TIDMSPR
RNS Number : 7141P
Springfield Properties PLC
22 June 2022
22 June 2022
Springfield Properties plc
("Springfield" or the "Group")
Acquisition of Mactaggart & Mickel's housebuilding
business
Springfield acquires premium Scottish housebuilding business and
timber frame factory
Springfield Properties (AIM: SPR), a leading housebuilder in
Scotland delivering private, affordable and PRS housing, is pleased
to announce that it has entered an agreement to acquire the
Scottish housebuilding business of Mactaggart & Mickel Group
Ltd ("Mactaggart & Mickel"), which has been delivering
high-quality housing across the Central Belt of Scotland for almost
100 years. The total consideration is GBP46.3m, comprising GBP10.5m
cash paid on completion and a deferred cash consideration of
GBP35.8m to be paid proportionally as homes are sold over the next
five years (the "Acquisition"). The Acquisition will be funded from
Springfield's internal resources and existing debt facilities with
Bank of Scotland.
Under the terms of the Acquisition, the Group has acquired six
live private and affordable sites with work in progress with a fair
value of approximately GBP15m and fixed assets. The Group has also
acquired a brand licence to build homes as Mactaggart & Mickel
on a further 11 private and affordable sites, which will transfer
to Springfield as homes are sold in line with the payments of the
deferred consideration. The total 17 sites, of which 16 have
planning permission and equating to the delivery of c. 700 homes,
have a gross development value of c. GBP2 30m. The Group expects to
generate gross margins on these sites materially in line with
margins delivered by the rest of the Group. Springfield intends to
retain all of Mactaggart & Mickel's housebuilding business
employees.
The Acquisition also includes Timber Systems, a timber frame
factory near Glasgow. The Group already constructs 90% of its homes
from timber kits and t he addition of a second timber frame factory
will secure kit supply and increase capacity for future growth
while further reducing its carbon footprint. Springfield will
retain all of Timber Systems' employees.
In addition, Springfield and Mactaggart & Mickel have
established a strategic alliance with an agreement that gives
Springfield opportunities for future acquisitions of sites from
Mactaggart & Mickel's remaining land bank of approximately
2,300 acres across Scotland.
The housebuilding business of Mactaggart & Mickel is a
premium brand housebuilder primarily targeting the larger private
home market. The land bank is in highly desirable locations within
the Central Belt of Scotland, expanding the Group's footprint in
areas with a higher price point.
The payment of the deferred cash consideration is subject to an
annual minimum payment of GBP7.7m from the second year following
completion. Each annual minimum payment will be reduced by any
excess deferred consideration paid by the Group over the annual
minimum payment in the prior year. The Group has the option to
defer any year's minimum payment by 12 months.
The consideration for the Acquisition will initially be
satisfied from the Group's existing cash and debt facilities and
the deferred consideration will be paid proportionally as homes are
completed. It will also partly utilise the Group's existing
uncommitted land purchase budget for the next five years.
The Acquisition is expected to be earnings enhancing in the
current year to 31 May 2023. For the year to 31 May 2022, the Group
expects to report results in line with market expectations, with
good revenue growth and a better-than-expected reduction in net
debt to c. GBP39.0m at year end (30 November 2021: GBP43.0m).
Further details will be provided in the Group's full year results
announcement, which is expected to be published in September
2022.
Innes Smith, Chief Executive Officer of Springfield Properties,
commented: "We are very pleased to welcome Mactaggart &
Mickel's Scottish housebuilding business into the Springfield
Group. As well as bringing another premium brand into the Group,
this acquisition gives us land, with planning permission, in areas
of significant demand. The structure of the acquisition - with the
majority of the payment to be made as homes are completed -
de-risks the deal and creates an effective and efficient means of
acquiring land.
"The addition of a timber frame facility in the Central Belt,
alongside our existing facility in Elgin, secures our supply of
timber kits and provides further capacity to support our next stage
of growth. It will also r educe our carbon footprint by enabling
local manufacture of all kits.
