INVESTING IN A FAIRER WORLD ANNUAL REVIEW 2015
WE SEE THE WORLD AS IT COULD BE ANNUAL REVIEW 2015
WELCOME 3 WHAT WE DO 4 WHAT WE STAND FOR 7 OUR INVESTORS 8 OUR VOLUNTEERS 10 LENDING 12 FINANCIAL OVERVIEW 16 GLOBAL REACH 18 LOOKING FORWARD 21
Front cover and this image: Raymisa, Alpaca Farmers, Peru
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TradeAID Integrated, Basket Weavers, Ghana
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WELCOME It is an honour to become Shared Interest Chair during the organisation’s 25th year. Not only have we surpassed our target of reaching £33m in Share Capital, but demand for our lending has continued to increase. With 177 customers globally, we recruited additional staff overseas and created a UK lending team responsible for customers in Europe, North America, Asia and Pacific Rim. Shortlisted for 13 awards, and winner of the prestigious Third Sector Award in the Enterprise category, we can be sure that this commemorative year has reflected the progress made since our inception in 1990. We have made payments of £51.4m, reaching over 400 organisations in 58 countries. We have also continued to increase product diversity, seeing a growth in lending to producers trading in fresh fruit, nuts, and cocoa. Our biennial member survey showed a continuing trend of our members’ fair trade motivation, and this year highlighted their interest in environmental issues. For the first time, members will be able to make investment transactions online. We are proud that Shared Interest was the first organisation to receive the Community Shares Standard for open share offers. Designed to bring greater standardisation into the community shares market, it is an honour to carry this accreditation. In response to our 25th anniversary challenge to raise our profile and investment levels, our volunteers and ambassadors have taken part in more events than ever before; a huge thank you to everyone involved. Shared Interest Society Chair, Mary Coyle
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WHAT WE DO We are Shared Interest; a community benefit society of more than 9,000 members with a mutual goal of investing in a fairer world. Our members have an equal voice and vote regardless of account size and their collective investment of £33m means that our financial services reach even the most remote areas of the world. With our headquarters in Newcastle upon Tyne, we have an overseas team in Kenya, Ghana, Peru, and Costa Rica. This means that we have the local knowledge needed to help producers in rural or marginalised communities. John Dossou from the Ghana office said: “Each year we strengthen our bond with customers, demonstrating Shared Interest’s commitment to finance with a human face.” Shared Interest has been awarded the Queens Award for Enterprise twice in the category of Sustainable Development. This year, we achieved the Third Sector Enterprise Award, and won the title of ‘most ethical finance institution working in the fair trade sector’ from the Price Project. WATCH THE STORY OF OUR PAST 25 YEARS HERE
www.shared-interest.com/25years
“ Each year we strengthen our bond with customers, demonstrating Shared Interest’s commitment to finance with a human face.”
SHARED INTEREST SOCIETY ANNUAL REVIEW 2015 5
Gourmet Gardens, Vanilla, Uganda
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Andean Naturals, Quinoa, Bolivia
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WHAT WE STAND FOR 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 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.
We will conduct our business in a manner which reflects the principles of love, justice and stewardship. 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
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2014-15 saw net investment growth of £2m, resulting in a closing share capital of £33.3m. Member numbers increased over the year following regular promotional activity and the launch of an online application process. Our membership has diversified and now includes faith groups, fair trade partnerships, businesses, schools, community organisations and individuals.
OUR LOYAL INVESTORS Richard Richard has been an investor since Shared Interest was founded in 1990. Richard said: “I became an investor 25 years ago, through my wife’s involvement in Traidcraft. We lived in Nairobi during the sixties because of my job as an architect, and saw the struggles people faced in making a living. We both liked the idea that trade could be fair as well as free. “You only have to read the quarterly newsletter to see how valuable it is to invest in small producers who may struggle to find finance elsewhere.”
arterly “You on ly have to read thvaeluqu newsletter to see how able it is to invest.”
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This year we organised events throughout the UK, to enable investors to meet together, ask questions and hear from producers. Some of our investors sit on our Council as representatives of our membership. W ATCH A FILM FEATURING OUR LOYAL INVESTORS
www.shared-interest.com/investors
Liz Liz has been investor since 2008 and a randomly selected member of Council since 2013. She first heard about Shared Interest from finance organisation, Gaeia. Liz says: “I first heard about Shared Interest when I inherited a little pot of money in 2008. I was very interested in ethical investments and wanted my money to do some good in the world. My financial advisor recommended Shared Interest and I thought it chimed perfectly with my intentions for the money. “Investing in Shared Interest is a powerful thing and, as a member, you get to hear directly from the people who benefit. This gives me enormous satisfaction that what we do is unique, sustainable and fair.”
“ I wanted to use the money that was given to me with love to help others in a sustainable way.”
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We are proud of our network of 77 volunteers, stretched right across the UK. This year, our volunteers attended almost 80 events, provide literature at over 120 venues, and gave almost 700 hours of their own time.
