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. 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.

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