Trafalgar Prop Regulatory News (TRAF)

22 August 2013

TRAFALGAR NEW HOMES PLC

("Trafalgar" or the "Company")

FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2013

NOTICE OF ANNUAL GENERAL MEETING

Trafalgar (AIM: TRAF), the residential property developer operating in southeast England, announces its audited results for the year ended 31 March 2013, a period which has seen a 196% increase in profit before tax.

Highlights

· Strategic move from ISDX to AIM in July 2013

· Profit before tax of £617,976, a 196% increase from last year (16 months to 31 March 2012: £208,619)

· Revenue of £2,205,786 (16 months to 31 March 2012: £2,346,404)

· Losses carried forward from previous years have reduced the tax charge for this financial year

· Work completed at Edenbridge site and sales contributed substantially to this year's profit

· Oakhurst Park Gardens development completed and marketing for sale to commence this September

· Acquired sites in Ticehurst, East Sussex and Tunbridge Wells for development

· Option entered into in respect of land in Staplehurst, Kent. Planning permission pending

James Dubois, Chairman, said: "As our first results announcement on AIM, I am delighted to report such positive news. We have worked hard to put Trafalgar New Homes in a strong position as we aim to take advantage of an improvement in the sector. We are optimistic about the future prospects of the residential property market as activity has started to increase which we believe will benefit the Company over this year and next."

The Annual Report will be posted to shareholders this week, together with a notice of Annual General Meeting to be held at 11.30am on 18 September 2013 at the offices of Allenby Capital Limited, 3 St Helen's Place, London EC3A 6AB. The Annual Report and notice of Annual General Meeting will be available tomorrow on the Company's website, www.trafalgar-new-homes.co.uk.

Enquiries:

CHAIRMAN'S STATEMENT

I am very pleased to present the Report and Accounts for the Group for the year ended 31 March 2013.

Business Environment

Trafalgar New Homes continues to specialise in small developments in Kent, Surrey, Sussex and the M25 ring south of London. The Board believes that this strategy positions the Group in a niche market place, between local builders and developers and larger house building companies in the high demand area of the South East.

As a Board, we are optimistic about the future prospects of the residential property market as activity has started to increase which we believe will benefit the Group over the next coming year. Various campaigns by the Government as well as an overall improvement in the residential property market are encouraging.

Financials

The period under review saw Group turnover at £2,205,786 (2012: £2,346,404 in a 16 month period), with a profit before tax up 196% to £617,976 (2012: £208,619). The underlying operating profit for the year was £559,732 (16 months to 31 March 2012: £394,999).

Land has been acquired to enable our development programme to continue profitably for 2014 and 2015.

Outlook

We have worked hard to put Trafalgar New Homes in a strong position as we aim to take advantage of an improvement in the sector. 

On 16 July 2013, we were delighted to announce our move from ISDX to AIM, something the Board felt was the next logical step for the Group seeking fast expansion and growth. The Directors believe that the AIM market will assist the Group in attracting new investors, improving liquidity in its shares and raising additional capital when required, as well as enhancing the Group's overall profile and helping to attract future acquisition opportunities moving forward.

I would like to take this opportunity to thank the staff and Board on their achievements, which have now laid the foundation for substantial future growth of Trafalgar New Homes. We have established a strong team, which is essential for our continued growth and I look forward to working together over the next year.

James Dubois

Chairman21 August 2013

DIRECTORS' REPORT

Operations Review

The year under review has seen us continue our movement towards establishing ourselves as a force in the house building market in our chosen area of operation, which, as in previous years, remains primarily Kent, East Sussex, Surrey and the outer London M25 ring.

At the commencement of the year, work was under way on our flagship site at Oakhurst Park Gardens, Hildenborough, Kent and our site at Edenbridge, Kent which two sites were anticipated to generate substantial turnover over the two financial years ended 31 March 2013 and 31 March 2014. This has been the case. Work was completed on the Edenbridge site, which comprised of eight two bed apartments, a three bedroom penthouse, a studio and retail shop (new build) and an existing cottage which was refurbished. Seven of the units contributed to the profit for the year end under review and all, but one, of the remaining units are currently under offer for sale. This site contributed substantially to the profit for the year.

