RNS Number : 0210Q

Trafalgar New Homes PLC

06 September 2017

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

 

6 September 2017

TRAFALGAR NEW HOMES PLC

("Trafalgar", the "Company" or "Group")

Final Results for the year ended 31 March 2017 and notice of Annual General Meeting

Trafalgar (AIM: TRAF), the AIM quoted residential property developer operating in southeast England, announces its final results for the twelve months ended 31 March 2017.

The Company's Annual Report is being posted to shareholders today and contains notice of the Annual General Meeting of the Company to be held at the Company's offices at Chequers Barn, Bough Beech, Edenbridge, Kent TN8 7PD at 11.00 a.m. on 29 September 2017.

Chairman's Statement

On behalf of the Board, I present herewith Trafalgar New Homes' results for the year ended 31 March 2017 which show that no house sales were recorded in the year. In previous years we have sold properties off plan or recorded sales prior to legal completion but for the last three years we only record sales on legal completion rather than on exchange.  We have therefore concentrated on constructing the properties with a view to marketing them in the following trading year.  The Board remains confident that with our current level of construction activity that the Company is well placed to deliver significantly improved results for future trading years.

We will continue to explore the potential for acquiring new sites that should produce increased turnover and a significant improvement in the future profit levels.

Financials

The year under review saw Group turnover at £30,000 (2016: £2,235,000), with a loss after tax of £298,397 (2016: Profit £204,877). The cash on the balance sheet at the end of the year was £100,808 (2016: £278,406) and the Group continues to have sufficient capital for all planned activities.

Business Environment and Outlook

Following the Brexit vote, the housing sector has seen patchy changes in demand depending on geographical area and price levels. However, the property price levels at which the Company operates have been largely unaffected so the Board does not consider this to be a major risk. We are currently marketing our completed units and continue with our construction programme.

While accepting that results to date have been disappointing, we feel that we are now in a strong position to deliver on sales and profits. In the meantime, we have been continuing to investigate new opportunities for developments and our site at Staplehurst in Kent is a prime example of this.

The Group remains confident about its prospects. Trafalgar New Homes is in a stronger position now than ever, and has secured several banking facilities to fund its 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.

As can be seen in Chris Johnson's Strategic Report, we believe the outlook for the Company is promising.

James Dubois

Chairman

6 September 2017

Operations review

A summary of the results for the year is as follows:-

Group turnover for the year amounted to only £30,000, representing the sale of three parking spaces at the Borough Green site which were pending at the last year end and which were finalised during the year under review.

There were no house sales recorded during the year and, after taking into account the overheads of the Group, there was a loss recorded for the year of £298,397.

There will be no tax charge and the Company now has tax losses being carried forward of £ 2,223,878

(2016: losses £ 1,926,708).

The loss per share is (0.12p) compared to the earnings per share of 0.09p recorded for the year ended 31st March 2016.

Key performance indicators (KPIs)

Management are closely involved in the day to day operations of the Group and are very aware of cashflows and expenditure.   However, Management believe that 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

At the end of the year ended 31st March 2016, the Group had contractors on sites at Burnside, Tunbridge Wells, Kent (6 luxury apartments); High Street, Edenbridge, Kent (terrace of three houses); and Vines Lane, Hildenborough, Kent (two executive detached houses).

In addition, the Group reported that we had commenced work at the site at Sheerness, Kent for six houses which had been owned by the Group for some time and that we had acquired a further site for development, being the site in Speldhurst, Tunbridge Wells, Kent with the benefit of planning permission for the demolition of the existing property and the erection of a substantial new build detached house on the site.

I can confirm that, as at the date of this report, we have completed the construction work of the terrace of three houses at Edenbridge, Kent and they are being marketed for sale.   

Work on the six apartments at Burnside, Tunbridge Wells, Kent are substantially complete, with us dealing only with snagging items at the present time, to achieve Building Control sign-off before fully marketing the site for sale (it is pleasing to note that we already have a reservation on the penthouse at a figure very close to the asking price of £600,000 which, in turn, is greater than we anticipated at the outset).

The detached house at Speldhurst, Tunbridge Wells is 70% complete and our contractor has confirmed to us that the house will be finished and ready for occupation by the end of September 2017.  

