Palcrafts (UK) Limited - Charities report

REGISTERED COMPANY NUMBER: SC242506 (Scotland)

REGISTERED CHARITY NUMBER: SC033983

Report of the Trustees and

Unaudited Financial Statements for the Year Ended 31st December 2024

for

Palcrafts (UK) Limited

Page

Report of the Trustees

1

to

6

Independent Examiner's Report

7

to

8

Statement of Financial Activities

9

Balance Sheet

10

to

11

Notes to the Financial Statements

12

to

17

The trustees who are also directors of the charity for the purposes of the Companies Act 2006, present their report with the financial statements of the charity for the year ended 31st December 2024. The trustees have adopted the provisions of Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019).

OBJECTIVES AND ACTIVITIES

Objectives and aims

The objects of the charity are to:

- Relieve poverty in Palestine, primarily the West Bank and Gaza;

- Promote co-operation with individuals and groups in the UK in organising events of all kinds to heighten local awareness of Palestinian issues; and

- Provide in the UK educational materials and goods from Palestinian producer groups, particularly those catering for people with special needs, either physical or mental, and whose activities benefit the whole community.

The main objectives during the year continued to be:

- Operation of the fair-trade shop through our subsidiary company, Hadeel (UK) Limited, so providing employment and income on fair trade principles to members of producer groups in the Palestinian areas, including women's cooperative groups, craft groups in refugee camps, physically disadvantaged and other special needs groups, agricultural cooperatives etc.

- Organising and participating in educational events and improving our educational and information materials.

- Awarding grants to suppliers, groups and organisations in Palestine.

Significant activities

The charity's wholly owned subsidiary, Hadeel, was established to operate the commercial retail operations, and its profits, where available, are gifted to the charity.

Palcrafts is dependent on donations and interest received on bank deposits. The trading arm of the Charity (Hadeel) aims to break even, covering its own expenses, the cost of staffing and the overheads. Any surplus would be reinvested in the charity to fulfil its objectives.

The continuing war in Palestine and the resulting humanitarian crisis in Gaza (in particular) and the West Bank were the main focus for Palcrafts/Hadeel activities over the past year. Efforts were made to increase the procurement of Palestinian goods from the Occupied Palestinian Territories, supporting small and medium-sized businesses, co-operatives, women's groups and artisans. As shown below in Hadeel's trading activities, the amount of goods purchased has grown by more than double that of the previous years.

Palcrafts were able to allocate funding to support UNRWA in its relief work in Gaza and also in making direct donations to groups and small businesses. Palcrafts/Hadeel took part in fundraising efforts for Medical Aid for Palestinians and other charities. Palcrafts also supported and pledged support to several initiatives in Scotland, including the creation of the Glasgow-based Palcafe and the opening of the Palestine Museum in Edinburgh.

Grant making policy

While the Directors believe that the best way to relieve poverty and improve people's welfare is to provide sustainable employment, they also see the importance of giving grants. Their criteria in making grants are

1. Producer groups who show that they can make good use of funding to improve and expand their work, providing social benefit;

2. Supplier groups we know and trust, whose members are suffering real distress, and individuals in exceptional cases; and

3. Groups or organisations, usually in Palestine, which in our best judgment would use the grants for sustainable development to serve the same purposes as Palcrafts (UK) Ltd.

Public benefit

In shaping the objectives for the year and planning the charity's activities, the trustees have considered the Charity Commission's guidance on public benefit, including the guidance 'public benefit: running a charity (PB2)'. It is the trustees' opinion that the operation of the charity in its present form is for the public benefit under the principles set out in the Charity Commission guidance.

ACHIEVEMENT AND PERFORMANCE

The performance of our trading company "Hadeel" continued to grow over the past year. The trade growth was a result of several factors including and, mostly, in response to the conflict in Gaza, but also due to the addition of new lines of Palestinian merchandise, participation in events and pop-up shops across the region and in Glasgow and most importantly the dedication and hard work of staff and volunteers to whom we are grateful.

2024- The year of raging conflict and extreme suffering in Palestine

This report is prepared to cover activities and the annual report for the year from 1 January to 31 December 2024. The report will be presented at the AGM on 27 June 2025.

