Company Registration No. 10186799 (England and Wales)
Y TREE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Y TREE LIMITED
COMPANY INFORMATION
Directors
Mr Stuart Cash
Mr John Hampel
Mr Eric Peretz
Mr Oliver Richards
Company number
10186799
Registered office
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
Y TREE LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 25
Y TREE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

 

Principal activities

Y TREE provides comprehensive reporting, sophisticated advice and continuous implementation to high-net-worth individuals and families.

Business review

During 2023 Y TREE grew steadily while focusing on controlling expenses.

 

We generated fee income of £7.2m, representing a year-on-year increase of 28%. Expenses amounted to £16.6m, leading to a net loss of £8.8m. Total expenses were 14% higher than 2022. This was mainly driven by increases in headcount, marketing spend and IT infrastructure. People costs, comprising salaries, NI and pensions together with the international technology team, made up 76% of our expenditure, in line with 72% of expenses in 2022.

 

The company’s cash position, including cash equivalents represented under current asset investments, was £11.0m at 31 December 2023 compared to £12.6m at 31 December 2022. Our surplus cash is invested to provide additional income and is almost entirely invested in institutional money market funds to diversify exposure to banks.

 

Our growth activities focused on expanding our coverage of corporate opportunities; building our influential community; and creating a strong pipeline of qualified leads using technology and digital advertising channels.

 

During 2023 we accelerated our marketing activities using a mix of digital and traditional advertising channels as well as increased PR. Y TREE has seen a significant increase in press coverage with featured articles in top tier media outlets such as the Financial Times, FTAdviser, Investors' Chronicle, Spear’s Magazine, Fortune and the Robb Report, as well as key trade media titles like Private Equity International, Private Banker International and TheWealthNet.

 

During 2023 we focused on improving our core technology systems; enhancing our mobile app user experience; generating operational efficiencies; enhancing our core investment and financial life solutions.

 

As we move into 2024 we are focused on driving Y TREE towards profitability through a series of growth initiatives whilst maintaining tight controls on costs. The main areas of focus are organic growth in billable assets; gross margin enhancements and the addition of valuable new services.

Principal risks and uncertainties

The principal risks to our business are those that: (1) impede our ability to execute on our operational processes and meet our commitments to our clients and prospects; and (2) materially change or disrupt the assumptions underpinning our model and strategy, thereby affecting the achievement of our strategic objectives. Examples of the former include failure of operational processes; risk management failures; failure of technology which supports the business; changes to the legal and regulatory environment; or consequences of a bad actor. Examples of the latter include risks connected to the scale of lead generation by different channels; the level of client satisfaction; and risks associated with capital market movements.

 

These risks are mitigated through a proactive and modern enterprise risk management framework. The framework monitors a combination of quantitative measures, controls and qualitative inferences by senior management. The quantitative measures are Key Performance Indicators and Key Risk Indicators, which operate across the whole business and within each team or functional area to provide management with regular information to conduct analysis, identify trends and tools to take actions to reduce risk.

 

Capital risk refers to the potential that Y TREE may not possess sufficient regulatory capital to sustain its business operations in accordance with regulatory requirements stipulated by FCA. Capital risk is reduced through methodical planning, modelling and dynamic forecasting, which is reflected in the firm’s annual Individual Capital Adequacy and Risk Assessment (ICARA) process.

 

Y TREE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key financial performance indicators

The key financial indicators and management information are regarded as important and are assessed, reviewed and acted upon promptly.

 

We also prepare a detailed five-year plan and annual budget which is reviewed on a quarterly basis.

 

The key performance indicators include, but are not limited to revenues, expenses and net income.

 

Primary indicators were as follows:

 

2023     2022    Change

£m      £m     %

 

Revenues             7.2     5.7     28%

Expenses              16.6     14.6     14%

Net income          (8.8)     (8.9)     1%

 

 

 

Section 172 (1) statement

This statement sets out how the Directors have fulfilled their duty to comply with the requirements of Section 172 of the Companies Act 2006 and explains how the directors have considered broader stakeholder interests when making decisions to promote the success of the business.