On the Oakhurst Park Gardens development, work is complete and whilst available for sale now, marketing of the properties will commence in earnest at the beginning of September, as we took the decision to delay the launch during the peak July and August summer holiday period. We are confident that this site will contribute substantially to turnover and profit for the year ended 31 March 2014.

During the year we have acquired sites in Ticehurst, East Sussex and Tunbridge Wells, Kent for the development of two units and six units respectively and development work will be undertaken on these two sites during this year, with the site we own at Sheerness, Kent (six units) being commenced at the same time. These three sites are anticipated to contribute to the profit for the year ended 31 March 2015.

The other site currently owned by us at Chatham, Kent (three units) will be retained for development or sale over the course of this year. We have decided to withdraw from the development at Chipstead as satisfactory terms could not be agreed.

The success of our development activities through the year is shown in the gross profit achieved for the year under review; the profitability being further enhanced by the addition of profit generated from the sale of the balance of the investment properties at The Square, Maidstone, which had been retained by us through the recession.

The consolidated profit after tax of £530,558 (2012: £208,464) on revenue of £2,205,786 is an encouraging result. The losses carried forward from previous years has reduced the tax charge in 2013. There has been a change in accounting policy in relation to revenue recognition as detailed in the accounting policy note below.

As stated previously, the declaration and payment of dividends is at the discretion of the Board and depends upon future funding requirements, profits generated and the available reserves of the Company. It remains the Board's intention to give consideration to the payment of a dividend at the earliest opportunity and we therefore aim to pay a dividend in respect of the financial year ending 31 March 2014, subject to the foregoing.

We continue to negotiate the purchase of a number of sites, some with planning permission and some without planning consent where we are confident that planning permission will be obtained. We have and are entering into options and conditional contracts on land in our chosen area of operation to ensure continuity of development activity with a view to achieving our projected profitability for 2015 and onwards.

In particular, we are excited about the option we have entered into in respect of land in Staplehurst, Kent (circa 5 acres in extent) where we are confident planning permission will be obtained and which has been acquired by us for a nominal consideration and at a beneficial purchase price.

In our area of operations we intend for the Group to continue our successful policy of developing property of high quality to satisfy public demand. We will continue our land acquisition programme to satisfy the likely needs and demands of house buyers, preferring to develop a broad and varied range of residential homes, as evidenced in the year under review where we have developed out the Edenbridge site comprising apartments and a refurbished cottage and the Oakhurst site which comprises twelve three/four bedroom houses ranging in size from 1,400 sq.ft to 1,900 sq.ft each and which we intend to market for sale at figures in excess of £500,000 per unit.

As regards financial matters, I can confirm that our main bankers have continued their full support for the Group and its activities and remains prepared to lend on realistic terms for both land acquisitions and construction costs. Indeed, we have a number of financial institutions keen to support our development activities. We have three main bankers/funders at present, satisfying our needs on competitive terms and the Johnson family will continue to support the Group in its activities where necessary via the established loan accounts, providing the necessary financial support to cover the balance of the monies needed to buy land and build out sites and for overheads. We borrow on a site specific basis only and do not seek general overdraft facilities.

On the corporate side, we signalled our intention to move the Company from the ISDX Growth Market (formerly PLUS) to AIM, which was completed on 16 July 2013, and the Company's shares may be a further source of capital funding in the future as a result. The Group does, indeed, intend to capitalise upon its funding sources to acquire and develop prime new build land sites on a favourable cost basis, where opportunities arise and it is prudent so to do.

We continue to run the business on a low overhead base and whilst costs will rise following our admission to AIM, we believe we will continue to operate on a low overhead base compared to our competitors.

