MANCHESTER CREDIT UNION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Registration No. 213400
MANCHESTER CREDIT UNION LIMITED
CREDIT UNION INFORMATION
FCA number
213400
Registered Society number
IP235C
Directors
B James
J Lee
C Moore
M Suringar
D Bodey
A McBeath
J Coverley
H Tshomba
M Franklin
Secretary
M Suringar
Registered office
24 Queen Street
Manchester
M2 5HX
Auditor
Alexander Sloan
180 St Vincent Street
Glasgow
G2 5SG
MANCHESTER CREDIT UNION LIMITED
CONTENTS
Page
Directors' report
1 - 2
Independent auditor's report
3 - 5
Revenue account
6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 25
MANCHESTER CREDIT UNION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 1 -
B James
J Lee
C Moore
M Suringar
D Bodey
A McBeath
J Coverley
H Tshomba
M Franklin
Principal risks and uncertainties
MANCHESTER CREDIT UNION LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 2 -
26/2/2024
MANCHESTER CREDIT UNION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MANCHESTER CREDIT UNION LIMITED
- 3 -
Opinion
We have audited the financial statements of Manchester Credit Union Limited (the 'credit union') for the year ended
30 September 2023 which comprise the revenue account, the statement of comprehensive income, the balance
sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting framework that has been applied in
their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial
Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting
Practice).
In our opinion the financial statements:
· give a true and fair view of the state of the credit union's affairs as at 30 September 2023 and of its surplus for
the year then ended;
· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
· have been prepared in accordance with the requirements of the Credit Union Act 1979 and the Co-operative
and Community Benefit Societies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) 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 the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard, 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
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the credit union's ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements
and our auditor's report thereon. The Directors are responsible for the other information contained within the annual
report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 Co-operative and Community Benefit Societies Act 2014
In our opinion, based on the work undertaken in the course of our audit:
· the information given in the Directors' report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
· the Directors' report has been prepared in accordance with applicable legal requirements.
MANCHESTER CREDIT UNION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MANCHESTER CREDIT UNION LIMITED
- 4 -
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Co-operative and Community Benefit
Societies Act 2014 requires us to report to you if, in our opinion:
· proper books of account have not been kept by the credit union in accordance with the requirements of the
legislation; or
· a satisfactory system of control over transactions has not been kept by the credit union in accordance with the
requirements of the legislation; or
· the Revenue Account and Balance Sheet are not in agreement with the books of account of the credit union; or
· we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors' responsibilities statement, 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
the Directors 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
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 have 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 (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, was as follows:
· the engagement partner ensured that the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
· we identified the laws and regulations applicable to the credit union through discussions with management,
and from our wider knowledge and experience of the sector;
· we focused on specific laws and regulations which we considered may have a direct material effect on the
financial statements or the operations of the credit union, including Corporate and Community Benefit
Society legislation and taxation legislation;
· we assessed the extent of compliance with the laws and regulations identified above through making
enquiries of management; and
· identified laws and regulations were communicated within the audit team regularly and the team remained
alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the credit union’s financial statements to material misstatement, including
obtaining an understanding of how fraud might occur, by:
· making enquiries of management as to where they considered there was susceptibility to fraud, their
knowledge of actual, suspected and alleged fraud; and
· considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and
regulations.
MANCHESTER CREDIT UNION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MANCHESTER CREDIT UNION LIMITED
- 5 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
To address the risk of fraud through management bias and override of controls, we:
· performed analytical procedures to identify any unusual or unexpected relationships;
· tested journal entries to identify unusual transactions;
· assessed whether judgements and assumptions made in determining the accounting estimates set out in
Note 2 were indicative of potential bias;
· investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but were not limited to:
· agreeing financial statement disclosures to underlying supporting documentation;
· reading the minutes of meetings of those charged with governance; and
· enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and
regulations are from financial transactions, the less likely it is that we would become aware of non-compliance.
Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to
enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may
involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the credit union’s members, as a body, in accordance with the Co-operative and
Community Benefit Societies Act 2014. 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.
Alexander Sloan
.........................