For the second year running, this annual report comes in the midst of a conflict that started in October 2023 and continues unabated bringing with it an incredible misery and unimaginable statistics of death, injuries, destruction, displacement, starvation and complete collapse of the civic life in the Gaza Strip and parts of the West Bank.

The conflict has extended into Lebanon, Syria and Yemen as well. At this point in time, we mourn and remember more than 65,000 people who have died directly due to the conflict and over 100,000 who have died as a consequence of the conflict due to diseases that could have been treated and lives that could have been saved, if hospitals and other health care facilities were not destroyed, forcefully evacuated and set on fire. Many lives could have been saved if healthcare workers, nurses and paramedics were not targeted and murdered in their clinics, ambulances and their own homes. Many lives could have been saved if clean water, food and shelter were not blocked and access was allowed.

There is no doubt that the impact of the conflict was felt sorely around the world and not least in Scotland, with many of our supporters and customers expressing their outrage at the attacks and support to the victims by visiting Hadeel, making donations and buying Palestinian goods.

In response to the conflict in Gaza, the Scottish public responded with support to Palestine by visiting Hadeel, buying Palestinian products and making donations. Palestinian producers in Gaza were unable to send products or receive payments due to the military, economic and financial siege imposed by Israel on the Strip. Producers in the West Bank faced a similar situation with restrictions on travel across the West Bank due to many checkpoints on roads between cities and villages. Also, restrictions on money transfer to producers in the West Bank led to delayed payment and, sometimes, no payments at all.

FUND-RAISING AND PUBLIC EVENTS

Opportunities for fundraising activities in Scotland on behalf of Palcrafts were limited during the year, but donations were received from customers and visitors at the shop. Although the amounts donated were modest, they were highly appreciated and valued. Participation in public events over the past year allowed Palcrafts/Hadeel to run stalls and build a network of relationships, generating off-site sales and reaching out to new customer bases.

GOVERNANCE AND MANAGEMENT SUPPORT

With increasing sales and trading activities and the increasing complexity of our operation, the Board of Directors continued in the process of reorganisation and commissioned a professional advisory company to assist in Human Resources management and in payroll responsibilities. Peninsula Business Services Limited was contracted in this role and produced a Staff Handbook, Health and Safety policies and advice on future contracts of employment.

FINANCIAL REVIEW

The charity's trading subsidiary, Hadeel (UK) Limited, continued to perform well in its trading activities during 2024. The directors of the charity are aware that the good trading activities are, largely, related to the Gaza war and therefore, future financial planning will take into account the possibility of a period of stagnation following the cessation of hostilities and the need for the rebuilding of Gaza. During the post-war period, much of the donations will probably be directed towards the rebuilding efforts and less to the buying of Hadeel products. Therefore, it has been prudent to build some reserve in order to ensure the sustainability of the organisation and maintain business within the fair-trade ethos and with Palestinian producers, small groups and cooperatives at the heart of our aims and objectives.

In the year 2025, Hadeel will have to address significant challenges with the rising cost of rent and staffing. The

Landlords' demands for an increase in rent will make the current premises unaffordable and a relocation of Hadeel will be necessary. Furthermore, the rise in national living wage, the rise in employer's national insurance contribution and the rising cost of living will add further challenge of on the Palcrafts/Hadeel wage bill and overall finances. A serious appraisal of the challenges will take place in the coming weeks and months.

FUTURE PLANS

In planning for the immediate and long-term future, addressing the above challenges is paramount, but we should also aim to build on recent success with a stable management structure and a reliable governance strategy. The directors, with the help of Peninsula Business Services Limited, streamlined the Human Resources support, produced Health and Safety policies and a staff handbook. Furthermore, the Hadeel stock management system was improved with the new "Lightspeed" electronic system.

STRUCTURE, GOVERNANCE AND MANAGEMENT

Governing document

The organisation is a company limited by guarantee, incorporated on 17th January 2003, and was granted recognition as a charity on 5th February 2003. The objects and the powers of the charitable company are established under its Memorandum of Association, and it is governed under its Articles of Association. In the event of the company being wound up members are required to contribute an amount not exceeding £1.

Recruitment and appointment of new trustees

The directors of the company are also charity trustees for the purposes of charity law and are known as the Council. Under the requirements of the Memorandum and Articles of Association, the directors are elected at the Annual General Meeting, with one-third retiring each year, though they may be re-elected at the next Annual General Meeting.