The experience of the Executive Directors in the industry enables us to buy land, negotiate and enter into construction contracts for the sites and engage professional services with a low head office overhead centre, enabling the Group to scale up or down the trading activity very quickly to react to changing market conditions and opportunities. We are very confident of being able to develop out sufficient sites to continue the Group's growth trend through the current year and onwards. We believe that the success of the Group and the profitability generated as a result will enable us to pay dividends to shareholders in the future.

Finally, we remain committed to providing quality homes in areas of undoubted demand at realistic prices.

The Directors do not recommend the payment of a final dividend for the year (2012: nil).

Christopher Johnson

Director

21 August 2013

Trafalgar New Homes Plc

CONSOLIDATED STATEMENT ON COMPREHENSIVE INCOME

For the year ended 31 March 2013

*Operating profit before costs of acquisition and deemed cost of listing

All results in the current and preceding financial year derive from continuing operations.

The notes set out below are an integral part of these consolidated financial statements

Trafalgar New Homes Plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 March 2013

These financial statements were approved by the Board of Directors and authorised for issue on 21 August 2013 and are signed on its behalf by:

C C Johnson J Dubois

Trafalgar New Homes Plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2013

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 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.

The reverse acquisition reserve relates to the reverse acquisition between Trafalgar New Homes plc and Combe Bank Homes Limited on 11 November 2011.

Trafalgar New Homes Plc

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 March 2013

Trafalgar New Homes Plc

ACCOUNTING POLICIES

For the year ended 31 March 2013

BASIS OF ACCOUNTING

These financial statements are for Trafalgar New Homes Plc ("the Company") and its subsidiary undertakings. The Company is incorporated in England and Wales.

The nature of the Company's operations and its principal activities are set out in the Directors' Report.

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 2013 and are presented in pounds sterling ("GBP"). The comparative year is for the 16 months to 31 March 2012.

The financial statements have been prepared under the historical cost basis, as modified by valuing financial assets and financial liabilities at fair value through the Statement of Comprehensive Income. 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 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. 

Mr Johnson confirms that he will continue to support the Group for its anticipated needs for the next two years. 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.

CHANGE IN ACCOUNTING POLICY - REVENUE RECOGNITION

For the year ended 31 March 2013, the group changed its accounting policy on revenue recognition to be more in line with the business practices of the group. For the previous period end, sales of homes were recognised when the sale had achieved legal completion and the proceeds had been received.

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 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 when contracts are exchanged and the building work is physically complete.

This complies with the relevant accounting standard for the preparation of group financial statements under International Financial Reporting Standards (IFRS) entitled IAS 18 - Revenue.

The Directors are of the opinion that this accounting policy more accurately reflects commercial reality and the recording of revenue for the group.

The effects of this change in accounting policy in the year to 31 March 2013 on the consolidated financial statements are presented below:

There was no impact of the change in accounting policies on the Group's financial statements for the period ended 31 March 2012.

STANDARDS ISSUED BUT NOT YET EFFECTIVE

At the date of authorisation of these financial statements the following Standards and Interpretations, some of which have not been endorsed by the EU, which have not been applied in these financial statements but were in issue but not yet effective:

IAS 1 (amended) - Presentation of Items of Other Comprehensive Income;

Annual improvements to IFRSs - (2009-2011) Cycle;

Amendments to IFRS7 and IAS 32 - Disclosures - Offsetting Financial Assets and Financial Liabilities;

IFRS 9 - Financial Instruments (not yet EU adopted);

IFRS 10 - Consolidated Financial Statements;

IFRS 11 - Joint Arrangements;

IFRS 12 - Disclosure of Interests in Other Entities;

IFRS 13 - Fair Value Measurement;

Amendments to IFRS 10, IFRS12 and IAS 27 - Investment Entities;

IAS 19 (revised) - Employee Benefits;

IAS 27 (revised) - Separate Financial Statements; and

IAS 28 (revised) - Investments in Associates and Joint Ventures.

The Directors do not anticipate that the adoption of these Standards and Interpretations in future years will have a material impact on the financial statements of the Group when the relevant standards and interpretations come into effect.

