People Tree Limited
Annual Report and Financial Statements
For the year ended 31 December 2020
Company Registration No. 02949366 (England and Wales)
People Tree Limited
Company Information
Directors
J Minney
S Minney
R J Minney
(Appointed 27 January 2022)
Secretary
MSP Corporate Services Limited
Company number
02949366
Registered office
27-28 Eastcastle Street
London
United Kingdom
W1W 8DH
Auditor
Moore Kingston Smith LLP
6th Floor
9 Appold Street
London
EC2A 2AP
People Tree Limited
Contents
Page
Directors' report
1 - 2
Independent auditor's report
3 - 6
Profit and loss account
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 19
People Tree Limited
Directors' Report
For the year ended 31 December 2020
Page 1
The directors present their annual report and financial statements for the year ended 31 December 2020.
Principal activities
The principal activity of the company during the year continued to be that of Fair Trade fashion retailing: that is designing, procuring and selling Fair Trade fashion and fashion-related products. People Tree’s mission is to create long-term livelihoods for disadvantaged artisans and producers in developing countries.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J Minney
S Minney
R J Minney
(Appointed 27 January 2022)
Going concern
The
c
ompany realised a profit
after tax
of
£31,644 (2019:
£20,077
) for t
he year ended 31 December 20
20
and, at that date, the
c
ompany’s current liabilities exceeded its total assets by
£1,379,574 (2019:
£2,755,696
)
. In addition, there is significant
long-term debt, including associated finance costs, of £3,753,038 (2019: £2,408,560)
outstanding at the balance sheet date.
In order to meet these liabilities as they fall due, t
he
c
ompany will need to continue to generate
profits and have ongoing support from its creditors.
As explained in the directors' report, the accounts have been prepared on a going concern basis which assumes the continuing support of the founders Safia and James Minney (who are also the directors), and the continuing support of the creditors of the company as disclosed in notes 10 and 11. The Directors have taken into consideration their own willingness to convert their debt into equity and further that the key external providers of finance have provided payment holidays on their facilities of both capital and interest during the year. Where conditions of minimum repayments have been put into place, these have been correctly classified based on the repayment terms. In addition, the directors have prepared forecasts for the 12 months from the date of the approval of these financial statements which show that the company can generate sufficient cash inflows to cover their debts as they fall due.
The forecasts prepared by the directors show positive cash inflows for the next 12 months using moderate sales growth and consistent margins, and current agreement with creditors. The directors recognise that achieving this forecast is not certain given the recent trading conditions, and this indicates that additional funding may be required, or some of the loan repayments may need to be renegotiated to cover the shortfall. Although the directors are confident that this can be achieved through continuing to develop the European markets and the planned cost reduction exercise, there is no guarantee at the date of approval the accounts.
The above may
indicate that a material uncertainty exists in relation to the ability of the company to continue as a going concern
. These financial statements do not include any adjustments that might be required if the application of the going concern basis proves to be inappropriate.
Auditor
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
People Tree Limited
Directors' Report (Continued)
For the year ended 31 December 2020
Page 2
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
J Minney
Director
2 September 2022
People Tree Limited
Independent Auditor's Report
To the Members of People Tree Limited
Page 3
Opinion
We have audited the financial statements of People Tree Limited (the 'company') for the year ended 31 December 2020 which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Changes in Equity and notes to the financial statements, including 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 company's affairs as at 31 December 2020 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 Companies Act 2006.
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
company
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.
Material uncertainty
relating to going concern
We draw attention to note 1.2 to the financial statements, which indicates that the company
’s current liabilities exceeded its total assets by
£1,379,574 (2019:
£2,755,696
) and that the
company will
need to continue to generate generate
profits and have ongoing support from its creditors In order to meet these liabilities as they fall due.
The forecasts prepared by the directors show positive cash inflows for the next 12 months using moderate sales growth and consistent margins, and current agreement with creditors. The directors recognise that achieving this forecast is not certain given the recent trading conditions, and this indicates that additional funding may be required, or some of the loan repayments may need to be renegotiated to cover the shortfall. Although the directors are confident that this can be achieved through continuing to develop the European markets and the planned cost reduction exercise, there is no guarantee at the date of approval the accounts.
As stated in note 1.2 these events or conditions, along with the other matters as set forth in note 1.2 indicate
that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
People Tree Limited
Independent Auditor's Report (Continued)
To the Members of People Tree Limited
Page 4
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 Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the Directors'
R
eport 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the Directors'
R
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us 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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit; or
-
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the Directors' Report and take advantage of the small companies exemption from the requirement to prepare a Strategic Report.
Responsibilities of directors
As explained more fully in the Directors'
R
esponsibilities
S
tatement, 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 company
'
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 company or to cease operations, or have no realistic alternative but to do so.
