Harrogate Fairtrade Shop
(A company limited by guarantee)
Report and Financial Statements For the Year Ending 31 December 2022
Charity number 1164801
Company number: 07097275
Report of the trustees for the year ending 31 December 2022
The trustees present their annual report together with the financial statements of the charity for the year to 31 December 2022 which are also prepared to meet the requirements for a directors’ report and accounts for Companies Act purposes. The financial statements comply with the Charities Act 2011, the Companies Act 2006, and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard 102 (effective 1 January 2015).
Structure, governance and management
The Charity is constituted as a company limited by guarantee and its governing document is its Memorandum and Articles of Association.
The charity is managed by the trustees who are also its directors for the purposes of company law. Trustees are nominated by members and elected at the annual general meeting of the company
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Objects
The charity's objects, as stated in its Memorandum of Association are:
a) The prevention or relief of poverty and the relief of suffering and distress in any part of the world.
b) The furtherance of exclusively charitable purposes of such UK registered charities which work directly in relieving or preventing poverty, relieving financial need, hardship, suffering or distress in any part of the world as the trustees see fit.
The principle of the fair trade movement is that producers and manufacturers in developing countries receive a fair price for their products and the charity aims to achieve its first object by selling goods produced and sourced in accordance with the principles of the World Fair Trade Organisation. That this generates the public benefit of alleviating or preventing the poverty of the producers was agreed by the Charity Commission in correspondence culminating in the registration of the Charity on 10 December 2015.
While making a profit is not the primary purpose of the Charity, it is necessary that its trading is profitable in order to ensure its long-term survival. The second object allows any excess profits not required for the maintenance of the Charity’s activities to be donated to other charities working in the field of the relief of poverty.
Activities
The principal activity of the company is the sale of fairtrade goods through its shop in a porch of St Peter’s Church in the centre of Harrogate.
The shop is staffed by volunteers, some of whom are members and some of whom are trustees. All volunteers are invited and encouraged to become voting members at no cost. The volunteers are organised by our shop manager who is supported by an assistant, both of whom are paid and work part-time.
Fair trade goods are also sold by members and others through stalls in local churches, schools etc. Apart from the income stalls generate, they are of course a useful way of raising awareness of fair trade. Alongside this, some of our trustees and members and our shop manager have undertaken outreach work in churches and schools from time to time and a new trustee has recently provided the impetus to make this a more frequent activity, though at little or no cost to the charity.
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In 2020 the first steps were taken to sell our goods online and the online shop was further developed in 2021. While the small amount of income generated through this channel has yet to cover costs, the online shop functions effectively as a website to display our goods and principles to the outside world both near and far.
The only source of income of the Charity is the sale of fairtrade goods as described above. Donations are not sought and any donations made by customers in the small collecting box in the shop, and occasionally by other persons, are passed directly to Traidcraft Exchange (now Transform Trade), a charity registered in England and Wales.
Similarly, none of the goods sold are donated, as is the case with the majority of “charity shops” and the main expense of the trade is the purchase of goods for resale. It is actually the purchase of fairtrade goods, rather than the sale, which generates the public benefit but of course the enterprise would not continue very long if the purchased goods were not sold to the public to provide fresh working capital to buy new stock.
Financial Review
Business in the shop recovered strongly this year following the closures imposed by the pandemic in the two previous years. Income from stalls, while still relatively small, also showed a return to normality. On the other hand, sales through our online shop actually fell back, indicating that this new enterprise was helped by the inability of customers to shop in person in the previous year.
Overall sales, at £89,324, were 8.9% up on the pre-pandemic level of 2019 and correspondingly purchases were increased by 4.8% to £50981.
This level of turnover breached the threshold for obligatory registration for VAT for the first time and the first VAT return, for the period ended 31 March 2023, has been filed. If sales in the current year amount to £90,000, the VAT liability for the year will be around £6000, which will have a serious impact on net profits (£7294 this year). It is felt however that this should be absorbed without increasing prices, which could have a negative impact on sales. Our primary object is to sell fairtrade goods on behalf of the producers, not to maximise our profit and, as long as we make even a small net profit, we will remain viable and able to continue to meet that object.
