Annual Report • Aug 28, 2014
Annual Report
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RNS Number : 2499Q
Trafalgar New Homes PLC
28 August 2014
28 August 2014
TRAFALGAR NEW HOMES PLC
("Trafalgar", the "Company" or "Group")
FINAL RESULTS AND NOTICE OF AGM
Trafalgar (AIM: TRAF), the AIM quoted residential property developer operating in southeast England, announces the audited results for the year ended 31 March 2014.
HIGHLIGHTS:
· The year under review saw Group turnover at £3,368,500 (2013: £2,205,786), generating a gross profit of £293,446.
· After administrative expenses and provision of AIM listing costs of £250,653 incurred in moving the Company to AIM, the Group recorded a loss before tax of £305,049 (2013: Profit £617,976).
· Successful move of the Company from the ISDX Growth Market (formerly PLUS) to AIM concluded on the 16th July 2013.
· The move to AIM was with a view to, inter alia, increasing the profile of the Company and utilising the Company's shares as a further source of capital funding in the future. Indeed, in the current year, the Company announced the issue of 10m new ordinary shares of 1p each at a price of 2p per share and the shares issued were admitted to trading on AIM in July 2014.
· Sales of the remaining units at Oakhurst Park Gardens, along with the development and sale of the sites at Ticehurst and Borough Green, are expected to contribute to profitability for the current year.
· The revised planning application at Staplehurst, Kent on the first phase for permission for a 23 house development on approximately half of the site under Option, is with Maidstone Borough Council. An early positive outcome is expected. The development of this site will contribute substantially to the Group's profitability for the years ended March 2016 and March 2017, along with the development and sale of the sites owned at Tunbridge Wells and Sheerness, Kent.
Annual Report and Notice of AGM
The Company advises that the 2014 Annual General Meeting of the Company will be held at the offices of Allenby Capital Limited, 3 St. Helen's Place, London EC3A 6AB at 11.00 a.m. on 29 September 2014, notice of which will be contained in the Annual Report to be posted to shareholders next week. Copies of the Annual Report will also be available on the Company's website: www.trafalgar-new-homes.co.uk.
Enquiries:
| Trafalgar New Homes Plc Christopher Johnson |
+44 (0)1732 700 000 |
| Allenby Capital Ltd - Nominated Adviser and Broker Jeremy Porter/James Reeve |
+44 (0)20 3328 5656 |
| Yellow Jersey PR Limited Dominic Barretto/Anna Legge |
+44 (0)7747 788 221 |
Notes to Editors:
Trafalgar New Homes is the holding company of Combe Bank Homes, a successful residential property developer operating in the southeast of England. The founders of Combe Bank Homes have a long track record of developing new and refurbished homes, principally in Kent. Combe Bank Homes was incorporated in 2006 and was acquired by ISDX quoted Trafalgar New Homes in a reverse takeover on 11 November 2011.
The Company's focus is on the select acquisition of land for residential property development. The Company outsources all development activities, for example the obtaining of planning permission, design and construction, and uses fixed price build contracts. This enables the Company to tightly control its development and overhead costs.
The Company focuses on the regions of Kent, Surrey, Sussex and the M25 ring south of London and targets development sites of up to 20 homes, with sales prices typically ranging from £100,000 to £750,000 per unit, although larger projects are undertaken.
For further information visit www.trafalgar-new-homes.co.uk.
TRAFALGAR NEW HOMES PLC
Annual report and consolidated financial statements for the year ended 31 March 2014
CHAIRMAN'S STATEMENT
The attached Report and Accounts for the Group for the year ended 31 March 2014 are very disappointing.
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 coming year. Various campaigns by the Government, as well as an overall improvement in the residential property market are encouraging.
However, we have experienced significant delays and cost over-runs during this past year which has resulted in a loss for the year. Full details are in the Operations Review in the Directors' Report.
Financials
The period under review saw Group turnover at £3,368,500 (2013: £2,205,786), with a loss before tax of £305,049 (2013: Profit £617,976). This loss is after providing for the AIM listing costs of £250,653. The underlying loss for the year was £205,843 (2013: Profit £559,732).
Land has been acquired to enable our development programme to continue profitably for 2015 and 2016.
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.