Accountants and Business Advisers
Statutory Auditor
180 St Vincent Street
Glasgow
G2 5SG
26/2/2024
MANCHESTER CREDIT UNION LIMITED
REVENUE ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 6 -
2023
2022
Notes
£
£
Loan interest receivable and similar income
3
2,835,029
2,685,255
Interest payable and similar charges
4
(271,601)
(58,689)
Net interest receivable
2,563,428
2,626,566
Fees and commissions receivable
5
6,449
8,084
Fees and commissions payable
6
(2,601)
(5,624)
Net fees and commissions
3,848
2,460
Other operating income
7
1,929
11,956
Administrative expenses
8
(1,368,269)
(1,299,093)
Depreciation and amortisation
(24,198)
(19,091)
Other operating expenses
9
(158,410)
(115,746)
Impairment on loans for bad and doubtful debts
15
(640,492)
(683,856)
Surplus before taxation
377,836
523,196
Corporation tax
12
(18,758)
(3,935)
Surplus for the year
359,078
519,261
The Revenue Account has been prepared on the basis that all operations are continuing operations.
The notes on pages 11 to 25 form an integral part of these financial statements.
MANCHESTER CREDIT UNION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 7 -
2023
2022
£
£
Surplus for the year
359,078
519,261
Other comprehensive income
-
-
Total comprehensive income for the year
359,078
519,261
The notes on pages 11 to 25 form an integral part of these financial statements.
MANCHESTER CREDIT UNION LIMITED
BALANCE SHEET
AS AT 30 SEPTEMBER 2023
- 8 -
2023
2022
Notes
£
£
Assets
Cash and balances at central banks
13
310
310
Loans and advances to banks
13
4,155,827
5,553,646
Loans and advances to customers
14
12,426,661
11,616,028
Tangible assets
16
60,657
55,037
Prepayments
415,885
135,616
Total assets
17,059,340
17,360,637
Liabilities and reserves
Customer accounts
17
13,416,990
14,076,070
Other liabilities
18
189,372
190,667
13,606,362
14,266,737
General reserve
24
3,452,978
3,093,900
Total reserves
24
3,452,978
3,093,900
Total liabilities and reserves
17,059,340
17,360,637
The financial statements were approved by the Board of Directors and authorised for issue on ......................... and
are signed on its behalf by:
..............................
B James
Director
..............................
M Suringar
Secretary
..............................
A McBeath
Chair
The notes on pages 11 to 25 form an integral part of these financial statements.
26/2/2024
MANCHESTER CREDIT UNION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 9 -
General
Reserve
£
Balance at 1 October 2021
2,574,639
Year ended 30 September 2022:
Surplus and total comprehensive income for the year
519,261
Other movements
-
Balance at 30 September 2022
3,093,900
Year ended 30 September 2023:
Surplus and total comprehensive income for the year
359,078
Balance at 30 September 2023
3,452,978
The notes on pages 11 to 25 form an integral part of these financial statements.
MANCHESTER CREDIT UNION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Surplus for the period
359,078
519,261
Depreciation and amortisation
10
24,198
19,091
Corporation tax expenses
12
18,758
3,935
Provision movement
15
739,856
709,563
Interest income on loans
3
(2,744,376)
(2,664,544)
Distribution on members shares
4
271,601
58,689
(1,689,963)
(1,873,266)
Working capital adjustments
Change in other receivables and
prepayments
(280,269)
(66,017)
Change in other liabilities
(16,118)
36,518
(296,387)
(29,499)
Cash flows from changes in operating
assets and liabilities
Loan repayments less loans advanced
14
1,193,887
(102,951)
Customer balance cash movement
(930,681)
301,182
Movement on funds on deposit
13
250,000
(1,000,000)
513,206
(801,769)
Corporation tax paid
(3,935)
(900)
Net cash flow from operating activities
(1,118,001)
(2,186,173)
Investing activities
Purchase of tangible fixed assets
16
(29,818)
(27,235)
Net cash used in investing activities
(29,818)
(27,235)
Net decrease in cash and cash equivalents
(1,147,819)
(2,213,408)
Cash and cash equivalents at beginning of year
3,043,956
5,257,364
Cash and cash equivalents at end of year
1,896,137
3,043,956
The notes on pages 11 to 25 form an integral part of these financial statements.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 11 -
1
Accounting policies
Background information
Manchester Credit Union Limited is registered in the UK as a society under the Co-operative and Community
Benefit Societies Act 2014, whose principal activity is to operate as a credit union, within the meaning of the
Credit Union Act 1979. The credit union is authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation Authority.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Co-operative
and Community Benefit Societies Act 2014.
The financial statements are prepared in sterling, which is the functional currency of the credit union.
Monetary amounts in these financial statements are rounded to the nearest pound.
