REG - Trafalgar PropertyGp - Proposed Acquisition of Hydroponics R&D Facility

Trafalgar PropertyAnnouncement

21/11/2022 07:00

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RNS Number : 9814G  Trafalgar Property Group PLC  21 November 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
(EU) 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY VIRTUE
OF THE EU (WITHDRAWAL) ACT 2018.

TRAFALGAR PROPERTY GROUP PLC

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

Proposed Acquisition of Hydroponics R&D Facility, Notice of General
Meeting and Trading Update

Trafalgar (AIM:TRAF), the AIM quoted residential and assisted living property
developer, announces that a conditional agreement has been entered into with
May Barn Horticultural Consultancy Limited ("May Barn") for the acquisition of
assets and leasehold premises comprising a hydroponic research and development
facility, for a cash consideration of £30,000 (the "Acquisition"). No profits
(or losses) are attributable to these assets.

Paul Treadaway, Managing Director of Trafalgar, commented:

"The acquisition of this dedicated research and development site is a step in
the Company's plans to facilitate  its vertical hydroponics strategy, with
opportunities for research relevant to food, cosmetic and pharmaceutical
products.

This is an exciting development for the Company and I look forward to being
able to update shareholders further in due course."

As May Barn is controlled by Dr Paul Challinor, a director of the Company, the
Acquisition, and the grant of a lease over the premises are related party
transactions under AIM Rule 13, and the Acquisition is also conditional upon
the approval of shareholders in general meeting as required under section 190
of the Companies Act 2006.

Trading Update

Trafalgar is pleased to report that its residential property activities have
continued to progress during 2022.  In particular, it has received outline
planning permission for a private residential scheme in Leatherhead Surrey,
where it has an option to purchase the land.

Posting of Circular and Notice of General Meeting

The Acquisition is conditional on the passing by Shareholders of the
resolution at a General Meeting of the Company, which is to be held at
10:00am. on 8 December 2022 at Chequers Hill, Bough Beech, Edenbridge, Kent
TN8 7PD. The notice convening the General Meeting is set out in the Circular
which has been posted to Shareholders together with a form of proxy for the
General Meeting. The Circular will be available on the Company's website at
www.trafalgarproperty.group (http://www.trafalgarproperty.group) . The Letter
from the Chairman has been extracted and is set out below:

1.            Introduction

In March 2020, the Company announced that it intended to deliver value to
shareholders through exploring hydroponics ventures which leverage off the
Company's property development expertise alongside its property development
business.  The Company strengthened the resources of the Board with the
appointments of Gary Thorneycroft in November 2020 and Dr Paul Challinor in
May 2022.  Paul has been reviewing opportunities in the hydroponic and
vertical farming areas.

It has become apparent that, in addition to food production, there are a
number of opportunities to grow various plants for use in cosmetic and
pharmaceutical products, and that there are opportunities for further research
to improve knowledge of plant structures and the capabilities of indoor
farming to produce food, cosmetic and pharmaceutical products.

The Directors believe that establishing a dedicated in-house research and
development facility fitted out with up to date technology will provide a good
base to undertake such activities both for the Company and on behalf of third
parties, including work carried out alongside third parties.

As announced on 21 November 2022, Life Hydroponic Assets Limited (a newly
incorporated subsidiary of the Company) has entered into a conditional
agreement with May Barn for the acquisition of assets and leasehold premises
comprising a hydroponic research and development facility, for a cash
consideration of £30,000 (including vat).  May Barn was founded by Dr
Challinor in 2011, and provides horticultural consultancy services.  The
Facility has been established by May Barn and is suitable for growing a range
of micro-greens, allowing detailed work on plant propagation requirements and
initial studies on tissue culture of plant material to be carried out.  Plant
types and varieties can be tested in the Facility to determine suitability for
commercial production using a range of hydroponic systems.  The Facility is
considered to be well suited to the testing of research-generated ideas in
readiness for commercial scaling-up, using the flexibility provided by the
space in the Facility and the size of the bench trays.

As May Barn is controlled by Dr Challinor, a director of the Company, the
Acquisition and the grant of a lease over the premises are related party
transactions under AIM Rule 13, and the Acquisition is also conditional upon
the approval of shareholders in general meeting as required under section 190
of the Companies Act 2006.

A General Meeting of the Company is to be held at 10.00 a.m. on 8 December
2022 at Chequers Barn, Chequers Hill, Bough Beech, Edenbridge, Kent TN8 7PD to
approve the Acquisition.  Formal notice of the General Meeting is set out at
the end of this document.

2.            Further details of the Facility

The research and development facility is situated in Nantwich, Cheshire in a
dedicated insulated air conditioned building of approximately 900 sq ft, which
is equipped with 16 Staal and Plast "Ebb and Flow" irrigation bench trays,
each of which is 3.2m long and 1.5m wide, mounted on Unistrut support racking
four tiers in height.  Fully automated lighting and irrigation systems are
installed, including Phillips dr/w 120 LED grow lights.  The lighting systems
were updated in 2020 by the addition of a range of new LED luminaires from
Current by GE, Valoya, and Heliospectra.