Following our move from ISDX to AIM on 16 July 2013 we have raised a further £200,000 with a new share issue in June 2014.
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
Chairman
27th August 2014
Operations review
The year under review can only be described as disappointing, that sentiment being reflected in the financial results for the year which showed a consolidated loss after tax of £305,049 on revenue of £3,368,500 (compared to a 2013 profit of £530,558 on revenue of £2,205,786).
During the year the Company anticipated completing the construction and sale of its flagship site at Oakhurst Park Gardens, Hildenborough, Kent comprising 12 houses and anticipating a turnover of not less than circa £6,500,000 from this site and a substantial profit.
In the event, the Company sold only four of the houses as at the year end which contributed only circa £186,000 towards the profits for the year. The reason for the failure to sell all the units and take in the profit, as anticipated on the entire site, included:-
a. Serious delays in the construction programme.
b. The liquidation of the contractor undertaking the work resulting in the Company having to employ third party contractors/sub-contractors and trades to finish the works. This incurred substantial additional cost over that which was agreed to be paid to the contractor under the Fixed Price JCT Contract it had entered into with the Company.
c. Planning delays, reference to which was made in the Interim Trading update of the 1st April 2014.
As a result of the above, the Company incurred an increase in the cost of financing the site due to having to re-finance because of the delays beyond the date of the expiry of the funding arrangement that was in place. This re-financing was successfully concluded but the increased cost reduced the potential profitability of the site yet further.
Despite the contribution to profit made by the sale of the remaining units on the Edenbridge site (which was the basis of the small profit generated at the interim stage, as already reported on), the fact that only four of the houses at Oakhurst Park Gardens sold by the year end, resulted in the Company only being able to declare a small profit overall from its development activities.
In addition, it was necessary during the year to write-off the costs of £250,653 of moving the Company from the ISDX Growth Market (formerly PLUS) to AIM which was successfully concluded on the 16th July 2013.
As a result of the above, the Company has recorded a loss for the year of £ 305,049.
Our move to AIM was with a view to, inter alia, increasing the profile of the Company and utilising the Company's shares as a further source of capital funding in the future. Indeed, in the current year, your Company announced the issue of 10m new ordinary shares of 1p each at a price of 2p per share and the shares issued were admitted to trading on AIM in July 2014.
Looking forward, we are pleased to report that our sales of the houses on the Oakhurst Park Gardens site continues with five more of the units sold and a further two under offer. All homes are now fully complete and landscaping and access road works mostly concluded. The attractive nature of the development, especially the garden spaces created for each home, continues to attract positive comment from prospective purchasers. We are confident that all the remaining houses will sell in the current year, contributing to profit for the year ended 31st March 2015, despite the fact that some potential buyers have been unable to proceed due to the recent reduction in mortgage availability.
During the current year we acquired a small site with planning permission in Borough Green, near Sevenoaks, Kent which will be undertaken and should contribute to profit in the current year, along with our site at Ticehurst, East Sussex, where construction is now under way. Also during the current year we will be commencing development of the sites, with planning permission, that we own in Sheerness, Kent and Tunbridge Wells, Kent. At Tunbridge Wells, we are awaiting receipt of a planning permission for a four house scheme (to replace the six apartment scheme for which we have planning consent) as the four house scheme will generate a higher profit with less cost and risk. We are advised by our planning consultants that the granting of this alternative consent should be a formality and, therefore, we anticipate commencing construction on this site during the current year.
Our flagship site going forward will be the land at Staplehurst, Kent. Our revised planning application on the first phase for permission for a 23 house development on approximately half of the site we have under Option, is with Maidstone Borough Council. An early positive outcome is expected. Thereafter, we will be applying for consent for a further 30 houses on the remainder of the site. We have worked closely with the planners on this. The development of this site will contribute substantially to the Group's profitability for the years ended March 2016 and March 2017.
We continue to investigate other opportunities and have no shortage of sites being offered to us. We have detected, though, that land costs are rising again and we are not prepared to bid for sites which do not show a realistic return on capital employed.