The financial statements have been prepared under the historical cost convention, modified to include certain
financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
At the time of approving the financial statements, the Directors have a reasonable expectation that the credit
union has adequate resources to continue in operational existence for the foreseeable future. Thus the
Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Income
Fees and charges receivable either arise in connection with a specific transaction, or accrue evenly over the
year. Income relating to individual transactions is recognised when the transaction is complete.
Interest receivable on loans to members and bank interest are recognised using the effective interest rate
basis and are calculated and accrued on a daily basis.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of
depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives
on the following bases:
Fixture and fittings
15% reducing balance
Computer equipment
33% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale
proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the credit union reviews the carrying amounts 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.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 12 -
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 pre-tax 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 (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An
impairment loss is recognised immediately in the revenue account, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 (or cash-
generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in the revenue account, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Cash at bank and in hand
Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks
and other short-term liquid investments with original maturities of less than 8 days.
1.7
Financial instruments
The credit union has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section
12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments. Financial instruments
are recognised in the credit union's balance sheet when the credit union becomes party to the contractual
provisions of the instrument.
Basic financial assets
Basic financial assets, which include loans to members and bank balances, are initially measured at
transaction price including transaction costs and are subsequently carried at amortised cost using the
effective interest method unless the arrangement constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts discounted at a market rate of interest.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or
joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are
subsequently carried at fair value and the changes in fair value are recognised in the revenue account, except
that investments in equity instruments that are not publicly traded and whose fair values cannot be measured
reliably are measured at cost less impairment.
Impairment of financial assets
The credit union assesses, at each balance sheet date, if there is objective evidence that any of its loans to
members are impaired. The loans are assessed collectively in groups that share similar credit risk
characteristics, because no loans are individually significant. In addition, if, during the course of the year,
there is objective evidence that any individual loan is impaired, a specific loss will be recognised. Any
impairment losses are recognised in the revenue account, as the difference between the carrying value of the
expected cash flows.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or
are settled, or when the credit union transfers the financial asset and substantially all the risks and rewards of
ownership to another entity, or if some significant risks and rewards of ownership are retained but control of
the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into.
Basic financial liabilities
Basic financial liabilities, including members deposits are classified as debt and are initially recognised at
transaction price. Debt instruments are subsequently carried at amortised cost, using the effective interest
rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at
transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at
fair value through the revenue account. Debt instruments may be designated as being measured at fair value
through the revenue account to eliminate or reduce an accounting mismatch or if the instruments are
measured and their performance evaluated on a fair value basis in accordance with a documented risk
management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the credit union’s contractual obligations expire or are discharged
or cancelled.
1.8
Taxation
The tax expense for the period comprises current tax. Tax is recognised in the revenue account, except that a
change attributable to an item of income or expense recognised as other comprehensive income is also
recognised directly in other comprehensive income.
Current tax
The tax currently payable is based on taxable surplus for the year. Taxable surplus differs from the surplus as
reported in the revenue account because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The credit union’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting end date.
1.9
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense. The cost of any
unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the credit union is demonstrably
committed to terminate the employment of an employee or to provide termination benefits.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to income on a
straight line basis over the term of the relevant lease except where another more systematic basis is more
representative of the time pattern in which economic benefits from the lease asset are consumed.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 14 -
2
Judgements and key sources of estimation uncertainty
In the application of the credit union’s accounting policies, the Directors are required to make judgements,
estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised where the revision affects only that
period, or in the period of the revision and future periods where the revision affects both current and future
periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying
amount of assets and liabilities are as follows.
Loan Impairment
The credit union assesses, at each reporting date, if there is objective evidence that any of its loans to
customers are impaired. The loans are assessed collectively in groups that share similar credit-risk
characteristics. In addition, if, during the course of the year, there is objective evidence that any individual loan
is impaired, a specific loss will be recognised. Any impairment losses are recognised in the Revenue Account,
as the difference between the carrying value of the loan and the net present value of the expected cash flows.
3
Interest receivable and similar income
2023
2022
£
£
Interest income on loans
2,744,376
2,664,544
Interest income on bank deposits
90,653
20,711
2,835,029
2,685,255
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 15 -
4
Interest payable and similar charges
As non-deferred shares are classed as a liability the dividend on these shares is classed as interest
for accounting purposes under FRS 102:
2023
2022
Interest and similar charges during the period
£
£
Dividend on dividend bearing shares
271,601
58,689
271,601
58,689
The distributions on member's shares represents distributions paid in the year which were approved at the
last Annual General Meeting. The dividend rates approved at the previous AGM were:
2023
2022
Dividend rates paid during year
%
%
Ordinary share dividend
2.00
0.50
At the forthcoming Annual General Meeting the Directors will propose the following dividends based on the
results for the current year. If approved these dividends will be included as a cost in next year's financial
statements once they have been paid.
