FINANCIAL STATEMENTS

CREDIT UNION REGISTRATION NUMBER 213400 MANCHESTER CREDIT UNION LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2010 HALLIDAYS ACCOUNTANTS LLP Chartered Accountants & Statutory Auditor Riverside House Kings Reach Business Park Yew Street Stockport SK4 2HD

FINANCIAL STATEMENTS CONTENTS PAGE Officers and professional advisers 1 The Committee of Management' report 2 Independent auditor's report to the shareholders 4 Income & Expenditure account 6 Balance sheet 7 Notes to the financial statements 8 The following pages do not form part of the financial statements Detailed income & expenditure account 14 Notes to the detailed income & expenditure account 15

OFFICERS AND PROFESSIONAL ADVISERS The board of directors The Supervisory committee Registered Office Auditor Bankers T Presswood - Chairman A McBeath B James C Davies P Jones C Culley C Moore C Smith G Olley Suites 17 & 18, First Floor Building No 2 Universal Square Devonshire Street Manchester M12 6JH Hallidays Accountants LLP Chartered Accountants & Statutory Auditor Riverside House Kings Reach Business Park Yew Street Stockport SK4 2HD Co-operative Bank Delf House Southway Skelmersdale Lancashire WN8 6NY 1

THE COMMITTEE OF MANAGEMENT REPORT The Committee of Management have pleasure in presenting their report and the financial statements of the Credit Union for the year ended 30 September 2010. PRINCIPAL ACTIVITIES The principal activity of the credit union during the year was that of the provision of savings and lending facilities for the benefit of its members. The common bond of the Credit Union continued to be that of providing savings and lending facilities to residents and employees of the city of Manchester. RESULTS AND DIVIDEND The surplus for the year, after taxation amounted to 21,137. Particulars of dividends paid are detailed in note 3 to the financial statements. The dividend is calculated at 1% (2009 0%) for the Member Accounts and Junior Accounts. The remainder of the surplus for the year is transferred to the general reserve. DIRECTORS The Directors who served the credit union during the year were as follows: T Presswood I Nuttall resigned as a director on 1 September 2010 A McBeath B James K Fairhurst resigned as a director on 1 July 2010 C Davies P Jones C Culley C Moore C Smith appointed as a director on 31 August 2010 Supervisory Committee G Olley 2

THE COMMITTEE OF MANAGEMENT' REPORT (continued) COMMITTEE OF MANAGEMENT' RESPONSIBILITIES The Committee of Management are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Credit Union law requires the Committee of Management to prepare financial statements for each financial year. Under that law the Committee of Management have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under credit union law the Committee of Management must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the credit union and of the profit or loss of the credit union for that period. In preparing those financial statements, the Committee of Management are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the credit union will continue in business. The Committee of Management are responsible for keeping adequate accounting records that are sufficient to show and explain the credit union's transactions and disclose with reasonable accuracy at any time the financial position of the credit union and enable them to ensure that the financial statements comply with the Friendly Industrial and Provident Societies Act 1986. They are also responsible for safeguarding the assets of the credit union and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the directors are aware: there is no relevant audit information of which the credit union's auditor is unaware; and the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. AUDITOR Hallidays Accountants LLP are deemed to be re-appointed under the Friendly Industrial and Provident Sociteies Act 1986. SMALL CREDIT UNION PROVISIONS This report has been prepared in accordance with the special provisions for small credit unions under the Friendly Industrial and Provident Societies Act 1986. Registered office: Signed by order of the Committee of Management Suites 17 &18, First Floor Building No 2 Universal Square Devonshire Street Manchester M12 6JH A McBEATH Credit Union Secretary Approved by the directors on... 3

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF MANCHESTER CREDIT UNION LIMITED We have audited the financial statements of Manchester Credit Union Limited for the year ended 30 September 2010. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the credit union's shareholders, as a body, in accordance with the Friendly Industrial and Provident Societies Act 1986. Our audit work has been undertaken so that we might state to the credit union's shareholders 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 shareholders as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF COMMITTEE OF MANAGEMENT AND AUDITOR As explained more fully in the Committee of Management' Responsibilities Statement set out on pages 2 to 3, the Committee of Management are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors. SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the credit union's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by Committee of Management; and the overall presentation of the financial statements. OPINION ON FINANCIAL STATEMENTS 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 2010 and of its profit 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 Friendly Industrial and Provident Societies Act 1986. OPINION ON OTHER MATTERS PRESCRIBED BY THE FRIENDLY INDUSTRIAL AND PROVIDENT SOCITIES ACT 1986 In our opinion the information given in the Committee of Management' Report for the financial year for which the financial statements are prepared is consistent with the financial statements. 4

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF MANCHESTER CREDIT UNION LIMITED (continued) MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters which we are required to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit; or (Senior Statutory Auditor) Riverside House Kings Reach Business Park Yew Street Stockport SK4 2HD... For and on behalf of HALLIDAYS ACCOUNTANTS LLP Chartered Accountants& Statutory Auditor 5