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of Trafalgar New Homes Plc and its subsidiaries.

On 11 November 2011, Trafalgar New Homes plc became the legal holding company of Combe Bank Homes Limited and its subsidiaries via a share for share exchange.

This transaction is deemed outside the scope of IFRS 3 (Revised 2008) and not considered a business combination because the Directors have made a judgement that prior to the transaction, Trafalgar New Homes plc was not a business under the definition of IFRS 3 Appendix A and the application guidance in IFRS 3.B7- B12 due to Trafalgar New Homes plc being a shell company that had no processes or capability for outputs (IFRS 3.B7).

On this basis, the Directors have developed an accounting policy for this transaction, applying the principles set out in IAS 8.10-12, in that the policy adopted is:

• relevant to the users of the financial information;

• more representative of the financial position, performance and cash flows of the Group;

• reflects the economic substance of the transaction, not merely the legal form; and

• free from bias, prudent and complete in all material aspects.

The accounting policy adopted by the Directors applies the principles of IFRS 3 in identifying the accounting acquirer and the presentation of the consolidated financial statements of the legal parent (Trafalgar New Homes plc) as a continuation of the accounting acquirer's financial statements (Combe Bank Homes Limited). This policy reflects the commercial substance of this transaction as follows:

• the original shareholders of the subsidiary undertakings are the most significant shareholders post initial public offering, owning 90 per cent. of the issued share capital; and

• the cash consideration paid as part of the initial public offering returned equity to the original shareholders of the legal subsidiary undertaking and as a consequence diluted their shareholding to 10 per cent.

Accordingly, the following accounting treatment and terminology has been applied in respect of the reverse acquisition:

• the asset and liabilities of the legal subsidiary Combe Bank Homes Limited are recognised and measured in the Group financial statements at the pre-combination carrying amounts, without reinstatement to fair value;

• the retained earnings and other equity balances recognised in the Group financial statements reflect the retained earnings and other equity balances of Combe Bank Homes Limited immediately before the business combination, and the results of the year from 1 December 2010 to the date of the business combination are those of Combe Bank Homes Limited. However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent, including the equity instruments issued under the share for share exchange to effect the business combination;

• the cost of the combination has been determined from the perspective of Combe Bank Homes Limited. The fair value of the shares in Combe Bank Homes Limited has been determined from the admission price of the Trafalgar New Homes plc shares on re-admission to trading on ISDFX (formerly PLUS) for 1 pence per share. The value of the consideration shares was £1,868,177. The fair value of the notional number of equity instruments that the legal subsidiary would have had to have issued to the legal parent to give the owners of the legal parent the same percentage ownership in the combined entity is 10 per cent of the market value of the shares after issues, being £207,575. The difference between the notional consideration paid by Trafalgar New Homes plc for Combe Bank Homes Limited and the Trafalgar New Homes plc net liabilities acquired of £54,000 has been charged to the Consolidated Statement of Comprehensive Income as a deemed cost of listing amounting to £261,575 with a corresponding entry to the reverse acquisition reserve.

Trafalgar New Homes plc had no significant assets nor significant other liabilities or contingent liabilities of its own at the time that the share for share exchange took effect.

Transaction costs of equity transactions relating to the issue and re-admission of the Company's shares are accounted for as a deduction from equity where they relate to the issue of new shares and listing costs are charged to the Group Income Statement as an exceptional item within administrative expenses.

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying the shareholding of more than half of the voting rights. Where necessary, adjustments have been made to the financial statements of subsidiaries, associates and joint ventures to bring the accounting policies used and accounting years into line with those of the Group. Intragroup balances and any unrealised gains and losses arising from intragroup transactions are eliminated in preparing the Consolidated financial statements.

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.

Business combinations, other than noted above, are accounted for under the acquisition method. Any excess of the purchase price of the business combination over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill.

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. The excess of consideration over the fair value of the assets and liabilities acquired is recorded as goodwill. 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.