The Council seeks to ensure that these aims are appropriately reflected through the knowledge and experience of the membership of the trustee body.

Organisational structure

The charity is managed by the board of directors which meets frequently throughout the year to decide on the strategic direction and policy of the charity. The board must consist of a minimum of 3 members and a maximum of 15. The management of the charity's shop is delegated to the Co-ordinator and Business Manager.

Induction and training of new trustees

Council members are already familiar with the practical work of the charity and conditions in the Palestinian areas. There are occasional visits by staff, council members and volunteers to our producer groups in Palestine to keep in touch with them and the social benefits they provide. An induction pack is being developed, setting out the responsibilities and obligations of trustees, the main documents, the history of the charity and details of the objectives and activities.

Related parties

The charity has close relationships with a number of similar organisations and groups, as well as the suppliers to the shop and beneficiaries of the grants awarded. Similar organisations include:

- Sunbula, our sister shop in Jerusalem

- The One World Shop, Edinburgh

- Zaytoun CIC, London

- Equal Exchange, Edinburgh

- Scottish Fair Trade Forum (SFTF)

- British Association for Fair Trade Shops and Suppliers (BAFTS)

- Association of Cultural Enterprises

- The Church of Scotland

- Social Enterprise Network Scotland

- Scottish Palestinian Forum

Risk management

The directors continue to assess the risks to which the charity is exposed, relating to the operations and finance of the charity. Procedures are in place to oversee all financial transactions and to ensure compliance with the health and safety of staff, volunteers, customers and visitors. The Council operates a reserves policy to be able to meet the needs of our beneficiaries as they arise.

REFERENCE AND ADMINISTRATIVE DETAILS

Registered Company number

SC242506 (Scotland)

Registered Charity number

SC033983

Registered office

123 George Street

Edinburgh

EH2 4JN

Trustees

Dr I Abu-Arafeh

Mr S A Ausat

Mrs M E Campbell (resigned 25.6.24)

Rev M W Frew

Ms O O'Sullivan

Rev C Douglas

Ms E Paterson

Ms F Young (appointed 25.6.24)

Ms E Strachan (appointed 25.6.24)

Mr W Shawish (appointed 25.6.24)

Rev D Collingwood (appointed 17.9.24)

Company Secretary

Rev M W Frew

Independent Examiner

S Syedain & Co

Chartered Accountants

First Floor

87 Kenton Road

Harrow

Middlesex

HA3 0AH

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

Approved by order of the board of trustees on 10th June 2025 and signed on its behalf by:

Dr I Abu-Arafeh - Trustee

I report on the accounts for the year ended 31st December 2024 set out on pages nine to seventeen.

Respective responsibilities of trustees and examiner

The charity's trustees are responsible for the preparation of the accounts in accordance with the terms of the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The charity's trustees consider that the audit requirement of Regulation 10(1)(a) to (c) of the Accounts Regulations does not apply. It is my responsibility to examine the accounts as required under Section 44(1)(c) of the Act and to state whether particular matters have come to my attention.

Basis of the independent examiner's report

My examination was carried out in accordance with Regulation 11 of the Charities Accounts (Scotland) Regulations 2006. An examination includes a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also includes consideration of any unusual items or disclosures in the accounts, and seeking explanations from you as trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit, and consequently I do not express an audit opinion on the view given by the accounts.

Independent examiner's statement

In connection with my examination, no matter has come to my attention :

(1)	which gives me reasonable cause to believe that, in any material respect, the requirements

-	to keep accounting records in accordance with Section 44(1)(a) of the 2005 Act and Regulation 4 of the 2006 Accounts Regulations; and

-	to prepare accounts which accord with the accounting records and to comply with Regulation 8 of the 2006 Accounts Regulations

have not been met; or

(2)	to which, in my opinion, attention should be drawn in order to enable a proper understanding of the accounts to be reached.