Our area of operation remains Kent, East Sussex, Surrey and the outer London M25 ring and we continue to believe that our selective and careful land acquisition policy will continue to bear fruit. Indeed, our approach to land buying and development has been vindicated in the Oakhurst Park Gardens development. Despite the many unforeseen and costly problems we have encountered on this site, we still anticipate making an overall profit on the development which will show an acceptable return on capital employed. We continue to operate the business on a low overhead cost basis, despite the rising costs largely related to being on the AIM Market. We are unable to pay a dividend this year but the Company remains committed to the declaration and payment of a dividend at the earliest opportunity. The losses carried forward from previous years will continue to be available to mitigate future tax charges.
Finally, our bankers continue their financial support of the Company and its activities and with the Directors' Loans and other loans from private investors available to the Company, we have sufficient funds available to continue the expansion of the business and the generation of profitability for the Company.
Christopher Johnson
Director
27th August 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2014
| Year ended 31 March |
Year ended 31 March |
||
| Note | 2014 | 2013 | |
| £ | £ | ||
| Revenue | 3,368,500 | 2,205,786 | |
| Cost of sales | 3,075,034 | 1,583,216 | |
| Gross profit | 293,466 | 622,570 | |
| Administrative expenses | 248,656 | 261,469 | |
| Gain on disposal of Group Company | - | 198,631 | |
| Underlying operating profit* | 44,810 | 559,732 | |
| AIM transaction costs | 250,653 | - | |
| Operating (loss)/profit | (205,843) | 559,732 | |
| (Loss)/profit before interest | (205,843) | 559,732 | |
| Other interest receivable and similar income | 2 | 794 | 58,244 |
| Interest payable and similar charges | 5 | 100,000 | - |
| (Loss)/profit before taxation | (305,049) | 617,976 | |
| Tax payable on (loss)/profit on ordinary activities | 6 | - | 87,418 |
| (Loss)/profit after taxation for the year attributable to equity holders of the parent |
(305,049) | 530,558 | |
| Other comprehensive income attributable to equity holders of the parent |
- | - | |
| Total comprehensive income for the year | (305,049) | 530,558 | |
| (Loss)/profit attributable to: | |||
| Equity holders of the Parent | (305,049) | 530,558 | |
| Total comprehensive (loss)/income for the year attributable to: | |||
| Equity holders of the Parent | (305,049) | 530,558 | |
| (LOSS)/PROFIT PER ORDINARY SHARE; Basic/diluted |
7 | (0.14p) | 0.25p |
*Operating profit before AIM transaction costs.
All results in the current and preceding financial year derive from continuing operations.
The notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2014
| 31 March | 31 March | ||
| Note | 2014 | 2013 | |
| £ | £ | ||
| Non-current assets | |||
| Property, plant and equipment | 8 | 863 | 1,150 |
| 863 | 1,150 | ||
| Current assets | |||
| Inventory | 11 | 5,070,454 | 6,261,384 |
| Trade and other receivables | 9 | 2,425,257 | 1,322,092 |
| Cash at bank and in hand | 10 | 1,216,471 | 393,922 |
| 8,712,182 | 7,977,398 | ||
| Total assets | 8,713,045 | 7,978,548 | |
| Liabilities: amounts falling due within one year | |||
| Trade and other payables | 12 | (741,090) | (452,579) |
| Borrowings | 13 | (574,503) | (3,380,034) |
| Net current assets | 7,396,589 | 4,144,785 | |
| Non-current liabilities | |||
| Borrowings | 13 | (8,295,572) | (4,993,391) |
| Net liabilities | (898,120) | (847,456) | |
| Capital and reserves | |||
| Called up share capital | 14 | 2,283,752 | 2,143,752 |
| Share premium account | 15 | 1,075,513 | 961,128 |
| Reverse acquisition reserve | (2,817,633) | (2,817,633) | |
| Profit & loss account | (1,439,752) | (1,134,703) | |
| Equity - attributable to the owners of the Parent | (898,120) | (847,456) | |
These financial statements were approved by the Board of Directors and authorised for issue on 27th August 2014 and are signed on its behalf by:
C C Johnson: ………………………………………. J Dubois: ……………………………………………
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2014
