Zentra Group PLC (LSE: ZNT), the
UK-based residential developer, development manager and property
manager focused on the North of England, is pleased to announce its
audited results for the year ended 30 June 2024 (FY
2024).
Financial highlights
-
Reduction in revenue of £0.94m, 6%
on the prior year, from £15.59m to £14.65m, driven by a reduction
in sales completions from 71 to 52 during the period.
-
Impairment £0.82m compared with
£1.09m in the prior year, a reduction of £0.27m. The impairment
loss is included in cost of sales.
- Previously reported factors have continued to
impact developments, including increases in costs due to rising
material prices, sub-contractor prices, delays experienced and the
cost of debt, as remaining self delivery projects completed by
year-end. The remaining project of Victoria Road Eccleshill,
procured on a fixed price contract, is within budget.
-
Gross profit of £0.18m, down by
£0.41m or 69% on prior year mainly due to the reduction in sales
completions (FY 2023: gross profit of £0.59m).
-
Loss before tax of £3.56m (FY 2023:
loss of £2.14m).
-
Basic loss per share of 8.7 pence
(FY 2023: loss of 6.2 pence).
-
Net debt of £16.89m (FY2023:
£16.94m). Repayment in the period of £1.0m of the £1.5m Corporate
Bond which matured in March 2024, with the reminder £0.5m rolled
into a new loan note facility on the same terms for a further 12
months to March 2025.
-
A decrease in the One Heritage
Property Development shareholder loan facility of £0.4m to £10.98m
(FY 2023: £11.38m). During the year renegotiation took place of the
facility termination date, which was extended to December 2025,
with the ability to extend for a further 3 years
Operating highlights
-
Practical completion of St
Petersgate Stockport and North Church House Sheffield (as
development manager), bringing to an end the policy of
self-delivery development.
-
A decision to move away from
co-living activity due to uncertainties on returns.
-
Advancement of construction on
Victoria Road, Eccleshill within budget by utilising a fixed price
contract procurement strategy, with practical completion occurring
in October 2024.
-
Completed a Company strategic
review, resulting in a number of financial and operational changes
after the financial year, including the alignment of overheads to
current business position.
-
Scott Nicol appointed as Group Head
of Investment, adding substantial knowledge and experience and Ben
Scandrett also came on board as Group Head of Development,
overseeing all development activities, from pipeline management to
project delivery.
Post Period Events
-
Rebranding of One Heritage Group
PLC to Zentra Group PLC reflecting a broader strategic
realignment.
-
Unconditional exchange of contracts
for the sale of our inventory valued at £7.0m.
-
The acquisition of a 30% stake in
the One Victoria project in Manchester, where we also serve as
Development Manager.
-
Agreement of refinancing
initiatives, including securing a new Related party £7.0m facility
at a more favourable 6% interest rate (down from 7%) and a £2.0m
debt write-off of existing Group facilities reducing our interest
burden and increased financial flexibility.
-
Completion of the sale of the
building Seaton House, Stockport for £0.6m together with exchange
of conditional contracts for the sale of the land to the rear for
£0.4m.
-
Practical completion in October
2024 of 24 houses at Victoria Road, Eccleshill.
Outlook
-
The movement away from in-house
delivery and Co-living are pivotal to allow the business to focus
on the securing of new business opportunities linked with the
promotion of our two main brands of Zentra Living for Apartments
and Zentra Homes for single dwelling houses.
-
The robust review of financial and
operational structures and steps put in place give the Company
greater operational and financial flexibility with the benefit of
adding value for our shareholders.
Jason Upton, Chief Executive
Officer, commented:
“Over the past year, the Company
has faced economic and trading challenges, affecting both consumer
confidence and our cost base. It has also been a time of reflection
and transition, with key decisions made to move away from
self-delivery, reduce our exposure to Co-living, and realign our
cost base and staffing structure. These actions are vital for
restoring profitability and increasing shareholder
returns.
The recent financial restructuring
and inventory disposal have laid a strong foundation as we enter a
new era with a fresh identity and revised strategy under the Zentra
brand. I look forward to leading the team through this exciting
chapter in the months ahead.”
Contacts
Zentra Group
PLC
Jason Upton
Chief Executive Officer
Email:
jason.upton@zentragroup.co.uk
Robert Holbrook
Head of Finance
Email:
robert.holbrook@zentragroup.co.uk
Hybridan LLP
(Financial Adviser and Broker)
Claire Louise Noyce
Email :
claire.noyce@hybridan.com
Tel: +44 (0)203 764 2341
About Zentra
Group PLC
Zentra Group PLC (previously One
Heritage Group PLC) is a property development and management
Company. It focuses on the residential sector primarily in the
North of England, seeking out value and maximising opportunities
for investors.
The Company is listed on the
Standard List of the Main Market of the London Stock Exchange,
trading under the ticker ZNT.
For further
information, please visit the Company’s website
at www.zentragroup.co.uk The
previous website www.oneheritageplc.com will
automatically redirect to the new website.
References to
page numbers throughout this announcement relates to the page
numbers within the Annual Report of the Company for the year ended
30 June 2024.
Chairman’s statement
It is my pleasure to present this
year’s annual report, which covers a period of significant
transformation for the Group. The period under review has continued
to be extremely challenging, with economic uncertainty and rising
construction costs and reduced investor appetite combining to
adversely affect our business. However, ‘out of adversity comes
opportunity’ as the saying goes, and I am very pleased with the way
that the executive team, post-period, has executed opportunities to
recapitalise the business and acquire a significant stake in a
prime Manchester high-rise apartment development.
During the year, we also made some
difficult yet necessary decisions, including the reduction of our
core cost base, and the streamlining of operations to ensure a
leaner and more focused Group. Importantly, our strategic shift
away from Co-Living and in-house construction has allowed us to
concentrate on our core strength—residential development—enabling
us to respond more effectively to market opportunities and deliver
predictable outcomes.
Looking ahead, I am optimistic
about the prospects for the Group. The adjustments we have made to
our structure and the sharpening of our focus will better enable us
to seize emerging opportunities in the residential development
market. Our continued emphasis on urban residential projects and
new-build housing in high-demand areas, particularly in the North
West of England, aligns with our commitment to meeting the evolving
needs of our customers while generating strong returns for our
shareholders.
I would like to take this
opportunity to express my gratitude to our shareholders, employees,
and other stakeholders for their unwavering support throughout this
period of transformation. As we embark on the next phase of our
journey, we do so with confidence, knowing that we have the right
strategy, the right team, and the right foundations to deliver
long-term success for the Group.
David Izett
Chairman
29 October 2024
Chief Executive’s
statement
As I reflect on the past few years,
it is clear that our journey has been shaped by a rapidly evolving
environment that has presented both opportunities and challenges.
Since listing on the London Stock Exchange in December 2020, we
have navigated significant changes in the property development
landscape, from rising construction costs and fluctuating investor
demand to broader macroeconomic uncertainties. These factors have
affected the rate of sales and our operational costs, forcing us to
rethink our strategy and reposition ourselves for the
future.
The external environment has
undoubtedly been challenging, with construction costs escalating
and the financial climate becoming increasingly complex. Investor
sentiment has also been tempered by economic volatility, further
impacting the speed at which we have been able to secure sales.
Despite these headwinds, we have remained steadfast in our
commitment to delivering high-quality residential developments and
managing our portfolio with discipline and foresight.
Recognising the need for decisive
action, we initiated a strategic review earlier this year, which
led to a restructuring of the Group. During this review, an
opportunity presented itself to complete several significant
transactions. Although the restructuring process presented
challenges, it was crucial for securing the long-term success of
the business. The process began with the strategic review and
culminated after the year-end with the announcement of the
exchange of contracts for the sale of our inventory valued at £7
million and our rebranding to
Zentra Group PLC, marking a key milestone in our
evolution.
The proposed restructuring will
strengthen our financial position and better align our operations
with current market opportunities. It also enabled us to refocus on
our core strength - residential development - while stepping away
from higher-risk areas like in-house construction and Co-Living
services. By adopting a leaner, more efficient business model,
centred on cost certainty through fixed-price contracts with
third-party contractors, we have reduced financial exposure and
mitigated the risks of rising construction costs, all while
continuing to deliver the high-quality developments that define our
company.
Our decision to rebrand as Zentra
Group is more than just a change in name; it reflects a broader
strategic realignment. Zentra embodies the values of balance,
harmony, and focus-principles that resonate with our renewed
commitment to providing high-quality residential developments. This
new identity allows us to distance ourselves from potential
reputational risks with the One Heritage brand which is synonymous
with financial services in Asia, allowing us to have our own
identity and forge a fresh path forward, particularly in the UK
market where our presence and reputation continue to
grow.
The restructuring also
includes the acquisition of a 30% stake in the One Victoria
project in Manchester, where we also serve as Development
Manager. Scheduled for completion
in H2 FY 2025, One Victoria will offer 129 apartments and 2
commercial units, further reinforcing our commitment to
high-quality urban developments. This acquisition, along with
our refinancing initiatives, including securing a new £7
million facility at a more favourable 6% interest rate (down from
7%) and a £2 million debt write-off, are major achievements that bring significant
value to our shareholders. This refinancing arrangement is a
significant milestone, allowing us to reduce our interest
burden and increase financial flexibility. The new terms place the Group in a stronger
position to navigate future market conditions while providing us
with the resources to focus on key development projects.
