ACCOUNTING POLICIES for the year ended 31 March 2013

BASIS OF ACCOUNTING

These financial statements are for Trafalgar New Homes Plc (“the Company”) and its subsidiary undertakings. The Company is incorporated in England and Wales.

The nature of the Company’s operations and its principal activities are set out in the Directors Report here.

BASIS OF PREPARATION

The Group financial statements 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.  These financial statements are for the year ended 31 March 2013 and are presented in pounds sterling (“GBP”).  The comparative year is for the 16 months to 31 March 2012.  

The financial statements have been prepared under the historical cost basis, as modified by valuing financial assets and financial liabilities at fair value through the Statement of Comprehensive Income. The principal accounting policies adopted are set out below.

GOING CONCERN

The Directors have reviewed forecasts and budgets for the coming year, which have been drawn up with appropriate regard for the current economic environment and the particular circumstances in which the Group operates. These were prepared with reference to historical and current industry knowledge, taking into account future strategy of the Group.

The existing operations have been generating funds to meet short-term operating cash requirements. As a result of these considerations, at the time of approving the financial statements, the Directors consider that the Company and the Group have sufficient resources to continue in operational existence for the foreseeable future. It is appropriate to adopt the going concern basis in the preparation of the financial statements.  

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.

CHANGE IN ACCOUNTING POLICY – REVENUE RECOGNITION

For the year ended 31 March 2013, the group changed its accounting policy on revenue recognition to be more in line with the business practices of the group.  For the previous period end, sales of homes were recognised when the sale had achieved legal completion and the proceeds had been received.

Revenue represents the amounts receivable from the sale of properties during the year and other income directly associated with property development.   Revenue from the sale of properties is recognised when the amounts of revenue and cost can be measured reliably, the significant risks and rewards of ownership have been transferred to the buyer and it is probable that the economic benefits associated with the sale will flow to the group/company.  In the majority of cases properties are treated as sold and profits are recognised when contracts are exchanged and the building work is physically complete.

This complies with the relevant accounting standard for the preparation of group financial statements under International Financial Reporting Standards (IFRS) entitled IAS 18 – Revenue.    

The Directors are of the opinion that this accounting policy more accurately reflects commercial reality and the recording of revenue for the group.

The effects of this change in accounting policy in the year to 31 March 2013 on the consolidated financial statements are presented below:

For page 2, click HERE