 

The directors recognise the importance of acting in ways which promote high standards of business conduct. The board periodically reviews and approves the company’s risk management framework and its resources aligned against identifying, evaluating and mitigating risk. The Board periodically reviews matters relating to employee relations and company structure to ensure that they are consistent with employees’ interests. On an annual basis the Board reviews and approves the company's Individual Capital Adequacy and Risk Assessment (ICARA), which considers the sufficiency of the company’s capital and liquidity to withstand short to medium term ‘stresses’ to its business plan. Furthermore, starting from 2023, the Board began receiving a report on the firm’s compliance with the FCA rules on ‘Consumer Duty’ and evaluates its performance against the ‘four outcomes’ (a. Products and Services; b. Price and Value; c. Consumer Understanding; d: Customer Support) and three cross-cutting obligations.

 

Customers

The needs of the customer are fundamental to everything that Y TREE does. Our products and services are designed to provide transparency, efficiency and meaning in enabling clients to achieve their financial life aspirations.

 

Suppliers

Y TREE enters into a variety of agreements with service providers and suppliers. We aim to treat all suppliers fairly, openly and as valued partners.

 

Employees

At Y TREE, we recognise that our success is linked to our people. Grounded in our core values of Time, Togetherness and Responsibility, we are committed to fostering an environment where every team member feels valued, heard and motivated to excel. We understand that the well-being and development of our team is integral to our mission, and we strive to ensure that our workplace is a space where individuals can thrive both professionally and personally.

 

Regulators

Y TREE operates a robust risk and compliance framework to ensure that it meets the obligations of the UK regulatory framework.

Y TREE proactively and preemptively considers developments in its business that contribute to its role as a regulated firm in upholding the FCA’s statutory objectives.

 

Shareholders

Y TREE’s Board is committed to delivering long-term shareholder value by creating a differentiated customer centric service in personal financial services for high net worth individuals and families.

 

Y TREE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

Decision making

Y TREE has dynamic governance and decision making processes, which ensures that decisions are taken at the right level with appropriate consultation. Executive decision makers at Y TREE follow their decisions and re-evaluate the intended outcomes against observed results. Decisions, proposals and strategies are scrutinised in separately managed teams and by specialist committees and ad hoc project groups. Y TREE considers the impact of its decisions on a number of stakeholders including clients and their families, shareholders, employees and contractors, counterparties/suppliers, authorities (e.g. regulators) and the broader context.

 

Impact on the community and the environment

When required by our clients’ constraints or preferences, we seek clarification from the asset management companies that we select for implementing investment strategies about their specific ESG considerations regarding the fund management processes in place, their business conduct and operations. This may include, but is not limited to, the security selection criteria for the investment products we may use, the asset management company policy on shareholder voting, the products’ prospectus and other legal documents references to ESG rules or the investment products’ benchmarks (where relevant).

 

Alongside our business, we have launched the Y TREE Foundation, which exists to advance the protection and improvement of the environment, the prevention and relief of poverty, and the inclusion and education of underserved people and communities through fundraising appeals and events with the Y TREE community.

On behalf of the board

Mr Stuart Cash
Director
24 April 2024
Y TREE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of providing regulated investment advice to high net worth individuals and families.

Results and dividends

The results for the year are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr Stuart Cash
Mr John Hampel
Mr Eric Peretz
Mr Oliver Richards
Research and development

We continue to invest strategically in people and technology to build a business of scale.

 

During 2023, we invested significantly in building IT systems including cloud infrastructure, software and data analytics.

 

There is currently no commercial solution to deal with the full range of services that we provide to our clients. This has required us to undertake significant research and development into ways of enhancing the current system with innovative solutions that we designed and developed from scratch.

 

We built considerable scale and coverage around our investment risk framework, enhancing the technological processes supporting the assessment of risks inherent to both public and private investment securities.

 

The work of enhancing our services will continue into 2024 and beyond and will add significantly to our capacity to provide our clients with the unique ability to view and manage all aspects of their financial life from a single place.

Auditor

The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Strategic Report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of engagement with suppliers, customers and others, and principal risks including reference to capital risk.

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.

Y TREE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
On behalf of the board
Mr Stuart Cash
Mr Eric Peretz
Director
Director
24 April 2024
Y TREE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

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:

 

 

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.

Y TREE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF Y TREE LIMITED
- 7 -
Opinion

We have audited the financial statements of Y TREE Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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:

Basis for opinion

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.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

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:

Y TREE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF Y TREE LIMITED
- 8 -
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 identified material misstatements in the strategic report and the directors' report.

 

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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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.

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.

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.

As part of our planning process:

Y TREE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF Y TREE LIMITED
- 9 -

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

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.

