30 September 2019
TRAFALGAR NEW HOMES PLC
("Trafalgar", the "Company" or "Group")
Final Results for the year ended 31 March 2019 and notice of Annual General Meeting
Trafalgar (AIM: TRAF), the AIM quoted residential property developer operating in southeast
England, announces its final results for the twelve months ended 31 March 2019.
The Company's Annual Report is being posted to shareholders today and contains notice of the Annual
General Meeting of the Company to be held at the Company's offices at Chequers Barn, Bough Beech,
Edenbridge, Kent TN8 7PD at 11.00 a.m. on 25 October 2019.
Highlights
Group turnover was £2,123,500 (2018: £906,484), with a loss after tax of £
2,296,422 (2018: Loss £424,903), after taking into account exceptional item of
£1,559,319.
Group turnover for the year amounted to £ 2,123,500, representing the sale of
five residential properties.
Management have concluded that an impairment of the investments in
subsidiaries is prudent and that these will be written down to zero, resulting in
an exceptional charge of £1,559,319.
The cash on the balance sheet at the end of the year was £32,800 (2018:
£458,209) and the Group continues to have sufficient bank facilities for all
planned activities.
On 27th May, 2019 Chris Johnson and his son Alex Johnson stepped down from
the Group Board, although they remain involved on a consultancy basis. On the
same day, Paul Treadaway was appointed as the new Group Managing Director
which strengthens the Board with his particular expertise being in the sector for
assisted living developments. This retains a good balance of complementary
skills on the Board.
Enquiries:
Trafalgar Property Group plc
James Dubois
SPARK Advisory Partners Limited - AIM Nominated Adviser
Matt Davis
Peterhouse Capital Limited - Broker
Duncan Vasey/Lucy Williams
+44 (0) 7899 995 421
+44 (0) 203 368 3550
+44 (0) 20 7409 0930
Prior to publication, the information contained within this announcement was deemed by the
Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 ("MAR"). With the publication of this announcement, this information is now considered to
be in the public domain.
Notes to Editors:
Trafalgar Property Group plc
For further information visit www.trafalgarproperty.group
CHAIRMAN’S STATEMENT
for the year ended 31 March 2019
On behalf of the Board, I present Trafalgar Property Group’s results for the year ended 31 March 2019
which show five property sales were recorded in the year. The overall result was very disappointing, as
can be seen in the attached Accounts and Strategic Report.
We will continue to explore the potential for acquiring new sites that should produce increased turnover
and a return to profit.
Financials
The year under review saw Group turnover at £2,123,500 (2018: £906,484), with a loss after tax of
£2,296,422 (2018: Loss £424,903), after taking into account exceptional items as detailed in note 19 to
the accounts.
Management have performed a review of the assets and liabilities of the underlying subsidiaries which
form the value of the anticipated profits on ongoing developments. In addition, the value of land options
in Trafalgar Retirement + have been re-assessed. At the time of approval of the financial statements there
is no confirmed planning permission on these land options.
Due to the uncertainties and timing of developments it has been agreed by management not to include any
future anticipated profits of developments in their assessment. Therefore the net asset value of the
underlying investments does not support the Trafalgar Property Group’s carrying value of investments in
the subsidiaries.
Management have concluded that an impairment of the investments is prudent and that these will be
written down to zero, resulting in an exceptional charge of £1,559,319.
The cash on the balance sheet at the end of the year was £32,800 (2018: £458,209) and the Group
continues to have sufficient bank facilities for all planned activities.
Business Environment and Outlook
Our recent move into the assisted living sector gives us an opportunity to expand into fresh areas of
residential units where we see an enormous demand, especially in the South-East. However, our failure in
obtaining finance for our first venture, at Camberley, has proved a poor start to our ambitions in this
direction.
On 27th May, 2019 Chris Johnson and his son Alex Johnson stepped down from the Group Board,
although they remain involved on a consultancy basis. On the same day, Paul Treadaway was appointed
as the new Group Managing Director which strengthens the Board with his particular expertise being in
the sector for assisted living developments. This retains a good balance of complementary skills on the
Board. We are currently progressing offers of finance alongside our planning applications so that we
should be well placed to commence our developments as soon as planning permits.
I would refer you to Paul Treadaway’s Strategic Report that covers our activities in more detail.
James Dubois
Chairman
27 September 2019
Trafalgar Property Group Plc
STRATEGIC REPORT
for the year ended 31 March 2019
Business review, results and dividends
All trading and property assets of Trafalgar Property Group Plc are held in the name of Trafalgar Property Group
Plc or its subsidiaries as follows:
Trafalgar New Homes Limited
Trafalgar Retirement+ Limited
Combe Bank Homes (Oakhurst) Limited
Combe Homes (Borough Green) Ltd
All bank and mortgage borrowings are the liability of Trafalgar New Homes Ltd, the wholly owned subsidiary of
Trafalgar Property Group Plc. The shares of Trafalgar Property Group Plc are quoted on the London Stock
Exchange AIM market.
The principal activity of the Group continues to be that of home building and property development and the
consolidated results of the year’s trading, are shown below. The consolidated loss for the year amounted to
£2,296,422 (2018: Loss £424,903) after taking into account exceptional items as mentioned in note 19 to the
accounts.
Principal risks & uncertainties
Set out below are certain risk factors which could have an impact on the Group's long-term performance. The
factors discussed below should not be regarded as a complete and comprehensive statement of all potential risks
and uncertainties facing the Group.
The principal risks and uncertainties facing the Group are:
1. Any possibility that lending criteria from the Group’s bankers may harden with little prior notice.
2. Construction costs may escalate and eat into gross profit margins.
3. Heavy overheads may be incurred especially when projects have been completed and before others have
been commenced.
4. The Group could pay too much for land acquisitions.
5. The Group’s reliance on key members of staff.
6. The market may deteriorate, damaging liquidity of the group and future revenues.
The Group considers that it mitigates these risks with the following policies and actions:
1. The Group affords its bankers and other lenders a strong level of asset and income cover and maintains
good relationships with a range of funding sources from which it is able to secure finance on favourable
terms.
2. Construction costs are outsourced on a fixed price contract basis, thereby passing on to the contractor
all risk of development cost overspend, including from increased material, labour or other costs.
3. Most other professional services are also outsourced, thus providing a known fixed cost before any
project is taken forward and avoiding the risk that can arise in employing in-house professionals at a
high unproductive overhead at times when activity is slack.
4. Land buying decisions are taken at board level, after careful research by the Directors personally, who
have substantial experience of the house building industry, potential construction issues and the local
market.
The Group focuses on a niche market sector of new home developments in the range of 4 to 20 units.
Within this unit size, competition to purchase development sites from land buyers is relatively weak, as
this size is unattractive to major national and regional house builders who require a larger scale to
justify their administration and overheads, whilst being too many units for the smaller independent
builder to finance or undertake as a project. Within this market, there are opportunities to negotiate
land acquisitions on favourable terms. Many competitors who also focus on this niche have yet to
recapitalise and are unable to raise finance.
5. Many of the activities are outsourced and each of the Directors is fully aware of the activities of all
members.
6. The Group has a rigorous corporate governance policy appropriate for a publicly quoted company with
ambitions substantially to raise its profile within the wider investor community.
Operations review
A summary of the results for the year is as follows:-
Revenue for the year
Gross (loss)/profit
Loss after taxation
2018
2019
£
£
906,484
2,123,500
(264,171) 33,838
(424,903)
(2,296,422)
Group turnover for the year amounted to £ 2,123,500, representing the sale of five residential properties.
After taking into account the overheads of the Group, there was a loss recorded for the year of £ 2,296,422 after
exceptional items as detailed in note 19.
There will be no tax charge and the Company now has tax losses being carried forward of £ 3,364,609 (2018:
losses £2,642,077)
The loss per share is (0.54p), (2018: loss per share 0.10p) during the year.
As can be seen from the above , the Group failed to achieve a profit for the year under review and, as at the year
end, only five of the residential units developed during the year have been sold, being the 2 apartments at the
Burnside Tunbridge Wells, Kent development, the two remaining terraced houses at the Edenbridge, Kent
development and one of the two detached houses at Hildenborough Kent development.
Key performance indicators (KPIs)
Management are closely involved in the day to day operations of the Group and are very aware of cashflows and
expenditure. However, Management believe that the key indicators of performance for the group are the revenue
and profitability achieved during the period. These measures are disclosed above in the operations review.
Development Pipeline & outlook
The year under review was not without its difficulties. In the residential division delays occurred on the building
programme for the various properties that were still in the course of construction, or being finished off, with
contractors appointed to complete the works but unable to follow the timetable laid down for completion of those
works.
The delays lead to escalating interest costs on borrowing and therefore affected the profitability of the completed
units that were for sale, on the disposal of the same. Five of the units were sold during the year grossing
£2,123,500.
Rather than sell the remaining completed units into a declining market the units were retained by the group,
refinanced and let out on assured shorthold tenancy agreements which in every case resulted in the group
receiving rents in excess of the borrowing cost of each property.
Currently the group holds 4 “let out” properties, valued at £1,975,000.
The substantial detached property developed by the group at Saxons, Speldhurst Nr Tunbridge Wells, Kent
required further build work which was commenced during the year and is nearing completion and terms have
been agreed with a buyer for a sale of the property at £1,600,000, subject to contract, which once the necessary
residual works have been completed should conclude.
During the year work has continued on the 6 town house site at Sheerness, Kent where, again, contractor
difficulties were experienced with the appointed contractor ceasing work on site resulting in the group having to
appoint an alternative contractor to complete the works. Work on site is anticipated to be completed by end
October where all the properties will be put on the market for sale and we will be taking advantage of the “help
to buy” scheme for which we are registered.
The integration of Trafalgar Retirement +, the extra/care assisted living operator has gone well and they have
secured a number of options for both extra/care assisted living developments and vanilla residential
developments which should provide a steady supply of sites for development in both sectors, to contribute to
turnover in the current year and beyond.
Whilst Trafalgar Retirement+ continue to identify and secure new land opportunities for extra/care and assisted
living, they are equally focused on obtaining a successful outcome on the sites currently under option and/or in
for planning. Once planning has been achieved then the sites can be built out and placed for sale on the open
market, or in the care of the smaller residential schemes, sold on with planning, both options being profitable to
the business.