OUR DEDICATED VOLUNTEERS Diana Diana has been an investor for almost 20 years and decided to become an ambassador in February this year. She says: “I retired a year ago, partly to free up time for volunteering and campaigning. I’ve visited Malawi and Tanzania in the past, and found the global range of Shared Interest very exciting. It’s a great cause and I’ve been impressed with the organisation – efficient but caring. “I love having a part, however tiny, in something so worthwhile and truly life-changing. Only nine months into my role, I feel I’ve hardly got off the ground myself yet, but look forward to contributing more.”
“ I love having a part, however tiny, in something so worthwhile and truly life-changing.”
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We refer to some of our volunteers as ambassadors as they focus specifically on raising awareness of Shared Interest. However, whether it is helping with mailings, inputting data, or talking to potential investors, each volunteer plays a vital role. R EAD MORE ABOUT OUR VOLUNTEERS
www.shared-interest.com/volunteers
Bill Bill has been an ambassador for 18 months, although he has invested in Shared Interest for over 20 years. He said: “I decided to become an ambassador as I had more time on my hands and wanted to make a further contribution. I find the work of Shared Interest fascinating and love talking about it to other people. Having travelled to Chile, Ethiopia, and India, I have seen the challenges faced in disadvantaged communities and would like to think that I am helping in some small way.”
“I have seen the challengesiesfacanedd in disadvantaged communit I am would like to think that helping in some small way.”
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LENDING Shared Interest Society lends funds to buyer and producer organisations. We provide loans and credit services to businesses worldwide that are registered with either Fairtrade International (FLO) or members of the World Fair Trade Organisation (WFTO), The British Association for Fair Trade Shops and Suppliers (BAFTS), Small Producer Seal (SPP), or the Fairtrade Federation. These businesses range from sole trader handcraft organisations to large scale coffee co-operatives and fair trade buyers. The seasonality of different products and the spread of lending across regions, enables us to use our Share Capital effectively. For example, when the coffee harvest in South America finishes, the Central American harvest begins, meaning that their borrowing peaks never coincide. This allows us to commit to lend more money than our capital value total. However to control the risk, we set a prudential limit on approved facilities of 125% of our Share Capital and reserves.
Average lending to customers 2011-2015
2011 2012 2013 2014 2015
PRODUCER
BUYER
£5,701,530 £6,266,513 £6,947,219 £8,530,062 £10,828,664
£11,300,449 £10,873,284 £8,994,711 £5,812,330 £5,697,578
TOTAL
£17,001,979 £17,139,797 £15,941,930 £14,342,392 £16,526,242
Note: the majority of our lending and overseas payments are made in USD, so the exchange rate with sterling has a significant impact on the lending figures above. To see the exchange rate per year, please refer to page 17.
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COFFEE
47%
TEA
1%
GARMENTS
4%
OUR PRODUCT MIX In 2015 we have increased product diversity, seeing a growth in lending to producers trading in fresh fruit, nuts, and cocoa.
OTHER
16%
FRUIT
6%
COCOA
NUTS
11%
7%
HANDCRAFTS
10%
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In 2015 we lent money to producer groups representing
150 247,348 93,478 individuals, including
women.
CEPICAFE, Cocoa, Peru
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LENDING Broadly speaking, our lending falls into two categories: funds lent directly to fair trade producer groups in developing countries, and funds lent to fair trade wholesale or retail businesses in developed countries (buyers). This year we made an overall total of £51.4m in payments – an increase of £3.4m on last year. As loans are repaid, we are able to lend the money out again. Last year we lent our Share Capital one and a half times. Lending directly to producers was the highest in the history of Shared Interest. We have continued to diversify the products within our lending portfolio to reduce our risk exposure in coffee. As a result we have seen growth in lending to producers trading in fresh fruit, nuts and cocoa. Even though we are working to increase our direct producer lending, we will keep lending to fair trade buyers such as Traidcraft and Equal Exchange Inc because through them our investors’ capital can reach producer groups who would not be able to borrow directly from us. READ MORE ABOUT OUR LENDING
www.shared-interest.com/lending
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FINANCIAL OVERVIEW
Raymisa, Alpaca Wool, Peru
In 2015 we made payments of over
£51.4m
The 2014-15 financial year saw total income rise by 6.7% with another fall in deposit income outweighed by strong growth in lending income. The amount lent to customers was at a five-year high at the year-end, at just under £25m, reflecting a strong performance throughout the year. Finance costs have increased as the unit price of borrowing currency to lend to customers and the volume of this has increased during the year. We have also invested in the staff team and the budget for generating investment in the Society, as we grow. We have taken some one-off costs this year, relating to a change of head office location within Newcastle upon Tyne, amounting to about £60k but this will lead to savings in coming years. The net result after tax and interest, and allowing for a charge for bad and doubtful debt of £457k, is a surplus of £87k. We are once again able to pay interest to members at 0.5%. The Board of Directors currently includes two executive directors and six non-executives. Its role is to determine and monitor the implementation of strategy for the Society, make sure that risks are managed appropriately and provide a proper account to members of the financial and social results of the Society.