Gary Miller (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
24 April 2024
Y TREE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
7,234,504
5,670,163
Other administrative expenses
16,061,708
14,260,255
Equity settled share-based payment costs
497,141
298,844
Total Administrative expenses
(16,558,849)
(14,559,099)
Operating loss
4
(9,324,345)
(8,888,936)
Interest receivable and similar income
8
46,333
5,470
Gains and losses on investments
9
481,316
-
Loss before taxation
(8,796,696)
(8,883,466)
Tax on loss
10
13,198
(12,049)
Loss for the financial year
(8,783,498)
(8,895,515)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Y TREE LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
84,825
139,056
Current assets
Debtors
12
2,961,777
2,455,858
Investments
13
9,458,700
-
0
Cash at bank and in hand
1,514,562
12,615,574
13,935,039
15,071,432
Creditors: amounts falling due within one year
14
(1,082,364)
(1,121,118)
Net current assets
12,852,675
13,950,314
Total assets less current liabilities
12,937,500
14,089,370
Provisions for liabilities
Deferred tax liability
15
21,206
34,404
(21,206)
(34,404)
Net assets
12,916,294
14,054,966
Capital and reserves
Called up share capital
18
89,309
82,870
Share premium account
39,367,111
32,225,865
Share option reserves
906,762
769,965
Profit and loss reserves
(27,446,888)
(19,023,734)
Total equity
12,916,294
14,054,966
The financial statements were approved by the board of directors and authorised for issue on 24 April 2024 and are signed on its behalf by:
Mr Stuart  Cash
Mr Eric Peretz
Director
Director
Company Registration No. 10186799
Y TREE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium account
Share option reserves
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
69,652
16,385,953
625,508
(10,282,606)
6,798,507
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
-
-
(8,895,515)
(8,895,515)
Issue of share capital
18
13,218
15,839,912
-
-
15,853,130
Other movements
-
-
0
144,457
154,387
298,844
Balance at 31 December 2022
82,870
32,225,865
769,965
(19,023,734)
14,054,966
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
-
-
(8,783,498)
(8,783,498)
Issue of share capital
18
6,439
7,141,246
-
-
7,147,685
Other movements
-
-
0
136,797
360,344
497,141
Balance at 31 December 2023
89,309
39,367,111
906,762
(27,446,888)
12,916,294
Y TREE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
21
(9,293,577)
(8,692,568)
Income taxes (paid)/refunded
-
0
811,036
Net cash outflow from operating activities
(9,293,577)
(7,881,532)
Investing activities
Purchase of tangible fixed assets
(25,450)
(115,180)
Proceeds on disposal of tangible fixed assets
1,381
-
0
Investments in financial assets
(8,977,384)
-
0
Interest received
46,333
5,470
Net cash used in investing activities
(8,955,120)
(109,710)
Financing activities
Proceeds from issue of shares
7,147,685
15,853,130
Net cash generated from financing activities
7,147,685
15,853,130
Net (decrease)/increase in cash and cash equivalents
(11,101,012)
7,861,888
Cash and cash equivalents at beginning of year
12,615,574
4,753,686
Cash and cash equivalents at end of year
1,514,562
12,615,574
Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

Y TREE Limited is a private company limited by shares incorporated in England and Wales. The registered office is Acre House, 11-15 William Road, London, United Kingdom, NW1 3ER.

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.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include investments and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Going concern

The financial statements are prepared on a going concern basis as the Directors are confident that the company has the ability to sustain business operations for at least the next 12 months from the financial statements' approval date.true The going concern assessment is based on the comprehensive forecast prepared by management and approved by the Board.

As part of the going concern review, the Directors have considered severe but plausible downside scenarios to evaluate the business's sustainability and its ability to meet its regulatory capital and liquidity requirements.

 

Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover represents advice fees charged and is shown net of VAT or any other sales related taxes. Fees are accrued on a daily basis on a percentage of billable assets.

1.4
Research and development expenditure

Research expenditure is expensed through the profit and loss account as it is incurred.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Fixtures, fittings and equipment
33.33% on straight line method

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.

1.6
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.

Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts 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.

1.7
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs.

1.8
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.9
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.

1.10
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.11
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

1.12
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.

1.13

Share option reserve

The share option reserve consists of the fair value of the option shares which were exercisable at the end of the year. The reserve is not distributable.