Notwithstanding that finance is readily available for the modest sized residential development schemes which
the group has specialised in, difficulties have been experienced in the raising of finance for the substantial larger
extra case/assisted living schemes which the group wishes to undertake and the group is accordingly actively
seeking the finance for such developments at the present time.
Since the year end Trafalgar Retirement+ entered into a guarantee agreement for £360,000 for funds supplied by
Mr C Johnson, being a deposit forfeited by Randell House Ltd, a subsidiary of Trafalgar Retirement+. This is
related to the acquisition of an assisted living site in Camberley Surrey, where the acquisition was not completed.
Financial Instruments
The Group’s principal financial instruments comprise cash at bank, bank loans, other loans and various items
within current assets and current liabilities that arise directly from its operations. The Directors consider that the
key financial risk is liquidity. This risk is explained in the section headed ‘Principal risks and uncertainties’ in
the Annual Report and Accounts on page 3.
Paul Treadaway
Director
27 September, 2019
Trafalgar Property Group Plc
DIRECTORS’ REPORT
for the year ended 31 March 2019
DIRECTORS’ REPORT
TRAFALGAR PROPERTY GROUP PLC
The Directors present their Report and Audited Financial Statements for the year ended 31 March 2019.
Results and dividends
The results for the year are set out on page 14.
The Directors do not recommend the payment of a final dividend for the year (2018: nil).
Directors
The following Directors have held office since 1 April 2018 and have all served for the entire accounting year:-
C C Johnson
A D Johnson
N A C Lott
J Dubois
D C Stocks
Appointed post year end:
Resignations post year end:
P A Treadaway – 27 May 2019
C C Johnson – 27 May 2019
A D Johnson – 27 May 2019
Conflicts of interest
Under the articles of association of the company and in accordance with the provisions of the Companies Act
2006, a Director must avoid a situation where he has, or can have, a direct or indirect interest that conflicts, or
possibly may conflict with the company's interests. However, the Directors may authorise conflicts and
potential conflicts, as they deem appropriate. As a safeguard, only Directors who have no interest in the
matter being considered will be able to take the relevant decision, and the Directors will be able to impose
limits or conditions when giving authorisation if they think this is appropriate. During the financial year ended
31 March 2019, the Directors have authorised no such conflicts or potential conflicts.
Directors’ interests in shares
Directors' interests in the shares of the Company, including family interests, at 31 March 2019 were as
follows:-
C C Johnson
A Johnson
J Dubois
N Lott
D C Stocks
P Treadaway
31.03.2019
31.03.2018
Ordinary shares of 0.1p each
Ordinary shares of 1p each
186,815,803
1,868
1,500,000
500,000
80,330,532
106,484,658
186,815,803
1,868
1,500,000
500,000
80,330,532
106,484,658
P Treadaway was a shareholder as at 31st March, 2019 and 31st March, 2018, but not a Director as at that time.
Other substantial shareholdings
As at 26 September, 2019, being the latest practicable date before the issue of these financial statements, the
company had been notified of the following shareholdings which constitute 3% or more of the total issued shares
of the company at that date.
C.C. Johnson
D C Stocks
P Treadaway
Statement of directors’ responsibilities
Ordinary
shares
No.
186,815,803
80,330,532
106,484,658
Shareholding
%
38.31
16.47
21.83
The Directors are responsible for preparing the Strategic Report, Directors’ 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 FRS 102 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 Group and of the profit or loss of the Group for that year. In
preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable 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
Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group 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.
They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other
information included in the Annual Report and Financial Statements is prepared in accordance with applicable
law in the United Kingdom.
The maintenance and integrity of the Group website is the responsibility of the Directors; the work carried out by
the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no
responsibility or any changes that may have occurred in the accounts since they were initially presented on the
website.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation in other jurisdictions.
Financial Instruments
Information relating to the financial instruments is now included in the Strategic report on pages 3-5.
Future Developments
Information relating to future developments is included in the Strategic report on pages 3-5.
Provision of information to auditor
Each of the persons who are Directors at the time when this Directors’ Report is approved has confirmed that:
so far as that Director is aware, there is no relevant audit information of which the Group’s auditor is
unaware; and
that Director has taken all the steps that ought to have been taken as a Director in order to be aware of
any information need by the Group’s auditor in connection with preparing their report and to establish
that the Group’s auditor is aware of the information.
Auditor
During the year the company changed auditors from Crowe UK LLP, to MHA MacIntyre Hudson.
The auditor, MHA MacIntyre Hudson, will be proposed for re-appointment in accordance with Section 489 of
the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Paul Treadaway Director
27 September 2019
Trafalgar Property Group Plc
CORPORATE GOVERNANCE STATEMENT
Trafalgar Property Group Plc
CORPORATE GOVERNANCE STATEMENT
The Board of Trafalgar Property Group Plc recognise the value of good corporate governance and has through
the year ended 31 March 2019 implemented corporate governance procedures appropriate for the present size of
the entity having given due regard to the Corporate Governance Code for Small and Mid-Size Quoted Companies
issued by the Quoted Companies Alliance (“QCA”). In accordance with AIM Rule 26 as amended, the Company
has decided to apply the QCA Corporate Governance Code (“QCA Code”) issued by the QCA in May 2018 and is
publishing on its website details of the QCA Code, how the Company complies with the QCA Code and, where it
departs from the QCA Code, an explanation of the reasons for doing so.
Board Structure
The Board consists of four Directors of which two are executive and two non-executive.
The Board meets as and when required and is satisfied that it is provided with information in an appropriate
form and quality to enable it to discharge its duties. All Directors are required to retire by rotation with one
third of the board seeking re-election each year.
Due to the current size of the Group, the duties that would normally be attributed to The Nomination Committee,
have been undertaken by the board as a whole.
The board has undertaken a formal assessment of the auditor's independence and will continue to do so at least
annually. This assessment includes:
a review of non-audit services provided to the company and the related fees;
a review of the auditor's own procedures for ensuring the independence of the audit firm and parties
and staff involved in the audit, including regular rotation of the audit partner; and
obtaining confirmation from the auditor that, in their professional judgement, they are independent.
Internal Controls
The Board is responsible for the Group's system of internal controls and for reviewing their effectiveness. The
internal controls are designed to ensure the reliability of financial information for both internal and external
purposes. The Directors are satisfied that the current controls are effective with regard to the size of the Group.
Any internal control system can only provide reasonable, but not absolute assurance against material mis-
statement or loss. Given the size of the Group, the Board has assessed that there is currently no need for an
internal audit function.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TRAFALGAR PROPERTY
GROUP PLC
Opinion
We have audited the group financial statements of Trafalgar Property Group Plc for the year ended 31 March
2019 which comprise the Group Statement of Comprehensive Income, the Group Statement of Financial
Position, the Group Statement of Changes in Equity, the Group Cash Flow Statement and notes to the financial
statements, including a summary of significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the group's affairs as at 31 March 2019
and of the Group's loss for the year then ended;
the financial statements have been properly prepared in accordance with IFRS as adopted by the
European Union; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
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 group financial statements section of our report. We are independent of the group 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 as applied to SME listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Conclusions relating to going concern
Material uncertainty related to going concern
We draw attention to the going concern section in the notes to the financial statements. The group’s ability to
generate funds to meet short term operating cash requirements and loan repayments is reliant on the group’s
ability to sell the properties it holds, or to obtain alternative financing. The timing of these sales is uncertain and
as a result the group is currently reliant on long term investor loans being renewed when they come up for
repayment.
Notwithstanding the disclosure in the going concern note in the notes to the accounts and the directors’ belief
that it is appropriate to produce these accounts on a going concern basis, we consider there to be factors that
indicate that a material uncertainty exists that may cast doubt on the ability of the company to continue as a
going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the group financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the group financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matters that we identified for the year ended 31 March 2019 are:
Key audit matter
How the scope of our audit addressed the key audit matter
Valuation of inventory
The group develops properties at a
number of sites incurring significant
costs. These are required to be valued at
the lower of cost and net realisable value.
Revenue recognition
The group recognises revenue at the point
of completion.
Going concern
The financial statements have been
prepared on a going concern basis as
discussed in the notes to the financial
statements.
Historically, the Group has been loss
making, and has raised capital and taken
out borrowings to fund costs during an
extended growth phase. Accumulated
losses shown in the Consolidated Balance
Sheet totalled £2,610,307 as at 31 March
2019.
We included the going concern
assumption as a key audit matter as it
relies on existing cash reserves and
revenue growth generating sufficient
cashflows to cover necessary
expenditure.
We reviewed the additions to the inventory value during the
year ensuring that the amounts recognised were appropriate
and accounted for correctly.
In addition we reviewed the assessed realisable value of the
developments for indications of potential impairment in the
carrying value of the inventory by reference to agents’
valuations and market trends and data.
We reviewed sales during the year to ensure that these were
recognised in line with the stated revenue recognition policy.
We reviewed revenue recognised post year end to ensure cut-
off had been suitably applied.
In assessing the appropriateness of the going concern
assumption used in preparing the financial statements, our
procedures included, amongst others:
Assessing the cash flow requirements of the Group over the
next 12 months based on budgets and forecasts.
Understanding what forecast expenditure is committed and
what could be considered discretionary.
Considering the liquidity of existing assets on the balance
sheet.
Considering the terms of the bank loan and trade finance
facilities and the amount available for drawdown.
Considering the continued support of the Directors and
Related Party Loans.
Our application of materiality
The materiality that we used for the consolidated financial statements was £92,000 (2018: £125,000). We
determine materiality using 2% of the total assets of the Group (2018: 2% of total assets), which we have
determined, in our professional judgment, to be one of the principal benchmarks within the financial statements
relevant to members of the Company in assessing financial performance.
We report to the director’s all corrected and uncorrected misstatements we identified through our audit with a
value in excess of £4,600 (2018: £2,000), in addition to other audit misstatements below that threshold that we
believe warranted reporting on qualitative grounds.