Executing such a comprehensive
restructuring within the necessary timeframes was a challenging
task, especially considering the complexities of aligning it with
our financial results and market conditions. There were moments of
uncertainty and in particular with respect to the timing of
transactions, but we remained focused on creating long-term value
for our shareholders. I firmly believe that the steps we have taken
lay the groundwork for a stronger, more resilient company going
forward.
During the period under review, I
am pleased we achieved several key milestones which included the
construction on the One Victoria project in Manchester mentioned
above. Additionally, we also commenced construction on our first
new build housing project, consisting of 24 houses at Victoria Road
in Eccleshill, West Yorkshire which reached practical completion
post period in October. We also achieved practical completion of
other significant projects, namely St. Petersgate Stockport and
North Church House Queen Street Sheffield. Furthermore, we
successfully repaid a £1.5 million corporate bond and secured a
£0.5 million unsecured loan with an interest rate of 8%, maturing
on March 15, 2025. These accomplishments reflect our ongoing
commitment to delivering value and advancing our strategic
objectives, positioning us for future growth.
KEY PROJET
ACHIEVEMENTS
In detail:
-
St Petersgate, Stockport:
In January, we achieved practical
completion of this significant conversion project, which involved
transforming a former office building into 18 high-quality
residential apartments and a commercial unit. During the
construction phase, the project encountered unexpected challenges,
notably around the rooftop extension. Despite these hurdles, we
successfully navigated the complexities to deliver the project on
time. The residential units were all sold, showing strong demand
for well-located housing in Stockport. Additionally, the commercial
unit was fully let, contributing to a balanced mixed-use
development that integrates residential and commercial space
effectively, creating value for both residents and
businesses.
-
Victoria Road, Eccleshill:
In October 2024, we completed our
first new-build housing development at Victoria Road. The
development comprises 24 houses, marking a significant milestone in
our story as we expand into the new-build sector. Sales efforts are
currently underway, with a dual approach targeting both individual
homebuyers and bulk sales to registered housing
providers.
-
North Church House, Sheffield:
In March, construction completed on
the 58-unit development North Church House. As the development
manager, we encountered several challenges in converting this
former office building, particularly in installing a rooftop
extension, which required careful planning and execution. Despite
these obstacles, the project was executed successfully, resulting
in a well-finished development that adds residential capacity in a
prime urban location. This conversion showcases our expertise in
adaptive re-use of commercial properties, contributing to
sustainable urban regeneration.
-
One Victoria, Manchester:
As well as exchanging contracts to
acquire a 30% shareholding in the SPV that owns One Victoria with
completion of this contract expected in October, the Group has
retained its role as Development Manager for the project. This
ongoing development consists of 129 high-quality residential
apartments and two commercial units, strategically located in
Manchester city centre.
The project is progressing well,
with construction expected to be completed in the second half of FY
2025. To ensure smooth financial progress, construction finance is
being drawn down in stages to cover the ongoing construction costs.
Torsion Construction Limited, a well-established contractor, is
leading the construction efforts, leveraging their expertise to
maintain progress on schedule.
This development is an important
part of the Group’s broader growth strategy, further strengthening
its presence in the Manchester property market. One Victoria is
poised to provide valuable housing stock while also creating
commercial opportunities that align with the city’s economic
growth. The project demonstrates the Group’s capability in managing
large-scale, mixed-use developments and its commitment to
delivering projects that balance residential and commercial needs
effectively.
STRATEGIC
OBJECTIVES FOR 2025
As we look to the future, we remain
focused on our core strategic objectives, which will drive our
continued growth and success:
1. Successfully Delivering
Existing Development Projects
Our development pipeline has been
strengthened by the expected acquisition of a 30% equity stake in
One Victoria, with our contract due to complete in October . This
investment represents a significant addition to our portfolio. As
Development Manager for One Victoria, we are committed to
overseeing its successful completion, ensuring the delivery of 129
high-quality residential units and 2 commercial spaces. Completion
of the development is on course for H2 FY 2025.
2. Securing Sales
for our properties
|
Direct
Development Projects
|
Residential
Units
|
Commercial
Units
|
Gross Development
Value (£m)
|
Reservations*
|
Exchanged
*
|
Completed Sales
*
|
Expected
Completion
|
|
Lincoln House, Bolton
|
88
|
0
|
£10.1m
|
0
|
0
|
88
|
Completed
|
|
Bank Street, Sheffield
|
23
|
0
|
£3.9m
|
0
|
0
|
23
|
Completed
|
|
Oscar House, Manchester
|
27
|
0
|
£6.8m
|
0
|
0
|
27
|
Completed
|
|
St Petersgate, Stockport
|
18
|
1
|
£2.9m
|
0
|
0
|
18
|
Completed
|
|
Victoria Road,
Eccleshill
|
24
|
0
|
£6.5m
|
2
|
0
|
0
|
Completed
|
|
One Victoria,
Manchester**
|
129
|
2
|
£39.5m
|
8
|
38
|
0
|
H2 FY 2025
|
*As at 03 October 2024
** Exchanged unconditional
contracts for 30% of the share capital of the company that owns the
project.
We are pleased to announce post
year end that in October, the completion of a £7 million bulk sale
of our inventory took place, marking a significant achievement.
This sale allows us to focus on new opportunities and further
strengthens our financial position to execute our strategic
objectives.
Sales at Victoria Road Eccleshill
are now a priority following the project's practical completion. We
have launched a targeted marketing campaign, partnering with local
agents to promote the 24 units. In addition to individual buyer
sales, we are in active negotiations with several registered
housing providers and institutions for a bulk sale, offering
another avenue to maximise value.
Our investment in One Victoria is
also a key focus. So far, we have exchanged contracts on 38 units,
and the newly completed showroom is expected to attract significant
interest.
3. Expanding the Pipeline of New
Development Opportunities
We are actively exploring new
development opportunities, both as a direct developer and through
partnerships with local authorities and housing providers.
Expanding our pipeline is crucial to maintaining our growth
momentum, and we are currently evaluating a number of promising
projects. The restructuring of our team earlier this year has
positioned us to be more agile and responsive in pursuing these
opportunities. We anticipate providing further updates as these
opportunities progress into contracted positions, aligning with our
long-term strategic goals.
Our proactive approach to seeking
new development sites will allow us to continue delivering projects
that meet market demand and generate value for our shareholders,
while also addressing the broader housing needs of the communities
in which we operate.
OUR
PEOPLE
Our people remain central to
everything we do, and this year has brought several key changes to
our senior leadership team. Earlier in the year, we welcomed Robert
Holbrook as Interim Head of Finance, who brings extensive financial
expertise and deep experience in the property sector. Scott Nicol
joined us as Group Head of Investment, adding substantial knowledge
and experience that has already enhanced our commercial
performance. His strategic insights have further strengthened our
leadership team. Ben Scandrett also came on board as Group Head of
Development, overseeing all development activities, from pipeline
management to project delivery.
We remain dedicated to investing in
our people and promoting a culture of inclusivity, innovation, and
professional growth. As we continue to expand, our team will play a
crucial role in driving our strategic objectives
forward.
INDUSTRY
OVERVIEW
Between June 2023 and June 2024,
the UK economy expanded at a much faster rate than initially
estimated. Revised figures show GDP growth of 0.3% during this
period, tripling the earlier reported figure of 0.1%. This
represents the strongest economic growth since the post-pandemic
recovery in 2021 and early 2022, following two consecutive quarters
of falling GDP in Q3 and Q4 of 2023, often termed a ‘technical
recession.’ The Bank of England’s reduction of its base rate from
5.25% to 5.00%, along with a decrease in inflation, offers positive
signs for the housing market, though consumer caution remains. The
policies of the new Labour government will be instrumental in
restoring confidence.
Government intervention in both the
housing market and the stagnating planning system will be critical
to achieving the target of building 1.5 million homes over the next
five years. A February 2024 report from the Competition and Markets
Authority highlighted the planning system's inadequacy and the
constraints it places on land supply needed to meet housing goals.
While there have been reforms, including revisions to the National
Planning Policy Framework (NPPF) and the reinstatement of local
housing targets, it is hoped that new policies will address the
systemic issues that have plagued the sector. Despite these
challenges, the ambitious housing targets create significant
opportunities for the Group to collaborate with local authorities,
government bodies and NGOs, fostering an environment for
growth.
In line with these reforms,
biodiversity net gain legislation came into force in February 2024,
and the Future Homes and Building Standards legislation is expected
to be passed shortly. This will require new homes to reduce
emissions by 75% to 80% compared to previous standards. While these
regulations present challenges, they also establish a level playing
field, allowing the Group to deliver high-quality developments in a
competitive market.
Affordability remains a major
concern, particularly for first-time buyers, as the cost of
purchasing a home now accounts for over 40% of take-home pay. While
recent reductions in the Bank of England’s base rate have allowed
lenders to lower the average mortgage rate (75% LTV) to 3.86%,
nearly 1.00% lower than 12 months ago, the threat of further
mortgage increases looms large for many homeowners whose fixed-rate
deals are yet to expire.
The constrained supply of new homes
for sale, along with structural shifts in consumer behaviour, has
exacerbated the supply-demand imbalance in the rental market,
supporting continued rental growth. In the 12 months to June 2024,
average UK residential rents increased by 8.7%, only a slight
decrease from the 8.9% rise in the previous year. This
supply-demand imbalance is expected to persist, keeping rental
values strong as potential homebuyers remain hesitant or unable to
purchase homes.
The outlook for affordable housing
is uncertain. The next Affordable Homes Program (AHP) in England
has been delayed until spring 2025 due to ongoing economic
challenges, financial uncertainties, and the need for critical
repairs to existing stock, including cladding and damp issues.
