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Springfield Properties (AIM: SPR), a leading housebuilder in Scotland offering private and affordable housing, is pleased to announce that it has completed the acquisition of the entire issued share capital of Walker Holdings (Scotland) Limited (trading as Walker Group) (“Walker”), a Livingston-based housebuilder focused on private housing in Edinburgh’s commuter belt, for a net consideration of up to £31.0 million (“Acquisition”). The net consideration of the Acquisition is to be funded from Springfield’s existing cash balances and borrowing facilities with Bank of Scotland.

 Acquisition highlights

• Expands land bank and sales presence to the popular, high-growth commuter belt surrounding Edinburgh
• Earnings enhancing by low double-digit in the current financial year
• Supports and enhances existing forecasts and visibility of future years

Acquisition terms

• Under the terms of the Acquisition, the Group has paid an initial net consideration of £21.0 million in cash
• The remaining consideration of up to £10.0 million will be payable as follows:

o             £4.0 million on receipt of planning consent at a site at Carlaverock, Tranent to be satisfied wholly in cash

o             £2.0 million on receipt of detailed planning consent on all of the sites at Carlaverock, Tranent to be satisfied wholly in cash

o             Approximately £4.0 million (subject to finalisation of accounts) in general deferred consideration, payable in equal amounts on the first and second anniversary of the completion of the Acquisition. Springfield has the option to satisfy this either in cash or shares in Springfield Properties plc

• The Group will acquire £41.4 million of cash in Walker, as part of the gross consideration of £72.4 million

Walker Group

Walker is a high-quality family housebuilder primarily targeting the two to five bedroom private home market in desirable locations within the Edinburgh commuter belt. Headquartered in Livingston, Walker is well-positioned to access the core markets of Midlothian as well as East and West Lothian – areas that have recently seen the highest rate of price growth in Scotland.

Walker’s developments generally comprise between 50 and 200 homes and the company also has the capability to deliver cost-effective larger, multi-phased schemes. Walker is currently developing five active sites with a gross development value (“GDV”) of £100 million and has five further sites in the pipeline with a GDV of over £300 million.

Background to and rationale for the Acquisition

The Acquisition is in line with Springfield’s stated strategy of expanding its land bank and sales presence. The Acquisition utilises and exceeds the Group’s budget for its current financial year for land purchases and therefore supports and enhances the Group’s existing forecasts and visibility for future years. Walker has a highly complementary land bank and sales presence, located in the popular commuter belt surrounding Edinburgh. The Directors believe that the Acquisition will complement last year’s acquisition of Dawn Homes, which gave Springfield access to land and a sales presence in Glasgow’s commuter belt.

Further, Walker does not currently build affordable housing whereas development of its current land bank will require at least 346 affordable homes to be built, which represents an opportunity for Springfield’s Affordable Housing division.

In addition, the Walker business, brand and culture are an excellent fit with Springfield. Both companies strongly promote an ethos of looking after customers and building quality homes. Walker follows a similar strategy to Springfield where it uses its respected position in the local land market to secure sites and utilises its extensive in-house skills and experience to bring future development schemes through the planning system efficiently.

The Enlarged Group

The Group will retain Walker’s premises in Livingston, all of the company’s 50 staff and the well- known Walker brand. Peter Matthews, Springfield’s Managing Director for Central Scotland (Private Housing), will take over the responsibility of running the Walker business.

Following the Acquisition, the Group is currently operating on a total of 43 active sites.

The addition of the Walker land bank provides greater visibility over the Group’s projections for the next three financial years and the Acquisition is expected to enhance earnings from the current financial year.