Directors Report and Accounts 2021/22 - Report - Page 21
NOTES TO THE FINANCIAL STATEMENTS
20. FINANCIAL COMMITMENTS
Financial commitments at the year-end under non-cancellable leases will result in the following payments:
Land and buildings
2022
2021
£’000
£’000
54
54
54
54
Annual commitment for leases expiring:
One to five years
The Society has a lease on its Head Office location for a 10-year period with a break at five years, which was removed by
agreement in Oct 2020. The annual commitment shown in the table above reflects the average, annualised payment under the
lease to the conclusion of the 10-year lease in 2025.
21. SUBSIDIARY
The Society is the only member of the charitable company Shared Interest Foundation (SIF). SIF is a company limited by
guarantee and registered in England and Wales. SIF’s objectives are to advance education and training; and to relieve poverty,
sickness and distress in all parts of the world in all respects for the benefit of the public.
Consolidation of the Society and Foundation Financial Statements is not required under FRS 102 1A. In addition, the Directors
believe that the scale of the result of the Foundation compared to the Society, means that consolidation would not provide
useful information to a user of these financial statements. The financial statements of the Shared Interest Foundation are
available on request to the Company Secretary at the Registered Office which is the same as that for the Society (see the back
of this document) and also from the Registrar of Companies or the Charity Commission.
During the year, a charge of £13k (2021: £15k) was paid by the Foundation to the Society in respect of rent and related
attributable overheads and a sum of £53k (2021: £35k) was paid by the Foundation to the Society in respect of services to it
provided by staff employed by the Society. Also, a sum of £2k (2021: £4k) was paid by the Society to the Foundation in respect
of services provided by the Foundation’s Project Manager to the Society for leading the Social Accounts process.
Income for the Foundation for the year ended 30 September 2022 was £311k (2021: £363k) and expenditure was £335k (2021:
£304k) leaving the charity with total funds in the sum of £360k (2021: £384k) at the year-end.
22. FINANCIAL INSTRUMENTS
The Society has entered into contracts (known as “derivatives”) to mitigate the exchange risk for certain foreign currency
income during the year ended 30 September 2023. At 30 September 2022 the Society had entered into forward exchange
contracts with a commitment to sell USD 840k (2021: 1,020k) and EUR 336k (2021: 336k) and receive a fixed sterling amount.
The Society had also entered into option based contracts which mean that the Society may also have to sell USD 840k (2021:
1,000k) and EUR Nil (2021: EUR 330k) depending on market exchange rates at four quarter ends (December 2022, March, June
and September 2023). These contracts all mature within 12 months of the year end.
The Society has also entered into forward foreign currency exchange contracts to the value of just over £32m (2021: about
£28m) to provide (and fix the cost of) a proportion of the currency required for lending within 12 months of the year end. This
deal works as follows. The Society contracted before the year-end to buy on 3 October 2022 USD 25m and EUR 13m at pre-set
rates. This reduces the need to borrow, and interest cost of borrowing, these currencies, which comprise much of the Society’s
lending for the financial year. The deal includes a commitment to re-sell this currency back to the Bank at agreed rates on 31
May 2023 and 29 September 2023. The cost of this will be shown in the Statement of Comprehensive Income to which it relates
in the 2022-23 year. This approach provides certainty before the financial year starts as to the value at which we can exchange
our capital held in pounds sterling. It also fixes the cost of currency conversion for a large proportion of our requirements and,
once booked, is not dependant on exchange or interest rates at the beginning or end of the financial year.
The Society has no interest rate derivative financial instruments (2021: none).
Shared Interest Society Limited - Directors’ Report and Financial Statements for the year ended 30 September 2022
page 21