These factors have reduced housing associations' capacity to invest
in new developments. The interim affordable housing grant
introduced in October 2024 has offered temporary relief, enabling
registered providers to continue work on some schemes. The Group is
already engaged in discussions with several local authorities and
housing associations to explore potential partnerships to support
their development needs.
After several years of volatile
inflation, with the peak during the Covid-19 pandemic, the past 12
months have seen a levelling off of construction cost inflation.
Prices for 'all work' have entered a period of deflation, though
this is likely a temporary correction following sustained price
increases. While falling material costs offer some relief, the
industry's capacity and workforce shortages remain key constraints.
Attracting and retaining talent will be essential to managing
future upward cost pressures and meeting government
targets.
Against this backdrop, the latest
BCIS residential forecast predicts that build costs will rise by
15% over the next five years, driven by pressures on materials and
labour costs, the latter expected to increase by 16%. Additionally,
BCIS forecasts a 24% growth in new work output over the same
period, as pent-up demand fuels house price growth.
ESG
(ENVIRONMENTAL, SOCIAL AND GOVERNANCE)
We remain dedicated to embedding
ESG principles throughout our operations. Our ESG strategy focuses
on ethical business practices, sustainable development, and strong
community engagement. This year, we have furthered our commitment
in the following ways:
1. Supporting
Local Communities and Charitable Organisations
Supporting local communities
remains central to our values, and this year we have continued to
engage with and contributed to the communities in which we operate.
Our strategy is under review and over the forthcoming financial
year we will continue to support a range of local initiatives and
charitable organisations that focus on social welfare, education,
and housing. Our contributions will be not just financial; our team
will actively participate in volunteer programmes which we support
by offering our people up to 2 volunteer days paid per year. We are
proud to work on established long-term partnerships with community
organisations, which enable us to make a lasting positive impact on
the areas surrounding our developments. Through these initiatives,
we aim to foster stronger, more resilient communities,
demonstrating our commitment to social responsibility beyond the
confines of property development.
2. Employee
Training and Development
We are committed to the
professional growth and development of our employees, recognising
that a highly skilled workforce is essential to our success. This
year, we launched a new training system that facilitates regular
e-learning across various disciplines, ensuring our team stays
updated with best practices and compliance requirements.
Additionally, we continue to support employees pursuing
professional qualifications such as AAT and ACCA, offering both
financial assistance and study leave to help them achieve their
career goals. By investing in continuous learning and development,
we ensure our team remains adaptable, capable, and ready to meet
the challenges of a fast-evolving industry.
3. Equality,
Diversity, and Inclusion
We remain fully committed to
fostering a diverse and inclusive workplace where all employees
feel valued and respected. Our ongoing efforts to promote equality
across all levels of the business include fair recruitment
practices, employee development opportunities, and fostering a
culture that celebrates diversity in its many forms. Our recent
application to become a full member of the Greater Manchester Good
Employment Charter reflects this commitment to high standards in
fair employment practices. Through this membership, we aim to
reinforce our dedication to improving working conditions, promoting
diversity, and ensuring an inclusive environment for
all.
4. Environmental
Impact
We are making progress in improving
the environmental performance of our developments. Our approach
includes working closely with contractors to monitor and manage
waste, aiming to reduce landfill contributions and increase
recycling rates. Additionally, we have been proactive in
incorporating energy-efficient design features where practical,
such as advanced insulation, energy-saving lighting, and
sustainable materials, into our projects. These measures not only
help us minimise our carbon footprint but also deliver
cost-effective solutions that benefit both residents and investors.
By prioritising sustainability, we align our business practices
with broader environmental goals, contributing to a greener future
while enhancing the long-term value of our developments.
TASK FORCE ON
CLIMATE-RELATED DISCLOSURES (TCFD)
In response to growing global
concerns over climate change, the Company is committed to
implementing the Task Force on Climate-related Financial
Disclosures (TCFD) framework. This initiative is central to our
climate strategy and reflects our dedication to transparency in
climate-related financial risks and opportunities.
Our TCFD implementation plan
includes:
-
Governance:
Establishing a dedicated committee to oversee climate-related risk
management.
-
Risk Management:
Conducting comprehensive climate risk assessments and integrating
climate risks into our broader risk management
framework.
-
Scenario Analysis:
Developing models to assess the financial implications of different
climate scenarios on our business.
-
Data Collection and
Disclosure: Enhancing data collection systems to support accurate
TCFD reporting.
By adopting the TCFD framework, we
are taking proactive steps to ensure our business remains resilient
in the face of climate challenges while aligning with best
practices in corporate governance.
OUTLOOK FOR
2025
The restructuring we recently
announced has laid the foundation for a pathway to grow shareholder
value. Through this transformation, we have made bold decisions to
streamline our operations, reducing our overheads and core cost
base by adjusting our headcount, renegotiating our core finance
facility, and reducing our debt to a more manageable level. These
decisive actions have resulted in a sharper, more focused approach
to residential development—our primary strength and the area where
we see the greatest opportunity for growth.
Our strategic decision to move away
from Co-Living and in-house construction were critical steps,
enabling us to fully concentrate on delivering high-quality
residential projects, allowing for greater efficiency and more
predictable outcomes. This targeted focus aligns with the evolving
needs of the market and reinforces our commitment to generating
long-term value for our shareholders.
After a turbulent few years marked
by rising costs and uncertainty, we are beginning to see the tide
turn. With the pressures of escalating costs easing and our
business now operating under a leaner, more efficient structure, we
are optimistic about the future. The fresh, new look of Zentra
Group PLC, coupled with our refined structure, gives us the best
opportunity to execute our strategy successfully. We believe that
these changes will allow us to seize emerging opportunities and
achieve sustained success, as we move forward with renewed energy
and confidence.
Jason Upton
Chief Executive
29 October 2024
Group’s Financial Review
Trading
For the twelve months ended 30 June
2024, revenue decreased by £0.94m (6%) to £14.65m (FY 2023:
£15.59m). This primarily reflects a reduction in development sales
and a reduction in the provision of management services.
|
Revenue
|
FY
2024
£m
|
FY
2023
£m
|
Change
£m
|
Change
%
|
|
Development sales
|
8.97
|
9.99
|
(1.02)
|
(10)%
|
|
Co-Living project management
fee
|
0.87
|
1.28
|
(0.41)
|
(32)%
|
|
Construction
|
4.02
|
3.17
|
0.85
|
27%
|
|
Development management
fee
|
0.36
|
0.70
|
(0.34)
|
(48)%
|
|
Property services
|
0.32
|
0.33
|
(0.01)
|
(3)%
|
|
Corporate
|
0.11
|
0.12
|
(0.01)
|
(8)%
|
|
TOTAL
|
14.65
|
15.59
|
(0.94)
|
(6)%
|
Development sales revenue from
legal completions remained the largest contributor to Group
revenue, accounting for 61% (FY 2023: 64%) of total revenue.
Overall, there is a reduction in legal completions from 71 in FY
2023 to 52 in FY 2024 with St Petersgate Stockport and Oscar House
Manchester both achieving practical completion in the year, and the
remainder of revenue coming from completed developments. Lincoln
House Bolton delivered £3.06m from 23 legal completions, St
Petersgate Stockport legally completed 17 sales for £2.87m, 10
sales legally completed at Oscar House Manchester for £2.42m, with
Bank Street Sheffield legally completing 2 sales equating to
£0.35m.
Co-Living project management
relates to the construction works undertaken on Co-Living
properties where the Group receives a 5.0% cost plus margin on all
works undertaken and generated revenue of £0.87m (FY 2023: £1.28m).
In addition, construction services generated revenue of £4.02m in
the period (FY 2023: £3.17m) from the management of construction
activity at North Church House Sheffield on behalf of a related
party.
There was a decrease in development
management fee income to £0.36m (FY 2023: £0.70m) and this relates
to management services provided on One Victoria, Manchester and the
One Heritage Tower, Salford.
Property services delivered revenue
of £0.32m (FY 2023: £0.33m). This was driven by management fees and
transaction fees.
|
Statement of
Comprehensive Income
|
FY24
£m
|
FY23
£m
|
Change
£m
|
Change
%
|
|
Revenue
|
14.65
|
15.59
|
(0.94)
|
(6)%
|
|
Cost of sales
|
(13.65)
|
(13.91)
|
0.26
|
|
|
Cost of sales -
Impairment
|
(0.82)
|
(1.09)
|
0.27
|
|
|
Gross
Profit
|
0.18
|
0.59
|
(0.41)
|
(69)%
|
|
Gross margin
|
1.20%
|
3.78%
|
|
|
|
Administration costs
|
(2.62)
|
(2.21)
|
(0.41)
|
|
|
Operating
Loss
|
(2.44)
|
(1.62)
|
(0.82)
|
(51)%
|
|
Finance expense
|
(1.12)
|
(0.52)
|
(0.60)
|
|
|
(Loss) before
taxation
|
(3.56)
|
(2.14)
|
(1.42)
|
(66)%
|
|
(Loss) per share
(pence)
|
(8.7)
|
(6.2)
|
(2.5)
|
(40)%
|
The gross profit declined by £0.41m
to £0.18m (FY 2023: profit £0.59m) due mainly to an overall
reduction in legal completions and in particular those at Lincoln
House, Bolton. The impairment charge in the period was £0.82m
(FY 2023: £1.09m) with the majority of the charge arising from the
completion of works at St Petersgate, the final project to be
completed using in-house construction services. The benefits of the
decision to cease this activity has been shown at Victoria Road,
Eccleshill where the site will complete within cost budget
following the appointment of a principal contractor on a fixed
price basis.
