Annual report & consolidated financial statements 2016
On behalf of the Board, I am pleased to present Trafalgar New Homes’ results for the year ended 31 March 2016 which saw the Group return to profitability. The Board is confident that it has a strong development pipeline and that the Company is well positioned to deliver profitability for FY2017 and onwards.
Our driving focus is now on acquiring new sites that should produce increased turnover and a significant improvement in the financial performance for FY2017. In addition, we have been progressing with the preparation of a revised planning application for our Staplehurst site, which, if successful, should make a significant contribution to our bottom line and address the chronic shortage in the area of good quality housing stock.
The year under review saw Group turnover at £2,235,000 (2015: £3,898,250), with a profit before and after tax of £204,877 (2015: Loss £619,106). The cash on the balance sheet at the end of the year was £278,406 (2015: £490,770) and the Group continues to have sufficient capital for all planned activities.
Business Environment and Outlook
The decision to exit the European Union at the end of June 2016 was unprecedented. It led to an immediate drop in the value of sterling and a sell-
The market fundamentals remain strong with robust demand for homes as a result of chronic undersupply. A recent report by the Resolution Foundation showed that home ownership in the UK had dropped to its lowest levels in 30 years, with outer London seeing the second biggest drop of 13.5% to just under 58%. Further, the Bank of England’s decision on 4th August 2016 to reduce interest rates to a record low of 0.25% should reduce the cost of financing and may also provide potential buyers with cheaper mortgages. Nevertheless, we strongly believe that as long as planning restrictions remain obstructive there will continue to be a considerable shortage of housing supply in the South East.
These fundamentals provide attractive opportunities for house builders with the right strategic focus and access to finance. We are confident that our focus on traditional housing for a wide range of buyers in the South East, along with the price of our current housing stock, will keep sale prices stable and we will continue to attract customers. The recent increases in Stamp Duty Tax are mainly applicable to the luxury end of the market and do not adversely affect our operations. The Group remains committed to building new homes in the South East that are in such high demand.
The Group remains confident about its prospects for FY2017 and beyond. Trafalgar New Homes is in a stronger position now than ever, having returned to profitability and having secured several banking facilities to fund its strong development pipeline. The Executive Directors collectively have many years of residential development experience, which enables the Group to negotiate land and property purchases and construction contracts efficiently and quickly. This, in turn, enables the Group to adapt to changing market conditions and exploit opportunities. We are committed to growing the Group’s profitability and to rewarding our shareholders through dividend payments when appropriate. We believe the outlook for the Company is exciting.
9 August 2016