| Share capital | Share premium | Reverse acquisition reserve |
Retained profits /(losses) |
Total equity | |
| £ | £ | £ | £ | £ | |
| At 1 April 2012 | 2,143,752 | 961,128 | (2,817,633) | (1,665,261) | (1,378,014) |
| Profit for the year | - | - | - | 530,558 | 530,558 |
| Total comprehensive income for the year | - | - | - | 530,558 | 530,558 |
| At 31 March 2013 | 2,143,752 | 961,128 | (2,817,633) | (1,134,703) | (847,456) |
| At 31 March 2013 | 2,143,752 | 961,128 | (2,817,633) | (1,134,703) | (847,456) |
| Loss for year | - | - | - | (305,049) | (305,049) |
| Total comprehensive income for the year | - | - | - | (305,049) | (305,049) |
| Issue of shares | 140,000 | 140,000 | - | - | 280,000 |
| Share issue costs | - | (25,615) | - | - | (25,615) |
| At 31 March 2014 | 2,283,752 | 1,075,513 | (2,817,633) | (1,439,752) | (898,120) |
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.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2014
| Note | 2014 | 2013 | |
| £ | £ | ||
| Cash flow from operating activities | |||
| Operating (loss)/profit | (205,843) | 559,732 | |
| Depreciation | 287 | 383 | |
| Decrease in stocks | 1,190,930 | 296,282 | |
| Increase in debtors | (1,103,394) | (1,013,418) | |
| Increase in creditors | 378,238 | 199,258 | |
| Interest received | 794 | 58,244 | |
| Gain on disposal of group company | - | (198,631) | |
| Net cash (outflow) / inflow from operating activities | 261,012 | (98,150) | |
| Investing activities | |||
| Purchase of tangible fixed assets | - | - | |
| Net cash used in investing activities | - | - | |
| Taxation | (89,483) | (3,402) | |
| Financing activities | |||
| New loans / (loan repayments) in year (net) | 900,631 | 485,575 | |
| Issue of shares (net of direct costs) | 254,370 | - | |
| Director loan repayments | (403,981) | (543,521) | |
| Interest paid | 100,000 | - | |
| Net cash inflow/(outflow) from financing | 651,020 | (57,946) | |
| Increase/(decrease) in cash and cash equivalents in the year | 822,549 | (159,498) | |
| Cash and cash equivalents at the beginning of the year | 393,922 | 553,420 | |
| Cash and cash equivalents at the end of the year | 1,216,471 | 393,922 | |
BASIS OF PREPARATION
The financial information set out in this announcement is abridged and does not constitute the Company's statutory financial statements for the year ended 31 March 2014. The financial information has been extracted from the financial statements for the year ended 31 March 2014, which 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 and were approved by the Board on 27 August 2014 and on which the auditors have reported without qualification.
The statutory financial statements for the year ended 31 March 2014 will be posted to shareholders next week and, once approved, will be delivered to the Registrar of Companies following the Annual General Meeting on 29 September 2014.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2014
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 2014.
| Year ended 31 March 2014 | United Kingdom | Total |
| £ | £ | |
| Property development - sales | 3,368,500 | 3,368,500 |
| 3,368,500 | 3,368,500 |
| Year ended 31 March 2013 | United Kingdom | Total |
| £ | £ | |
| Property development - sales | 2,205,786 | 2,205,786 |
| 2,205,786 | 2,205,786 |
2 OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
| 2014 | 2013 | |
| £ | £ | |
| Bank interest received | 189 | 253 |
| Rental income & ground rent | 605 | 57,991 |
| Gain on disposal of Group Company | - | 198,631 |
| 794 | 256,875 |
3 LOSS FOR THE YEAR
The Group's loss for the year is stated after charging the following:
| 2014 | 2013 | |
| £ | £ | |
| AIM Transaction costs | 250,653 | - |
| Depreciation of tangible fixed assets | 287 | 383 |
| Loan interest to Director | 100,000 | - |
| Auditor's remuneration: | ||
| Audit of these financial statements | 10,000 | 10,000 |
| Amounts receivable by the auditor in respect of the audit of the financial statements of subsidiary undertakings pursuant to legislation |
4,250 | 4,000 |
| Non-audit services associated with AIM Listing | 40,000 | 383 |
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.
