 30 September 2015

Unrestricted Funds

Restricted Funds

Total Funds

Unrestricted Funds

Restricted Funds

Total Funds

101

137

238

130

258

388

1

–

1

1

–

1

Total income

102

137

239

131

258

389

Cost of fundraising

28

–

28

42

–

42

Charitable activities

106

202

308

114

116

280

Governance costs

3

–

3

3

–

3

Total expenditure

137

202

339

159

166

325

Net (deficit)/surplus

-35

-65

-100

(28)

92

64

Funds brought forward

135

142

277

163

50

213

Funds carried forward

100

77

177

135

142

277

£’000 Donations & grants Interest income

10

CANN, IVORY COAST, COCOA

11

LOOKING FORWARD

With the local knowledge of our in-country colleagues, Shared Interest Society will continue to focus on increasing direct lending to smallholder farmers and handcraft co-operatives in the developing world.

In the UK, we will create more regional opportunities for investors to meet one another and share their views with Board members and staff following our pledge to keep members at our heart.

Our charity, Shared Interest Foundation, has already begun consulting with stakeholders as part of a strategic review

process that will set its strategic direction over the next five years.

As well as continue to support the membership networks we helped establish in Rwanda and Swaziland, our sister organisation will partner once more with Malawi Fairtrade Network to provide business support to five co-operatives producing tea and nuts.

Please visit our website for further details of our plans for 2016/17 at www.shared-interest.com/annualreview