2023
2022
Dividend rates to be proposed at the Annual General Meeting
%
%
Ordinary share dividend
4.00
2.00
5
Fees and commissions receivable
2023
2022
£
£
Service charges
6,449
8,084
6
Fees and commissions payable
2023
2022
£
£
Bank charges
2,601
5,624
7
Other operating income
2023
2022
£
£
Other income
1,929
11,956
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 16 -
8
Administrative expenses
2023
2022
Notes
£
£
Staff costs
11
671,441
645,718
Insurance costs
89,016
85,175
External auditor's remuneration
8,347
8,010
Member communication and advertising
63,004
61,655
Legal, professional and credit control costs
296,356
283,589
Computer and software expenses
184,070
160,869
Travel costs
1,731
2,892
General administration costs
54,304
51,185
1,368,269
1,299,093
9
Other operating expenses
2023
2022
£
£
Regulatory costs
1,699
2,548
Costs of occupying offices
156,711
113,198
158,410
115,746
10
Operating surplus
2023
2022
Operating surplus for the year is stated after charging:
£
£
Fees payable to the credit union's external auditor for the audit of the financial
statements
8,347
8,010
Depreciation of owned tangible fixed assets
24,198
19,091
Operating lease charges
132,926
97,826
11
Employees
The average monthly number of persons (including Directors) employed by the credit union during the year
was:
2023
2022
Number
Number
Administration and Support
22
24
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
11
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
602,680
585,803
Social security costs
49,900
49,151
Pension costs
18,861
10,764
671,441
645,718
12
Corporation tax
2023
2022
£
£
Current tax
UK corporation tax on taxable surplus for the current period
18,758
3,935
The actual charge for the year can be reconciled to the expected charge for the year based on the surplus or
deficit and the standard rate of tax as follows:
2023
2022
£
£
Surplus before taxation
377,836
523,196
Expected tax charge based on the standard rate of corporation tax in the UK
of 25.00% (2022: 19.00%)
94,459
99,407
Tax effect of income/expenditure not taxable in determining taxable surplus
(75,701)
(95,472)
Taxation charge for the year
18,758
3,935
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 18 -
13
Loans and advances to banks
2023
2022
£
£
Cash held at banks
1,895,827
3,043,646
Bank deposits
2,260,000
2,510,000
Loans and advances to banks
4,155,827
5,553,646
Cash in hand
310
310
Total cash and bank balances
4,156,137
5,553,956
Loans split by repayment period
Cash and cash equivalents
1,896,137
3,043,956
Amounts maturing in over 8 days
2,260,000
2,510,000
4,156,137
5,553,956
14
Loans and advances to customers
2023
2022
Notes
£
£
Loan movement
Opening balances
13,168,662
11,156,757
Interest on loans
2,744,376
2,664,544
Loans advanced during the period
14,124,116
14,511,729
Loans repaid during the period
(15,318,003)
(14,408,778)
Loans derecognised
(782,195)
(755,590)
13,936,956
13,168,662
Loan impairment provisions
15
(1,510,295)
(1,552,634)
12,426,661
11,616,028
Loans split by repayment period
Capital repayments due within 1 year
10,899,500
10,464,040
Capital repayments due after 1 year
3,037,456
2,704,622
Loan impairment provisions
15
(1,510,295)
(1,552,634)
12,426,661
11,616,028
Loans split by type
Loans to members
13,936,956
13,168,662
Loan impairment provisions
15
(1,510,295)
(1,552,634)
12,426,661
11,616,028
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 19 -
15
Loan impairment
Write off
Arrears
Total
Provision
Provision
Provisions
£
£
£
Loan impairment provision
Opening balances
2,430
1,550,204
1,552,634
Provision movement
(2,430)
(39,909)
(42,339)
Closing balances
-
1,510,295
1,510,295
Under Financial Reporting Standard 102 (FRS 102), the criteria for derecognising (writing off a loan) is
different from when the credit union would write off the loan for internal purposes. Loans written off by the
Board that do not meet the criteria in FRS 102 for being derecognised are not written off in these financial
statements. The loans the credit union feel should be written off but which do not meet the criteria in FRS 102
for being derecognised are fully provided in the write off provision which is shown above. As a result there is
no net effect on the surplus or net assets of the credit union from this requirement of FRS 102.