4 EMPLOYEES AND DIRECTORS' REMUNERATION
Staff costs during the year were as follows:
| 2014 | 2013 | |
| £ | £ | |
| Directors remuneration | 30,000 | 25,000 |
| Wages and salaries | 71,000 | 61,000 |
| Social security costs | 11,489 | 7,736 |
| Other pension costs | 18,000 | 18,000 |
| 130,489 | 111,736 |
The average number of employees of the company during the year was:
| 2014 | 2013 | |
| Number | Number | |
| Directors and management | 3 | 4 |
Key management are the Group's Directors. Remuneration in respect of key management was as follows:
| 2014 | 2013 | |
| £ | £ | |
| Short-term employee benefits: | ||
| - Emoluments for qualifying services C C Johnson | - | - |
| - Emoluments for qualifying services A Johnson | - | 10,000 |
| - Emoluments for qualifying services J Dubois | 30,000 | 15,000 |
| 30,000 | 25,000 |
There are retirement benefits accruing to Mr C C Johnson for whom a company contribution was paid during the year of £18,000 (2013: £18,000).
Consultancy fees of £10,000 (2013: £10,000) were paid to Mr N Lott during the year.
5 INTEREST PAYABLE AND SIMILAR CHARGES
During the year all interest paid on borrowings is normally capitalised with the exception of:-
| 2014 | 2013 | |
| £ | £ | |
| Director's loan interest paid | 100,000 | - |
| 100,000 | - |
6 TAXATION
| 2014 | 2013 | |
| £ | £ | |
| Current tax | - | 87,418 |
| Tax charge | - | 87,418 |
| 2014 | 2013 | |||
| £ | £ | |||
| (Loss)/profit on ordinary activities before tax | (305,049) | 617,976 | ||
| Based on (loss)/profit for the year: | ||||
| Tax at 23% (2013: 24%) | (70,161) | 148,314 | ||
| Effect of: | ||||
| Losses utilised | - | (64,509) | ||
| Disallowable items | 43,784 | 3,636 | ||
| Capital allowances claimed | - | (23) | ||
| Losses c/f | 26,377 | - | ||
| Tax charge for the year | - | 87,418 | ||
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
7 (LOSS)/PROFIT PER ORDINARY SHARE
The calculation of (loss)/profit per ordinary share is based on the following profits/(losses) and number of shares:
| 2014 | 2013 | |
| £ | £ | |
| (Loss)/profit for the year | (305,049) | 530,558 |
| Weighted average number of shares for basic (loss)/profit per share | 224,347,803 | 214,375,200 |
| Weighted average number of shares for diluted (loss)/profit per share | 224,347,803 | 214,375,200 |
| (LOSS)/PROFIT PER ORDINARY SHARE: Basic |
(0.14p) | 0.25p |
| Diluted | (0.14p) | 0.25p |
8 PROPERTY, PLANT AND EQUIPMENT
| Fixtures and fittings £ |
|||||
| Cost | 11- | ||||
| At 1 April 2013 | 2,936 | ||||
| At 31 March 2014 | 2,936 | ||||
| Depreciation | |||||
| At 1 April 2013 Charge for the year |
1,786 287 |
||||
| At 31 March 2014 | 2,073 | ||||
| Net book value at 31 March 2014 | 863 | ||||
| Net book value at 31 March 2013 | 1,150 |
9 TRADE AND OTHER RECEIVABLES
| 2014 | 2013 | |||
| £ | £ | |||
| Trade debtors | - | 1,140,000 | ||
| Other receivables | 2,395,257 | 103,442 | ||
| Other taxes | 25,451 | 76,149 | ||
| Prepayment | 4,548 | 2,501 | ||
| 2,425,257 | 1,322,092 |
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. 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 2014 are in sterling and held at floating interest rates.
| 2014 | 2013 | |
| £ | £ | |
| Cash and cash equivalents | 1,216,471 | 393,922 |
The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value.