INCOME AND EXPENDITURE ACCOUNT Note INCOME 681,600 425,487 Administrative expenses 659,676 421,929 SURPLUS ON ORDINARY ACTIVITIES BEFORE TAXATION 21,924 3,558 Tax on bank interest received 787 1,654 SURPLUS FOR THE FINANCIAL YEAR 21,137 1,904 All of the activities of the credit union are classed as continuing. The credit union has no recognised gains or losses other than the results for the year as set out above. The notes on pages 8 to 12 form part of these financial statements 6

BALANCE SHEET 30 SEPTEMBER 2010 FIXED ASSETS Tangible assets 4 32,522 37,065 ------------------------------- ------------------------------- CURRENT ASSETS Debtors 5 1,942,079 1,313,386 Cash at bank and in hand 976,597 709,255 ---------------------------------------------- ---------------------------------------------- 2,918,676 2,022,641 CREDITORS: Amounts falling due within one year 6 238,219 146,545 ---------------------------------------------- ---------------------------------------------- NET CURRENT ASSETS 2,680,457 1,876,096 ---------------------------------------------- ---------------------------------------------- TOTAL ASSETS LESS CURRENT LIABILITIES 2,712,979 1,913,161 CREDITORS: Amounts falling due after more than one year 7 3,561 Growth Fund Grant in respect of Capital Expenditure 8 80,610 36,694 DWP Growth Fund Capital Grant 9 886,247 550,465 ---------------------------------------------- ---------------------------------------------- 1,746,122 1,322,441 = = CAPITAL AND RESERVES Members share capital 11 1,573,201 1,270,657 General Reserves 12 59,374 51,784 Transfer of Growth Fund Capital Reserve 12 100,000 - Income and expenditure account 13 13,547 ---------------------------------------------- ---------------------------------------------- SHAREHOLDERS' FUNDS 14 1,746,122 1,322,441 = = These financial statements have been prepared in accordance with the version one provisions for credit unions under the Friendly Industrial and Provident Societies Act 1986. These financial statements were approved by the Committee of Management and authorised for issue on..., and are signed on their behalf by:...... T PRESSWOOD B JAMES... A McBEATH Credit union Registration Number: 213400 The notes on pages 8 to 12 form part of these financial statements 7

1. ACCOUNTING POLICIES Basis of accounting MANCHESTER CREDIT UNION LIMITED NOTES TO THE FINANCIAL STATEMENTS The financial statements have been prepared under the historical cost convention, and in accordance with applicable UK accounting standards. Cash flow statement The Committee of Management have taken advantage of the exemption in Financial Reporting Standard No 1 (Revised 1996) from including a cash flow statement in the financial statements on the grounds that the credit union is small. Income Income shown in the income & expenditure account represents amounts receivable in respect of loan interest, bank interest and grants received during the year. The policy of the credit union is to recognise interest received on a daily basis. Fixed assets All fixed assets are initially recorded at cost. Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Fixtures & Fittings - 15% reducing balance basis Equipment - 33% straight line Deferred DWP Growth Fund Grants Deferred DWP Growth Fund Grants in respect of capital expenditure are treated as deferred income and are credited to the income and expenditure account over the estimated useful life of the assets to which they relate. Deferred grants in respect of revenue items are credited to the income and expenditure account to match relevant expenditure. The grants shown in the balance sheet represent total grants receivable to date less the amounts so far credited to the income and expenditure account. Taxation UK Corporation tax is calculated on bank interest received during the year. Provision for doubtful debts The provision for doubtful debts is made in accordance with guidance issued by the FSA. Amount of interest Interest receivable on loans and other investments of the credit union are accounted for on the accruals basis. 8

2. OPERATING SURPLUS MANCHESTER CREDIT UNION LIMITED NOTES TO THE FINANCIAL STATEMENTS Operating surplus is stated after charging: Committee of Management' remuneration Depreciation of owned fixed assets 9,502 13,120 Auditor's fees 6,871 7,950 3. DIVIDENDS Dividends Paid during the year: Dividends on members shares - 7,971 Proposed at the year-end: Dividends on members shares 13,547-4. TANGIBLE FIXED ASSETS Fixtures & Fittings Computer Equipment Total COST At 1 October 2009 38,095 42,294 80,389 Additions 1,459 3,500 4,959 At 30 September 2010 39,554 45,794 85,348 DEPRECIATION At 1 October 2009 5,714 37,610 43,324 Charge for the year 5,076 4,426 9,502 At 30 September 2010 10,790 42,036 52,826 NET BOOK VALUE At 30 September 2010 28,764 3,758 32,522 At 30 September 2009 32,381 4,684 37,065 9