Reserves
During the pandemic we qualified for, and duly received, business support grants from the government which, in the event, we did not fully utilise. We applied some of this money in creating the online shop in its present format and placed the remaining funds into a reserve to fund further development of our trading activities.
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In addition, the charity has for many years maintained a deposit with the Shared Interest Society and this has been regarded as only to be drawn upon in the event that we are not otherwise able to meet our liabilities, in other words, although it has not been formally reported as such, a business continuity reserve.
As with most other retail trades, our business is cyclical and more than half of our annual sales are made in the ten weeks or so leading up to Christmas. Until this period begins, sales generally do not cover overheads, including wages and rents, and so our bank balances fall steadily through the year. The necessity of beginning to stock-up for Christmas in the late summer accelerates this depletion of the bank balances and, in the past, with the bulk of net profits being donated, this led to a distinct cash-flow squeeze in October each year which, however, was always overcome without the need to draw on the Shared Interest deposit.
In recent years a slightly higher retention out of net profits has steadily built up a buffer against this cash-flow squeeze but, even in the present year when the low point fell on 1 November, the balances on the current accounts, excluding the residue of the government grants, totalled £6438. The comparable figure at the start of the year was £23,809 and at the end of the year, £25,312. If the donation of £6000, voted for at last year’s AGM, had been paid before 1 November, the margin would have been only £438.
The trustees have considered the possibility of expanding the charity’s trading and, although no clear way has yet been identified by which this can be achieved, they wish to build up funds to support an expansion should the opportunity arise. With this in mind, it was decided that, instead of donating the £6000 voted last year outright, it should be added to the Shared Interest* account so that this becomes our business development reserve. In this way, the money is applied to support fair trade enterprises while remaining available to us should we need it in future. An AGM proposal that this be repeated with the current year’s net profit was approved by the members and the sum of £7000 transferred.
The trustees have also considered the question of a business continuity reserve. In practice we have always retained the bulk of our bank balances as explained above, which together with stock, account fully for the balance on Profit and Loss account carried forward. Without this retention we would not survive the next trading cycle. It is not available for distribution as donations and is therefore now labelled as “General Reserve”.
*The Shared Interest Society uses the deposits of its investors to provide loans and credit facilities to primarily fairtrade businesses, to ensure that farmers are paid on time for their crops. The deposits are not covered by protection such as the Financial Services Compensation Scheme (FSCS) and are therefore at risk.
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Reference and Administrative details
Charity name: Harrogate Fairtrade Shop Registered charity number: 1164801 Registered company number: 07097275 Registered office: Community House 46 – 50 East Parade Harrogate HG1 5RR
Directors and trustees
The directors of the charitable company (the charity) are its trustees for the purpose of charity law. The trustees and officers serving during the year and since the year end were as follows:
Dr Philip Thake Chair Resigned 6 April 2022 David Seaman Treasurer Erica Miller Resigned 14 March 2022 Dr Gillian Parkin Acting Chair from April 2022 Judith Simpson Debbie Handslip Resigned 20 July 2022 Rachel Batchelor Diane Maguire Appointed 14 March 2022 Roger Elliott Appointed 25 November 2022
None of the trustees receive remuneration or other benefits from their work with the charity.