11 INVENTORY
| 2014 | 2013 | ||||||||
| £ | £ | ||||||||
| Work in progress | 5,070,454 | 6,261,384 | |||||||
12 TRADE AND OTHER PAYABLES
| 2014 | 2013 | |||
| £ | £ | |||
| Trade creditors | 60,766 | 169,510 | ||
| Accruals | 54,848 | 140,693 | ||
| Tax | 5,478 | 89,483 | ||
| Other creditors | 619,998 | 52,893 | ||
| 741,090 | 452,579 |
13 BORROWINGS
| 2014 | 2013 | |||
| £ | £ | |||
| Director's loans | 3,631,410 | 4,035,391 | ||
| Other loans | 755,000 | 565,000 | ||
| Bank and other loans | 4,483,665 | 3,773,034 | ||
| 8,870,075 | 8,373,425 |
Included in other loans, all bearing interest at 10% - 12% per annum, is the sum of £300,000 (2013: £300,000) advanced by the DFM Pension Scheme of which Mr J Dubois is the principal beneficiary.
C C Johnson is a named guarantor on the loan included within bank loans.
The bank borrowings are repayable as follows:
| 2014 | 2013 | |||
| £ | £ | |||
| On demand or within one year | 574,503 | 3,380,034 | ||
| In the second year | 3,909,162 | 393,000 | ||
| In the third to fifth years inclusive | - | - | ||
| After five years | 4,483,665 | 3,773,034 | ||
| Less amount due for settlement within 12 months (included in current liabilities) | (574,503) | (3,380,034) | ||
| Amount due for settlement after 12 months | 3,909,162 | 393,000 |
The weighted average interest rates paid on the bank loans were as follows:
Bank Loans - 8.41% (2013: 5.1%).
All of the Director's loan is repayable after more than 1 year. Interest of £ 100,000 was paid at the rate of 5% pa as from 1 April 2013 (2013: nil).
14 Share capital
Authorised Share Capital
| 2014 | 2013 | |||||
| Number | Number | |||||
| Ordinary shares of 1p each - @ 1April 2013 | 214,375,200 | 214,375,200 | ||||
| Additional shares issued for cash in year | 14,000,000 | - | ||||
| 228,375,200 | 214,375,200 | |||||
Issued, allotted and fully paid
| 2014 | 2013 | |
| £ | £ | |
| Ordinary shares of 1p each | 2,283,752 | 2,143,752 |
On 16 July 2013 Trafalgar New Homes plc issued 14,000,000 ordinary shares for cash at £0.02 per share.
15 Share PREMIUM ACCOUNT
| 2014 | 2013 | |||
| £ | £ | |||
| Balance brought forward | 961,128 | 961,128 | ||
| Premium on issue of new shares | 140,000 | - | ||
| Share issue costs | (25,615) | - | ||
| Balance carried forward | 1,075,513 | 961,128 |
16 RELATED PARTY TRANSACTIONS
Mr C C Johnson holds 81.8% (2013: 87.15%) of the total issued share capital of the Group.
In the prior 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. There have been no such similar arrangements in the current year.
In the previous year, four properties were also sold to an independent third party to whom Mr J Dubois provided an indirect loan of nil (2013: £275,000) in connection with these purchases, for an aggregate consideration of £nil (2013: £972,000).
The following working capital loans have been provided by the Directors:
2014 2013
C C Johnson £3,631,410 £4,035,391
J Dubois £300,000 £300,000
Mr Johnson's Loan was interest-free except that £2,000,000 bore 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 12% pa interest (2013: 15% pa).
Mrs L C Howard (daughter of Mr C C Johnson) has provided a loan to the company at a rate of 10% per annum of £90,000 (2013: £ 100,000).
17 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.
| Loans, cash and cash equivalents and receivables held at amortised cost | Borrowings and trade payables held at amortised cost | |||
| 2014 | 2013 | 2014 | 2013 | |
| £ | £ | £ | £ | |
| Financial assets | ||||
| Cash and cash equivalents | 1,216,471 | 393,922 | - | - |
| Financial liabilities | ||||
| Borrowings - Directors' loans | - | - | 3,631,410 | 4,035,391 |
| Borrowings - Bank loan | - | - | 4,483,665 | 3,773,034 |
| Borrowings - Other loans | - | - | 755,000 | 565,000 |
| Total | 1,216,471 | 393,922 | 8,870,075 | 8,373,425 |
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 16 to 21 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. £ 2,000,000 of the loans from Mr Johnson bears interest at 5% pa from 1 April 2013. Mr Dubois' loan from his Pension Fund attracts interest at 12% pa.
The impact of a 100 basis point increase in interest rates would result in additional interest cost for the year of £41,283 (2013: £43,969).
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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