2023
2022
Notes
£
£
Impairment revenue account charge
Impairment provision movement
(42,339)
(46,027)
Bad debts derecognised
14
782,195
755,590
Bad debts recovered
(99,364)
(25,707)
640,492
683,856
16
Tangible fixed assets
Fixture and fittings
£
Cost
At 1 October 2022
381,335
Additions
29,818
At 30 September 2023
411,153
Depreciation and impairment
At 1 October 2022
326,298
Depreciation charged in the year
24,198
At 30 September 2023
350,496
Carrying amount
At 30 September 2023
60,657
At 30 September 2022
55,037
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 20 -
17
Customer accounts
2023
2022
£
£
Deposit movement
Opening balances
14,076,070
13,716,199
Deposited during the period
31,270,566
28,380,118
Withdrawn during the period
(31,929,646)
(28,020,247)
13,416,990
14,076,070
Deposits split by type
Standard dividend bearing member shares
12,617,342
13,158,483
Corporate dividend bearing shares
666,233
799,977
Juvenile member deposits
133,415
117,610
13,416,990
14,076,070
18
Other liabilities
2023
2022
£
£
Corporation tax
18,758
3,935
Other creditors
77,239
64,115
Accruals and deferred income
93,375
122,617
189,372
190,667
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to revenue account in respect of defined contribution schemes
18,861
10,764
The credit union operates a defined contribution pension scheme for all qualifying employees. The assets of
the scheme are held separately from those of the credit union in an independently administered fund.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 21 -
20
Financial risk management
The credit union manages its shares and loans so that it earns income from the margin between interest
receivable and interest payable (including dividends paid).
The main financial risks arising from the activities of the credit union are credit risk, liquidity risk and market
risk. The Board reviews and agrees policies for managing each of these risks which are summarised below:
Credit risk
Credit risk is the risk that a borrower will default on their contractual obligations relating to repayment to the
credit union, resulting in financial loss to the credit union. In order to manage this risk the Board approves the
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 the likelihood of
repayment has changed. The credit union also monitors its banking arrangements for credit risk.
Liquidity risk
The policy of the credit union is to maintain sufficient funds in liquid form at any time to ensure that it can meet
its liabilities as they fall due and meet the liquidity ratios set by the regulators. The objective of the policy is to
provide a degree of protection against any unexpected developments that may arise.
Market risk
Market risk generally comprises of interest rate risk, currency risk and other price risk. The main risks
impacting the credit union are set out below:
Interest rate risk: The main interest rate risk for the credit union arises between the interest rate exposure on
loans, bank deposits and shares that form an integral part of a credit union's operations. The credit union
considers rates of interest receivable when deciding on proposed dividend rates. Dividend rates are based on
the historical results of the credit union and the credit union's strategic plans. The credit union does not use
interest rate options to hedge its own positions.
Foreign Currency Risk: All transactions are carried out in sterling and therefore the credit union is not exposed
to any form of foreign currency risk.
Other price risk: The credit union only holds investments in government securities and those with credit
institutions that meet the criteria of Chapter 6 of the PRA rulebook. The credit union monitors the investments
throughout the year.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 22 -
21
Credit risk on lending
The credit union holds the following security against its loans to members:
2023
2022
£
£
Security for loans
Attached shares
1,717,739
1,806,985
The carrying amount of the loans to members represents the credit union's maximum exposure to credit risk.
The following table provides information on the credit quality of loan repayments. Where loans are not
impaired it is expected that the amounts repayable will be received in full. The status 'past due' includes any
loan where payments are in arrears. The amount included is the entire loan amount and not just the overdue
amount.
2023
2022
£
£
Loans not individually impaired
Not past due
11,882,097
11,359,237
Up to 3 months past due
885,488
705,745
12,767,585
12,064,982
Loans individually impaired
Between 3 and 6 months past due
256,841
317,736
Between 6 months and 1 year past due
306,878
255,270
Over 1 year past due
605,652
528,244
Individually impaired and written off for internal purposes
-
2,430
1,169,371
1,103,680
Total loans
13,936,956
13,168,662
Impairment allowance
(1,510,295)
(1,552,634)
12,426,661
11,616,028
22
Credit risk on bank and investments
The credit union invests funds not yet actively deployed in the following investments:
2023
2022
£
£
Bank accounts
1,895,827
3,043,646
Bank term deposits
2,260,000
2,510,000
4,155,827
5,553,646
The credit union believes the full amount of these investments is recoverable.