People Tree Limited
Independent Auditor's Report (Continued)
To the Members of People Tree Limited
Page 5
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
.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
-
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
People Tree Limited
Independent Auditor's Report (Continued)
To the Members of People Tree Limited
Page 6
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
-
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
-
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
-
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
-
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
-
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company'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 company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Jonathan Sutcliffe (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
6 September 2022
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
People Tree Limited
Profit and Loss Account
For the year ended 31 December 2020
Page 7
2020
2019
£
£
Turnover
3,475,521
4,014,483
Cost of sales
(1,778,115)
(1,933,096)
Gross profit
1,697,406
2,081,387
Distribution costs
(473,219)
(577,417)
Administrative expenses
(1,239,537)
(1,560,629)
Other operating income
146,774
252,133
Operating profit
131,424
195,474
Interest payable and similar expenses
(99,780)
(175,397)
Profit before taxation
31,644
20,077
Tax on profit
Profit for the financial year
31,644
20,077
People Tree Limited
Balance Sheet
As at 31 December 2020
31 December 2020
Page 8
2020
2019
Notes
£
£
£
£
Fixed assets
Intangible assets
8,487
14,363
Tangible assets
4
3,899
8,487
18,262
Current assets
Stock
585,316
551,258
Debtors
5
417,940
538,396
Cash at bank and in hand
36,536
26,382
1,039,792
1,116,036
Creditors: amounts falling due within one year
6
(2,427,853)
(3,889,994)
Net current liabilities
(1,388,061)
(2,773,958)
Total assets less current liabilities
(1,379,574)
(2,755,696)
Creditors: amounts falling due after more than one year
7
(3,753,038)
(2,408,560)
Net liabilities
(5,132,612)
(5,164,256)
Capital and reserves
Called up share capital
8
600,000
600,000
Profit and loss reserves
(5,732,612)
(5,764,256)
Total equity
(5,132,612)
(5,164,256)
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 2 September 2022 and are signed on its behalf by:
J Minney
Director
Company Registration No. 02949366
People Tree Limited
Statement of Changes in Equity
For the year ended 31 December 2020
Page 9
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2019
600,000
(5,784,333)
(5,184,333)
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
20,077
20,077
Balance at 31 December 2019
600,000
(5,764,256)
(5,164,256)
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
31,644
31,644
Balance at 31 December 2020
600,000
(5,732,612)
(5,132,612)
People Tree Limited
Notes to the Financial Statements
For the year ended 31 December 2020
Page 10
1
Accounting policies
Company information
The Company is a United Kingdom private limited company limited by shares. It is both incorporated and domiciled in England and Wales. The registered office address is 27-28 Eastcastle Street, London, W1W 8DH.
These financial statements comprise the financial statements of the Company for the year ended 31 December 2020 and presented to the nearest pound.
The principal activity of the Company is detailed in the Directors' report on page 1.
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 Companies Act 2006 as applicable to companies subject to the small companies regime.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
The
true
c
ompany realised a profit
after tax
of
£31,644 (2019:
£20,077
) for t
he year ended 31 December 20
20
and, at that date, the
c
ompany’s current liabilities exceeded its total assets by
£1,379,574 (2019:
£2,755,696
)
. In addition, there is significant
long-term debt, including associated finance costs, of £3,753,038 (2019: £2,408,560)
outstanding at the balance sheet date.
In order to meet these liabilities as they fall due, t
he
c
ompany will need to continue to generate
profits and have ongoing support from its creditors.
As explained in the directors' report, the accounts have been prepared on a going concern basis which assumes the continuing support of the founders Safia and James Minney (who are also the directors), and the continuing support of the creditors of the company as disclosed in notes 10 and 11. The Directors have taken into consideration their own willingness to convert their debt into equity and further that the key external providers of finance have provided payment holidays on their facilities of both capital and interest during the year. Where conditions of minimum repayments have been put into place, these have been correctly classified based on the repayment terms. In addition, the directors have prepared forecasts for the 12 months from the date of the approval of these financial statements which show that the company can generate sufficient cash inflows to cover their debts as they fall due.
The forecasts prepared by the directors show positive cash inflows for the next 12 months using moderate sales growth and consistent margins, and current agreement with creditors. The directors recognise that achieving this forecast is not certain given the recent trading conditions, and this indicates that additional funding may be required, or some of the loan repayments may need to be renegotiated to cover the shortfall. Although the directors are confident that this can be achieved through continuing to develop the European markets and the planned cost reduction exercise, there is no guarantee at the date of approval the accounts.
The above may
indicate that a material uncertainty exists in relation to the ability of the company to continue as a going concern
. These financial statements do not include any adjustments that might be required if the application of the going concern basis proves to be inappropriate.