DAVID BOWMAN
PATRICIA ALEXANDER
MARTIN KYNDT
PAUL CHANDLER
PAULINE CAMERON
MARY COYLE
KEITH SADLER
TIM MORGAN
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PROFIT AND LOSS 2015 Credit Charges Bank Deposit Interest Other Total
2011 £’000
2012 £’000
2013 £’000
2014 £’000
2015 £’000
1,684 636 102 2,422
1,797 784 68 2,649
1, 611 903 89 2,603
1,799 839 103 2,741
2,164 683 77 2,924
Finance Costs Provision for Doubtful Debts Operating Costs Corporation Tax Profit before Members’ Interest and donation Members’ Interest Donation £/$ Exchange Rate at the year-end
119 670 1,545 15 73 - - 1.56
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
BALANCE SHEET 2015 Tangible Fixed Assets Investments Lent to Customers Cash Debtors Total Assets Creditors < I Year Creditors > I Year
31 101 19,722 10,165 332 30,351 581 40
120 90 18,103 13,631 382 32,326 529 1,340
97 93 16,490 16,177 458 33,315 544 1,340
57 94 21,063 13,756 362 35,332 542 1,340
35 95 24,933 11,702 381 37,146 649 975
Total Capital Reserve for Lending Loss Proposed share interest Proposed donation to Shared Interest Foundation Profit and Loss Total
29,730 28,208 766 - - 756 29,730
30,457 28,669 766 143 - 879 30,457
31,431 29,454 766 112 - 1,099 31,431
33,450 31,255 766 115 50 1,264 33,450
35,522 33,289 766 116 1,351 35,522
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 figures are for the Society only and we have not shown here the combined result (“Consolidation”) with Shared Interest Foundation.
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.
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GLOBAL REACH • Bolivia COINACAPA is a co-operative of brazil nut gatherers in Bolivia. As the co-operative collects the nuts in December, they use a Shared Interest export credit facility to provide working capital earlier in the harvest season. Gatherers can spend weeks in the forest gathering nuts falling from trees up to 160ft tall – the nuts are encased in a ‘coconut’.
•
• •
One member of COINACAPA says: ‘‘Since we started the co-operative, it’s as if we’ve gained our freedom. It feels like we’re not slaves any more. We have more income, more work and more dignity.”
Peru As gold miners sit at the bottom of the supply chain, they are offered very little for what they extract, although the final product can sell for a fortune. Nestled in the central mountains of Peru, Aurelsa is a Fairtrade gold organisation looking to change this. A Shared Interest lending facility is helping them with mineral extraction and gold processing.
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WHERE OUR INVESTORS’ FUNDS ARE SUPPORTING FAIR TRADE
•
Fair trade buyer organisations
•
Producer groups
•
Our offices
Central Asia One of only two certified Fairtrade organisations in Central Asia, Vega Plus is a walnut producer based in Kyrgyzstan.
•
Working with co-operatives, Vega Plus provides the link between the forest gatherers and importer, Intersnack. Thanks to a Shared Interest lending facility, Vega Plus is able to pay the farmers when the nuts are harvested and ensure they can fulfil their orders on time.
Ivory Coast COCOPACK in Ivory Coast is the first African coconut organisation to achieve Fairtrade certification, and is the first coconut producer Shared Interest has financed. COCOPACK’s Renaud Goirand said: “We are delighted to have received the loan from Shared Interest. This will enable us to solve a number of challenges. Buying a tractor will improve efficiency in the coconut plantation and also help us upgrade our fruit processing plant.”
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TradeAID Integrated, Basket Weavers, Ghana
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LOOKING TO THE FUTURE Our ability to reach out to even the most marginalised communities in the developing world is helped greatly by our in-country presence. To meet this increased demand for our lending, we have recruited additional staff overseas to focus on helping organisations access fair finance. Continuing development of our regional teams is vital as we aim to carry out more direct lending to producers and diversify further the commodities our finance supports. We continue to keep members at our heart. In response to requests for more regional meet-ups, we are planning a series of member events throughout the UK. We will travel to Edinburgh, York, London, and Oxford, and hold our 2016 AGM in Newcastle. The need for Share Capital has never been higher and we aim to raise our total by ÂŁ2.5m in order to reach ÂŁ35.5m by the end of the financial year.
Shared Interest Society Pearl Assurance House 7 New Bridge St West Newcastle upon Tyne NE1 8AQ
T: (0)191 233 9102 F: (0)191 233 9110 info@shared-interest.com www.shared-interest.com @SharedInterest The complete Directorsâ&#x20AC;&#x2122; Report and Accounts and the Social Accounts are available to download from our website. Shared Interest Society Ltd is registered with the Registrar of Mutual Societies, number 27093R Printed on paper from sustainable well managed sources certified by the Forest Stewardship Council