An overview of the scope of our audit
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Company's
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements. In addition,
we read all the financial and non-financial information in the Chairman’s statement, Strategic report and
Directors’ report to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies, we consider the implication for our report.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the group financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the group financial
statements or our knowledge obtained in 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 there is a
material misstatement of the group financial statements or a material misstatement of the other information. 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.
Opinion on matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
group financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have 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 group and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 7, the directors are
responsible for the preparation of the group 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 group
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group financial statements, the directors are responsible for assessing the group’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 group or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the group financial statements
Our objectives are to obtain reasonable assurance about whether the group 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our audit report
This report is made solely to the parent 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 parent 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 parent
company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Andrew Moyser FCCA ACA (Senior statutory auditor)
for and on behalf of
MHA Macintyre Hudson
Chartered Accountants and Statutory Auditors
Equipoise House
Grove Place
Bedford
MK40 3LE
27 September 2019
Trafalgar Property Group Plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2019
Revenue
Cost of sales
Gross (loss)/profit
Administrative expenses
Operating (loss)
(Loss) before interest
Other income
Exceptional items
Interest payable and similar charges
(Loss) before taxation
Tax payable on (loss) on ordinary activities
(Loss) after taxation for the year attributable to equity
holders of the parent
Other comprehensive income attributable to equity
holders of the parent
Total comprehensive (loss) for the year
(Loss) attributable to:
Equity holders of the Parent
Total comprehensive (loss) for the year attributable to:
Equity holders of the Parent
(LOSS) PER ORDINARY SHARE:
Basic/diluted
Year
ended
Year
ended
Note
31 March
2019
£
31 March
2018
£
2
19
5
6
2,123,500
906,484
(2,392,360)
(880,846)
(268,860)
25,638
(472,932)
(440,014)
(741,792)
(414,376)
(741,792)
(414,376)
4,689
8,200
(1,559,319)
-
-
(18,727)
(2,296,422)
(424,903)
-
(2,296,422)
(424,903)
-
-
(2,296,422)
(424,903)
(2,296,422)
(424,903)
(2,296,422)
(424,903)
7
(0.54)p
(0.10)p
All results in the current and preceding financial year derive from continuing operations.
The notes on pages 18 to 35 are an integral part of these consolidated financial statements.
Trafalgar Property Group Plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 March 2019
TOTAL ASSETS
Non-current assets
Property, plant and equipment
Current assets
Inventory
Trade and other receivables
Cash at bank and in hand
Total assets
EQUITIES & LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Non-current liabilities
Deferred tax
Borrowings
Total liabilities
Equity attributable to equity holders of the Company
Called up share capital
Share premium account
Reverse acquisition reserve
Profit & loss account
Total Equity
Total Equity & Liabilities
31 March
31 March
Note
2019
£
2018
£
8
11
9
10
1,339
1,339
2,079
2,079
4,481,230
92,092
32,800
4,606,122
7,792,611
94,844
458,209
8,345,664
4,607,461
8,347,743
12
13
442,203
2,502,462
394,255
3,108,510
2,944,665
3,502,765
6
13
-
4,273,103
291,045
4,867,818
7,217,768
8,661,628
14
15
2,570,567
2,510,462
(2,817,633)
(4,873,703)
(2,610,307)
4,607,461
2,570,567
2,510,462
(2,817,633)
(2,577,281)
(313,885)
8,347,743
These financial statements were approved by the Board of Directors and authorised for issue on 27 September,
2019 and are signed on its behalf by:
P Treadaway: ………………………………………. J Dubois: ……………………………………………
The notes on pages 18 to 35 are an integral part of these consolidated financial statements.
P a g e | 17
Trafalgar Property Group Plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2019
Re
Share capital
Share
premium
£
£
Reverse
acquisition
reserve
£
Retained
profits
/(losses)
£
Total equity
£
At 1 April 2017
2,383,752
1,165,463
(2,817,633)
(2,152,378)
(1,420,796)
Loss for the year
Total comprehensive
income for the year
-
-
-
-
Issue of shares
186,815
1,344,999
Share issue costs
-
-
- (424,903)
(424,903)
-
-
-
(424,903)
(424,903)
-
-
1,531,814
-
At 31 March 2018
2,570,567
2,510,462
(2,817,633)
(2,577,281)
(313,885)
At 31 March 2018
2,570,567
2,510,462
(2,817,633)
(2,577,281)
(313,885)
(Loss) for year
Total comprehensive
(loss) for the year
Issue of shares
Share issue costs
-
-
-
-
-
-
-
-
-
(2,296,422)
(2,296,422)
-
(2,296,422)
(2,296,422)
-
-
-
-
-
-
At 31 March 2019
2,570,567
2,510,462
(2,817,633)
(4,873,703)
(2,610,307)
The reverse acquisition reserve was created in accordance with IFRS3 ‘Business Combinations’. The reserve
arises due to the elimination of the Company’s investment in Trafalgar New Homes Ltd (formerly Combe Bank
Homes Limited). Since the shareholders of Trafalgar New Homes Ltd became the majority shareholders of the
enlarged group, the acquisition is accounted for as though there is a continuation of the legal subsidiary’s
financial statements. In reverse acquisition accounting, the business combination’s costs are deemed to have
been incurred by the legal subsidiary.retained profit/(losses) – Relate to the profits/ losses earned by the business
that have not been distributed and have built up over the years of trading.
For the purpose of preparing the consolidated financial statement of the Group, share capital represents the
nominal value of the issued share capital of 0.1p per share (2018: 0.1p per share). Share premium represents the
excess over nominal value of the fair value consideration received for equity shares net of expenses plus deferred
shares of 0.9p after issued share capital of 1p.
The notes on pages 18 to 35 are an integral part of these consolidated financial statements.
P a g e | 18
Trafalgar Property Group Plc
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2019
Cash flow from operating activities
(Loss) after taxation
Depreciation
Decrease/(increase) in stocks
Decrease in debtors
Increase in creditors
Interest paid
Net cash outflow from operating activities
Investing activities
Purchase of tangible fixed assets
Net cash used in investing activities
Taxation
Financing activities
(Repayment)/new loans in year
Director loan cash injected
Interest paid
Net cash (outflow)/inflow from financing
2019
£
2018
£
(2,296,422)
740
3,494,598
2,752
47,948
145,434
(424,903)
447
(517,488)
3,371
160,546
18,727
1,395,050
(759,300)
-
-
(291,045)
-
-
-
(1,520,763)
320,000
(328,651)
(1,529,414)
931,367
204,061
(18,727)
1,116,710
Increase/(Decrease) in cash and cash equivalents in the year
(425,409)
357,401
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
458,209
100,808
32,800
458,209
The notes on pages 18 to 32 are an integral part of these consolidated financial statements.
P a g e | 19
Trafalgar Property Group Plc
GROUP ACCOUNTING POLICIES
For the year ended 31 March 2019
BASIS OF ACCOUNTING
These financial statements are for Trafalgar Property Group Plc (“the Company”) and its subsidiary undertakings
(‘the Group’). The Company is a public company, limited by shares and incorporated in England and Wales.
(company number is 04340125). The Company’s registered office is Chequers Barn, Bough Beech, Edenbridge,
Kent, TN8 7PD.
The nature of the Group’s operations and its principal activities are set out in the Strategic Report on page 3.
BASIS OF PREPARATION
The Group financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and interpretations adopted by the European Union (“EU”) and as applied in accordance with
the provisions of the Companies Act 2006. These financial statements are for the year ended 31 March 2019 and
are presented in pounds sterling (“GBP”). The comparative year is for the year to 31 March 2018.
The financial statements have been prepared under the historical cost basis. The principal accounting policies
adopted are set out below.
GOING CONCERN
The Directors have reviewed forecasts and budgets for the coming year, which have been drawn up with
appropriate regard for the current economic environment and the particular circumstances in which the Group
operates. These were prepared with reference to historical and current industry knowledge, taking into account
future strategy of the Group.
The Group continues to utilise banking sources for the financing of its developments, together with loans from
third party investors, to ensure that there is sufficient money available for the Group to undertake and complete its
various developments.
The Group do not operate an overdraft facility but borrow on a site specific basis from various bankers, with a
mix of loans from outside investors geared to some of the development properties and otherwise loaned on a
general basis to the Group.
The Board is comfortable with the structure of its bank finance, which usually involves the bank lending a modest
sum towards the land purchase for the modest sized residential development schemes, with the Group putting up
the rest of the funds required to acquire the site and the costs associated with the acquisition and then for the bank
to provide 100% of the build finance. However, difficulties have been experienced in the raising of finance for
the substantial larger extra care/assisted living schemes which the group wishes to undertake and the group is
accordingly actively seeking the finance for such developments at the present time.
Investor loans that are not related to specific sites are long term loans with repayment dates extending beyond the
year end and have, in the past, been renewed when they come up for repayment.
The existing operations have been generating funds to meet short-term operating cash requirements and
management are confident that the expected sales will allow the Group to meet loan repayments due within the
next twelve months or that the loans will be refinanced.
As a result of these considerations, at the time of approving the financial statements, the Directors consider that
the Company and the Group have sufficient resources to continue in operational existence for the foreseeable
future.
However given that a degree of uncertainty exists in the timing of future sales, and management’s ability to
refinance all loans due in the next twelve months, there exists a material uncertainty in relation to the going
P a g e | 20
concern basis adopted in the preparation of the financial statements.
REVENUE RECOGNITION
Revenue represents the amounts receivable from the sale of properties during the year and other income directly
associated with property development. Revenue from the sale of properties is recognised when the amounts of
revenue and cost can be measured reliably, the significant risks and rewards of ownership have been transferred
to the buyer, neither continuing managerial involvement nor effective control of the property is retained and it is
probable that the economic benefits associated with the sale will flow to the group/company. In the majority of
cases properties are treated as sold and profits are recognised at the point of legal completion.
The Directors are of the opinion that this accounting policy accurately reflects commercial reality and the
recording of revenue for the group.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
The fina The financial statements comply with IFRS as adopted by the European Union. A number of new and revised
Standards and Interpretations have been adopted in the current period by the Group for the first time and do
not have a material impact on the group.