Tahira Siddiqui (Senior Statutory Auditor)

The Institute of Chartered Accountants in England and Wales

S Syedain & Co

Chartered Accountants

First Floor

87 Kenton Road

Harrow

Middlesex

HA3 0AH

10th June 2025

31.12.24

31.12.23

Unrestricted

Restricted

Total

fund

funds

Notes

£

INCOME AND ENDOWMENTS

FROM

Donations and legacies

8,775

50

8,825

32,604

Charitable activities

Charitable Activities

10,483

-

10,483

Total

19,258

50

19,308

43,087

EXPENDITURE ON

Charitable activities

Expenditure on Charitable Activities

507

6,500

7,007

16,631

Governance costs

1,152

-

1,152

1,183

Support Costs

11,064

3,000

14,064

14,211

Total

12,723

9,500

22,223

32,025

NET INCOME/(EXPENDITURE)

6,535

(9,450

)

(2,915

)

11,062

RECONCILIATION OF FUNDS

Total funds brought forward

72,562

13,485

86,047

74,985

TOTAL FUNDS CARRIED
FORWARD

79,097

4,035

83,132

86,047

31.12.24

31.12.23

Unrestricted

Restricted

Total

fund

funds

Notes

£

FIXED ASSETS

Investments

3

100

-

100

CURRENT ASSETS

Debtors

4

73,842

-

73,842

76,809

Cash at bank

8,124

4,035

12,159

12,107

81,966

4,035

86,001

88,916

CREDITORS

Amounts falling due within one year

5

(2,969

)

-

(2,969

)

(2,969

)

NET CURRENT ASSETS

78,997

4,035

83,032

85,947

TOTAL ASSETS LESS CURRENT
LIABILITIES

79,097

4,035

83,132

86,047

NET ASSETS

79,097

4,035

83,132

86,047

FUNDS

6

Unrestricted funds

79,097

72,562

Restricted funds

4,035

13,485

TOTAL FUNDS

83,132

86,047

The charitable company is entitled to exemption from audit under Section 477 of the Companies Act 2006 for the year ended 31st December 2024.

The members have not required the company to obtain an audit of its financial statements for the year ended 31st December 2024 in accordance with Section 476 of the Companies Act 2006.

The trustees acknowledge their responsibilities for

(a)	ensuring that the charitable company keeps accounting records that comply with Sections 386 and 387 of the Companies Act 2006 and

(b)

preparing financial statements which give a true and fair view of the state of affairs of the charitable company as at the end of each financial year and of its surplus or deficit for each financial year in accordance with the requirements of Sections 394 and 395 and which otherwise comply with the requirements of the Companies Act 2006 relating to financial statements, so far as applicable to the charitable company.

These financial statements have been prepared in accordance with the provisions applicable to charitable companies subject to the small companies regime.

The financial statements were approved by the Board of Trustees and authorised for issue on 10th June 2025 and were signed on its behalf by:

Dr I Abu-Arafeh - Trustee

1.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements of the charitable company, which is a public benefit entity under FRS 102 have prepared in accordance, the Statement of Recommended Practice "Accounting and Reporting by Charities" issued in March 2005 (SORP 2005) and the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts \Scotland) Regulations 2006 \as amended), Financial Reporting Standard FRS 102 'The Financial Reporting Standard applicable in the UK and and Republic of Ireland' (effective 1 January 2009) and the Companies Act 2006. The financial statements have been prepared under the historical cost convention, with the exception of investments which are included at market value.

The financial statements contain information about Palcrafts (UK) Ltd as an individual charity and do not contain consolidated financial information as the parent of a group.

Income

All income is recognised in the Statement of Financial Activities once the charity has entitlement to the funds, it is probable that the income will be received and the amount can be measured reliably.

Expenditure

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably. Expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all cost related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources.

Taxation

The charity is exempt from corporation tax on its charitable activities.

Fund accounting

Unrestricted funds can be used in accordance with the charitable objectives at the discretion of the trustees.

Restricted funds can only be used for particular restricted purposes within the objects of the charity. Restrictions arise when specified by the donor or when funds are raised for particular restricted purposes.

Further explanation of the nature and purpose of each fund is included in the notes to the financial statements.

2.	TRUSTEES' REMUNERATION AND BENEFITS

There were no trustees' remuneration or other benefits for the year ended 31st December 2024 nor for the year ended 31st December 2023.

Trustees' expenses

There were no trustees' expenses paid for the year ended 31st December 2024 nor for the year ended 31st December 2023.