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 23 -
23
Interest rates on financial instruments
The following table shows the interest earned during the year divided by the average loan balance and the
dividend/interest paid during the year divided by the average share balance. The average balance is taken as
the average of the opening and closing balances.
2023
2022
Rates
received/incur
red
Rates
received/incur
red
Amount
in year
Amount
in year
£
%
£
%
Financial assets
Loans to members
13,936,956
20.25%
13,168,662
21.91%
Loans and advances to banks
4,155,827
1.87%
5,553,646
0.34%
18,092,783
18,722,308
Financial liabilities
Juvenile deposits
(133,415)
-
(117,610)
-
Dividend bearing shares
(13,283,575)
1.99%
(13,958,460)
0.42%
(13,416,990)
(14,076,070)
24
Reserves
General Reserve
The general reserve represents the base capital of the credit union and is the retained surpluses and deficits
which have not been allocated to another specific reserve.
25
Capital
The credit union classes all of its reserves as capital. The credit union manages its reserves through its
financial and budgeting policies and procedures. The Prudential Regulation Authority sets out requirements
for the capital ratio that the credit union must maintain. The ratio is calculated after proposed dividends. The
credit union's compliance with the ratio at the year end is set out below:
2023
2022
%
%
Actual capital to asset ratio
17.08%
16.25%
Regulatory requirement
Base capital requirement
6.24%
6.27%
Total capital requirement
6.24%
6.27%
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 24 -
26
Analysis of changes in net funds
1 October
2022
Cash flows
30 September
2023
£
£
£
Cash and cash equivalents
3,043,956
(1,147,819)
1,896,137
Bank deposits maturing in over 8 days
2,510,000
(250,000)
2,260,000
5,553,956
(1,397,819)
4,156,137
27
Financial commitments, guarantees and contingent liabilities
The credit union participates in the Financial Services Compensation Scheme (FSCS) which provides
protection for its members up to the level of protection offered by the FSCS. As a result of the credit union's
participation it has a contingent liability, which cannot be quantified, in respect of future contributions to the
FSCS, as required by the Financial Services and Markets Act 2000.
28
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments
under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
140,745
83,869
Between two and five years
417,533
269,475
In over five years
-
33,913
Total lessee operating lease commitment
558,278
387,257
MANCHESTER CREDIT UNION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 25 -
29
Related party transactions
The credit union classes the Directors and members of the senior management team as key management.
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Wages and salaries
186,393
206,053
Transactions with key management
Balances held by members of key management and their close family members in the credit union are set out
below. Loans to key management and their close family members are on standard terms and conditions.
2023
2022
£
£
Loans to key management and their close family
30,161
15,574
Shares held by key management and their close family
99,322
54,429
Other related party transactions
One of the Directors is also a Director of Busy Bee Lottery. Busy Bee Lottery is set up to provide the
members' lottery for the Credit Union. During the year, the Credit Union paid £10,314 (2022: £nil) to Busy Bee
Lottery for ticket sales. At the year end, there is a sum of £1,104 (2022: £nil) included within other creditors, to
be paid to external charities from the Lottery.
During the year, the credit union incurred transactions amounting to £300 (2022: £1,216) with companies that
have common directorships with the credit union.
The following page does not form part of the statutory accounts
MANCHESTER CREDIT UNION LIMITED
DETAILED REVENUE ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2023
2022
Notes
£
£
Income
Interest income on loans
3
2,744,376
2,664,544
Interest income on bank deposits
3
90,653
20,711
Fees and commissions receivable
5
6,449
8,084
Other income
7
1,929
11,956
2,843,407
2,705,295
Expenditure
Staff costs
11
671,441
645,718
Insurance costs
89,016
85,175
Auditors remuneration
8,347
8,010
Member communication and advertising
8
63,004
61,655
Legal, professional and credit control costs
8
296,356
283,589
Computer and software expenses
8
184,070
160,869
Travel costs
8
1,731
2,892
Bank charges
6
2,601
5,624
General administration costs
8
54,304
51,185
Regulatory costs
9
1,699
2,548
Costs of occupying offices
9
156,711
113,198
Depreciation and amortisation
10
24,198
19,091
Impairment on loans for bad and doubtful debts
15
640,492
683,856
2,193,970
2,123,410
Surplus before taxation
649,437
581,885
Corporation tax
12
(18,758)
(3,935)
630,679
577,950
Distributions
(271,601)
(58,689)
Surplus for the year
359,078
519,261