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
1
Accounting policies
(Continued)
Page 11
1.3
Turnover
Turnover
represents the value of goods supplied to customers during the year, exclusive of Value
Added Tax. Turnover is recognised when the risks and rewards of ownership of products sold have
passed on to the customer. This is deemed to be at the point of delivery.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated
.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
3 - 5 years straight line
1.6
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 or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
IT and office equipment
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
.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible 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
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
1
Accounting policies
(Continued)
Page 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
profit
or
loss
, 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
profit
or
loss
, 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.
1.8
Stock
Stock are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stock to their present location and condition.
Selling price is the
price at which the stock can be realised in the normal course of business. Provision is made for slow
moving stocks.
Stock held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stock over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash at bank and in hand
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
1
Accounting policies
(Continued)
Page 13
Basic financial assets
Basic financial assets, which include
debtors
and cash 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.
Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors
, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
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. A
m
ounts 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.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
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 company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
1
Accounting policies
(Continued)
Page 14
1.14
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
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
s
asset are consumed.
1.15
Government grants
Government grants are recognised at the fair value of the asset receive d or receivable when there is
reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to the amounts received under the Coronavirus Job Retention Scheme
where staff have been furloughed due to the global pandemic are recognised in the same periods as the
related salary costs within other income.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Total
20
21
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
Page 15
3
Intangible fixed assets
Software
£
Cost
At 1 January 2020
41,148
Additions
2,804
Disposals
(20,440)
At 31 December 2020
23,512
Amortisation and impairment
At 1 January 2020
26,785
Amortisation charged for the year
8,680
Disposals
(20,440)
At 31 December 2020
15,025
Carrying amount
At 31 December 2020
8,487
At 31 December 2019
14,363
4
Tangible fixed assets
Fixtures and fittings
IT and office equipment
Total
£
£
£
Cost
At 1 January 2020
9,953
29,106
39,059
Additions
1,473
1,473
Disposals
(9,953)
(30,579)
(40,532)
At 31 December 2020
Depreciation and impairment
At 1 January 2020
6,911
28,249
35,160
Depreciation charged in the year
3,042
2,330
5,372
Eliminated in respect of disposals
(9,953)
(30,579)
(40,532)
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
3,042
857
3,899
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
Page 16
5
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
211,197
308,266
Amounts owed by group undertakings
22,080
26,692
Other debtors
184,663
203,438
417,940
538,396
6
Creditors: amounts falling due within one year
2020
2019
£
£
Bank loans and overdrafts
1,234
Trade creditors
820,687
1,313,500
Other taxation and social security
121,971
46,075
Other creditors
1,483,961
2,530,419
2,427,853
3,889,994
Analysis of loans
£
173,864
(201
9
: £171,982) owed to Shared Interest Society Limited in the form of a rolling credit facility,
which attracts interest at a rate of 11% and £Nil (201
9
: £Nil) of the Shared Interest loan (details in note
11). £
21
,
767
of accrued interest (201
9
: £
20
,000) on the Shared Interest loan is included within accruals
above.
The loan from Chocolat Bernrain AG of £
723,417
(201
9
: £690,768) including accrued interest was
outstanding at 31 December 2019. The accrued interest of £
124,024
(201
9
: £
99,126
) is due within one
year along with
CHF 724,200 (2019:
CHF 759,700
)
; £
599,393 (2019:
591,642
)
of the principal balance. The loan attracts an annual interest rate
of 3% and is denominated in CHF. A payment plan was
agreed during the year
with a view to pay off the
principal and interest by 2023.
£
32,363
(201
9
: £28,767) of the principal amount in relation to the Oikocredit loan is due within 12 months
(details in note 11). Accrued interest on this loan as at 31 December 2019 total
l
ed £
Nil
(201
9
: £
54,743
)
and is included in other creditors in note 11.
$
10,908
: £
7,905
(201
9
: $38,400
,
£29,277) of the principal loan plus accrued interest due to Stephen
Romaine is due within 12 months. See note 11 for further details.
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
6
Creditors: amounts falling due within one year
(Continued)
Page 17
£4
46
,
5
00 of bonds issued in the UK (201
9
: £4
45
,000) along with associated accrued interest of £
80,544
(201
9
: £
66,963
). These are mainly redeemable from 30 April 202
2
and interest is payable at 8 - 9%,
made up of 3 - 4% cash interest and 5% in vouchers redeemable for People Tree products.
A Founders' loans balance, including accrued interest, of £
902,586
(201
9
: £866,808). The loan
attracts interest of 5% per annum.
Bo
th Founders have granted extensions on both
the capital and interest elements of their loan balances until June 2021
.