REVENUE

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 probably that the economic benefits associated with the sale will flow to the Group. In the majority of cases properties are treated as sold and profits are recognised when contracts are exchanged and the building work is physically complete.

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 PROFIT

Operating profit is stated before interest and tax.

FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group has become a party to the contractual priorities of the instrument.

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 bring the inventories to their present location and condition. Interest of sums borrowed that finance specific projects is added to cost. Cost is calculated using the weighted average method. 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 improvement. Depreciation is calculated to write down the cost less estimated residual value of all tangible fixed assets by equal annual instalments 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.

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 necessarily take a substantial year of time to get ready for their intended use of sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the statement of comprehensive income in the year in which they relate.

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 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 balance sheet date.

DEFERRED TAXATION

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 taxable 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 balance sheet 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, and is accounted for using the balance sheet liability method. 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 balance sheet 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 balance sheet 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.

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

The preparation of financial statements in conformity with IFRS 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 assessment requires the use of judgment and estimates. The carrying amount of inventory is disclosed in note 12 to the financial statements.

Trafalgar New Homes Plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 March 2013

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.

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.

Geographical segments

The following tables present revenue regarding the Group's geographical segments for the year ended 31 March 2013.

2 OTHER INTEREST RECEIVABLE AND SIMILAR INCOME

3 GAIN ON DISPOSAL GROUP COMPANY

On 31 March 2013 Combe Bank Homes Limited, a fully owned subsidiary of the Group, sold its 100% shareholding in

Combe Homes (Investments) Limited for £200,000. The net assets of Combe Homes (Investments) Limited at the date of disposal were £1,369, which provided a gain on disposal of £198,631.

A summary of the results of Combe Homes (Investments) Limited for the current year and prior period are included below:

4 Interest payable AND SIMILAR CHARGES

5 PROFIT FOR THE YEAR

The Group's profit for the year is stated after charging the following:

Amounts payable to Crowe Clark Whitehill LLP and its related entities in respect of audit and non-audit services are disclosed in the table above.

6 EMPLOYEES AND DIRECTORS' REMUNERATION

Staff costs during the year were as follows:

The average number of employees of the company during the year was:

Key management are the Group's Directors. Remuneration in respect of key management was as follows:

There are retirement benefits accruing to Mr C C Johnson for whom a company contribution was paid during the year of £18,000 (2012: £25,500).

Consultancy fees of £10,000 (2012: £13,333) were paid to Mr N Lott during the year.

7 TAXATION

8 PROFIT PER ORDINARY SHARE

The calculation of profit per ordinary share is based on the following profits/(losses) and number of shares:

9 PROPERTY PLANT AND EQUIPMENT

10 TRADE AND OTHER RECEIVABLES

There are no receivables that are past due but not impaired at the year end, and receivables relate only to customers with no recent history of default.

11 CASH AND CASH EQUIVALENTS

All of the Group's cash and cash equivalents at 31 March 2013 are in sterling and held at floating interest rates.

The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value.

12 INVENTORY

13 TRADE AND OTHER PAYABLES

14 BORROWINGS

Included in other loans, all bearing interest at 10% - 15% per annum, is the sum of £300,000 (2012: £300,000) advanced by the DFM Pension Scheme of which Mr J Dubois is the principal beneficiary.

The bank borrowings are repayable as follows:

The weighted average interest rates paid on the bank loans were as follows:

Bank Loans - 5.1% (2012: 5.1%)

£2,000,000 of the Director's loan is repayable after more than 1 year while the balance will be repaid in the next few months when cashflow permits. Interest will be payable at the rate of 5% pa as from 1 April 2013 (previously nil).

The other loans bear interest of between 10-15% and are repayable after more than 1 year.

15 Share capital

Authorised Share Capital

Issued, allotted and fully paid

16 Share PREMIUM ACCOUNT

17 RELATED PARTY TRANSACTIONS

Mr C C Johnson holds 87.15% (2012: 87.15%) of the total issued share capital of the Group.