The gross margin was 1.20% (FY
2023: 3.78%), this reduction being predominantly due to the reduced
legal completions on Lincoln House offset by a reduced impairment
charge in the year.
Administrative expenses were £2.62m
in the period (FY 2023: £2.21m). This represents an overall £0.41m
increase in overheads arising from a number of factors: a higher
salary cost of £0.11m driven by an increase in average headcount to
30 employees (FY 2023: 28) and an increase in professional and
consultancy costs. Post year-end, a review of overheads was
undertaken and a cost cutting exercise has been implemented
including a series of redundancies with headcount realigned to the
current position in terms of development streams.
The operating loss increased by
£0.82m to a loss of £2.44m (FY 2023: loss of £1.62m). Finance costs
were £1.12m (FY 2023: £0.52m). The increase in finance cost is
attributable to the holding costs associated with unsold units on
completed sites. Where practical, these units have been rented to
generate a revenue stream to offset the holding costs. The pre
taxation loss amounts to £3.56m (FY 2023: £2.14m). The basic loss
per share was 8.7 pence (FY 2023: loss 6.2 pence).
Balance
Sheet
Development Inventory has decreased
by £3.30m from £16.57m to £13.27m. The key balances are at St
Petersgate £0.3m (FY 2023: £2.7m), Oscar House £4.49m (FY 2023:
£6.42m) and Lincoln House £1.10m (FY 2023: £3.6m), where the
projects are completed and sales have taken place. The inventory
balance at Victoria Road, Eccleshill is £5.23m (FY 2023: £1.80m),
with practical completion being achieved post year end in October
2024.
The negative equity position has
increased by £3.38m from £0.57m to negative equity of £3.95m due to
the impaired inventory position generating insufficient profit to
cover the operational and financing costs of the business. The
monetisation of impaired assets and the recycling of the funds
generated into new developments will improve this position over
time, and in this regard the regearing of borrowings together with
the sale of stock properties to a related party at market value
post year end (as outlined in the post balance sheet events note
contained within the financial statements) is a great step towards
rebuilding the balance sheet. No dividends have been declared in
this year due to continuing loss-making position.
Reported Net Assets per share
decreased by 8.7p in the period to negative 10.2p (FY 2023:
negative 1.5p).
Liquidity
There was no raising of Capital in
the year through the issue of shares and the focus has been on
paying down development related borrowings and where appropriate
putting new lines of funding in place that give improved
terms.
Net Debt has decreased marginally
from £16.94m to £16.89m. This movement includes:
-
Interest payment of
£1.48m;
-
A refinance of Oscar
House, Manchester in line with the revised sales and letting
strategy on improved terms to the previous loan of
£2.4m;
-
Investment in
Victoria Road Eccleshill from equity but also a £3.85m debt
facility with Hampshire Trust Bank of which £2.82m was drawn down
at 30th
June
2024.
-
The repayment of
£1.0m of the £1.5m Corporate Bond which matured in March 2024, with
the remaining £0.5m rolled into a new loan note facility on the
same terms for a further 12 months to March 2025.
-
A decrease in the
One Heritage Property Development shareholder loan facility of
£0.4m to £10.98m (FY 2023: £11.38). During the year renegotiation
took place of the facility termination date which was extended to
December 2025, with the ability to extend for a further 3 years. As
detailed in the post balance sheet events note, post year-end, the
sale of completed stock and a regear of the Group’s funding
position has seen this liability reduce to £7m with an improved
debt servicing cost of 6%.
Net Cash inflow used in operating
activities was £1.61m, primarily due to the cashing in of stock
inventory, albeit at nominal profit.
In summary, the Company’s
operational and financial performance will improve as it divests
itself of the legacy sites and recycles cash into new developments
which will be carefully sourced and managed to improve operational
efficiency. The operational and financial restructures which have
taken place post year end, will accelerate this strategy and put
the Group on a stronger financial footing.
Risk Management and Principal
Risks
The ability of the Group to operate
effectively and achieve its strategic objectives is subject to a
range of potential risks and uncertainties. The Board and the
broader management team take a pro-active approach to identifying
and assessing internal and external risks. The potential likelihood
and impact of each risk is assessed and mitigation policies are set
against them that are judged to be appropriate to the risk level.
Management constantly updates plans and these are monitored by the
Audit and Risk Committee and reported to the Board.
The principal risks that the Board
sees as impacting the Group in the coming period are divided into
six categories, and these are set out below together with how the
Company mitigates such risks.
1. Strategy: Government regulation,
planning policy and land availability.
2. Delivery: Inadequate controls or
failures in compliance will impact the Group’s operational and
financial performance.
3. Operations: Availability and
cost of raw materials, sub-contractors, and suppliers.
4. People and culture: Attracting
and retaining high-calibre employees.
5. Finance & Liquidity:
Availability of finance and working capital.
6. External Factors: Economic
environment, including housing demand and mortgage
availability.
1. Strategy: Government regulation,
planning policy and land availability
A risk exists that changes in the
regulatory environment may affect the conditions and time taken to
obtain planning approval and technical requirements including
changes to Building Regulations or Environmental Regulations,
increasing the challenge of providing quality homes where they are
most needed. Such changes may also impact our ability to meet our
margin or site return on capital employed (ROCE) hurdle rates (this
ratio can help to understand how well a company is generating
profits from its capital as it is put to use). An inability to
secure sufficient consented land and strategic land options at
appropriate cost and quality in the right locations to enhance
communities, could affect our ability to grow sales volumes and/or
meet our margin and site ROCE hurdle rates. The Group mitigates
against these risks by liaising regularly with experts and
officials to understand where and when changes may occur. In
addition, the Group monitors proposals by Government to ensure the
achievement of implementable planning consents that meet local
requirements and that exceed current and expected statutory
requirements. The Group regularly reviews land currently owned,
committed and pipeline prospects, underpinned with robust key
business control where all land acquisitions are subject to formal
appraisal and approved by the senior executive team.
2. Delivery: Inadequate controls or
failures in compliance will impact the Group’s operational and
financial performance
A risk exists of failure to achieve
excellence in construction, such as design and construction
defects, deviation from environmental standards, or through an
inability to develop and implement new and innovative construction
methods. This could increase costs, expose the Group to future
remediation liabilities, and result in poor product quality,
reduced selling prices and sales volumes.
To mitigate this, the Group liaises
with technical experts to ensure compliance with all regulations
around design and materials, along with external engineers through
approved panels. It also has detailed build programmes supported by
a robust quality assurance.
3. Operations: Availability and
cost of raw materials, sub-contractors, and suppliers
A risk exists that not adequately
responding to shortages or increased costs of materials and skilled
labour or the failure of a key supplier, may lead to increased
costs and delays in construction. It may also impact our ability to
achieve disciplined growth in the provision of high-quality
homes.
The Group no-longer participates in
in-house construction of residential development projects. It is
reducing its exposure to providing services for the development of Co-Living
projects for related parties and has also chosen an approach to the
delivery of our development projects by appointing a principal
contractor after a period of due diligence, which we believe will
deliver the best shareholder value through cost
certainty.
4. People and culture: Attracting
and retaining high-calibre employees
A risk exists that increasing
competition for skills may mean we are unable to recruit and/or
retain the best people. Having sufficient skilled employees is
critical to delivery of the Company’s strategy, whilst maintaining
excellence in all of our other strategic priorities.
To mitigate this the Company has a
number of People Strategy programmes which include development,
training and succession planning, remuneration benchmarking against
competitors, and monitoring of employee turnover, absence
statistics and feedback from exit interviews.
5. Finance & Liquidity:
Availability of finance and working capital
A risk exists that lack of
sufficient borrowing and surety facilities to settle liabilities
and/or an ability to manage working capital, may mean that we are
unable to respond to changes in the economic environment, and take
advantage of appropriate land buying and operational opportunities
to deliver strategic priorities.
To minimise this risk, the Group
has a disciplined operating framework with an appropriate capital
structure together with forecasting of working capital and external
funding requirements. Management have stress tested the Group’s
resilience to ensure the funding available is sufficient. This
process has regular management and Board attention to review the
most appropriate funding strategy to drive the Company’s growth
ambitions. We have regular Treasury updates, and we gain market
intelligence and availability of finance from in-house and
experienced sector Treasury advisers.
6. External Factors: Economic
environment, including housing demand and mortgage
availability
A risk exists that changes in the
world and UK macroeconomic environment may lead to falling demand
or tightened mortgage availability, upon which most of our
customers are reliant, thus potentially reducing the affordability
of our homes. This could result in reduced sales volumes and affect
our ability to deliver targeted returns.
To mitigate this risk, the
Group partners with a network of overseas agents, tapping into
overseas investor and private individual demand and in particular
in Hong Kong, China and Singapore with the majority of overseas purchasers being cash
buyers. The Group
continually monitors the market at Board, Executive Committee, and
team levels, leading to amendments in the Group’s forecasts and
planning, as necessary. In addition, there are comprehensive sales
policies, regular reviews of pricing in local markets and
development of good relationships with mortgage lenders. This is
underpinned by a disciplined operating framework with an
appropriate capital structure.
Statement of Directors’
Responsibilities
The Directors are responsible for
preparing the Annual Report and the Group and parent Company
financial statements in accordance with applicable law and
regulations.
Company law requires the Directors
to prepare Group and parent Company financial statements for each
financial year.
Under that law they are required to
prepare the Company financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and applicable law and have
elected to prepare the parent Company financial statements in
accordance with UK accounting standards and applicable law (UK
Generally Accepted Accounting Practice), including FRS 101 Reduced
Disclosure Framework.
Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and parent Company and of the Group’s profit or loss for that
period.
In preparing each of the Group and
parent Company financial statements, the Directors are required
to:
-
select suitable accounting policies
and then apply them consistently;
-
make judgements and estimates that
are reasonable, relevant, and reliable;
-
for the Group financial statements,
state whether they have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and, as regards the Group
financial statements, International Financial Reporting
Standards;
-
for the parent Company financial
statements, state whether applicable UK accounting standards have
been followed, subject to any material departures disclosed and
explained in the financial statements;
-
assess the Group and parent
Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern;
and
-
use the going concern basis of
accounting unless they either intend to liquidate the Group or the
parent Company or to cease operations or have no realistic
alternative but to do so.
The Directors are responsible for
keeping adequate accounting records that are sufficient to show and
explain the parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and
regulations, the Directors are also responsible for preparing a
Strategic Report, Directors’ Report, Directors’ Remuneration Report
and Corporate Governance Statement that complies with that law and
those regulations.
The Directors are responsible for
the maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
WEBSITE PUBLICATION
The Directors are responsible for
the maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
DIRECTORS’ RESPONSIBILITIES
PURSUANT TO DTR4
The Directors confirm to the best
of their knowledge:
-
The financial statements have been
prepared in accordance with the applicable set of accounting
standards and Article 4 of the IAS Regulation and give a true and
fair view of the assets, liabilities, financial position, and loss
of the Company.
-
The Annual Report
includes a fair review of the development and performance of the
business and the financial position of the Company, together with a
description of the principle risks and uncertainties that it
faces.
By order of the Board
Jason Upton
Chief Executive Officer
29 October 2024
Independent Auditor’s Report to the
Members of Zentra Group PLC (previously One Heritage Group
PLC)
Our
opinion
We have audited the consolidated financial
statements and Company financial statements of Zentra
Group PLC (previously One Heritage Group PLC) (the “Company”) and its subsidiaries (together,
the "Group"), which comprise the consolidated statement of
financial position and Company’s balance sheet as at 30 June
2024, the consolidated statement of comprehensive
income, the consolidated and Company’s statement of changes in
equity and consolidated statement of cash flows for the year then
ended, and notes, comprising material accounting policies and other
explanatory information.
In our
opinion:
-
the financial
statements give a true and fair view of the state of the Group's
and of the Company's affairs as at 30 June 2024 and
of the Group's loss for the year then
ended;
-
the Group financial
statements are properly prepared in accordance with UK-adopted
international accounting standards;
-
the parent Company
financial statements have been properly prepared in accordance with
UK accounting standards, including FRS 101 Reduced Disclosure
Framework; and
-
have been prepared
in accordance with the requirements of the Companies Act
2006.
Basis for
opinion
We conducted our audit in
accordance with International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and
are independent of the Company and Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as applied
to public interest entities. We believe that the audit evidence we
have obtained is a sufficient and appropriate basis for our
opinion.
Key audit
matters: our assessment of the risks of material
misstatement
Key audit matters are those matters
that, in our professional judgment, were of most significance in
the audit of the consolidated financial statements and company
financial statements and include the most significant assessed
risks of material misstatement (whether or not due to fraud)
identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of
the consolidated financial statements and company
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
In arriving at our audit opinion
above, the key audit matters were as follows (unchanged from
2023):
|
|
The
risk
|
Our
response
|
|
|
|
|
|
Impairment of
inventory - developments
2024: £13,273,743 (2023
£16,566,922)
Refer to the Audit and Risk
Committee Report on page 28, note 5 accounting policy and note 13
disclosures.
|
Estimation
uncertainty:
The carrying value of inventory is
determined by reference to a number of assumptions such as sales
values, costs to complete that are inherent in site forecasts and
the level of provisioning, if any, required for impairment. These
assumptions are inherently subjective and therefore may be open to
management bias.
The effect of these matters is
that, as part of our risk assessment, we determined that the
assumptions used in the impairment assessment have a high degree of
estimation uncertainty, with a potential range of reasonable
outcomes greater than our materiality for the financial statements
as a whole, and possibly many times that amount.
Risk:
There is a risk that the carrying
value of inventory is overstated. The carrying value of inventory
is assessed by management for impairment by reference to current
market information and assumptions. In performing the assessment,
management undertake quarterly valuations to determine the expected
outcome of each development and hence identify if any impairment is
required.
|
Our audit
procedures included:
Internal
Controls:
Documenting and assessing the
design and implementation of the processes and controls regarding
impairment of inventory;
Challenging
management’s assumptions and inputs:
We critically assessed the
appropriateness of key assumptions and the commercial viability of
sites as determined by management through comparison against
historic data and consideration of current market
conditions;
Assessing
impairment model:
For incomplete development sites we
compared the actual costs incurred to date to the budgeted costs to
complete where relevant and agreed the budgeted costs to
construction contracts where they had been signed or completion of
works statements from contractors;
Forecast sales for each development
site were vouched to pre-sales and bookings where available and,
where not available, to budgeted sales listings (and assessed for
reasonableness based on market prices for similar
developments);
For each incomplete development we
recalculated the impairment charge by deducting the estimated costs
to complete from the estimated selling price, and where complete,
we compared actual costs incurred to estimated selling
prices;
Assessing
disclosures:
We considered the adequacy of the
group’s disclosures about the economic and operational
circumstances impacting the carrying value of inventory
property.
Our
results:
We found the results of our testing
and related disclosures in respect of the impairment to be
satisfactory and the carrying value of inventory recognised to be
acceptable.
|
|
|
The
risk
|
Our
response
|
|
|
|
|
|
Going
concern
Refer to the Audit and Risk
Committee Report on page 28 and notes 3 and 1 disclosures in the
Group and Company financial statements respectively.
|
Disclosure
quality:
The financial statements explain
how the Board has formed a judgement that it is appropriate to
adopt the going concern basis of preparation for the Group and
parent Company.
That judgement is based on an
evaluation of the inherent risks to the Group’s and Company’s
business model and how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations
over a period of at least a year from the date of approval of the
financial statements.
Risk:
The risks most likely to adversely
affect the Group’s and Company’s available financial resources over
this period were:
• The implementation of the post
year end restructure of the group’s inventory and debt financing
(as described in note 23);
• Continued support from a related
company (in the nature of a confirmation from a related company
that their loan, due to mature in December 2025, will not be
demanded for repayment until such a time that the Group can afford
to repay them without impacting on its going concern);
• The refinancing of a previous
construction loan on improved terms to match forecast completion
dates of the related developments; and
• The timely completion and sale of
property developments.
There are also less predictable but
realistic second order impacts, such as the erosion of customer or
supplier confidence, which could result in a rapid reduction of
available financial resources.
The risk for our audit was whether
or not those risks were such that they amounted to a material
uncertainty that may have cast significant doubt about the ability
of the Group and the Company to continue as a going concern. Had
they been such, then that fact would have been required to have
been disclosed.
|
Our audit
procedures included:
Consideration of whether these
risks could plausibly affect the liquidity of the Group and Company
in the going concern period by assessing the Directors’
sensitivities over the level of available financial resources
indicated by the Group’s and Company’s financial forecasts taking
account of severe, but plausible, adverse effects that could arise
from these risks individually and collectively.
Our procedures
also included:
Funding
assessment:
• Understanding the impact of the
proposed restructure to be implemented post year end on the
financial position and forecasts of the Group, and obtaining the
signed agreements implementing those arrangements;
• Agreeing the committed level of
funding from current lenders in note 17 and new funding secured in
note 23 to the facility agreements and confirmed the balance drawn
and undrawn as at the year end;
• Agreeing post year-end receipts
from sale of units in completed developments to bank statements,
repayment of the related construction finance loans or restructure
agreements (as described in note 23);
• Assessing whether the forecast
proceeds from the sale of developments projected to complete in the
forecast period to 31 December 2025 (net of repayment of related
construction finance loans), supplemented by continued financial
support from the Company’s parent company and related company are
sufficient to provide the Group and Company with sufficient
liquidity to meet committed expenditure in the forecast period up
to 31 December 2025;
Sensitivity
analysis:
• Considering sensitivities over
the level of available financial resources indicated by the Group’s
and Company’s financial forecasts taking account of plausible (but
not unrealistic) adverse effects that could arise from these risks
individually and collectively. We did this by stress testing the
identified critical factors, namely delaying the timing of the
planned sales of developments by 3 months;
Evaluating
Directors’ intent:
• Evaluating the achievability of
the actions the Directors consider they would take to improve the
position should the risks materialise, which included realising
property sales via auction and availing the group of the financial
support commitment from a related entity, taking into account the
extent to which the Directors can control the timing and outcome of
these;
Assessing
transparency:
• Considering whether the going
concern disclosure in notes 3 and 1 to the group and company
financial statements respectively give a full and accurate
description of the Directors’ assessment of going concern,
including the identified risks and dependencies.