The following new standards and amendments to standards and interpretations have been issued but are not
yet effective and not early adopted. None of these are expected to have a significant effect on the financial
statements of the Group.
IFRS 3
Amendments resulting from Annual Improvements 2015-2017 Cycle
1 January 2019
IFRS 11
(re measurement of previously held interest)
IFRS 9
Amendments regarding prepayment features with negative compensation and
modifications of financial liabilities
IFRS 16
Leases – new standard
IAS 12
1 January 2019
1 January 2019
1 January 2019
Amendments resulting from Annual Improvements 2015–2017 Cycle (income
tax consequences of dividends)
IAS 19
Amendments regarding plan amendments, curtailments or settlements
IAS 23
Amendments resulting from Annual Improvements 2015–2017 Cycle (intended
use or sale)
IAS28
Amendments regarding long-term interests in associates and joint ventures
1 January 2019
1 January 2019
1 January 2019
Applied in year
IFRS 15
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is
recognised. It replaces IAS 18 Revenue, IAS 11 Construction contracts and related interpretations. Under IFRS
15, revenue is recognised when a customer obtains control of the good or services. The Group has adopted IFRS
15 in full at the date of initial application (1 January 2018) but this has not had any impact on the recognition of
income.
P a g e | 21
IFRS 9
IFRS 9 establishes a framework of the recognition and measurement, impairment, derecognition and general
hedge accounting. It replaces IAS 39 Financial Instruments: Recognition and Measurement. The Group has
adopted IFRS 9 in full at the date of initial application (1 January 2018) and elected to apply the limited
exemptions in IFRS 9 relating to classification, measurement and impairment requirements for financial
instruments, and accordingly comparative periods have not been restated and remain in line with the previous
standard IAS 39 Financial Instruments: Recognition and Measurement.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of Trafalgar Property Group Plc and
its subsidiaries.
The results of subsidiaries acquired during the year are included from the effective date of acquisition, being the
date on which the Group obtains control. They are deconsolidated on the date that control ceases.
The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group. This fair value includes any contingent
consideration. Acquisition-related costs are expensed as incurred.
Investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs
of investment. If the consideration is less than the fair value of the assets and liabilities acquired, the difference is
recognised directly in the Statement of Comprehensive Income.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured
to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial
carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.
This may mean the amounts previously recognised in other comprehensive income are reclassified to profit or
loss.
FUNCTIONAL CURRENCY
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Pounds Sterling (£), which is the Company’s functional and the Group’s
presentation currency.
OPERATING (LOSS)/PROFIT
Operating (loss)/profit is stated before interest and tax.
DEFINED CONTRIBUTION PENSION PLAN
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan
under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the
Group has no further payments obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due.
Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the
plan are held separately from the Group in independently administered funds
FINANCIAL INSTRUMENTS
The Company recognises financial instruments when it becomes a party to the contractual arrangements of the
instrument. Financial instruments are de-recognised when they are discharged or when the contractual term
expire. The Company’s accounting policies in respect of financial instruments transactions are explained below:
Financial assets and financial liabilities are initially measured at fair value.
Financial assets:
All recognised financial assets are subsequently measured in their entirety at either fair value or amortised cost,
depending on the classification of the financial assets.
P a g e | 22
Fair value through profit or loss
All of the Company’s financial assets other than those which meet the criteria to be measured at amortised cost
are subsequently measured at fair value at the end of each reporting period, with any fair value gains or losses
being recognised in profit or loss to the extent they are not part of a designated hedging relationship. The net
gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset.
Debt instruments at amortised cost
Debt instruments are subsequently measured at amortised cost where they are financial assets held within a
business model whose objective is to hold financial assets in order to collect contractual cash flows and selling
the financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. Amortised cost is calculated
using the effective interest method and represents the amount measured at initial recognition less repayments of
principal plus the cumulative amortisation using the effective interest method of any difference between the
initial amount and the maturity amount, adjusted for any loss allowance.
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses (ECL) on investments in debt instruments
that are measured at amortised cost or FVTOCI, lease receivables, amounts due from customers under
construction contracts, as well as on loan commitments and financial guarantee contracts. No impairment loss is
recognised for investments in equity instruments. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Company recognises lifetime ECL on all financial instruments where there has been a significant increase in
credit risk since initial recognition. The assessment of whether lifetime ECL should be recognised is based on
significant increase in the likelihood or risk of a default occurring since initial recognition instead of on evidence
of a financial asset being credit-impaired at the reporting date or an actual default occurring.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the
expected life of a financial instrument. In contract, 12 month ECL represents the portion of lifetime ECL that is
expected to result from default events on a financial instrument that are possible within 12 months after the
reporting date.
In assessing whether the credit risk on a financial instrument has increased, the following shall be taken into
account:
- Actual or expected significant deterioration in the financial instrument’s external or internal credit rating; or
- Significant deterioration in external market conditions; or
- Existing or forecast adverse changes in business, financial or economic conditions that will impact the debtor’s
ability to meet debt obligations; or
- Actual or expected deterioration in the operating results of the debtor; or
- Actual or expected significant adverse changes in the regulatory or technological environment of the debtor
that will impact the debtor’s ability to meet debt obligations.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment
for a portfolio of receivables could include the Company's past experience of collecting payments, an increase in
the number of delayed payments in the portfolio past the average credit period of 30 days, as well as observable
changes in the national or local economic conditions that correlate with default on receivables.
Financial liabilities:
Fair value through profit or loss
Financial liabilities are classified as at fair value through profit or loss, when the financial liability is held for
trading, or is designated as at fair value through profit or loss. This designation may be made if such designation
estimates or significantly reduces a measurement or recognition inconsistency that would otherwise arise, or the
financial liability forms part of a group of financial instruments which is managed and its performance is
evaluated on a fair value basis, or the financial liability forms part of a contract containing one or more
embedded derivatives, and IFRS 9 permits the entire combined contract to be designated as at fair value through
profit or loss. Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent
that they are not part of a designated hedging relationship.
P a g e | 23
At amortised cost
Financial liabilities which are neither contingent consideration of an acquirer in a business combination, held for
trading, nor designated as at fair value through profit or loss are subsequently measured at amortised cost using
the effective interest method. This is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial liability, or where appropriate a shorter
period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
The company derecognises financial liabilities when, and only when, the company's obligations are discharged,
cancelled or they expire.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash balances and deposits held at call with banks.
INVENTORIES
Inventories consist of properties under construction and are stated at the lower of cost and net realisable value.
Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been
incurred in bringing the inventories to their present location and condition. Interest on sums borrowed that
finance specific projects is added to cost. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs to be incurred in marketing, selling and distribution.
TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is
calculated to write down the cost less estimated residual value of all tangible fixed assets using the reducing
balance method over their expected useful economic lives. The rates generally applicable are:
Fixtures, fittings and equipment - 25% on reducing balance
TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially measured at fair value and are subsequently reassessed at the end of
each accounting year. The Group establishes an allowance for impairment that represents its estimate of incurred
losses in respect of the trade and other receivables as appropriate. Impairment is estimated by management based
on prior experience and the current economic environment.
FINANCIAL LIABILITIES AND EQUITY
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all
of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set
out below.
TRADE PAYABLES
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the
effective interest rate method.
BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that take a substantial period of time to be completed for sale, are added to the cost of property held as
stock at the year end. All other borrowing costs are recognised in the statement of comprehensive income in the
year in which they relate.
P a g e | 24
EQUITY INSTRUMENTS
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Shares
issued are held at their fair value.
CURRENT AND DEFERRED TAXATION
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be
recovered from or paid to the tax authorities. The tax rates and the tax laws used to compute the amount are
those that are enacted or substantively enacted, by the reporting date.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxa ble or
deductible in other years and it further excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination)
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 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 year when the liability is settled or
the asset is realised. Deferred tax is charged or credited in profit or loss, except when it relates to items
charged or credited directly to other comprehensive income, in which case the deferred tax is also dealt with in
other comprehensive income.
SHARE CAPITAL
Ordinary share capital is classified as equity. Interim ordinary dividends are recognised when paid and final
ordinary dividends are recognised as a liability in the year in which they are approved.
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group
expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but
only when the reimbursement is virtually certain. The expense relating to any provision is presented in the
income statement net of any reimbursement. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a
borrowing cost.
COMMITMENTS AND CONTINGENCIES
Commitments and contingent liabilities are disclosed in the financial statements. They are disclosed unless
the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not
recognised in the financial statements but disclosed when an inflow of economic benefits is virtually certain.
SUBSEQUENT EVENTS
Events subsequent to the year end that provide additional information about the Group’s position at the
P a g e | 25
reporting date and are adjusting events are reflected in the financial statements. Events subsequent to the
year end that are not adjusting events are disclosed in the notes when material.
Since the year end TR+ entered into a guarantee agreement for £ 360,000 for funds supplied by Mr C Johnson
being a deposit forfeited by Randell House Ltd, a subsidiary of TR+. This is related to the acquisition of an
assisted living site in Camberley Surrey, where the acquisition was not completed.
The Group has raised an additional £ 250,000 less costs by issuing a further 62,500,000 Ordinary 0.1p shares by
way of a share issue made on 31st May, 2019.
Mr C Johnson and Mr A D Johnson both resigned as Directors in this Group on 27 th May, 2019 but
both remain officers and shareholders within the associated companies as named in Note 7 page s 41 to
these accounts.
CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND
UNCERTAINTY
The preparation of financial statements in conformity with IFRS as adopted by the EU requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the Group financial statements are disclosed below.
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the present circumstances.
Valuation of Inventory
The Group assesses the net realisable value of inventories under development and completed properties held for
sale according to their recoverable amounts based on the realisability of these properties, taking into account
estimated costs to completion based on past experience and committed contracts and estimated net sales based
on prevailing market conditions. Provision is made when events or changes in circumstances indicate that the
carrying amounts may not be realised. The carrying value is reduced by its selling price less costs to complete
and sell. This impairment loss is recognized immediately in the Statement of Comprehensive Income. The
assessment requires the use of judgment and estimates. The carrying amount of inventory is disclosed in note 11
to the financial statements.
Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable
taxable profits will be available in the future against which the reversal of temporary differences can be
deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts.
Where the temporary differences are related to losses, relevant tax law is considered to determine the availability
of the losses to offset against the future taxable profits.
Impairment of non financial assets
At each statement of financial position date the company reviews the carrying amounts of its tangible and
intangible assets with finite lives to determine whether there is an 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).
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately, unless
the relevant asset is land or buildings at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
P a g e | 26
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 in prior years. A
reversal of an impairment loss is recognised as income immediately, 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.
P a g e | 27
Trafalgar Property Group Plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2019
1
SEGMENTAL REPORTING
For the purpose of IFRS 8, the chief operating decision maker (“CODM”) takes the form of the Board of Directors. The
Directors’ opinion of the business of the Group is as follows.
The principal activity of the Group was property development. All the Group’s non-current assets are located in the
UK.
Based on the above considerations, there is considered to be one reportable segment. The internal and external
reporting is on a consolidated basis with transactions between Group companies eliminated on consolidation. Therefore
the financial information of the single segment is the same as that set out in the consolidated statement of
comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position
and cashflows.
Revenue
An analysis of revenue is as follows:
The Group’s revenue, which is all attributable to their principal activity, can be split as follows:
Development sales
Rental income
Timing of revenues are as follows:
Goods transferred at a point in time
Services transferred over time
Revenues analysed by geographic location are as follows:
United Kingdom
2
OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
Rental income & ground rent
2019
£
2,123,500
4,689
2,128,189
2018
£
906,484
8,200
914,684
2019
£
2,123,500
4,689
2,128,189
2018
£
906,484
8,200
914,684
2019
£
2,128,189
2018
£
914,684
2019
£
4,689
4,689
2018
£
8,200
8,200
P a g e | 28
3
LOSS FOR THE YEAR
Operating loss is stated after charging / (crediting) the following:
Subcontractor costs and cost of inventories recognised as an expense
Interest charges
2019
£
2,063,709
328,651
2,392,360
2018
£
556,291
324,555
880,846
Depreciation of property, plant and equipment
740
447
Auditor’s remuneration – audit services
Auditor’s remuneration – taxation services
Operating expenses by nature:
Subcontractors costs, interest and consumables
Employee expenses
Depreciation
Other expenses
4
EMPLOYEES AND DIRECTORS’ REMUNERATION
Staff costs during the year were as follows:
Directors’ remuneration
Wages and salaries
Social security costs
Other pension costs
The average number of employees of the company during the year was:
Directors and management
10,000
6,000
16,000
10,000
7,000
17,000
2,392,360
169,054
740
1,862,457
4,424,611
880,846
168,774
447
289,520
1,339,587
2019
£
75,000
63,000
11,394
19,660
169,054
2018
£
75,000
63,000
11,945
18,830
168,774
2019
Number
2018
Number
6
4
Key management are the Group’s Directors. Remuneration in respect of key management was as follows:
Short-term employee benefits:
- Emoluments for qualifying services C C Johnson
- Emoluments for qualifying services A Johnson
- Emoluments for qualifying services J Dubois
2019
£
-
65,617
15,907
2018
£
-
65,574
15,943
81,524
81,517
There are retirement benefits accruing to Mr C C Johnson for whom a company contribution was paid during the year
of £18,000 (2018: £18,000) and Mr A Johnson £ 1,200 (2018: £600).
Consultancy fees of £ 4,994 (2018: £4,994) were paid to Mr N Lott during the year.
P a g e | 29
5
INTEREST PAYABLE AND SIMILAR CHARGES
During the year the interest paid on borrowings relating to ongoing developments was capitalised as part of inventory £
183,217 (2018: £324,555) with the interest on properties sold in the year forming part of cost of sales and transferred to
profit & loss accordingly.
For sites where the construction had been completed, the interest paid of £ 145,434 (2018: £18,727) has been accounted
for in the profit & loss within cost of sales together with an impairment provision of £ 126,661 (2018: Nil) on account
of the reduction of likely selling prices being achieved since the year end.
6
TAXATION
Current tax
Tax charge
2019
£
2018
£
-
-
-
-
2019
£
2018
£
(Loss)/profit on ordinary activities before tax
(2,296,422)
(424,903)
Based on (loss) for the year:
Tax at 19% (2018: 19%)
Unrelieved tax losses
Impairment
Disallowable expenses
Tax charge for the year
Deferred tax
(436,320)
(80,732)
138,799
296,271
1,250
80,732
-
-
-
-
The deferred tax liability recognised in 2018 of £ 291,045 to reflect timing differences on the future tax liability arising
as a result of the uplift in the fair value of the options acquired as part of the Trafalgar Retirement + acquisition has
been reversed due to the impairment review performed by management (note 8, page 42).
No deferred tax asset has been recognised in respect of historical losses due to the uncertainty in future profits against
which to offset these losses. As at the 31 March 2019, the group had cumulative tax losses of £3,364,609 (2018:
£2,634,086) that are available to offset against future taxable profits.
7
(LOSS) PER ORDINARY SHARE
The calculation of (loss)/profit per ordinary share is based on the following profits/(losses) and number of shares:
2018
2019
(Loss) for the year
£
£
(2,296,422)
(424,903)
Weighted average number of shares for basic (loss) per share
Weighted average number of shares for diluted (loss) per share
425,190,380 425,190,380
425,190,380 425,190,380
(LOSS) PER ORDINARY SHARE:
Basic
Diluted
(0.54)p
(0.54)p
(0.10)p
(0.10)p
P a g e | 30
8
PROPERTY, PLANT AND EQUIPMENT
Fixtures and fittings
Cost
At 1 April
Additions
At 31 March
Depreciation
At 1 April
Charge for the year
At 31 March
2019
£
6,205
-
6,205
4,126
740
4,866
2018
£
5,467
738
6,205
3,679
447
4,126
Net book value at 31 March
1,339
2,079
9
TRADE AND OTHER RECEIVABLES
Other receivables
Other taxes
Prepayment
2019
£
75,389
14,629
2,074
92,092
2018
£
66,192
24,327
4,325
94,844
There are no receivables that are past due but not impaired at the year-end. There are no provisions for irrecoverable
debt included in the balances above.
10
CASH AND CASH EQUIVALENTS
All of the Group's cash and cash equivalents at 31 March 2019 are in sterling and held at floating interest rates.
Cash and cash equivalents
2019
£
2018
£
32,800
458,209
The
Direct
ors
consid
er that the carrying amount of cash and cash equivalents approximates to their fair value.
11
INVENTORY
Work in progress
See note 5 for details of interest capitalised as part of the value of inventory.
2019
£
2018
£
4,481,230
7,792,611
P a g e | 31
12
TRADE AND OTHER PAYABLES
Trade payables
Accruals
PAYE, & other taxes
Other payables
13
BORROWINGS
Directors’ loans
Other loans
Bank and other loans (less than 1 year)
2019
£
21,602
411,990
6,149
2,462
442,203
2018
£
82,145
278,468
6,288
27,354
394,255
2019
£
2018
£
2,693,103
1,580,000
2,502,462
6,775,565
3,167,818
1,700,000
3,108,510
7,976,328
Included in Directors’ loans is the sum of £ 300,000 (2018: £300,000) advanced by the DFM Pension Scheme of which
Mr J Dubois is the principal beneficiary. This loan bears interest at 12% per annum (2018: 12% per annum).
Included in Directors’ loans is the sum of £ nil (2018: £697,161) drawn down from a £835,000 loan facility advanced by
Lloyds Bank and which is linked to the Speldhurst development. The loan was made in the name of A Johnson as the
Speldhurst property is held in his name, and bears interest at 5.2% above base rate per annum. During the year the loan
was repaid.
The remaining balance is disclosed in note 16.
Included in other loans is £ 980,000 (2018: £1,100,000) advanced by Mr. G Howard (son-in-law of Mr. C C Johnson) to
the company at a rate of 10% per annum (2018: 10% pa). £ 600,000 (£2018: £600,000) has been advanced by C Rowe,
an employee of the group, at a rate of 10% per annum.
Lloyds Bank hold a legal charge over land at Wellesley Road, Sheerness, Kent, together with charges over two term life
policies on two of the Directors. Bridgeco holds a legal charge on the site known as Saxons, Speldhurst, Kent and
Ratesetter holds a legal charge on the site known as Burnside, Tunbridge Wells, Kent and Alexander Stables,
Hildenborough, Kent.
The bank borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
After five years
Less amount due for settlement within 12 months
(included in current liabilities)
Amount due for settlement after 12 months
2019
£
2018
£
2,502,462
-
-
-
2,502,462
3,082,010
-
-
-
3,082,010
2,502,462
-
3,082,010
-
The weighted average interest rates paid on the bank loans were as follows:
P a g e | 32
Bank loans: - 7.18% (2018: 4.23%)
All of the Directors’ loans are repayable after more than 1 year. All loans are interest bearing and charged accordingly.
However Mr C C Johnson has waived his right to interest in the year and as a result interest of £ Nil (2018: £ Nil) was
paid to Mr C C Johnson. The rate of interest on the loan is 5% pa (2018: 5% pa). Interest of £36,000 (2018: £36,000)
was paid to Mr J Dubois at the rate of 12% pa (2018: 12% pa).
14
SHARE CAPITAL
Authorised Share Capital
Ordinary shares of 0.1p in issue
Deferred shares of 0.9p in issue
Sub division
Ordinary shares of 0.1p
Deferred shares of 0.9p
Additional ordinary shares issued as part of
acquisition
2019
Number
2018
Number
425,190,380 238,375,200
-
238,375,200 238,375,200
238,375,200
- 238,375,200
- 238,375,200
- 186,815,180
663,565,580 425,190,380
Ordinary shares entitle the holder to receive notice of and to attend or vote at any general meeting of the Company or to
receive dividends or other distributions.
Deferred shares do not entitle the holder to receive notice of and to attend or vote at any general meeting of the Company
or to receive dividends or other distributions. Upon winding up or dissolution of the Company the holders of deferred
shares shall be entitled to receive an amount equal to the nominal amount paid up thereon, but only after holders of
Ordinary shares have received £ 100,000 per Ordinary Share. Holders of deferred shares are not entitled to any further
rights of participation in the assets of the Company. The Company has the right to purchase the deferred shares in issue
at any time for no consideration.
