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

To the Members of Trafalgar Property Group plc

For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal, professional and regulatory responsibilities and reporting obligations to the members of Trafalgar Property Group plc. For the purposes of the table on pages 13 to 15 that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our” refer to MHA. The Group financial statements, as defined below, consolidate the accounts of Trafalgar Property Group plc and its subsidiaries (the “Group”). The “Parent Company” is defined as Trafalgar Property Group plc, as an individual entity. The relevant legislation governing the Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).

Opinion

We have audited the financial statements of Trafalgar Property Group plc for the year ended 31 March 2023.

The financial statements that we have audited comprise:

• the Consolidated Statement of Comprehensive Income
• the Consolidated Statement of Financial Position
• the Consolidated Statement of Changes in Equity
• the Consolidated Statement of Cash Flows
• Notes 1 to 20 to the consolidated financial statements, including significant accounting policies
• the Company Balance Sheet
• the Company Statement of Changes in Equity and
• Notes 1 to 13 to the Company financial statements, including significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards as adopted in the United Kingdom (“UK adopted IFRS”). 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 FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2023 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with applicable law and International Financial Reporting Standards as adopted in the United Kingdom (UK Adopted IFRS);
• the Parent Company financial statements have been properly prepared in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

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 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 other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw your attention to the going concern section of the accounting policies in the financial statements which states that the group incurred substantial losses during the year and the continued requirement for successful future equity or debt fund raising. The impact of this together with other matters set out in the note, indicate a material uncertainty 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.

Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:

• The consideration of inherent risks to the Group’s and Parent Company’s operations and specifically their business model.
• The evaluation of how those risks might impact on the Group’s and Parent Company’s available financial resources.
• Review of the mathematical accuracy of the cashflow forecast model prepared by management and corroboration of key data inputs to supporting documentation for consistency of assumptions used with our knowledge obtained during the audit.
• Challenging management for reasonableness of assumptions in respect of the timing and quantum of cash receipts and payments included in the cash flow model.
• Where additional resources may be required the reasonableness and practicality of the assumptions made by the Directors when assessing the probability and likelihood of those resources becoming available.
• Holding discussions with management regarding future financing plans, corroborating these where necessary and assessing the impact on the cash flow forecast.
• Evaluating the accuracy of historical forecasts against actual results to ascertain the accuracy of management’s forecasts.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.  

Scope  

Overview of our audit approach

Key audit matter description

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 or misclassified.  

Undisclosed Related Party Transactions

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. 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.  

How the scope of our audit responded to the key audit matter

Our procedures included:

Identifying the susceptibility of the financial statements to material misstatement from related party relationships and transactions.

Obtaining management’s records of related parties – who they are, the nature of these relationships, whether any related party transactions have been entered into in the year and the nature of those transactions.

Understanding the controls procedures in place to identify, account for and disclose RP relationships and transactions, authorise and approve significant transactions and arrangements (both in the normal course of business and outside the normal course of business).

An assessment of the presentation of related party transactions within the financial statements, this focused primarily on the Directors loan accounts.

We reviewed movement 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 confirmation of the balances from all disclosed parties and confirmed key terms to agreements.  

Key observation

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

Key audit matters

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.

The Group consists of seven reporting components, of which three were considered to be significant components: Trafalgar Property Group plc, Selmat Limited and Trafalgar New Homes Limited. The significant components were subjected to full scope audits for the purposes of our audit report on the Group financial statements.

Significant components were determined based on:

1) financial significance of the component to the Group as a whole, and

2) assessment of the risk of material misstatements applicable to each component.

Our audit scope results in all major operations of the Group being subject to audit work.  

• Undisclosed related party transactions

Recurring

For page 2, click HERE

For page 3, click HERE