Our
results:
We found the going concern basis of
preparation without any material uncertainty to be appropriate and
the related disclosure in notes 3 and 1 of the Group and Company
financial statements respectively adequately describe the
judgements, assumptions and dependencies.
|
|
|
The
risk
|
Our
response
|
|
|
|
|
|
Recoverability of
parent Company’s loans to and investment in subsidiaries
Loans to subsidiaries £1,604,331
(2023 £3,033,711) and investment in subsidiaries £nil (2023
£1,007,732)
Refer to the Audit and Risk
Committee Report on page 28, note 1 accounting policy and notes 3
and 4 disclosures in the Company financial statements.
|
Low risk, high
value:
The carrying value of the parent
Company’s loans to and investment in subsidiaries represents 99% of
the parent Company’s total assets. The assessment of carrying value
is not at a high risk of significant misstatement or subject to
significant judgement as the carrying value is supported by the net
asset value of the subsidiaries and the profits forecast to be made
on sale of the development properties owned by the subsidiaries
(which are stated at cost in the financial statements). However,
due to its materiality in the context of the parent Company
financial statements, this is considered to be the area that had
the greatest effect on our overall parent Company audit.
|
Our audit
procedures included:
Test of
details:
Comparing the carrying amount of
100% of the parent Company’s loans to and investments in
subsidiaries with the relevant subsidiaries’ balance sheet and
budgets for the underlying development properties to identify
whether their financial position supported the carrying amount of
the parent Company’s loans to and investments in those subsidiaries
and evaluating budgeted forecasts in line with our knowledge of the
entity. This procedure was also relevant for our assessment of
going concern.
Assessing
disclosures:
We have also considered the
adequacy of the Company’s disclosure of the circumstances
identified by management in respect of the carrying value of the
investments and intercompany loan receivable from the
subsidiary.
Our
results:
The results of our testing were
satisfactory and we found the carrying value and associated
disclosure of the investment in subsidiary, following the provision
recognised by management, and recoverability of parent Company’s
loans to be acceptable.
|
Our application
of materiality and an overview of the scope of our audit
Materiality for
the consolidated financial statements as a whole
was set at £120,000 (2023: £147,000), determined with reference to
a benchmark of group total assets of
£14,853,264 (2023: £19,251,448), of which it represents
approximately 0.81% (2023: 0.76%).
Materiality for the Company
financial statements was set at £20,000 (2023: £40,000), determined
with reference to a benchmark of Company total assets of £2,093,631
(2023: £4,354,322), of which it represents approximately 0.92%
(2023: 0.83%).
In line with our audit methodology,
our procedures on individual account balances and disclosures were
performed to a lower threshold, performance materiality, so as to
reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the consolidated financial statements as a whole.
Performance materiality for Group was set at 65% (2023: 65%) of
materiality for the consolidated financial statements as a whole,
which equates to £78,000 (2023: £95,500), which is lower than the
maximum of 75% per our methodology. This was to take into account
the Group nature of the audit and resulting increased level of
aggregation risk from consolidation of the subsidiaries. For the
Company, performance materiality was set at 75% (2023: 75%), which
equates to £15,000 (2023: £30,000). We applied this percentage in
our determination of performance materiality because we did not
identify any factors indicating an elevated level of
risk.
We reported to the Audit and Risk
Committee any corrected or uncorrected identified misstatements
exceeding £6,000 (2023: £7,350), for the consolidated financial
statements and £1,000 (2023: £2,000) for the Company financial
statements, in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Our audit of the
Group was undertaken to the materiality level
specified above, which has informed our identification of
significant risks of material misstatement and the associated audit
procedures performed in those areas as detailed
above.
The group team performed the audit
of the Group as if it was a single aggregated set of financial
information. The audit was performed using the materiality level
set out above and covered 100% of total group revenue, total group
profit before tax, and total group assets and
liabilities.
Going
concern
The Directors have prepared the
consolidated financial statements and Company financial statements
on the going concern basis as they do not intend to liquidate the
Group or the Company or to cease their operations, and as they have
concluded that the Group and the Company's financial position means
that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over
their ability to continue as a going concern for at least a year
from the date of approval of the consolidated financial statements
and the Company financial statements (the “going concern
period").
An explanation of how we evaluated
the Directors’ assessment of going concern is set out in the
related key audit matter in the key audit matters section of this
report.
Our conclusions based on this
work:
-
we consider that the
Directors' use of the going concern basis of accounting in the
preparation of the consolidated financial statements and Company
financial statements is appropriate;
-
we have not
identified, and concur with the Directors' assessment that there is
not, a material uncertainty related to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and the Company's ability to continue as a going concern for
the going concern period; and
-
we have nothing
material to add or draw attention to in relation to the Directors'
statement in the notes to the consolidated financial statements and
Company financial statements on the use of the going concern basis
of accounting with no material uncertainties that may cast
significant doubt over the Group and the Company's use of that
basis for the going concern period, and that statement is
materially consistent with the consolidated financial statements
and Company financial statements and our audit knowledge. See the
Key Audit Matter with respect to going concern for additional
detail.
However, as we cannot predict all
future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable
at the time they were made, the above conclusions are not a
guarantee that the Group and the Company will continue in
operation.
Fraud and
breaches of laws and regulations – ability to detect
Identifying and
responding to risks of material misstatement due to
fraud
To identify risks of material
misstatement due to fraud (“fraud risks”) we assessed events or
conditions that could indicate an incentive or pressure to commit
fraud or provide an opportunity to commit fraud. Our risk
assessment procedures included:
-
enquiring of
management as to the Group’s policies and procedures to prevent and
detect fraud as well as enquiring whether management have knowledge
of any actual, suspected or alleged fraud;
-
reading minutes of
meetings of those charged with governance; and
-
using analytical
procedures to identify any unusual or unexpected
relationships.
As required by auditing standards,
we perform procedures to address the risk of management override of
controls, in particular the risk that management may be in a
position to make inappropriate accounting entries. On this audit we
do not believe there is a fraud risk related to revenue recognition
because the Group’s revenue streams are simple in nature with
respect to accounting policy choice, and are easily verifiable to
external data sources or agreements with little or no requirement
for estimation from management. We did not identify any additional
fraud risks.
We performed procedures
including:
-
Identifying journal
entries and other adjustments to test based on risk criteria and
comparing any identified entries to supporting documentation;
and
-
incorporating an
element of unpredictability in our audit procedures.
Identifying and
responding to risks of material misstatement due to non-compliance
with laws and regulations
We identified areas of laws and
regulations that could reasonably be expected to have a material
effect on the consolidated financial statements and Company
financial statements from our sector experience and through
discussion with management (as required by auditing standards), and
from inspection of the Group’s regulatory and legal correspondence,
if any, and discussed with management the policies and procedures
regarding compliance with laws and regulations. As the Group is
regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
The Group is subject to laws and
regulations that directly affect the consolidated financial
statements and Company financial statements including financial
reporting legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
The Group is subject to other laws
and regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the consolidated
financial statements and Company financial statements, for instance
through the imposition of fines or litigation or impacts on the
Group and the Company’s ability to operate. We identified financial
services regulation as being the area most likely to have such an
effect, recognising the regulated nature of the Group’s activities
and its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and
regulations to enquiry of management and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that
breach.
Context of the
ability of the audit to detect fraud or breaches of law or
regulation
Owing to the inherent limitations
of an audit, there is an unavoidable risk that we may not have
detected some material misstatements in the consolidated financial
statements and Company financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the consolidated financial statements and Company
financial statements, the less likely the inherently limited
procedures required by auditing standards would identify
it.
In addition, as with any audit,
there remains a higher risk of non-detection of fraud, as this may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit
procedures are designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and cannot be
expected to detect non-compliance with all laws and
regulations.
The Directors'
Report and Strategic Report
The Directors are responsible for the Strategic Report and
the Directors' Report. Our opinion on the consolidated financial statements and Company
financial statements do not cover those reports and we do not
express an audit opinion thereon.
Our responsibility is to read the
Strategic Report and the Directors' Report and, in doing so,
consider whether, based on our consolidated financial statements and Company
financial statements audit work, the information therein is
materially misstated or inconsistent with the consolidated
financial statements and Company financial statements or our audit
knowledge.
Based solely on that
work:
-
we have not
identified material misstatements in the Strategic Report and the
Directors' Report;
-
in our opinion the
information given in those reports for the financial year is
consistent with the consolidated financial statements and Company
financial statements; and
-
in our opinion those
reports have been prepared in accordance with the Companies Act
2006.
Matters on which
we are required to report by exception
Under the Companies Act 2006, we are required
to report to you if, in our opinion:
-
adequate accounting
records have not been kept, or returns adequate for our audit have
not been received from branches not visited by us;
or
-
the
parent Company financial statements are not in
agreement with the accounting records and returns;
or
-
certain disclosures
of Directors’ remuneration specified by law are not made;
or
-
we have not received
all the information and explanations we require for our
audit.
We have nothing to report in these
respects.
Respective
responsibilities
Directors'
responsibilities
As explained more fully in their
statement set out on page 36, the Directors are responsible for: the preparation
of the consolidated financial statements and Company
financial statements including being satisfied that they give a
true and fair view; such internal control as they determine is
necessary to enable the preparation of consolidated financial statements and Company
financial statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and Company’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's
responsibilities
Our objectives are to obtain
reasonable assurance about whether the consolidated financial statements and Company
financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the consolidated financial
statements and Company financial statements.
A fuller description of our
responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The purpose of
our audit work and to whom we owe our responsibilities
This report is made solely to the
Company’s members, as a body, in
accordance with chapter 3 of part 16 of the Companies Act
2006.
Our audit work has been undertaken
so that we might state to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and its members, as a body, for our
audit work, for this report, or for the opinions we have
formed.