This report has been approved by the trustees and is signed on their behalf
Dr Gillian Parkin Acting Chair
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HARROGATE FAIRTRADE SHOP
Company limited by guarantee No 7097275
Charity No 1164801
BALANCE SHEET AT 31 DECEMBER 2022
| Fixed Assets Computer and Till Equipment Fixtures & Fittings Current Assets Cash at Bank Co-operative Bank Cash at Bank CAF Bank Cash at Bank Shared Interest Society Cash in Hand Stock Debtors Current Liabilities Creditors and Accruals Net Assets Reserves Note 2 Government Covid Grant Reserve Business Development Reserve General Reserve |
31 December 2022 330 230 560 7625 28669 11730 516 22300 536 71376 -2196 69740 0 11730 58010 69740 |
31 December 2021 450 330 780 24746 10058 5716 144 22600 296 63558 -1920 62418 10981 0 51437 62418 |
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Harrogate Fairtrade Shop Trustees Annual Report 2022 Page 6 | 9
HARROGATE FAIRTRADE SHOP Company limited by guarantee No 7097275 Charity No 1164801
TRADING & PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31st DECEMBER 2022
| Shop sales (card) Shop sales (cash) Online sales Stalls etc Total Sales Cost of Sales Gross profit Employee costs Job Retention Support received Rent & Rates Online sales expenses Credit Card Fees (Shop) Electricity Insurance Music licences Harrogate BID Consultancy BAFTS Conference Postage, Phone & Stationery Subscriptions & fees Advertising and publicity Window cleaning WiFi charges Small equipment purchase & repair Consumables and Sundries Fast Fashion Film Gifts Bank charges Recycling charges Covid measures Depreciation Net Profit / Loss |
Year to 31/12/2022 69312 14550 83862 1950 3512 89324 51395 37929 18963 0 5754 1118 1049 493 349 414 360 300 229 43 96 0 100 311 219 244 0 163 161 49 0 220 30635 7294 |
Year to 31/12/2021 52645 10184 62829 2421 Note 1 2444 67694 34704 32990 15837 -514 5396 749 869 201 349 395 0 0 0 62 91 60 64 358 178 149 77 84 72 71 12 270 24830 8160 |
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Harrogate Fairtrade Shop Trustees Annual Report 2022
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HARROGATE FAIRTRADE SHOP
Notes to the 2022 accounts
Note 1 Restatement of online trading results for the year ending 31 December 2021
The charges made to customers of the online shop include postage and packing which amounted to 22% of the total in 2022. Although the figures are small, it is clearly incorrect to include P&P charges as sales of goods and so, in 2022, these charges have been extracted and set against Online Sales Expenses.
The comparative figures for 2021 have been re-stated in the same manner.
A small amount of sales made during lockdown by email or telephone order has also been re-classified as stalls sales so that only sales actually made through the online sales platform are shown as such.
Note 2 Reserves
As explained in the trustees' report, the Shared Interest deposit is identified as our Business Development Reserve and the balance of government Covid grants merged into general reserves required to support the business through its annual trading cycle.
| 31 December 31 2022 Government Covid Grant Reserve 10981 Further Grants received 0 Less Development Costs - Online Shop 0 Transfer -10981 0 General Reserve Balance b/f 51437 Profit / Loss for the year 7294 Interest 28 Covid Grant Reserve 10981 Business Development Reserve -11730 Balance c/f - General Reserve 58010 |
December 2021 11334 8097 -8450 0 10981 43263 8160 14 0 51437 |
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Harrogate Fairtrade Shop Trustees Annual Report 2022
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Independent Examiner's Report to the Trustees of Harrogate Fairtrade Shop ('the Company,) I report to the charity trustees on my examination of the accounts of the Company for the year ended 31 December 2022. as set out on pages 6 to 8 of your report. Responsibilitles and basis of report As the charity's trustees (who a also the directors of the Company for the purposes of company law). you are responsible for the preparation of the accounts in accordance with the requirements of the Companies Act 2006 (Ihe 2006 Acr). Having satisfied myself that the accounts of the Company are not required to be audited under Part 16 of the 2006 Act and are eligible for independent examination, I report in respect of my examination of your charity's accounts as carried out under section 145 of the Charities Act 2011 (°the 2011 Act"). In carying out my examination. I have followed the Directions given by the Charity Commission under section 145(5){b) of the 2011 Act. Independent examinerfs statement I have completed my examination. I confinn that no material matters have come to my attention giving me cause to believe: accounting records were not kept in respect of the Company as required by section 386 of the Companies Act 2006: or 2. the accounts do not accord with those records: or 3. the accounts do not comply with relevant accounting requirements of section 396 of the 2006 Act other than any requirement that the accounts give a 'true and fair, view which is not a matter considered as part of an independent examination. or 4. the accounts have not been prepared in accordance with the methods and principles of the Charities SORP {FRS102). I have no concems and have come across no other matters in connection with the examination to which attention should be drawn in this report in order to enable a proper understanding of the accounts to be reached. Signed: Date: April 2023 Karen Washer ACA Harrogate Harrogate Fairtrade Shop Trustees Annual Report 2022 Page 919