During the year, the Directors agreed to sell a small number of completed properties to Mr C C Johnson and his Pension Fund for an aggregate consideration of £760,000 (2012: £1,090,000).

Four properties were also sold to an independent third party to whom Mr J Dubois provided an indirect loan of £275,000 in connection with these purchases, for an aggregate consideration of £972,000 (2012: £nil).

The following working capital loans have been provided by the Directors:

Mr Johnson's Loan was interest-free but will bear interest at 5% pa from 1st April 2013. Mr Dubois's Loan, which is from his Pension Fund of which he is the sole beneficiary, was at 15% pa interest (2012: 15% pa), reducing to 12% pa as from 1 April 2013.

18 CATEGORIES OF Financial instruments

The Group's financial assets are divided as cash and cash equivalents. The Group's financial liabilities are divided as Directors loans, bank loans and other loans.

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and it sets policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Capital risk management

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 15 to 22 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 banks. The loans from Mr Johnson were interest free in the year but will bear interest at 5% pa from 1 April 2013. Mr Dubois's loan from his Pension Fund attracts interest at 15% pa which reduces to 12% pa from 1 April 2013.

The impact of a 100 basis point increase in interest rates would result in additional interest cost for the year of £43,969 (2012: £33,302).

Credit risk management

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 Company 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.

Mr Johnson confirms that he will continue to support the Group for its anticipated needs for the next two years. 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.

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.

In accordance with IAS 39, "Financial instruments: recognition and measurement", the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet specific requirements set out in the standard. No material embedded derivatives have been identified.

Trafalgar New Homes Plc

COMPANY BALANCE SHEET

Company Registration Number 05332938

31 March 2013

The financial statements were approved by the Board of Directors on 21 August 2013 and authorised for issue and are signed on its behalf by:

C C Johnson J Dubois

Trafalgar New Homes Plc

COMPANY STATEMENT OF CASH FLOWS

Year ended 31 March 2013

3. ANALYSIS OF CHANGES IN NET DEBT

Trafalgar New Homes Plc

NOTES TO THE COMPANY FINANCIAL STATEMENTS

For the year ended 31 March 2013

BASIS OF ACCOUNTING

The financial statements have been prepared in accordance with the historical cost convention and in accordance with applicable United Kingdom law and accounting standards. The principal accounting policies are described below. They have all been applied consistently throughout the year and proceeding year.

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. 

Mr Johnson confirms that he will continue to support the Company and Group for its anticipated needs for the next two years.

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

Investments held as fixed assets are stated at cost less provision for impairment.

TAXATION

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.

Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial statements. Neither is deferred tax recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being charged to tax only if and when the replacement assets are sold.

Taxation arising on disposal of a revalued asset is split between the profit and loss account and the statement of total recognised gains and losses on the basis of the tax attributable to the gain or loss recognised in each statement.

1 LOSS FOR THE FINANCIAL YEAR

a) 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 year was £74,919 (2012: Loss £376,359).

The company's loss for the financial year has been arrived at after charging auditor's remuneration payable to Crowe Clark Whitehill LLP for audit services to the company of £10,000 (2012: £10,000).

2 EMPLOYEES AND DIRECTORS' REMUNERATION

The average number of employees of the company during the year was:

There are no retirement benefits accruing to any of the Directors.

£10,000 (2012: £13,333) was paid to Mr Norman Lott for his professional services.

3 INVESTMENTS

The company owns the following undertakings, all of which are incorporated in the United Kingdom:

On 31 March 2013 Combe Bank Homes Limited sold the entire share capital of Combe Homes (Investments) Limited for £200,000. This provided a gain on disposal of the investment in Combe Bank Homes Limited of £199,900.

4 OTHER RECEIVABLES

5 CREDITORS: Amounts falling due within one yeaR

6 borrowings

7 Share capital

Authorised share capital

Issued, allotted and fully paid

8 Share PREMIUM ACCOUNT

9 profit and loss account

10 Reconciliation of movements in shareholders' funds-