Issued, allotted and fully paid
Ordinary shares
Deferred shares
Issued in year – Ordinary shares as part of acquisition
15
SHARE PREMIUM ACCOUNT
Balance brought forward
Premium on issue of new shares
Share issue costs
Balance carried forward
2019
£
2018
£
425,190
2,145,377
-
2,570,567
2,383,752
-
186,815
2,570,567
2019
£
2018
£
2,510,462
-
-
2,510,462
1,165,463
1,344,999
-
2,510,462
P a g e | 33
16
RELATED PARTY TRANSACTIONS
Mr C C Johnson holds 43.94% (2018: 43.94%) of the total issued share capital of the Group as at 31st March, 2019
Mr D C Stocks holds 18.89% (2018: 18.89%) of the total issued share capital of the Group as at 31st March, 2019
Mr P Treadaway holds 25.04% (2018: 25.04%) of the total issued share capital of the Group as at 31st March, 2019.
Further details relating to an issue of shares post year end can be found under accounting policies on page 24.
The following working capital loans have been provided by the Directors:
C C Johnson
Opening balances
Loan repayments
Personal drawings
Capital injected
Interest payable
Balance carried forward
J Dubois -
D Stocks -
P Treadaway
Balance carried forward
2019
£
2018
£
2,170,657
-
(73,511)
320,000
-
2,417,146
2,168,802
-
(48,145)
50,000
-
2,170,657
300,000
300,000
(23,935)
26,500
(108)
2,693,103
21,693
2,518,850
Mr Johnson’s Loan bore interest during the year at 5% (2018: 5% pa), but he has chosen to forego the interest in the
year. Mr Dubois’s Loan, which is from his Pension Fund of which he is the sole beneficiary, was at 12% pa interest
(2018: 12% pa). Mr Stocks’ & Mr Treadaway’s loans bore no interest.
The development at Speldhurst was acquired in the name of A Johnson and is held in trust by him on behalf of the Group,
together with a Lloyds Bank loan facility for up to £ 835,000 connected to this development which has been repaid in the
year (2018: £ 697,161).
During the year rents were paid of £ 10,259 (2018; £ 10,000) to the Combe Bank Homes Pension Scheme which owns
the freehold offices at Chequers Barn. Mr C C Johnson is a Trustee and Beneficiary of that Pension Scheme.
17
SHARE OPTIONS AND WARRANTS
There are no share options or warrants.
18
CATEGORIES OF FINANCIAL INSTRUMENTS
The only impact of IFRS 9 was in relation to reclassification and is documented in the tables below:
As at 1 April 2018
Previously
reported
Fair value
through
(see note profit or
loss
£
below)
IFRS 9 measurement category
Amortised
Fair
cost value
through
OCI
£
£
IAS 39 measurement category
Loans and receivables
Trade receivables
Cash and cash equivalents
Amortised cost
86,327
(6,740,092)
(6,653,765)
-
86,327
(6,740,092)
(6,653,765)
-
-
P a g e | 34
Trade and other payables
(178,675)
(178,675)
- (178,675)
(178,675)
-
As at 31 March 2018
IAS 39 measurement category
Loans and receivables
Trade receivables
Cash and cash equivalents
Amortised cost
Trade and other payables
As at 31 March 2019
IAS 39 measurement category
Loans and receivables
Trade receivables
Cash and cash equivalents
Amortised cost
Trade and other payables
Capital risk management
Fair value
Previously
through
reported
(see note
profit or
below) loss
£
Amortised
cost
IFRS 9 measurement category
Fair
value
through
OCI
£
£
66,192
(7,518,119)
(7,451,927)
-
66,192
- (7,518,119)
(7,451,927)
-
-
-
(458,209)
(458,209)
- (458,209)
- (458,209)
-
-
Fair value
through
profit or
loss
£
Amortised
cost
IFRS 9 measurement category
Fair
value
through
OCI
£
£
-
75,389
- (6,742,765)
(6,667,376)
-
-
-
- (436,054)
- (436,054)
-
-
The Group considers its capital to comprise its share capital and share premium. The Group’s capital
management objectives are to safeguard the entity’s ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders and to provide an adequate
return to shareholders by pricing products and services commensurately with the level of risk.
Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument are disclosed on pages 18 to 25 to these financial
statements.
Foreign currency risk
The Group has minimal exposure to the differing types of foreign currency risk. It has no foreign currency
denominated monetary assets or liabilities and does not make sales or purchases from overseas countries.
Interest rate risk
The Group is sensitive to changes in interest rates principally on the loans from Lloyds Bank, Rate Setter and
Bridgeco where interest is charged on a variable rate basis.
The impact of a 100 basis point increase in interest rates on these loans would result in additional interest cost
for the year of £ 25,025 (2018: £37,792).
Credit risk management
P a g e | 35
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial
loss to the Group.
Liquidity risk management
This is the risk of the Group not being able to continue to operate as a going concern.
The Directors have, after careful consideration of the factors set out above, concluded that it is appropriate to
adopt the going concern basis for the preparation of the financial statements and the financial statements do not
include any adjustments that would result if the going concern basis was not appropriate.
Derivative financial instruments
The Group does not currently use derivative financial instruments as hedging is not considered necessary.
Should the Group identify a requirement for the future use of such financial instruments, a comprehensive set of
policies and systems as approved by the Directors will be implemented.
Financial liabilities
Trade payables
Borrowings – Directors’ loan
Borrowings – Bank loan
Borrowings – Other loans
Total
Derivative financial instruments
Carrying
amount £
Within 1
year or on
demand £
436,054
436,054
2,693,103
2,502,462 2,502,462
1,580,000
7,211,619
2,938,516
Over 1
Year but
less than 5
years £
2,693,103
1,580,000
4,273,103
The Group does not currently use derivative financial instruments as hedging is not considered necessary. Should
the Group identify a requirement for the future use of such financial instruments, a comprehensive set of policies
and systems as approved by the directors will be implemented.
19
EXCEPTIONAL ITEM
As disclosed in note 8 page 42, management have performed a review of the assets of its trading subsidiaries.
This assessment concluded that the land options in Trafalgar Retirement+ should be written down to zero.
Consequently, inventory valued at 31 March 2018 of £ 1,850,364 less potential deferred tax of £ 291,045 has
been written off in the financial statements.
20
NET DEBT RECONCILIATION
Cash at bank
Cash and cash equivalents
2019
£
2018
£
32,800
32,800
458,209
458,209
Borrowing repayable within one year (including overdrafts)
(6,775,565)
(7,976,328)
Net Debt
(6,742,765)
(7,518,119)
Cash and
Gross
Total cash
P a g e | 36
£
liquid
investments
£
borrowings
with a fixed
interest rate
£
and liquid
investments
Net debt as at 1 April 2018
Cash flows
100,808
357,401
(6,840,900)
(1,135,428)
(6,740,092)
(778,027)
Net debt as at 31 March 2018
Cash flows
458,209
(425,409)
(7,976,328)
1,200,763
(7,518,119)
775,354
Net debt as at 31 March 2019
32,800
6,775,565
(6,742,765)
Trafalgar Property Group Plc
COMPANY BALANCE SHEET
For the year ended 31 March 2019
FIXED ASSETS
Investments
Current assets
Stocks
Debtors
Cash at bank and in hand
Note
2019
£
2018
£
7
9
-
-
2,354,732
2,354,732
5,292
278,363
9,561
293,216
5,292
275,996
68,723
350,011
Creditors: amounts falling due within one year
10
995,543
875,726
Net current liabilities
(702,327)
(525,715)
Net (liabilities)/assets
(702,327)
1,829,017
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Equity – attributable to the owners of the Parent
12
13
14
15
2,570,567
2,510,462
(5,783.356)
(702,327)
2,570,567
2,510,462
(3,252,012)
1,829,017
The loss for the financial year dealt with in the financial statements of the Parent Company was £ 2,531,344
(2018: Loss £1,733,709 ).
P a g e | 37
The financial statements were approved by the Board of Directors on 27 September, 2019 and authorised for
issue and are signed on its behalf by:
P Treadaway: ………………………………………. J Dubois: ……………………………………………
Company Registration Number: 04340125
The notes on pages 39 to 45 form an integral part of these financial statements
Trafalgar Property Group Plc
COMPANY STATEMENT OF CHANGES IN EQUITY
31 March 2019
P a g e | 38
Share capital
Share
premium
£
£
Reverse
acquisition
reserve
£
Retained
profits
/(losses)
£
Total equity
£
At 1 April 2017
2,383,752
1,165,463
Loss for the year
Total comprehensive
income for the year
-
-
-
-
-
-
(1,518,303)
2,135,800
(1,733,709)
(104,888)
-
(1,733,709)
(104,888)
Issue of shares
186,815
1,344,999
Share issue costs
-
-
-
-
-
-
1,531,814
-
At 31 March 2018
2,570,567
2,510,462
-
(3,252,012)
1,829,017
At 1 April 2018
2,570,567
2,510,462
-
(3,252,012)
1,829,017
Loss for year
Total comprehensive
income for the year
Issue of shares
Share issue costs
-
-
-
-
-
-
-
-
-
(2,531,344)
(2,531,344)
-
(2,531,344)
(2,531,344)
-
-
-
-
-
-
At 31 March 2019
2,570,567
2,510,462
-
(5,783,356)
(702,327)
For the purpose of preparing the consolidated financial statement of the Group, the share capital represents the
nominal value of the issued share capital of 0.1p per share and 0.9p per share deferred (2018: 1p per share).
Share premium represents the excess over nominal value of the fair value consideration received for equity
shares net of expenses of the share issue. Retained earnings represent the cumulative value of the profits not
distributed to shareholders, but retained to finance the future capital requirements of the Company.
The notes on pages 39 to 45 form an integral part of these financial statements.