3.	FIXED ASSET INVESTMENTS

Subsidiary

£

Investment in subsidiary undertaking

100

As at 31 December 2024 & 2023

=======

Palcrafts (UK) Limited owns 100% of the issued share capital of Hadeel (UK) Limited, a company registered in Scotland. The accounts of Hadeel (UK) Limited show a profit of £8,552 (2023: £31,515) for the year ended 31 December 2024 and closing capital and reserves totalling £1,107 ( 2023: (£7,445)) as at 31 December 2024.

4.	DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.12.24

31.12.23

£

Other Debtors

4,216

Debtors due from Hadeel Ltd

69,626

72,593

73,842

76,809

Debts due from Hadeel (UK) Ltd represents amount due from group undertakings carrying an interest free loan to assist with working capital, which is repayable on demand.

5.	CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.12.24

31.12.23

£

Other creditors

1,410

Accrued expenses

1,559

2,969

6.	MOVEMENT IN FUNDS

Net

movement

At

At 1.1.24

in funds

31.12.24

£

Unrestricted funds

General fund

72,562

6,535

79,097

Restricted funds

West Bank and Gaza projects

13,485

(9,450

)

4,035

TOTAL FUNDS

86,047

(2,915

)

83,132

Net movement in funds, included in the above are as follows:

Incoming

Resources

Movement

resources

expended

in funds

£

Unrestricted funds

General fund

19,258

(12,723

)

6,535

Restricted funds

West Bank and Gaza projects

50

(9,500

)

(9,450

)

TOTAL FUNDS

19,308

(22,223

)

(2,915

)

Comparatives for movement in funds

Net

movement

At

At 1.1.23

in funds

31.12.23

£

Unrestricted funds

General fund

70,485

2,077

72,562

Restricted funds

West Bank and Gaza projects

4,500

8,985

13,485

TOTAL FUNDS

74,985

11,062

86,047

Comparative net movement in funds, included in the above are as follows:

Incoming

Resources

Movement

resources

expended

in funds

£

Unrestricted funds

General fund

14,628

(12,551

)

2,077

Restricted funds

West Bank and Gaza projects

28,459

(19,474

)

8,985

TOTAL FUNDS

43,087

(32,025

)

11,062

A current year 12 months and prior year 12 months combined position is as follows:

Net

movement

At

At 1.1.23

in funds

31.12.24

£

Unrestricted funds

General fund

70,485

8,612

79,097

Restricted funds

West Bank and Gaza projects

4,500

(465

)

4,035

TOTAL FUNDS

74,985

8,147

83,132

A current year 12 months and prior year 12 months combined net movement in funds, included in the above are as follows:

Incoming

Resources

Movement

resources

expended

in funds

£

Unrestricted funds

General fund

33,886

(25,274

)

8,612

Restricted funds

West Bank and Gaza projects

28,509

(28,974

)

(465

)

TOTAL FUNDS

62,395

(54,248

)

8,147

7.	OTHER FINANCIAL COMMITMENTS

At 31 December 2024 the group had annual commitments under non-cancellable operating leases as follows:

2024

2023

£

Premises lease expiring within one year

7,997

8.	RELATED PARTY DISCLOSURES

The following transactions with Hadeel (UK) Limited ("Hadeel"), a 100% subsidiary of Palcrafts, took place during the year:

i) Included in income from charitable activities is £10,483 (2023: £10,483) which relate to rent and rates received from Hadeel in relation to Hadeel's proportion which are made to third parties by Palcrafts (UK) Ltd.

ii) As at 31 December 2024 a balance of £69,626 (2023: £72,593) was owed to Palcrafts by Hadeel.

9.	POST BALANCE SHEET EVENTS

The Church of Scotland (COS), which has generously acted as landlords to Palcrafts for the past 13 years, have now served a notice requesting to vacate the premises by 5 September 2025. Alternatively, proposed a significant increase in rent, from the current £7,999 per annum to £30,000 per annum, in addition to charges for other services such as water and internet.

Appreciating the support of COS, the Council members are actively engaged in negotiations with COS to explore possible ways forward. At the same time, they are proactively seeking new premises that will be affordable and sustainable for Palcrafts in the long term.

The council members believe they should be able to obtain a financially viable result either by relocating to a new premises or by re-negotiating a more appropriate cost with the Church of Scotland.