The Facility will provide an in-house horticultural and hydroponic research
and development capability to the Company under the direction of Dr Challinor.

At present, the Facility is being used by May Barn to monitor the growth
characteristics of two new multi-leaf lettuce varieties, which have been
specifically developed for use under controlled environment conditions.  This
work will allow the correct selection of leafy plant varieties for future
supply to specific food market and supermarket outlets.

In addition, the Facility is being used for the Company to demonstrate the
capabilities of the Facility to interested third parties:

·      Hydroponic tomato seedlings are being raised to enable plant
density and potential plant leaf yield information to be recorded, in
readiness for future work on the production of vitamins.

·      Seedlings of Nicotiana benthamiana are being grown in rockwool (a
hydroponic substrate), to monitor growth and development of the plants in
readiness for future work on the formulation of plant proteins in leaf tissue
for cosmetics and pharmaceutical preparations.

3.            Further details of the Acquisition

The Company has conditionally agreed to acquire (through a newly formed
subsidiary, Life Hydroponic Assets Limited) the Facility's equipment and
fixtures and fittings for a consideration of £30,000 (including vat), to be
satisfied in cash on completion.  The Company intends to maintain the
Facility at the Nantwich site.  The Acquisition Agreement provides that a
lease over the premises occupied by the Facility will be granted to LHA for a
five year period (terminable by either party on six months' notice) at an
annual rent of £6,000.

The Independent Directors consider that the Acquisition presents an
opportunity for the Company to establish a research and development facility
at a significant saving in time and cost, as the Facility is already
established and operating in situ to Dr Challinor's specifications and under
his direction.  The consideration is less than the original cost of the
equipment proposed to be acquired, and is considered to be significantly less
than it would cost to purchase and set up new equipment in (and fit out) new
premises.  The Independent Directors consider that the rent for the premises
is in line with rents for similar premises in the local area.

As the Acquisition is from a company controlled by Dr Challinor, being a
Director of the Company, as the new lease will be granted by Dr Challinor (and
his wife, Mrs D. Challinor), and as the assets being acquired comprise
"substantial non-cash assets" for the purposes of the Companies Act 2006, the
Acquisition is conditional upon the approval of Shareholders of the Company in
general meeting as required by section 190 of the Companies Act 2006.

4. Trading Update

Trafalgar is pleased to report that its residential property activities have
continued to progress during 2022.  In particular, it has received outline
planning permission for a private residential scheme in Leatherhead Surrey,
where it has an option to purchase the land.

5. Related Party Transaction

As Dr Challinor is a Director of the Company, the Acquisition and the grant of
the lease also comprise related party transactions under Rule 13 of the AIM
Rules.  The Independent Directors (being all the directors of the Company
excluding Dr Challinor), having consulted with SPARK, the Company's nominated
adviser, consider the Acquisition Agreement and the terms of the lease to be
fair and reasonable insofar as the Company's Shareholders are concerned.

6.            General Meeting

At the end of this Circular is a notice convening a General Meeting of the
Company to be held at Chequers Barn, Chequers Hill, Bough Beech, Edenbridge,
Kent TN8 7PD at 10.00 a.m. on 8 December 2022, at which the Resolution will be
proposed as an ordinary resolution to approve the Acquisition and grant of the
lease.

7.            Action to be taken

Shareholders will find a form of proxy enclosed for use at the General
Meeting.  Whether or not you intend to be present at the meeting, you are
requested to complete and return the form of proxy in accordance with the
instructions printed thereon as soon as possible.  To be valid, completed
forms of proxy must be received by the Company's Registrars, Neville
Registrars Limited, Neville House, Steelpark Road, Halesowen, West Midlands
B62 8HD, not later than two business days before the time appointed for
holding the General Meeting.

You are entitled to appoint a proxy to attend and to exercise all or any of
your rights to vote and to speak at the meeting instead of you.  Completion
of the form of proxy will not preclude you from attending and voting at the
meeting in person if you so wish.  Your attention is drawn to the notes to
the form of proxy.

8.            Recommendation

The Directors consider the Resolution to be in the best interests of the
Company and the Shareholders as a whole.  The Independent Directors therefore
unanimously recommend that you vote in favour of the Resolution at the General
Meeting, as they intend to do in respect of the 20,823,466 Ordinary Shares
held by them, representing approximately 7.55% of the current issued ordinary
share capital.

Enquiries:

 Trafalgar Property Group plc                             +44 (0) 1732 700 000

 James Dubois
 SPARK Advisory Partners Limited - AIM Nominated Adviser  +44 (0) 203 368 3550

 Matt Davis
 Peterhouse Capital Limited - Broker                      +44 (0) 20 7409 0930

 Duncan Vasey/Lucy Williams

 

 

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