P a g e | 39
2019
£
2018
£
(176,612)
(1,733,709)
Trafalgar Property Group Plc
CASHFLOW
for the year ended 31 March 2019
Cash flow from operating activities
Operating loss
Operating loss before working capital changes
Impairment of investment
Decrease/(Increase) in stocks
(Increase)/decrease in impairments
(Increase) in debtors
(Decrease)/Increase in creditors
Net cash (outflow)/inflow from operating activities
Income tax paid
Net cash (outflow)/inflow from operating activities
Cashflow from investing activities
Net cash (outflow/inflow from investing activities
Cashflow from financing activities
(Repayments)/loans from Group undertakings
Capital injected
-
Net cash (outflow)/inflow from financing
Net(decrease)/increase in cash and cash equivalents
Cash and cash equivalent at beginning of the year
Cash and cash equivalent at end of the year
(176,612)
-
2,354,732
(2,354,732)
(2,367)
(66,000)
(244,979)
-
(244,979)
-
(244,979)
85,817
100,000
185,817
(59,162)
68,723
9,561
The notes on pages 39 to 45 form an integral part of these financial statements.
Trafalgar Property Group Plc
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ended 31 March 2019
(1,733,709)
1,500,606
(5,292)
-
(19,260)
317,375
59,720
-
59,720
-
59,720
-
-
59,720
9,003
68,723
P a g e | 40
1.
GENERAL INFORMATION
Nature of operations
Trafalgar Property Group Plc (“the Company”) is the UK holding company of a group of companies which are
engaged in property development. The Company is registered in England and Wales. Its registered office and
principal place of business is Chequers Barn, Bough Beech, Edenbridge, Kent TN8 7PD.
2.
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost convention and in accordance with
applicable United Kingdom law, FRS 102 and accounting standards. The principal accounting policies are
described below. They have all been applied consistently throughout the year and preceding year.
3.
SIGNIFICANT ACCOUNTING POLICIES
(a) GOING CONCERN
The Directors have reviewed forecasts and budgets for the coming year, which have been drawn up with
appropriate regard for the current economic environment and the particular circumstances in which the Company
operates. These were prepared with reference to historical and current industry knowledge, taking into account
future strategy of the Company and wider Group.
The existing operations have been generating funds to meet short-term operating cash requirements. As a result
of these considerations, at the time of approving the financial statements, the Directors consider that the
Company and the Group have sufficient resources to continue in operational existence for the foreseeable future.
It is appropriate to adopt the going concern basis in the preparation of the financial statements.
As with all business forecasts, the Directors’ statement cannot guarantee that the going concern basis will remain
appropriate given the inherent uncertainty about the future events.
INVESTMENTS
(b)
Investments held as fixed assets are stated at cost less provision for impairment.
TAXATION
(c)
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the
balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a
right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences
between the company's taxable profits and its results as stated in the financial statements that arise from the
inclusion of gains and losses in tax assessments in years different from those in which they are recognised in
the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all
available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from
which the future reversal of the underlying timing differences can be deducted.
FINANCIAL INSTRUMENTS
(d)
Financial assets and liabilities are recognised in the statements of financial position when the Company has
become a party to the contractual provisions of the instruments.
The Company’s financial assets and liabilities are initially measured at fair value plus any directly attributable
transaction costs. The carrying value of the Company’s financial assets, primarily cash and bank balances, and
liabilities, primarily the Company’s payables and other accrued expenses, approximate to their fair values.
Financial assets
(i)
On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss,
held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as
P a g e | 41
appropriate.
Trade and other receivables
Trade and other receivables (including deposits and prepayments) that have fixed or determinable payments that
are not quoted in an active market are classified as other receivables, deposits, and prepayments. Other
receivables, deposits, and prepayments are measured at amortised cost using the effective interest method, less
any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term
receivables when the recognition of interest would be immaterial.
Financial liabilities and equity instruments
(ii)
Financial liabilities are classified as liabilities or equity in accordance with the substance of the contractual
arrangement.
Financial liabilities
Financial liabilities comprise long-term borrowings, short-term borrowings, trade and other payables and
accruals, measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees on points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all
its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct
issue costs.
DEBTORS AND CREDITORS
(e)
Short term debtors and creditors are measured at transaction price, less any impairment. Loans receivable are
measured initially at fair value, net of transaction costs, and other financial liabilities, including bank loans, are
all measured subsequently at amortised cost using the effective interest method, less any impairment.
4
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company’s accounting policies, which are described in note 3, the Directors are
required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that
are not apparent from other sources. The estimates and assumptions are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods.
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at
the statement of financial position date that have a significant risk of causing a significant adjustment to the
carrying amounts of assets and liabilities in the financial statements:
P a g e | 42
Carrying value of investments in subsidiaries and intercompany
Management’s assessment for impairment of investment in subsidiaries is based on the estimation of value in use
of the subsidiary by forecasting the expected future cash flows expected on each development project. The value
of the investment in subsidiaries is based on the subsidiaries being able to realise their cash flow projections.
Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable
taxable profits will be available in the future against which the reversal of temporary differences can be
deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts.
Where the temporary differences are related to losses, relevant tax law is considered to determine the availability
of the losses to offset against the future taxable profits.
5.
LOSS FOR FINANCIAL PERIOD
The Company has taken advantage of section 408 of the Companies Act 2006 and, consequently, a profit and
loss account for the Company alone has not been presented. The Company’s loss for the financial period was
£2,531,344 (2018: Loss £1,733,709). The Company’s loss for the financial year has been arrived at after
charging auditor’s remuneration payable to MHA MacIntyre Hudson for audit services to the Company of
£10,000 (2018: £10,000) and an impairment adjustment of £ 2,354,732 – see note 8.
6.
EMPLOYEES AND DIRECTORS' REMUNERATION
Directors’ fees
Wages and salaries
Social security costs
Management fees
The average number of employees of the company during the year was:
Directors and management
There are no retirement benefits accruing to any of the Directors.
£ 4,994 (2018: £4,994) was paid to Mr Norman Lott for his professional services.
2019
£
15,000
-
907
4,994
20,901
2018
£
15,000
-
943
4,994
20,937
2019
Number
2018
Number
1
1
Additional directors remuneration of £60,000 (2018: £60,000) was paid to a director through subsidiary entities.
7.
INVESTMENTS
At 1 April 2018
Additions
Impairments
At 31 March 2019
Subsidiary
undertakings
£
2,354,732
-
(2,354,732)
-
The company owns the following undertakings, all of which are incorporated in the United Kingdom and have
their registered offices at Chequers Barn, Chequers Hill, Bough Beech, Edenbridge, Kent, TN8 7PD.
P a g e | 43
Held directly
Trafalgar New Homes Limited
Trafalgar Retirement+ Ltd
Held indirectly through Trafalgar
New Homes Limited
Combe Bank Homes (Oakhurst) Ltd
Class of
share held
%
shareholding
Principal
activity
Ordinary
shares
Ordinary
shares
100%
100%
Residential property
developers
Residential property and
assisted living scheme
Ordinary
shares
100%
Residential property
developers
Held indirectly through TR+
Ordinary
Randell House Ltd shares 100% Assisted living developer
Class of
share held
%
shareholding
Principal
activity
Controlled via Deed of Trust
Combe Homes (Borough Green) Ltd
Ordinary
shares
100%
Residential property
developers
8.
IMPAIRMENT
The investment carried in the Plc entity financial statements reflects the entity’s control over Trafalgar New
Homes Limited, Combe Bank Homes (Oakhurst) and Combe Bank (Borough Green) Limited and Trafalgar
Retirement + Ltd.
There has been minimal trading in Combe Bank Homes (Oakhurst) and Combe Bank (Borough Green) Limited
and both entities now hold very little inventory.
Development continues in Trafalgar New Homes Limited and there have been sales of five properties in the
year, however due to the factors laid out in the Operations review, there has been some erosion of the margins
that had been anticipated at the start of the year.
Management have performed a review of the assets and liabilities of the underlying subsidiaries which form the
value of the investment.
In performing this assessment consideration has been given to anticipated profits on ongoing developments. In
addition, the value of land options in Trafalgar Retirement + have been re-assessed. At the time of approval of
the financial statements there is no confirmed planning permission on these land options.
Where the ‘real’ net asset value is in excess of the carrying value of the investment in the Plc entity statement of
financial position, there is no indication of impairment.
Due to the uncertainties and timing of developments it has been agreed by management not to include any future
anticipated profits of developments in their assessment. Therefore the net asset value of the underlying
investments does not support the Trafalgar Property Group’s carrying value of investments in Trafalgar New
P a g e | 44
Homes Limited, Combe Bank Homes (Oakhurst), Combe Bank (Borough Green) and Trafalgar Retirement +.
Management have concluded that an impairment of the investments is prudent and that these will be written
down to zero.
9.
DEBTORS
Amounts owed by group undertakings
Other debtors
Other taxes and social security
10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Taxation and social security
Other creditors
Director’s loan account – cash injected in year
Amounts owed to group undertakings
11.
FINANCIAL INSTRUMENTS
Financial assets
Financial assets measured at amortised cost:
Amounts owed by group undertakings and other debtors
Financial liabilities
Financial liabilities measured at amortised cost
2019
£
274,304
1,136
2,923
278,363
2019
£
2,939
1,323
30,300
100,000
860,981
995,543
2018
£
253,304
6,137
16,555
275,996
2018
£
73,159
1,325
26,078
-
775,164
875,726
2019
£
2018
£
275,440
259,441
994,220
874,401
Financial liabilities include, trade creditors, other creditors and amounts due to group undertakings.
12.
SHARE CAPITAL
Authorised Share Capital
Ordinary shares of 0.1p in issue
Deferred shares of 0.9p in issue
Sub division
Ordinary Shares of 0.1p
Deferred shares of 0.9p
2019
Number
2018
Number
425,190,380 238,375,200
-
- 238,375,200
238,375,200
- 238,375,200
- 238,375,200
P a g e | 45
Additional shares issued as part of acquisition
- 186,815,180
Deferred shares do not entitle the holder to receive notice of and to attend or vote at any general meeting of the
Company or to receive dividends or other distributions. Upon winding up or dissolution of the Company the
holders of deferred shares shall be entitled to receive an amount equal to the nominal amount paid up thereon, but
only after holders of Ordinary shares have received £ 100,000 per Ordinary Share. Holders of deferred shares are
not entitled to any further rights of participation in the assets of the Company. The company has the right to
purchase the deferred Shares in issue at any time for no consideration.