NOTES TO THE FINANCIAL STATEMENTS 5. DEBTORS Amounts due from members for loans 1,928,620.46 1,372,230.57 Provision for doubtful debts (56,202) (82,399) Prepayments & accrued income 57,636 23,554 Other debtors 12,025-1,942,079 1,313,386 6. CREDITORS: Amounts falling due within one year Juvenile Savings 22,889 27,900 Corporation Tax 668 3,217 Accruals & deferred income 19,106 12,963 Deferred DWP Revenue Grants 153,446 99,680 Credit Union Current Account 41,827 - Other Creditors 283 2,785 238,219 146,545 7. CREDITORS: Amounts falling due after more than one year Other creditors 3,561 8. DWP AMOUNTS DESIGNATED FOR CAPITAL EXPENDITURE: At 1 October 2009 36,694 - Amounts received during the year 50,000 43,450 Amounts released in respect of depreciation of Capital Expenditure (6,084) (6,756) Net balance at 30 September 2010 80,610 36,694 The balance refers to monies received from the Department of Work and Pensions which have been designated for Capital Expenditure and will be applied towards depreciation of the capital expenditure in future periods. 10

NOTES TO THE FINANCIAL STATEMENTS 9. DWP GROWTH FUND CAPITAL GRANTS Received and receivable: At 1 October 2009 550,465 519,873 DWP Loan and bank interest recycled 127,693 71,419 Capital received during the year 563,632 115,304 Bad debts written off (43,377) (37,681) Amounts released in respect of Capital Expenditure (50,000) (43,450) Amounts released in respect of revenue expenditure (162.165) (75,000) Amounts released in respect of transfers to reserves (100,000) Net balance at 30 September 2010 886,248 550,465 The DWP Growth Fund Capital grant refers to monies received from the Department of Work and Pensions which will be applied towards capital lending and related expenditure in future periods. 10. RELATED PARTY TRANSACTIONS No transactions with related parties were undertaken such as are required to be disclosed under Financial Reporting Standard 8. 11. MEMBERS SHARE CAPITAL Balance brought forward 1,270,657 1,066,279 Net (reduction)/increase in members shares 302,544 204,378 At 30th September 2010 1,573,201 1,270,657 12. RESERVES General reserve balance brought forward: 51,784 49,880 Transfer from /(to) the Income & Expenditure Account 7,590 1,904 Balance carried forward 59,374 51,784 Growth Fund Capital Reserve balance brought forward: - - Transfer from Growth Fund Capital 100,000 - Balance carried forward 30 th September 2010 100,000-11

NOTES TO THE FINANCIAL STATEMENTS 13. INCOME & EXPENDITURE ACCOUNT 2009 2008 Balance brought forward - 12,601 Surplus for the financial year 21,137 1,904 Equity dividends paid - (7,971) Surplus recycled to income & expenditure account (7,590) (4,630) Transfer to general reserve - (1,904) -------------------------- -------------------------- Balance carried forward 13,547 - = = 14. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Surplus for the financial year 21,137 1,904 New members share capital subscribed 302,544 204,378 Surplus recycled to income and expenditure account (4,630) Dividends paid (7,971) Growth Fund Transfer Reserve 100,000 Net addition to shareholders' funds 423,681 193,681 Opening shareholders' funds 1,322,441 1,128,760 Closing shareholders' funds 1,746,122 1,322,441 15. POST BALANCE SHEET EVENTS In January 2011 the credit union contracted to pay 150,000 for the upgrade of the IT facilities. Of this amount 52,164 had been paid on account at the time of signing the accounts. The upgrade is expected to be completed by June 2011. 12

MANAGEMENT INFORMATION The following pages do not form part of the statutory financial statements which are the subject of the independent auditor's report on pages 4 to 5. 13

DETAILED INCOME & EXPENDITURE ACCOUNT INCOME Loan interest 113,280 101,780 Bank interest received 2,992 4,316 Grant income 439,408 269,681 Bad debts recovered 8,912 8,013 Annual membership fees 11,590 8,603 Other income 76,275 8,132 Money Made Clear Income 29,143 17,462 Barclays marketing contribution 7,500 681,600 425,487 OVERHEADS Administrative expenses 659,676 421,929 SURPLUS ON ORDINARY ACTIVITIES 21,924 3,558 14

NOTES TO THE DETAILED INCOME AND EXPENDITURE ACCOUNT ADMINISTRATIVE EXPENSES Personnel costs Wages and salaries 392,777 271,792 Establishment expenses Rent, rates and water 30,288 15,055 Light and heat 3,046 1,952 Loan & share insurance 20,047 16,986 ABCUL fees 4,487 4,210 Office Repairs and maintenance 1,316 5,436 Property relocation costs 1,618 59,184 45,257 General expenses Training, travel & conferences 14,309 13,087 Telephone 11,528 4,611 Office expenses 6,951 6,234 Printing, stationery 9,050 5,233 Postage 1,788 1,750 Donations 126 Advertising & Marketing 2,782 7,499 General expenses 1,863 3,028 Credit agency fees 4,526 2,945 Legal and professional fees 6,292 1,280 CUCA Banking Platform set up fees 71,809 15,748 Accountancy fees 1,860 541 Auditors remuneration 6,871 7,950 Depreciation 9,502 13,120 149,257 83,026 Financial costs Bad debts written off 84,385 42,871 Provision for doubtful debts (26,198) (21,318) Bank charges 271 301 58,458 21,854 659,676 421,929 15