"We welcome our new colleagues to the Group and look forward to
working together to continue delivering high-quality homes across
Scotland."
Paul McAninch , Group Finance Director of Mactaggart &
Mickel , added: "We welcome this agreement with Springfield, which
we believe provides a strong platform for growth for both
parties.
"Our company has had a proud tradition as a leading housebuilder
in Scotland, which is built on the work of its dedicated teams.
"This tradition will continue, and I'm pleased that there will
be continuity of employment as a result of this agreement. I'd like
to thank all our staff for their dedication over the years as we
look to our second century as a successful business. I'd also like
to wish transferring colleagues every success for their
future."
Enquiries
Springfield Properties
Sandy Adam, Chairman
Innes Smith, Chief Executive Officer +44 1343 552550
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Singer Capital Markets
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Shaun Dobson, Rachel Hayes, James Moat
(Investment Banking) +44 20 7496 3000
-----------------
Luther Pendragon
-----------------
Harry Chathli, Claire Norbury +44 20 7618 9100
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Further Detail
Background to, and rationale for, the Acquisition
Mactaggart & Mickel is a family-owned, award-winning group
of companies operating in the UK construction industry. Established
as a housebuilding company in Scotland in 1925, and following
diversification, comprised seven divisions: Homes, which operated
predominantly in Scotland; Timber Systems; Investments; Strategic
Land; Commercial Property; Private Rental Sector (Lettings); and
Contracts. Springfield has agreed to acquire the majority of what
constituted Mactaggart & Mickel 's Homes and Timber Systems
divisions.
The housebuilding business of Mactaggart & Mickel is a
premium brand housebuilder primarily targeting the three- to
five-bedroom private home market in highly desirable locations
within the Central Belt of Scotland. The Acquisition complements
Springfield's previous acquisitions of Dawn Homes, Walker Group and
Tulloch Homes, enhancing the Group's presence across Scotland,
whilst expanding its footprint into areas with a higher price
point.
The Acquisition is in line with Springfield's stated growth
strategy. It partly utilises the Group's existing budget for land
purchases for the next five years and therefore supports the
Group's existing forecasts and enhances visibility for future
years. The Group will benefit from expanding its land bank through
one transaction rather than multiple individual purchases. In
addition, the Group has potential upside from a strategic alliance
regarding possible purchases of further sites from Mactaggart &
Mickel 's remaining land bank of approximately 800 acres of
freehold land and 1,500 acres of option land across central
Scotland (the "Strategic Land Bank") .
For over twenty years, Springfield has utilised its own off-site
timber frame factory in Elgin, north Scotland, and uses timber
frame construction in 90% of its homes. As part of the Acquisition,
the Group has acquired an additional timber frame factory outside
Glasgow, in the heart of the Central Belt of Scotland. This will
enable all of the Group's timber frames to be manufactured off-site
at the Group's own factories, thereby increasing surety of timber
kit supply, increasing capacity for future growth and reducing the
Group's carbon footprint as it will no longer be transporting
timber frames from the Elgin factory to the Central Belt.
Mactaggart & Mickel 's housebuilding business will continue
to operate from Glasgow, with its three directors - Peter Shepherd,
Joanne Casey and Marion Forbes - reporting into Martin Egan,
Springfield's Chief Operating Officer.
The Mactaggart & Mickel housebuilding business is an
excellent cultural fit with the Group as another well-respected
brand that strongly promotes an ethos of looking after customers
and building quality homes. Joanne Casey is an industry member of
the New Homes Quality Board, which is developing a new Code and
framework for quality and consumer protection that housebuilders
must follow across the UK from 2023. Mactaggart & Mickel
achieves consistently outstanding levels of customer satisfaction,
and has been awarded a 5 star rating in the Home Builders
Federation annual survey for 10 consecutive years . Regularly
receiving recognition for its developments from industry awards,
Mactaggart & Mickel has been named housebuilder of the year
(What House; 2017 and Homes for Scotland; 2013 and 2014) and is
renowned across the UK for its performance in the Supreme NHBC
Pride in the Job Awards.
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END
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