GROUP ACCOUNTING POLICIES

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, Chequers Hill, 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 4-7.

BASIS OF PREPARATION

The Group financial statements have been prepared in accordance with International Financial Reporting Standards as adopted in the United Kingdom (“UK adopted IFRS”) and those parts of the Companies Act 2006 that are relevant to companies which report in accordance with IFRS. These financial statements are for the year ended 31 March 2023 and are presented in pounds sterling (“GBP”) rounded to the nearest pound. The comparative year is for the year to 31 March 2022.

The financial statements have been prepared under the historical cost convention and on an accrual method of accounting, except for certain financial assets and liabilities which are measured at fair value as explained in the accounting policies below.

AUDIT EXEMPTION OF SUBSIDIARIES

The following subsidiaries are exempt from the requirements of the UK Companies Act 2006 relating to the audit of individual accounts by virtue of s479A of the Act.

The outstanding liabilities at 31 March 2023 of the above named subsidiaries have been guaranteed by the Company pursuant to s479AC of the Act. In the opinion of the directors, the possibility of the guarantees being called upon is remote.

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.

During the year the Company raised £400,000 for working capital purposes by way of an issue of 133,333,333 shares at 0.3p per share and re-organised the loans with C C Johnson for a further two years.

As indicated in note 20 subsequent to the balance sheet date, the Company has raised £125,000 for working capital purposes by way of an issue of 125,000,000 shares at 0.1p per share.

The total amount of loans remaining in the Group following the sale of the investment property during the year amounts to £4,447,914 (2022 - £4,694,421) as shown in note 13. At the date of the audit report the final investment property had been sold and from the sale proceeds a total of £851,698 was repaid to clear part of the loans outstanding. Of the balance of the loans remaining outstanding of £3,596,216, a sum of £3,299,800 relates to loans owed to C Johnson, plus connected parties, a director of subsidiary companies. The balance of amounts owed were to independent third parties.

The Group continues to utilise banking sources for the financing of its developments, together with significant loans from third party investors as stated in note 13, which is after the disposal of its investment properties, to ensure that there is sufficient money available for the Group to undertake and complete its various developments.

The Group does 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.

The site at Speldhurst is due for completion by the end of 2023 with a sale expected in quarter one of 2024. This sale will then make additional funds available to the group.

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 concern basis adopted in the preparation of the financial statements.

REVENUE RECOGNITION

Revenue represents the amounts receivable from the investment in residential property during the year and other income directly associated with property development. This will take the form of rental income and sales of investment property.

Rental income is recognized at the point of receipt being the contractual date in accordance with the tenancy agreements.

Revenue from customers arising from the sales of development property are recognized at the transaction price which reflects the amount of consideration that is expected to be received, and is recognized at a point in time when ownership passes to the customer, which in the majority of cases is the point of legal completion of the property sale and are shown in the accounts by way of a profit/(loss) on disposal.

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 following new standards or amendments to existing standards were applicable for the first time and have not had an impact on the financial statements.

New standards, interpretations and amendments

Amendments to IFRS 16, Lease liability in a Sale and Leaseback

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease.

The Group does not expect a material impact on its consolidated financial statements from these amendments.

The Group adopt early the following amendments to standards which are not yet mandatory.

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (issued January 2020)

The amendments clarify that the classification of a liability as current or non-current is based only on rights existing at the end of the reporting period and the classification is not affected by expectations about whether rights to settle or defer a liability will be exercised. Further, the amendments clarify that the settlement of a liability refers to the transfer of cash, convertible debts, other assets, or services to the counterparty. This amendment only affects presentation.

The amendment is effective for financial years beginning on or after 1 January 2024 and has not yet been adopted for use in the United Kingdom.

The Group does not expect a material impact on its consolidated financial statements from these amendments.

Adoption of the following standards does not have an impact on the consolidated financial statement of the Group:

Amendments to IFRS 3 – References to the conceptual framework (issued in May 2020)

The amendments change references and cross-references from IFRS 3 to the Framework for the Preparation and Presentation of Financial Statements.

The amendment is effective for financial years beginning on or after 1 January 2022.

The Group does not expect a material impact on its consolidated financial statements from these amendments.

Amendments to IAS 16 Property, Plant and Equipment (issued in May 2020)

The amendments require any proceeds from selling items produced (and related production costs) in the course of bringing an item property, plant and equipment into operation to be recognised in profit or loss clarifying that such items are not reflected in the cost of the asset.

The amendment is effective for financial years beginning on or after 1 January 2022.

The Group does not expect a material impact on its consolidated financial statements from these amendments.

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets (issued in May 2020)

The amendments clarify that the cost of fulfilling a contract are costs that relate directly to

that contract. Such costs can be the incremental costs of fulfilling that contract or an allocation of other costs directly related to fulfilling that contract.

The amendment is effective for financial years beginning on or after 1 January 2022.

The Group does not expect a material impact on its consolidated financial statements from these amendments.

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