I am able, therefore, to confirm that twelve units, involving a mix of detached houses/apartments/terraced houses, for which we are aiming to achieve a gross development value on sale of circa £7 million, will all be complete and ready for marketing for sale during September.   Hence, I anticipate a sale of most of these units prior to the 31st March 2018 year end.

In addition, the development of the site at Sheerness, Kent continues and we anticipate completion of the construction work on the site before the end of the current financial year and it is hoped sales of some of the units would have been achieved by 31st March 2018.

The Directors are confident that the current financial period will show an upturn in the fortunes of the Group.

The site at Staplehurst, Kent

Last year I reported on the refusal of the Planning Application we submitted for residential development on this site.   Having taken advice and considered the position, we propose to continue seeking planning permission for development of this site.   We are fortified by the advice received that this site should be able to accommodate an Assisted Living (Extra Care) Scheme which could provide up to 30 units on the front half of the site (for which we have been seeking planning permission for residential development) together with ancillary support buildings, to provide an Extra Care Assisted Living facility which is so sorely needed at the present time, not only in the area in which we operate, but in the country as a whole.

Your Group is taking advantage of the fact that the 'Extra Care' and 'Very Sheltered/Assisted Living' sectors are expected to grow significantly as the population of older people in the UK is expected to increase from 10.3 million in 2010 to 28 million by 2035.   The proposed development at Staplehurst will come with communal areas and a range of social and recreational activities to promote health and happiness.   These are key attributes compared to non-specialised homes.

It is believed that our application, when submitted, will find favour with the Planners and that Planning Permission will be granted accordingly.

Future Development

The Company is not short of opportunities to acquire sites for residential development in its chosen area of operation.   However, it is not prepared to pay prices for land which are unrealistic and which would severely erode margins.   Hence, the Group will be selective in its choice of offers to be made on sites that present themselves.

Currently it has an offer accepted for a nine unit site in the South of England, comprising two/three and four bedroom houses and is investigating various sites in Kent and East Sussex, to purchase during the current financial year, which should contribute to revenue for the year ended 31st March 2019.

Outlook

The Company is confident that the development programme, referred to above, will deliver improved results for the Group for the year ended 31st March 2018.

Looking ahead and during the current year, the Company will continue its negotiations for the purchase of other sites in the South of England, its chosen area of operation, which will contribute to turnover for the Group for the year ended 31st March 2019 and beyond.

As has been mentioned before, Trafalgar New Homes, remains focused on growing the Group, both through site acquisition and development and corporate acquisitions, to enable value to be created for the shareholders and for a dividend to be paid by the Group when appropriate.

Banking

The Group continues to utilise banking sources for the financing of its developments, together with loans from third party investors, to ensure that there is sufficient money available for the Group to undertake and complete its various developments.

We do not operate an overdraft facility but borrow on a site specific basis from our 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, with the Group putting 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.   These are the arrangements that have been entered into with Coutts and Lloyds who lend to the Group at very competitive rates.

The Group have also used RateSetter as a funder who, again, provided 100% of the build finance on the Burnside, Tunbridge Wells site, the Group having paid off the borrowing on the land prior to entering into the arrangement with RateSetter for the development of that site.  

Investor loans that are not related to specific sites are long term loans with repayment dates extending beyond the year end and have, in the past, been renewed when they come up for repayment.

Hence, in general terms, the Group is happy with its financial support afforded to it by its banks and investors, enabling it to trade without a general overdraft facility.

I will continue to support the Group, leaving my own loan to the Group outstanding and taking no interest on it for the year to 31 March 2017.

Financial Instruments

The Group's principal financial instruments comprise cash at bank, bank loans, other loans and various items within current assets and current liabilities that arise directly from its operations.    The Directors consider that the key financial risk is liquidity.   This risk is explained in the Section headed 'Principal risks and uncertainties in the Annual Report and Accounts'.

Christopher Johnson

Director

6 September 2017

Enquiries:

Trafalgar New Homes plc

Christopher Johnson

For further financial details go to the London Stock Exchange website HERE

+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

Felicity Winkles/Henry Wilkinson

+44 (0)7748 843 871

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