1.14

Investments

Investments comprise investments in listed shares which are initially measured at transaction price excluding transaction costs and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised through profit and loss.

Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Valuation of share options

The directors have been unable to directly measure the fair value of share options granted during the year as there is no open market for Y TREE Limited shares. The Black-Scholes model has been used to estimate their fair value indirectly. The model uses a number of assumptions, which the directors consider to be reasonable based on the current size and condition of the company and the sector it operates in. As a result, the valuation is subject to a degree of uncertainty and is made on the basis of assumptions that may not prove to be accurate. See further details of the assumptions used in the model in note 17.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Fee income
7,234,504
5,670,163
2023
2022
£
£
Other significant revenue
Interest income
46,333
5,470
2023
2022
£
£
Turnover analysed by geographical market
UK
7,234,504
5,670,163
4
Operating loss
2023
2022
Operating loss for the year is stated after charging:
£
£
Depreciation of owned tangible fixed assets
76,522
65,543
Loss on disposal of tangible fixed assets
1,778
-
Share-based payments
497,141
298,844
Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
35,000
35,000
For other services
Taxation compliance services
6,350
6,050
All other non-audit services
24,537
36,923
30,887
42,973
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Client service
45
39
R&D and support
40
37
Administrative functions
26
22
Total
111
98

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
8,481,728
6,683,072
Equity settled share-based payments
497,141
298,844
Social security costs
1,012,524
823,343
Pension costs
147,958
110,904
10,139,351
7,916,163
7
Directors' remuneration
2023
2022 restated
£
£
Remuneration for qualifying services
572,251
457,130
Company pension contributions to defined contribution schemes
3,963
3,963
576,214
461,093

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).

Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022 restated
£
£
Remuneration for qualifying services
200,713
160,000
Company pension contributions to defined contribution schemes
1,320
1,320
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
46,333
5,470
9
Amounts written off investments
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Change in value of financial assets held at fair value through profit or loss
329,565
-
0
Other gains/(losses)
Gain on disposal of investments held at fair value
151,751
-
481,316
-
Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
(13,198)
12,049

From 01 April 2023, the corporation tax rate increased to 25%.

The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Loss before taxation
(8,796,696)
(8,883,466)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(2,069,031)
(1,687,859)
Tax effect of expenses that are not deductible in determining taxable profit
132,279
57,439
Change in unrecognised deferred tax assets
2,128,102
2,153,268
Other permanent differences
(65,403)
5,484
Remeasurement of deferred tax for changes in tax rates
(125,937)
(516,283)
Fixed asset differences (super deduction)
(10)
-
0
Fixed asset timing differences
(13,198)
-
0
Taxation (credit)/charge for the year
(13,198)
12,049
Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
11
Tangible fixed assets
Fixtures, fittings and equipment
£
Cost
At 1 January 2023
285,400
Additions
25,450
Disposals
(10,777)
At 31 December 2023
300,073
Depreciation and impairment
At 1 January 2023
146,344
Depreciation charged in the year
76,522
Eliminated in respect of disposals
(7,618)
At 31 December 2023
215,248
Carrying amount
At 31 December 2023
84,825
At 31 December 2022
139,056
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
865,326
694,836
Other debtors
86,023
88,009
Prepayments and accrued income
2,010,428
1,673,013
2,961,777
2,455,858
13
Current asset investments
2023
2022
£
£
Investments measured at fair value through profit or loss
9,458,700
-
0

Current asset investments represent an investment in money market funds that are classified at fair value through profit and loss (FVTPL).

 

These are highly liquid mutual funds available for trading daily. The carrying amount of this asset approximates to its fair value.

Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
354,598
397,216
Taxation and social security
459,648
357,246
Other creditors
43,464
51,111
Accruals and deferred income
224,654
315,545
1,082,364
1,121,118
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
21,206
34,404
2023
Movements in the year:
£
Liability at 1 January 2023
34,404
Credit to profit or loss
(13,198)
Liability at 31 December 2023
21,206

The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

Deferred tax is not recognised in respect of tax losses on the basis that the company is in the early stages of development. There are total tax losses to use against future taxable profits of £18,280,080 (2022: £14,332,611).