663,565,580 425,190,380
Issued, allotted and fully paid
Ordinary shares
Deferred shares
Issued in year – Ordinary shares as part of acquisition
13.
SHARE PREMIUM ACCOUNT
Balance brought forward
Premium on issue of new shares
Balance carried forward
14. PROFIT AND LOSS ACCOUNT
Balance brought forward
Loss for financial year
Balance carried forward
15. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
Loss for the financial year
Net decrease in shareholders' funds
Issue of new shares
Opening Shareholders' funds
Closing Shareholders' funds
16.
INTERCOMPANY
2019
£
2018
£
425,190
425,190.38
2,145,377
-
2,570,567
2,383,752
2,383,752
-
186,815
2,570,567
2019
£
2018
£
2,510,462
-
2,510,462
1,165,463
1,344,999
2,510,462
2019
£
2018
£
(3,252,012)
(2,531,344)
(5,783,356)
(1,518,303)
(1,733,709)
(3,252,012)
2019
£
2018
£
(2,531,344)
(2,531,344)
-
1,829,017
(702,327)
(1,733,709)
(1,733,709)
1,531,814
2,030,912
1,829,017
The company has taken advantage of the exemption conferred by FRS102 Section 33 “Related Party
P a g e | 46
disclosures” not to disclose transactions undertaken with other wholly owned members of the group.
P a g e | 47
Trafalgar Property Group Plc
EXPLANATION OF RESOLUTIONS AT THE ANNUAL GENERAL MEETING
Explanation of resolutions at the Annual General Meeting
Information relating to resolutions to be proposed at the Annual General Meeting is set out below. The notice of
AGM is set out on page 47.
Ordinary business at the AGM
In addition to the re-election of a Director (resolution 4) and renewal of authorities to allot shares (resolutions 5
and 6), the following ordinary business resolutions will be proposed at the AGM:
(a)
Resolution 1: to approve the annual report and accounts. The Directors are required to lay before
the Company at the AGM the accounts of the Company for the financial year ended 31 March 2019,
the report of the Directors and the report of the Company's auditors on those accounts.
(b)
Resolution 2: to approve the re-appointment of MHA MacIntyre Hudson as auditors of the
Company. The Company is required to appoint auditors at each general meeting at which accounts
are laid, to hold office until the next such meeting.
(c)
Resolution 3: to approve the remuneration of the auditors for the next year.
Re-election of Directors
Under the Articles of Association, Directors must retire and submit themselves for re-election at the annual
general meeting if they have not done so at either of the two previous annual general meetings. Following the
board changes since the last annual general meeting, no Directors need to retire by rotation at this year’s annual
general meeting.
Directors appointed since the previous annual general meeting are required to be re-appointed at the next annual
general meeting. By resolution 4, Paul Treadaway is submitted for re-appointment.
Grant of authorities to allot shares
The Company currently has an issued ordinary share capital of £425,690.38 divided into 487,690,380 Ordinary
Shares of 0.1p. The Company has outstanding warrants to subscribe for 4,567,504 Ordinary Shares at 2p per
share. Following the share re-organisation in March 2018, the Company also has 238,375,190 deferred shares of
0.9p in issue (£2,145,376.71 in nominal amount).
The Board proposes to renew the current authorities to allot shares, which expire at the next AGM. Accordingly,
resolutions 5 and 6 are being proposed at the AGM for the purpose of (i) granting the Directors general authority
to allot up to £244,000 in nominal amount (equivalent to 24,000,000 ordinary shares) and (ii) disapplying pre-
emption rights in connection with the allotment of up to £97,500 in nominal amount (equivalent to 97,500,000
ordinary shares). Both authorities will provide residual authorities equivalent to approximately 50% of the
current issued ordinary share capital generally and 20% of the current issued ordinary share capital for issues for
cash.
P a g e | 48
TRAFALGAR PROPERTY GROUP PLC
(Registered in England No. 04340125)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 2019 Annual General Meeting of the Company will be held at the
Company’s offices at Chequers Barn, Bough Beech, Edenbridge, Kent TN8 7PD at 11.00 am on 25th October
2019, for the following purposes:
RESOLUTIONS
To consider and, if thought fit, to pass resolutions 1 to 7 (inclusive) as ordinary resolutions:
1
2
3
4
To receive and adopt the directors’ report, the auditor’s report and the Company’s accounts for the
year ended 31 March 2019.
To re-appoint MHA MacIntyre Hudson as auditor in accordance with section 489 of the Companies
Act 2006, to hold office until the conclusion of the Annual General Meeting of the Company in
2020.
To authorise the Directors to determine the remuneration of the auditor.
To re-appoint Paul Treadaway as a Director of the Company.
As special business, to consider and, if thought fit, to pass resolution 5 as an ordinary resolution and resolution 6
as a special resolution:
5
6
THAT the directors be authorised generally and unconditionally pursuant to Section 551 of the
Companies Act 2006 as amended ("2006 Act") (in substitution for all other existing authorities to
allot securities generally to the extent not utilised at the date this resolution is passed) to exercise all
the powers of the Company to allot shares and/or rights to subscribe for or to convert any security
into shares, provided that the authority conferred by this resolution shall be limited to the allotment
of shares and/or rights to subscribe or convert any security into shares of the Company up to an
aggregate nominal amount of £244,000 such authority (unless previously revoked, varied or
renewed) to expire on the conclusion of the Annual General Meeting of the Company to be held in
2020 or, if earlier, 15 months after the date on which this resolution has been passed, provided that
the Company may, before such expiry, make an offer, agreement or other arrangement which would
or might require shares and/or rights to subscribe for or to convert any security into shares to be
allotted after such expiry and the directors may allot such shares and/or rights to subscribe for or to
convert any security into shares in pursuance of such offer, agreement or other arrangement as if the
authority conferred hereby had not expired.
THAT, subject to resolution 5 above being duly passed, in substitution for any existing and
unexercised authorities, the directors be and are hereby generally empowered pursuant to Section
570 of the 2006 Act to allot equity securities (within the meaning of Section 560 of the 2006 Act)
for cash pursuant to the authority conferred by resolution 5 above or by way of sale of treasury
shares as if Section 561 of the 2006 Act or any pre-emption provisions contained in the Company’s
articles of association did not apply to any such allotment, provided that the power conferred by this
resolution shall be limited to
(i)
any allotment of equity securities where such securities have been offered (whether by
way of rights issue, open offer or otherwise) to holders of equity securities in
proportion (as nearly as may be practicable) to their then holdings of such securities,
but subject to the directors having the right to make such exclusions or other
arrangements in connection with such offer as they deem necessary or expedient to deal
with fractional entitlements or legal or practical problems arising in, or pursuant to, the
laws of any territory or the requirements of any regulatory body or stock exchange in
any territory or otherwise howsoever;
(ii)
the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities
up to an aggregate nominal value of £97,500.
such authority and power (unless previously revoked, varied or renewed) to expire on the earlier to
occur of 15 months after the passing of this resolution or the conclusion of the Annual General
Meeting of the Company to be held in 2020, provided that the Company may prior to such expiry
P a g e | 49
make any offer, agreement or other arrangement which would or might require equity securities to
be allotted after such expiry and the directors may allot equity securities pursuant to any such offer,
agreement or other arrangement as if the power hereby conferred had not expired.
Dated: 27 September 2019
Registered Office:
Chequers Barn
Chequers Hill
Bough Beech
Edenbridge
Kent
TN8 7PD
By order of the Board
Nicholas Narraway
Secretary
Notes:
1.
2.
3.
4.
5.
6.
7.
As a member of the Company, you are entitled to appoint a proxy to exercise all or any of your
rights to attend, speak and vote at the Meeting and you should have received a proxy form with this
notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the
notes to the proxy form.
A proxy does not need to be a member of the Company but must attend the Meeting to represent
you. Details of how to appoint the Chairman of the Meeting or another person as your proxy using
the proxy form are set out in the notes to the proxy form.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached
to different shares. You may not appoint more than one proxy to exercise rights attached to any one
share. To appoint more than one proxy, you may photocopy the enclosed proxy form.
If you do not give your proxy an indication of how to vote on any resolution, your proxy will vote or
abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or
she thinks fit in relation to any other matter which is put before the Meeting.
The notes to the proxy form explain how to direct your proxy how to vote on each resolution or
withhold their vote.
To appoint a proxy using the proxy form, the form must be:
(a)
(b)
(b)
completed and signed;
sent or delivered to the Company’s Registrars, Neville Registrars Limited, Neville
House, Steelpark Road, Halesowen B62 8HD; and
received by no later than 11.00 a.m. on 23 October 2019.
Any power of attorney or any other authority under which the proxy form is signed (or a duly
certified copy of such power or authority) must be included with the proxy form.
To change your proxy appointment, simply submit a new proxy appointment using the methods set
out above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in
relation to amended instructions; any amended proxy appointment received after the relevant cut-off
time will be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the
instructions using another hard-copy proxy form, you may photocopy the enclosed proxy form.
If you submit more than one valid proxy appointment, the appointment received last before the
latest time for the receipt of proxies will take precedence.
In order to revoke a proxy appointment you will need to inform the Company by sending a signed
hard copy notice clearly stating that you revoke your proxy appointment to Neville Registrars
Limited, Neville House, Steelpark Road, Halesowen, B62 8HD. Any power of attorney or any other
authority under which the revocation notice is signed (or a duly certified copy of such power or
authority) must be included with the revocation notice.
The revocation notice must be received by no later than 11.00 a.m. on 23 October 2019.
P a g e | 50
If you attempt to revoke your proxy appointment but the revocation is received after the time
specified then, subject to the paragraph directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person.
8.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, only those members
registered in the register of members of the Company as at 6.00 p.m. on 23 October 2019 shall be
entitled to attend and vote at this Meeting in respect of the number of shares registered in their name
at that time. Changes to entries on the relevant register of securities after such time shall be
disregarded in determining the rights of any person to attend or vote at this Meeting.
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