Strategic Report

Business review, results and dividends

All trading and property assets of Trafalgar Property Group Plc (Group) are held in the name of the Group or its subsidiaries as follows:

Trafalgar New Homes Limited (TNH) Trafalgar Retirement+ Limited (TR+)

Selmat Limited (Selmat)

Combe Bank Homes (Oakhurst) Limited (Oakhurst) Combe Homes (Borough Green) Limited (Borough Green)

Mortgages of £924,373 (2021: £924,373) exist on the three properties held by Selmat. The shares of the Group are quoted on the London Stock Exchange AIM market.

The principal activity of the Group continues to be that of investment in residential property, which includes rental income £64,839 (2021: £73,300) and sales from property development £nil (2021:£2,212,500) and the consolidated results of the year’s trading, are shown below. The consolidated loss for the year was £486,336 (2021: Loss £329,194). Management believe the key indicators of performance for the Group are the revenue and profitability achieved during the year.

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. Direct costs may escalate and eat into gross profit margins.

2. There may be uncertainty in obtaining adequate finance thus putting pressure on the going concern of the Group.

3. Heavy overheads may be incurred especially when projects have been completed and before others have been commenced.

4. The Group could commit too much to future capital projects.

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. The Plc also has access to shareholder funding via placing of shares in the market. A full statement regarding going concern is shown in the accounting policies on page 22.

2. Direct costs are outsourced on a fixed price contract basis, thereby passing on to the contractor all risk of 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. Buying decisions for capital projects are taken at Board level, after careful research by the Directors … personally, who have substantial experience in various business sectors and markets.

The Group has focused on a niche market sector of new home developments in the range of four to twenty 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. 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 corporate governance policy appropriate for a small publicly listed 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:-  

Group turnover for the year amounted to £64,839 (2021: £2,285,800), representing no sales but rental income received (2021: six residential properties sold plus two land options). Investment properties have been transferred into current assets this year as a result of the impending sales of the remaining properties since the year end. The administration costs include costs written off following the unsuccessful planning appeal on the Send site amounting to £ 73,517. In additional one investment property was sold for £ 352,500 and there was a loss on disposal on this of £ 28,646 included in administration costs. The property portfolio was revalued at year end and this showed an increase in value of £ 112,000.

After taking into account the overheads of the Group, there was a loss recorded for the year of £486,336 (2021: £329,194).

There will be no tax charge and the Company now has tax losses being carried forward of £5,453,582 (2021: losses £5,049,125).

The loss per share during the year was (0.34p), (2021: loss per share 0.34p).

Directors’ duties under S172

The Directors believe that, individually and together, they have acted in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole, having regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act 2006 in the decisions taken during the year ended 31 March 2022.

Our Board of Directors remain aware of their responsibilities both within and outside of the Group. Within the limitations of a Group with so few employees we endeavour to follow these principles:

Purpose, vision and strategy: this is set out in the Strategic Report and we recognise our role in identifying opportunities to develop homes and apartments to the best quality standards.

Group policies: these are reviewed annually and staff and Directors are encouraged to improve their skillset as appropriate.

Culture and people: we fully support a culture where all customers, staff and suppliers are treated in an open and honest fashion, irrespective of race, gender, ethnic, disabilities or other scenarios.

Board structure: the role of the Board is reviewed annually with a clear focus on the specific roles assigned to each individual to enable the Board to properly support each member of staff.

Freedom within a framework: we are developing a new framework for communicating this freedom in a straight-forward methodology.

Risk and internal control framework: risks and controls are subject to discussion at quarterly Board meetings. Every project undertaken by the Group is analysed with a view to limiting the risks to the Group and its Stakeholders before proceeding with implementation.

Key performance indicators (KPIs)

Management are closely involved in the day to day operations of the Group and constantly monitor cashflows and expenditure. However, Management believe 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

We still hold a land option on a site in Leatherhead for a scheme to build seven apartments. We have incurred costs to date of £25,659 on this site as shown in inventory note 13 within the accounts. Recently the Appeals Inspector visited the site and we are awaiting his decision.

Financial Instruments

Information relating to the financial instruments is now included in the Directors’ Report

Paul Treadaway

Director

27 September 2022