16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
147,958
110,904

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
17
Share-based payment transactions
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 January 2023
56,243
56,704
15.33
15.63
Granted
11,375
9,755
99.73
98.00
Forfeited
(14,273)
(10,216)
19.07
25.46
Outstanding at 31 December 2023
53,345
56,243
45.82
28.13
Exercisable at 31 December 2023
32,236
34,178
24.20
15.33

The options outstanding at 31 December 2023 had an exercise price ranging from £5 to £132, and a remaining contractual life of up to 10 years.

The weighted average fair value of options granted in the year was determined using the Black-Scholes option pricing model. The Black-Scholes model is considered to apply the most appropriate valuation method due to the relatively short contractual lives of the options and the requirement to exercise within a short period after the employee becomes entitled to the shares (the “vesting date”).

 

Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option at grant date.

Inputs were as follows:
2023
2022
Weighted average share price
75.89
59.92
Weighted average exercise price
45.82
28.13
Expected volatility
26.46
26.51
Expected life (years)
6.12
6.24
Risk free rate
1.63
1.05
Liabilities and expenses

During the year, the company recognised total share-based payment expenses of £497,141 (2022 - £298,844) which related to equity settled share based payment transactions.

18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
(restated)
£
£
(restated)
Issued and fully paid
Ordinary A shares of 10p each
378,721
382,132
37,872
38,213
Ordinary B shares of 10p each
514,373
446,567
51,437
44,657
893,094
828,699
89,309
82,870
Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
18
Share capital
(Continued)
- 24 -

During the year, 64,395 Ordinary B shares were issued with a nominal value of £6,440 for an aggregate consideration of £7,141,245

 

This was made up of the following issues:

 

On 6 January 2023 an issue of 9,268 Ordinary B shares were issued with a nominal value of £927 for an aggregate consideration of £1,221,430

 

On 31 January 2023 an issue of 7,547 Ordinary B shares were issued with a nominal value of £755 for an aggregate consideration of £994,619

 

On 1 February 2023 an issue of 3,821 Ordinary B shares were issued with a nominal value of £382 for an aggregate consideration of £503,570

 

On 27 February 2023 an issue of 13,646 Ordinary B shares were issued with a nominal value of £1,364 for an aggregate consideration of £1,798,406

 

On 25 April 2023 an issue of 19,411 Ordinary B shares were issued with a nominal value of £1,941 for an aggregate consideration of £2,558,176

 

On 23 June 2023 an issue of 9,160 Ordinary B shares were issued with a nominal value of £916 for an aggregate consideration of £44,884

 

On 26 July 2023 2,274 £0.10 Ordinary A shares were re-designated as 2,274 £0.10 Ordinary B shares

 

On 31 July 2023 an issue of 700 Ordinary B shares were issued with a nominal value of £70 for an aggregate consideration of £3,430

 

On 30 August 2023 1,137 £0.10 Ordinary A shares were re-designated as 1,137 £0.10 Ordinary B shares

 

On 1 September 2023 an issue of 466 Ordinary B shares were issued with a nominal value of £47 for an aggregate consideration of £2,283

 

On 19 September 2023 an issue of 20 Ordinary B shares were issued with a nominal value of £2 for an aggregate consideration of £2,038

 

On 29 September 2023 an issue of 237 Ordinary B shares were issued with a nominal value of £24 for an aggregate consideration of £11,826

 

On 18 December 2023 an issue of 119 Ordinary B shares were issued with a nominal value of £12 for an aggregate consideration of £583

 

19
Operating lease commitments

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
205,920
123,285
Y TREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
(Continued)
- 25 -

Transactions with directors and companies in which directors hold an interest

 

At the year end creditors included £1,977 due to directors (2022: £9,943).

 

During the year, expenses of £10,918 (2022: £11,332) were paid to directors.

 

During the year, expenses of £nil (2022: £46,200) were made to companies for which directors are also Directors.

21
Cash absorbed by operations
2023
2022
£
£
Loss for the year after tax
(8,783,498)
(8,895,515)
Adjustments for:
Taxation (credited)/charged
(13,198)
12,049
Investment income
(46,333)
(5,470)
Loss on disposal of tangible fixed assets
1,778
-
Depreciation and impairment of tangible fixed assets
76,522
65,543
Gains and losses on investments
(481,316)
-
Equity settled share based payment expense
497,141
298,844
Movements in working capital:
Increase in debtors
(505,919)
(548,266)
(Decrease)/increase in creditors
(38,754)
380,247
Cash absorbed by operations
(9,293,577)
(8,692,568)
22
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
12,615,574
(11,101,012)
1,514,562
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