In 2018, the Company received an advance from PayPal totalling £80,000. As at the year end, £
77,740
was outstanding (201
9
: £52,417). The balance is to be repaid over a maximum of 30 months or as a
direct deduction from the PayPal sales if this is higher. No interest is being charged on the advance as a fixed fee was incurred on
receipt.
7
Creditors: amounts falling due after more than one year
2020
2019
£
£
Amounts owed to group undertakings
1,957,492
1,621,848
Other creditors
1,795,546
786,712
3,753,038
2,408,560
Analysis of loans
The Company meets its working capital requirements through lending provided by its Founders, lending
provided by institutions supportive of Fair Trade, credit on accounts payable provided by Fair Trade
Company KK, its fellow subsidiary company (disclosed within Founders' loans and amounts due to
related undertakings) and borrowings from the parent company People Tree Fair Trade Group Limited.
The Founders consider sufficient facilities for working capital requirements are available for the
foreseeable future.
Amounts owed to related undertakings is a balance due to People Tree Fair Trade Group Limited of
£1,
957,492
(201
9
: £1,621,848 ). A new agreement was formalised in 2017 where interest of 2.5% per
annum is charged and the loan falls due for repayment on 31 July 2023.
The amounts owed to Shared Interest Society Limited totaled £
440,611
(201
9
: £399,529) including
accrued interest. The principal loan amounted to £285,009 and incurred interest at a rate of 10%. The
total principal balance is due after one year. Accrued interest of £
155,602
(201
9
: £
114,520
) has been included in
creditors due in less than one year.
The loan from Oikocredit Ecumenical Development Co-operative Society, U.A of £
254,108
(201
9
:
£390,358 ) including accrued interest was outstanding at 31 December 20
20
. £
32,363
(201
9
: £54,743) of
the capital (£350,000) is repayable in 12 months and the remainder in more than one year. None of the
accrued interest (201
9
: £Nil) is repayable within 12 months. Accrued interest has been included in other
creditors above. The loan attracts interest at 9%. A guarantee over the loan has been given by Fair Trade
Company KK. The loan is secured by a fixed and floating charge over the Company's assets.
The Stephen Romaine loan plus accrued interest of $
10,908
; £
7,905
(201
9
: $71,966; £54,869 ) is to be
repaid in monthly instalments of $3,200.
this has now been included in credicotrs due in less than one year
. The loan is subject to
waiver on the interest.
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
Page 18
8
Called up share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Oridnary of £1 each
-
-
600,000
600,000
9
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2020
2019
£
£
16,000
People Tree Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2020
Page 19
10
Related party transactions
The Company has taken advantage of the exemption conferred by Section 1A of FRS 102 "Related party disclosures" and has not disclosed transactions with companies that are wholly owned within the People Tree Fair Trade Group of companies.
The policy for assessment of cost-sharing between group entities was updated in the year to better reflect the cost of activities undertaken for group development. The strategic investment provided to the Company in previous years completed in 2017 and in 2018 and going forward expenses incurred on behalf of the parent are to be reimbursed. The Company carried out activities to a value of £252,133 (2019: £252,133) during the year and this is shown as "Other Operating Income" in the statement of comprehensive income.
Founders' loans
The Founders' loan account, excluding accrued interest, of £715,560 (2019: £715,560) shown within creditors within one year consists of loans from Mrs S Minney and Mr J Minney, directors of the Company and of the parent Company People Tree Fair Trade Group Limited. An agreement was formalised in January 2008, and interest of 5% per annum is charged. During the year interest of £35,778 (2019: £35,778) has been charged. The Founders' do not expect to draw down any of this loan within the next 12 months.
Bonds
Bonds totalling £219,500 (2019: £219,500) are in issue to Mrs S Minney and Mr J Minney, directors of the Company and of the parent Company People Tree Fair Trade Group Limited. These bonds attract a cash interest rate of 4% per annum. All of this balance has been extended and is now redeemable from May 2022.
People Tree Foundation
During the year, People Tree Limited paid expenses on behalf of People Tree Foundation of £1,771 (2019: £4,048) and donations of £1,000 (2019: £715). People Tree Limited also collected income and donations on behalf of the charity of £1,507 (2019: £868). At the year end People Tree Limited owed the Foundation £1,266 (2019: £2). People Tree Foundation is both a registered charity, and a company limited by guarantee with a sole member, the parent Company, People Tree Fair Trade Group Limited.
11
Parent company
The immediate parent company and ultimate controlling party is People Tree Fair Trade Group Limited, a company incorporated in England and Wales. These accounts are not consolidated in those of its ultimate parent as the group qualifies as small under Companies Act 2006.
2020-12-31
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