TIDMTRAF
RNS Number : 6935F
Trafalgar Property Group PLC
11 March 2020
11 March 2020
For immediate release
THE INFORMATION COMMUNICATED IN THIS ANNOUNCEMENT CONTAINS
INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET
ABUSE REGULATION EU NO. 596/2014 ("MAR").
TRAFALGAR PROPERTY GROUP PLC
("Trafalgar", the "Company" or "Group")
Diversification into hydroponic vertical farming investment
and
Notice of General Meeting to increase authorities to allot
shares
Introduction
Trafalgar (AIM: TRAF) announces that it is posting a circular to
Shareholders today, outlining that it intends to add an additional
business unit to operate alongside the Company's existing property
development operations. The Company intends to invest in the
hydroponic vertical farming sector. Hydroponics maximises yield per
acre on a reduced physical footprint without soil. This form of
food production has the potential to address:
-- increasing global population
-- insufficient available agricultural land
-- degraded soil quality
-- excessive forest clearance
Trafalgar's existing property divisions' activities will
continue. Trafalgar's group parent will be a holding company with
hydroponic investments in a new division.
In order to enable the raising of funds to implement this
diversification, it is proposed to seek Shareholders' approval in a
General Meeting to increase the current authorities to allot shares
and to disapply statutory pre-emption rights as described.
The General Meeting of the Company is to be held at 11.00 a.m.
on 27 March 2020 at the offices of Peterhouse at 80 Cheapside,
London EC2V 6EE.
Information on the Company and its diversification
The Company was incorporated in December 2001 and its Ordinary
Shares have been traded on AIM since July 2013. The Company is the
holding company for two property development divisions
-- Trafalgar New Homes Limited which was acquired in 2011 and is
a regional residential property developer focused on Kent, Surrey
Sussex and M25 ring south of London. This division designs and
builds its own sites of up to approximately 12 units - a scale that
is too small for large developers, but too big for jobbing
builders.
-- Trafalgar Retirement + Limited which was acquired in March
2018 and is focused on the development of assisted living and extra
care schemes intended for older residents. This division sources
options to build sites, applying for planning permission and change
of use for schemes that offering a degree of care and support that
is less than a nursing home, preserving resident independence.
The Group sold the property at Saxons in late 2019 for GBP1.58
million; four residential properties have been refinanced and
rented on assured shorthold tenancies; six units at Sheerness are
now on the market for sale with the benefit of the Help-to-Buy
Scheme; and planning permission has been obtained for a site in
Ashtead, and an offer accepted for disposal which is expected to
complete in March 2020.
Since the Company's move into the assisted living sector, the
Group has experienced difficulties in obtaining finance for
developments in that sector, leading to the loss of the first
development opportunity. The residential division has experienced
delays to building programmes, combined with a lack of activity in
the market for the Company's units.
Accordingly, while actively continuing to develop its property
development assets, the Board has looked at other opportunities
where it can utilise its property development skills and diversify
into other sectors. It has identified hydroponic food production,
which requires significant property investment and expertise, as an
area for investment.
Hydroponic vertical farming
Traditional agriculture
The Directors consider that there are significant growth
opportunities in the hydroponic vertical farming sector. The
Company has commenced the search for appropriate hydroponic
vertical farming opportunities and is in early stage discussions
with a potential hydroponics operator who requires the Company's
property expertise. However, there can be no guarantee that this
investment will go ahead, and the Company will continue to post
regulatory updates.
Meeting the food production needs of a growing global population
raises a number of significant challenges, including:
Sufficiency of food production: It is estimated that the global
population could grow to approximately 9.7 billion people by 2050
(UN report: World Population Prospects 2019), and that food
production (net of food used for biofuels) will need to rise by 70%
by 2050 to feed 9.1 billion people (a 2009 forecast, in UN Food and
Agricultural Organisation Report: How to Feed the World in
2050).
Amount of agricultural land : It is estimated that to meet food
demand by 2050, land equivalent to nearly twice the size of India
may need to be brought into cultivation (World Resources Institute
article 2018: How to sustainably feed 10 billion people by 2050).
Expanding agriculture is responsible for most of the world's
deforestation (World Wildlife Fund article), destroying natural
ecosystems in the process.
Agricultural soil quality : According to the UN Convention to
Combat Desertification, Global Land Outlook 2017, one third of the
world's soils are severely degraded. The most significant proximate
cause of land degradation continues to be human-induced drivers
such as deforestation, wetland drainage, overgrazing, unsustainable
land-use practices, and land use change. Many crop and livestock
management practices lead to soil erosion/compaction, reduced water
filtration/availability, and declining biodiversity. The use of
agrochemicals such as fertilizers, pesticides and herbicides,
boosts yields in the short term, but also has significant adverse
impacts on soil and water quality.
Water resources : Agriculture accounts for 70% of freshwater
withdrawals in the world, and is usually seen as one of the main
factors behind the increasing global scarcity of freshwater (J
Bruinsma, 2009: The Resource Outlook to 2050). Irrigated
agriculture covers 20% of arable land, accounting for nearly 50% of
crop production. Although there is sufficient water globally, it is
very unevenly distributed.