Edward Houghton
(Senior Statutory Auditor)
For and on behalf
of KPMG Audit LLC (Statutory Auditor)
Chartered
Accountants
Isle of Man
29 October 2024
Consolidated statement of
comprehensive income
For the year ended 30 June
2024
|
£ unless stated
|
Notes
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
|
|
|
|
|
Revenue
|
6,7
|
14,650,154
|
15,591,928
|
|
Revenue – developments
|
|
14,650,154
|
15,591,928
|
|
|
|
|
|
|
Cost of sales
|
|
(14,473,775)
|
(15,000,835)
|
|
Cost of sales -
developments
|
|
(13,657,663)
|
(13,906,259)
|
|
Cost of sales – write down of
inventory
|
13
|
(816,112)
|
(1,094,576)
|
|
Gross
profit
|
|
176,379
|
591,093
|
|
|
|
|
|
|
Administration expenses
|
8
|
(2,622,935)
|
(2,210,021)
|
|
Operating (loss)
for the year
|
|
(2,446,556)
|
(1,618,928)
|
|
|
|
|
|
|
Finance expense
|
10
|
(1,117,234)
|
(520,851)
|
|
(Loss) before
taxation for the year
|
|
(3,563,790)
|
(2,139,779)
|
|
|
|
|
|
|
Taxation
|
11
|
184,012
|
(250,473)
|
|
(Loss) after tax
and comprehensive income for the year
|
|
(3,379,778)
|
(2,390,252)
|
|
|
|
|
|
|
Weighted average shares in issue
over the period
|
|
38,678,333
|
38,657,785
|
|
(Loss) per share
(GBpence)
|
|
(8.7)
|
(6.2)
|
|
Diluted (loss) per share
(GBpence)
|
|
(8.7)
|
(6.2)
|
The accompanying notes on pages 51
to 78 form an integral part of the financial statements.
Consolidated statement of financial
position
As at 30 June 2024
|
£ unless stated
|
Notes
|
30 June 2024
|
30 June 2023
|
|
ASSETS
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Property, plant and
equipment
|
12
|
177,204
|
278,628
|
|
Intangible assets
|
|
1,680
|
1,913
|
|
|
|
178,884
|
280,541
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
88,161
|
303,816
|
|
Inventory – developments
|
13
|
13,273,743
|
16,566,922
|
|
Trade and other
receivables
|
15
|
1,312,476
|
2,100,169
|
|
|
|
14,674,380
|
18,970,907
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
14,853,264
|
19,251,448
|
|
LIABILITIES
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Borrowings
|
17
|
11,097,615
|
11,572,047
|
|
|
|
11,097,615
|
11,572,047
|
|
Current
liabilities
|
|
|
|
|
Trade and other payables
|
18
|
1,826,470
|
2,579,643
|
|
Borrowings
|
17
|
5,877,673
|
5,668,474
|
|
|
|
7,704,143
|
8,248,117
|
|
TOTAL LIABILITIES
|
|
18,801,758
|
19,820,164
|
|
EQUITY
|
|
|
|
|
Share capital
|
21
|
386,783
|
386,783
|
|
Share premium
|
21
|
4,753,325
|
4,753,325
|
|
Retained earnings
|
|
(9,088,602)
|
(5,708,824)
|
|
TOTAL EQUITY
|
|
(3,948,494)
|
(568,716)
|
|
TOTAL LIABILITIES AND
EQUITY
|
|
14,853,264
|
19,251,448
|
|
|
|
|
|
|
Shares in issue
|
|
38,678,333
|
38,678,333
|
|
Net asset value per share
(GBpence)
|
|
(10.2)
|
(1.5)
|
These financial statements were
approved by the board of directors on 29 October 2024 and were
signed on its behalf by:
Jason David Upton
Company registration number:
12757649
The accompanying
notes on pages 51 to 78 form an integral part of the financial
statements.
Consolidated statement of cash
flows
For the year ended 30 June
2024
|
£ unless stated
|
Notes
|
Year to
30 June 2024
|
Restated Year to
30 June 2023
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
Loss for the year before
tax
|
|
(3,563,790)
|
(2,139,779)
|
|
Adjustments for:
|
|
|
|
|
Finance expense
|
10
|
1,117,234
|
520,851
|
|
Profit on disposal of
associate
|
14
|
-
|
50,000
|
|
Loss on disposal of fixed
assets
|
|
1,002
|
-
|
|
Depreciation of property, plant and
equipment
|
8, 12
|
104,750
|
103,984
|
|
Amortisation of intangible
asset
|
8
|
411
|
411
|
|
Movement in working
capital:
|
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
|
787,693
|
(188,818)
|
|
Decrease/(increase) in
inventories^
|
|
3,667,813
|
117,179
|
|
(Decrease)/Increase in trade and
other payables
|
|
(502,261)
|
384,538
|
|
Cash inflow/ (outflow) from
operations
|
|
1,612,852
|
(1,151,634)
|
|
Taxation paid
|
|
(66,934)
|
-
|
|
Net cash
generated from/(used in operating) activities
|
|
1,545,918
|
(1,151,634)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Purchases of property, plant and
equipment
|
12
|
(4,284)
|
(8,137)
|
|
Net cash used in
investing activities
|
|
(4,284)
|
(8,137)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Issue of share capital
|
21
|
-
|
1,247,100
|
|
Interest paid^
|
10,17
|
(1,482,411)
|
(2,064,587)
|
|
Proceeds from
borrowings*
|
17
|
5,572,200
|
8,725,789
|
|
Borrowings repaid*
|
17
|
(4,559,386)
|
(9,535,263)
|
|
Proceeds of related party
borrowing*
|
17
|
10,149,165
|
12,177,035
|
|
Related party borrowings
repaid*
|
17
|
(11,350,234)
|
(9,974,065)
|
|
Payments made in relation to lease
liabilities
|
12
|
(86,623)
|
(86,623)
|
|
Net cash (used
in)/generated from financing activities
|
|
(1,757,289)
|
489,386
|
|
|
|
|
|
|
Net change in
cash and cash equivalents
|
|
(215,655)
|
(670,385)
|
|
Opening cash and cash
equivalents
|
|
303,816
|
974,201
|
|
Closing cash and
cash equivalents
|
|
88,161
|
303,816
|
^ Restated. Refer note
10.
* Restated. Refer note
17.
The accompanying notes on pages 51
to 78 form an integral part of the financial statements.
Consolidated statement of changes
in equity
For the year ended 30 June
2024
|
£ unless stated
|
|
Share
capital
|
Share
premium
|
Retained
earnings
|
Total
Equity
|
|
Balance at 01
July 2023
|
|
386,783
|
4,753,325
|
(5,708,824)
|
(568,716)
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
-
|
-
|
(3,379,778)
|
(3,379,778)
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
|
-
|
-
|
(3,379,778)
|
(3,379,778)
|
|
|
|
|
|
|
|
|
Balance at 30
June 2024
|
|
386,783
|
4,753,325
|
(9,088,602)
|
(3,948,494)
|
For the year ended 30 June
2023
|
£ unless stated
|
|
Share
capital
|
Share
premium
|
Retained
earnings
|
Total
Equity
|
|
Balance at 01
July 2022
|
|
324,283
|
3,568,725
|
(3,318,572)
|
574,436
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
-
|
-
|
(2,390,252)
|
(2,390,252)
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
|
324,283
|
3,568,725
|
(5,708,824)
|
(1,815,816)
|
|
|
|
|
|
|
|
|
Issue of share capital
|
|
62,500
|
1,187,500
|
-
|
1,250,000
|
|
Cost of share issue
|
|
-
|
(2,900)
|
-
|
(2,900)
|
|
|
|
|
|
|
|
|
Balance at 30
June 2023
|
|
386,783
|
4,753,325
|
(5,708,824)
|
(568,716)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
The accompanying notes on pages 51
to 78 form an integral part of the financial statements.
Notes to the consolidated financial
statements
For the year ended 30 June
2024
-
Reporting entity
Zentra Group PLC (the
“Company”)(Company number: 12757649) is a public limited company,
limited by shares, incorporated in England and Wales under the
Companies Act 2006. The address of its registered office and its
principal place of trading is 80 Mosley Street, Manchester, M2 3FX.
The principal activity of the company and subsidiaries is that of
property development.
These consolidated financial
statements (“Financial Statements”) as at the end of the financial
year to 30 June 2024 comprise of the Company and its subsidiaries.
A full list of companies consolidated in these Financial Statements
can be found in Note 25.
-
Measuring convention
The financial statements are
prepared on the historical cost basis except for financial assets
at fair value through profit or loss.
-
Basis of preparation
The Group’s
financial statements have been prepared and approved by the
Directors in accordance with international accounting standards in
accordance with UK-adopted international accounting standards
(“UK-adopted IFRS”). The Company has elected to prepare its parent
company financial statements in accordance with FRS 101. These are
presented on pages79 to 87. The significant accounting policies are
set out in note 5. The accounting policies have
been applied consistently to all periods presented in these group
Financial Statements.
They were authorised for issue by
the Company’s Board of Director on 29 October 2024.
Segment
reporting
The Group operates in three
operating segments, each managed by a senior manager who sits on
the Group’s management team. In addition to these, there is a
corporate segment which covers central operations. The following is
a summary of the operations for each reportable segment.
|
Reportable
segments
|
Operations
|
|
Developments
|
Internally managed development
activities including the sales of completed developments and
Co-Living property management fee
|
|
Construction
|
Construction services provided to
an internally owned and managed development
|
|
Property Services
|
Property letting and management
services
|
|
Corporate
|
Head office, fees to related
parties and other costs
|
Management has determined the
Group’s operating segments based on the information reviewed by
Senior Management to make strategic decisions. The chief operating
decision maker is the Senior Management Team, comprising the
Executive Director and the Department Directors. The information
presented to Senior Management Team includes reports from all
functions of the business as well as strategy, financial planning,
succession planning, organisational development and Company wide
policies.
