INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TRAFALGAR PROPERTY GROUP PLC

1. Our Opinion

We have audited the financial statements of Trafalgar Property Group plc (the parent) and its subsidiaries (the group) for the year ended 31 March 2020.

The financial statements that we have audited comprise:

The financial reporting framework of the group that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our ethical responsibilities in accordance with those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Material uncertainty regarding going concern

We draw your attention to note 3 in the financial statements which states that the group incurred substantial losses during the year and the continued requirements for successful future equity or debt fund raising. The impact of this together with other matters set out in the note, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Overview

Materiality:

Group.       £68k.     2% of gross assets

Company.  £7k.       2% of gross assets.

Key audit matters

Group.


4. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those matters which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team and, as required for listed entities, our results from those procedures. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Annual report & consolidated financial statements 2020

The risk

Our response

There is a risk that inventory in the financial statements might not be valued correctly either at initial recognition or when assessing the recoverability at the year end.

This balance is required to be measured at the lower of cost and net realisable value.

This requires significant judgement from management. These factors increase the risk of a material misstatement.  


We reviewed the accounting policy to be adopted by management and assessed its consistency with the requirements of IAS 2 on inventories.

We reviewed and discussed each material inventory item, as these relate to specific sites being developed, with the Directors.

We tested additions to inventory in the year and corroborated to supporting evidence.

A material element of these balances was capitalised borrowing costs and we considered this against the requirements of IAS 32 and confirmed that the requirements were appropriately applied.

We reviewed the Directors assessment of the recoverability of each inventory item and confirmed these to post year end sales were possible.  



The Group enters into a significant number of transactions with related parties, both intra-group transactions and with individuals related to the Group. There is a risk that transactions (particularly any transactions which are not at arm’s length) and balances with related parties are undisclosed.  


Our procedures included an assessment of the presentation of related party transactions in the financial statements. This focussed primarily on the Directors’ loan accounts.

We reviewed movements on these balances in the year and vouched items to supporting evidence.

We discussed with management the nature and purpose of these items and considered whether disclosure sufficiently addressed these matters.

In addition we obtained written confirmations of the balances from all disclosed parties and confirmed key terms to agreements.  



5. Our application of materiality

Our definition of materiality considers the value of error or omission in the financial statements that would change or influence the economic decision of a reasonably knowledgeable person. Materiality is used in planning the scope of our work, executing that work and evaluating the results.

Materiality in respect of the group was set at £68K and for the parent company was £7K which was determined based on 2% of gross assets.

6. An overview of the scope of our audit

The group consists of 6 reporting components all of which were considered to be significant components of the group, Trafalgar Property Group Plc, Trafalgar New Homes Limited, Trafalgar Retirement + Limited, Combe Bank Homes (Oakhurst) Limited, Combe Homes (Borough Green) Ltd and Selma Limited. The significant components were subjected to full scope audits for the purposes of our audit report on the group financial statements.

7. We have nothing to report on the other information in the Annual Report

The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. Our opinion of the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:




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Valuation of inventory

The risk

Our response

Undisclosed Related Party Transactions

Results of our procedures

We concluded that the classification and disclosure of related party transactions is complete and appropriate.