30 Aug 2017 17:15
30 August 2017
Royal Mail plc
Exchange of contracts for sale of Mount Pleasant development plots
Royal Mail plc (RMG.L) announces that contracts have been exchanged for the sale of 6.25 acres of its Mount Pleasant site (the Phoenix Place and Calthorpe Street plots) to Taylor Wimpey UK Ltd (part of the Taylor Wimpey plc group of companies) for a total gross consideration of £193.5 million. The consideration is made up of £190 million in cash and the fair value of parking facilities provided for Royal Mail of £3.5 million. As previously stated, significant further investment by Royal Mail is required for works to separate the retained operational site from the development plots. These works are expected to cost approximately £100 million and are planned to be completed by 2021.
A deposit of £9.5 million has been paid to Royal Mail following the exchange of contracts. The remaining cash proceeds of £180.5 million will be paid as follows. There are contractually agreed staged payments over the 2017-18 to 2020-21 financial years which, in aggregate, are expected to cover Royal Mail's outgoings on the separation and enabling works over this period. Lump sum payments are then due in 2024 for the balance of the consideration. All deferred payments are secured by a Taylor Wimpey plc guarantee and by registered charges on the land subject to the transaction. It is expected that any surplus proceeds will be applied in accordance with the Group's capital management policy.
Completion on Phoenix Place is unconditional and is expected in 2017. Completion on Calthorpe Street is subject to completion of the separation and enabling works and is expected in 2021. An accounting profit for each plot will be recognised in the year of completion based on an apportionment of the total consideration less the respective book value of the plot (including associated separation and enabling costs), to reflect the commercial substance of the transaction. The Phoenix Place and Calthorpe Street plots had a combined net book value1 of £29 million at 26 March 2017.
In the event that the purchaser sells either the Phoenix Place or Calthorpe Street plots to a third party, Royal Mail will be entitled to 50 per cent of any uplift in value achieved over the initial purchase price. All reasonable costs incurred would be taken into account with the appropriate indexation in the case of Calthorpe Street. This clause will no longer apply once the first building on each plot has been constructed up to the first floor level.
Royal Mail secured a detailed development planning consent in March 2015 to create 681 residential units at Mount Pleasant, including affordable housing, retail and office space, and public areas. The consent covers the separation and enabling works, involving a major civil engineering and construction programme to enable the residential development and achieve complete separation between Royal Mail's ongoing operations and the new residential properties. A further 0.27 acres plot, the office element of the planning consent, will be marketed at a later date.
Martin Gafsen, Group Director of Property and Facilities Solutions, Royal Mail said: "The sale of our development sites at Mount Pleasant to Taylor Wimpey is a great opportunity for us to contribute to the regeneration of the area around our iconic Mail Centre building. This will create more housing, including affordable units, as well as community facilities and more public space. It will also help us secure the long-term future of our key central London operational site."
1 Net book value represents the historic cost of an asset adjusted, where appropriate, for depreciation and subsequent investment; it can therefore differ widely from the market value of the asset.
This announcement contains inside information
Ends
Enquiries:
Media Relations
Sally Hopkins
Tel: 020 7449 8252/07801 094345
Email: sally.hopkins@royalmail.com
Peter Tilley
Tel: 07841 803316/020 3338 1007
Email: peter.tilley@royalmail.com
Investor Relations
Catherine Nash
Tel: 07436 560910/020 7449 8183
Email: investorrelations@royalmail.com
Company Secretariat
Kulbinder Dosanjh
Tel: 020 7449 8133
Email: cosec@royalmail.com
About Royal Mail plc
Royal Mail plc is the parent company of Royal Mail Group Limited, the leading provider of postal and delivery services in the UK and the UK's designated universal postal service provider. UK Parcels, International and Letters ("UKPIL") comprises the company's UK and international parcels and letters delivery businesses operating under the "Royal Mail" and "Parcelforce Worldwide" brands. Through the Royal Mail Core Network, the company delivers a one-price-goes-anywhere service on a range of parcels and letters products. Royal Mail has the capability to deliver to more than 29 million addresses in the UK, six days a week (excluding UK public holidays). Parcelforce Worldwide operates a separate UK network which collects and delivers express parcels. Royal Mail also owns General Logistics Systems (GLS) which operates one of the largest ground-based, deferred parcel delivery networks in Europe.