TREASURER’S STATEMENT AT AGM ON WEDNESDAY 20 FEB 2008.

 

In presenting this 6th report on the annual accounts of STADCU, I am pleased to report that there has been good rate of growth all round. Consider the following key statistics as at 30.09.07 and comparisons with just a year earlier

 

Income – Up 24.5% at £41085 [2006 was £32979]

Retained surplus – Up 300% at £3332 {2006 was £1170]

Total net assets – Up 12.9% at £271514 [2006 was £240513]

Total loans outstanding to members (after bad debt provisions) – Up 32.5% at £163749 [against £123590]-

Total members shares– Up 9.1% at £228524 [2006 was £209416]

Total Juniors deposits – Up71.8% at £22911 [2006 was £13330]

 

All this is good news and most of these very positive trends have continued into the present financial year which started on 1st Oct 2007 and is now over a third of the way through.

BUT – as always there are some ifs and buts!

 

1. We have only shown a surplus in 2007 because we received credits from Local authority grants of over £15000. Without these we would still be in significant deficit on our Operating Income & Expenditure a/c.

2. The growth of members share deposits has slowed down as compared with earlier years and is significantly slower than the growth in loans made to members.  Whilst this has not caused any problems in 2007, this trend has continued in a more marked manner into 2008 and unless we can go on attracting a steady inflow of new share deposits, it could be that we shall have to soon start rationing the issue of new loans – which would be a pity as that is what generates income for the CU. So what is the answer? .. We still very much need your support with continuing deposits and regular monthly standing order savings are especially welcome.

 

It is with this latter matter in mind that the Board of Directors are minded to recommend to the members that we shortly launch a new type of members share – to encourage new savings and to retain the money with the CU.

These shares will be different from the existing ordinary members’ shares in 2 main respects:

a. They will only be issued in multiples of £100 only and two months notice will be required for withdrawals.

b. But – they will expect to receive a competitive rate of dividend. This will be declared at the end of each financial year, but not before the AGM has approved it.

We will speak further on this subject later in the meeting when we will be seeking your reactions to this proposal.

 

What of the future? We have prepared a business model that goes forward 6 years to 2013 – this was necessary for the submission to St Albans Council in connection with the Section 106 grant. We have very recently received the final tranche of that grant and we are now necessarily going to have to stand on our own feet in financial terms for the future.  The Board are confident that this will be achievable and recent sharp growth in lending has tended to justify that view as being a reasonable one. It will not be without its difficulties and one of the principal ongoing challenges is to be able to make a good judgement on who is a good borrower. Our Loans committee needs great wisdom in this and we use sophisticated software modelling now as well as credit rating agencies to help in controlling this vital factor.

 

Lending to small local start-up businesses via the STANTA enterprise scheme initially was very slow, but is now beginning to become established; but most of our lending is for private purposes and the amounts are comparatively modest – currently there are almost 150 loans outstanding with an average indebtedness of just over £1600. Although about 10% of all loans are in arrears, the actual losses incurred from bad debts have run at under 5% per annum, which is appreciably better that, some other CUs.  Diligence in spotting a member getting into difficulty with their loan at the earliest possible stage is usually the most certain way of working out a solution and debts are sometimes rescheduled accordingly where an unexpected change of circumstance of the member has occurred.

 

Although there is a surplus shown by these accounts, our current liquidity margin is quite low and as already pointed out the surplus only results from the receipt of grants, which will not recur once the unspent balances have been exhausted. We expect these unspent balances to be exhausted over the next two to three financial years, so by that time we have to be assured that we can expand our operations and income generation sufficiently to fully cover our costs by around 2009/10.  In the mean time payment of ordinary share dividends is unlikely.

 

 

The accounts are largely self-explanatory I think but if any members need additional information over and above the figures shown we will endeavour to answer them.

 

 

Allan Plumpton  February 2008

 

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