Hydroponic vertical farming
Hydroponics is not a new technology, and has existed since the
1950s. It is a form of controlled environment agriculture, where
crops are grown under cover using technology to ensure crops are
grown in optimal conditions, which can be without soil. Hydroponics
is a water-based growth system in which a nutrient solution is
pumped around reservoirs in which plant roots grow directly. In
vertical farming, crops are cultivated in vertical stacked levels
in buildings, under artificial lights, without soil or natural
sunlight. Its benefits include:
Reduced pressure on land use : T he hydroponic yield per acre is
several times higher than traditional agriculture (dependent on
crop type), as crops can be continuously grown and harvested.
Vertical farming further multiplies the effective yield on any
given land footprint by a factor, taking into account the number of
levels used, that can be 100 times or more (Journal of Agricultural
Studies: Up, Up and Away! The Economics of Vertical Farming,
2014).
Under cover food production : The controlled environment
optimises conditions, allowing for all-year round growth without
the negative impacts of poor weather.
No need for pesticides or fungicides : As the environment is
closed, plants do not need the agrochemicals that are required in
an external environment where plants are exposed to pests and
weeds. Accordingly, crops are chemical free, healthier plants.
Crops produced in this way require less processing and handling,
thereby reducing "time to market", resulting in an increased shelf
life.
Contained water cycle : Water is recycled; the only water to
leave the production facility is that contained in the plants.
Water use of up to 90% less than traditional agriculture can be
achieved (Journal of Agricultural Studies, as above).
Location : Facilities can be located in urban or brownfield
sites closer to population centres, reducing "food miles", and also
reducing the need to use agricultural land.
There are certain limitations to hydroponic and vertical
farming, including the need for manual pollination, the range of
produce suitable for hydroponic growth or vertical farming,
dependence on technology (including nascent technology relating to
vertical farming), and high costs of establishing production
facilities.
Hydroponic market
There has been significant capital flowing into this sector,
with Softbank, Amazon's Jeff Bezos, and Google's Eric Schmidt
having invested $200m into 'Plenty', a significant project in the
US in 2017; Google Ventures investing $80m into Bowery Farming in
2018; and Ocado entering into the market in 2019 when they took a
majority stake in Europe's largest vertical farm.
The market appears set to grow significantly. The global
vertical farming market was valued at $2.23bn in 2018 and is
projected to grow to $12.77bn by 2026, owing to a rise in the
popularity of organic food (Allied Market Research: Global Vertical
Farming Market, August 2019).
Authorities to allot shares
The Company has an Existing Share Capital of GBP487,690.38,
comprising 487,690,380 ordinary shares of 0.1p each, and has
existing authorities to allot shares generally of GBP244,000 in
nominal amount (244,000,000 ordinary shares of 0.1p each) and to
allot shares for cash (disapplying statutory pre-emption rights) of
GBP97,500 in nominal amount (97,500,000 ordinary shares of 0.1p
each). The Directors do not consider that these authorities are
sufficient to allow the Company to raise the levels of finance that
would enable the Company to make meaningful investments in
hydroponic vertical farming projects.
Accordingly, it is proposed to increase the authorities to allot
shares generally by a further GBP2,000,000 in nominal amount
(2,000,000,000 ordinary shares of 0.1p), and to disapply statutory
pre-emption rights in respect of the allotment for cash by a
further GBP2,000,000 in nominal amount (2,000,000,000 ordinary
shares of 0.1p). Including the existing authorities to allot shares
noted above, these authorities would represent approximately 430%
of the Existing Share Capital.
It is proposed that these authorities will be used to take
advantage of opportunities to raise significant funds for
hydroponic investment, and to allow for the exercise of any
warrants or options that may be granted in conjunction with such
fundraising or the development of the hydroponic investment
division.
Recommendation
The Directors consider the Proposals to be in the best interests
of the Company and the Shareholders as a whole. The Directors
therefore unanimously recommend that you vote in favour of the
Resolutions at the General Meeting. Undertakings to vote in favour
of the resolutions at the General Meeting have been received from
shareholders holding 297,800,461 Ordinary Shares representing
approximately 61% of the current issued ordinary share capital.
Enquiries:
Trafalgar Property Group Plc
James Dubois +44 (0) 1732 700 000
SPARK Advisory Partners Ltd - AIM Nominated
Adviser
Matt Davis +44 (0) 20 3368 3550
Peterhouse Capital Limited - Broker
Duncan Vasey/Lucy Williams +44 (0) 20 7409 0930
Notes to Editors:
Trafalgar Property Group Plc is the holding company of Trafalgar
New Homes Limited, a residential property developer operating in
the southeast of England and Trafalgar Retirement + Limited, a
property developer in the assisted living and extra care for the
elderly sector. The founders have a long track record of developing
new and refurbished homes, principally in Kent.
The Company's focus is on the select acquisition of land for
residential property development. The Company outsources all
development activities, for example the obtaining of planning
permission, design and construction, and uses fixed price build
contracts, enabling it to tightly control its development and
overhead costs.
For further information visit www.trafalgarproperty.group
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END
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