There are various levels of
integration between Development and Construction. This integration
involves the services that Construction undertakes on the
developments on behalf of the Development segment.
The Group’s primary measure of
financial performance for segments is the operating profit or loss
in the period.
Going
concern
Notwithstanding net current
liabilities of £6.3m (excluding inventory balances totalling
£13.3m) as at 30 June 2024 (2023: £5.8m (excluding inventory
balances totalling £16.6m), a loss for the year then ended of £3.4m
(2023: £2.4m) and operating cash inflow for the year of £1.5m
(2023: outflow £1.2m), the financial statements have been prepared
on a going concern basis which the directors consider to be
appropriate for the following reasons.
The Directors have prepared a cash
flow forecast on a consolidated basis for the period to 31 December
2025 which indicates that, taking account of reasonably possible
downsides, the Group will have sufficient funds to meet its
liabilities including loans and loan note, as they fall due for
that period using the proceeds from:
-
existing resources
held by the Group (including funds drawn down on external loan
facilities and the loan facility to be provided by OH UK Holdings
Limited(“OHUK”) as detailed in notes 19 and 23);
-
the implementation
of the proposed restructure of the Group outlined in note 23, which
includes the refinancing of Group shareholder loan with a related
party, the disposal of completed inventory, the acquisition of an
equity stake in the One Victoria, Manchester property development
project, the waiver of a portion of the existing shareholder loan
and the provision of continuing shareholder financial support via
related party;
-
the forecast
continued sale of development property inventory (net of repayment
of related construction finance loans (note 19)); being the Seaton
House Stockport, Churchgate Leicester and Victoria Road, Eccleshill
and sales of units in the One Victoria development property on
completion in line with management estimates for timing and
quantum;
-
in the event of need
the Directors consider that mitigating actions are required,
actions available to the Group would include realising development
property inventory via auction and/or refinancing of the post
restructure of the remaining 3rd
party loan due to
expire in March 2025 and also the Loan Note due to expire in March
2025;
-
in the event of
need, continued financial support from both also its parent
company, One Heritage Property Development Limited (“OHPD”), and
OHUK to meet its liabilities as they fall due for that period. OHUK
have confirmed that their loans due to mature in December 2025 will
not be demanded for repayment until such a time that the Group can
afford to repay them without impacting on its going concern. OHUK
have also confirmed the potential to draw down on additional
flexible funding support of up to £1.0m.
As with any company placing
reliance on other group/related entities for financial support, the
Directors acknowledge that there can be no certainty that this
support will continue although, at the date of approval of these
financial statements, they have no reason to believe that it will
not do so.
Consequently, and based upon events
after the reporting date referenced in Note 23, the Directors are
confident that the Company and its subsidiaries will have
sufficient funds to continue to meet their liabilities as they fall
due for at least 12 months from the date of approval of the
financial statements and therefore have prepared the financial
statements on a going concern basis.
-
Use of judgements and estimation uncertainty
The Board has made judgements,
estimates and assumptions that affect the application of the
Group’s accounting policies and the reported amounts in the
financial statements. The directors continually evaluate these
judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses based upon historical
experience and on other factors that they believe to be reasonable
under the circumstances. Actual results may differ from the
judgements, estimates and assumptions.
The key areas of judgement and
estimation are:
-
The carrying
value of inventory: Under
IAS 2: Inventories the Group must hold developments at the lower of
cost and net realisable value. The Group applies judgement to
determine the net realisable value of developments at a point in
time that the property is partly developed and compares that to the
carrying value. The Group has undertaken an impairment review of
all of the Inventory and determined that an impairment is
appropriate on four of the developments.
-
Going
concern: The directors have
concluded that it is appropriate to prepare the financial
statements on a going concern basis and have disclosed the key
assumptions on which they have done so, being the continued
availability of third party and related party funding facilities
and management of the
Company and its subsidiaries are not aware of any material
uncertainties that may cast significant doubt on the Company and
its subsidiaries ability to continue as going concerns. Therefore, the Group financial statements
continue to be prepared on the going concern basis. For detail
refer note 3 going concern.
Measurement of
fair values
A number of the Group’s accounting
policies and disclosures require the measurement of fair values,
for both financial and non-financial assets and
liabilities.
The Group has an established
control framework with respect to the measurement of fair values.
The board has overall responsibilities for overseeing all
significant fair value measurements.
The board in conjunction with
departmental directors regularly reviews significant unobservable
inputs and valuation adjustments. If third party information, such
as broker prices or pricing services, is used to measure fair
values, then the board assesses the evidence obtained from the
third parties to support the conclusion that these valuations meet
the requirements of the Standards, including the level in the fair
value hierarchy in which the valuations should be
classified.
Significant
valuation issues are reported to the Group’s audit
committee.
When measuring the fair value of an
asset or a liability, the Group uses observable market data as far
as possible. Fair values are categorised into different levels in
fair value hierarchy based on the inputs used in the valuation
techniques as follows:
-
Level 1: quotes prices (unadjusted)
in active markets for identical assets and liabilities.
-
Level 2: inputs other than quoted
prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
-
Level 3: inputs for the asset or
liability that are not based on observable market data
(unobservable inputs)
If the inputs used to measure the
fair value of an asset or liability fall into different levels of
the fair value hierarchy, then the fair value measurement is
categorised in its entirely in the same level of the fair value
hierarchy as the lowest level input that is significant to the
entire measurement.
The Group recognises transfer
between levels of the fair value hierarchy at the end of the
reporting period during which the change has occurred.
-
Material accounting policies
Basis of
consolidation
Subsidiaries
Subsidiaries are entities
controlled by the Group. The Group ‘controls’ any entity when it is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date
on which control commences until the date on which control
ceases.
Transactions
eliminated on consolidation
Intra-group balances and
transactions, and any unrealised income and expenses (except for
foreign currency transaction gains or losses) arising from
intra-group transactions, are eliminated. Unrealised gains arising
from transactions with equity-accounted investees are eliminated
against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence
of impairment.
Interests in
equity-accounts investees
The Group’s interests in
equity-accounted investees comprise interests in
associates.
Associates are those entities in
which the Group has significant influence, but not control or joint
control, over the financial and operating policies.
Interests in associates are
accounted for using the equity method. They are initially
recognised at cost, which includes transaction costs. Subsequent to
initial recognition, the consolidated financial statements include
the Group’s share of the profit or loss and OCI of equity-accounted
investees, until the date on which significant influence or joint
control ceases.
Earnings per
share and net asset value per share
Basic earnings per share amounts
are calculated by dividing net profit or loss for the year
attributable to the owners of the Company by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share amounts
are calculated by dividing the net profit or loss attributable to
the owners of the Company (after adjusting for interest on the
convertible notes) by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number
of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
Net asset value per share amounts
is calculated by dividing net assets of the Company at the
reporting date by the weighted average number of ordinary shares
outstanding during the year.
Revenue
Revenue is recognised when the
performance obligation associated with the sale is completed or as
the performance obligation is completed over time where
appropriate. The transaction price comprises the fair value of the
consideration received or receivable, net of value added tax,
rebates and discounts and after eliminating sales within the Group.
Revenue and gross profit are recognised as follows (note
7):
-
Developments
Revenue from housing sales is
recognised in profit or loss when control is transferred to the
customer. This is deemed to be when title of the property passes to
the customer on legal completion and the performance obligation
associated with the sale is completed.
-
Property services and
developments
Management fees are recognised as
revenue in the period to which they relate when performance
obligations are fulfilled based on agreed transaction prices.
Variable performance fees are estimated based on the expected value
and are only recognised over time as performance obligations are
fulfilled when progress can be measured reliably and to the extent
that a significant reversal of revenue in a subsequent period is
unlikely.
-
Construction
services
The Group primarily operates under
cost plus margin agreements and therefore revenue is recognised
when the relevant cost has been incurred.
-
Corporate income
The Group generates a monthly
Co-Living management fee for services provided relating to
day-to-day administration and office space. These fees are
recognised as revenue in the period to which they relate when
performance obligations are fulfilled based on agreed transaction
prices.
Cost of
sales
The Group determines the value of
inventory charged to cost of sales based on the total budgeted cost
of developing a site. Once the total expected costs of development
are established, they are allocated to individual plots to achieve
a standard build cost per plot. Cost of sales represent cost for
purchase of land, construction costs, consultant costs, utilities
cost and other related direct costs.
To the extent that additional costs
or savings are identified as the site progresses, these are
recognised over the remaining plots unless they are specific to a
particular plot, in which case they are recognised in profit or
loss at the point of sale.
Operating
profit/(loss)
Operating profit/(loss) is the
Group’s total earnings from its core business functions for a given
period, excluding the deduction of interest and taxes, the
gain/(loss) on sale of subsidiaries and gain/(loss) on sale of
fixed assets.
Financial
guarantees
A financial guarantee contract is
initially recognised at fair value. At the end of each subsequent
reporting period, financial guarantees are measured at the higher
of:
-
The amount of the loss allowance,
and
-
The amount initially recognised
less cumulative amortisation, where appropriate.
The amount of the loss allowance at
each subsequent reporting period equals the 12-month expected
credit losses. However, where there has been a significant increase
in the risk that the specified debtor will default on the contract,
the calculation is for lifetime expected credit losses.
Finance
income
Interest income on bank deposits is
recognised on an accruals basis. Also included in interest
receivable are interest and interest-related payments the Group
receives on other receivables and external loans.
Finance
costs
Borrowing costs are recognised on
an accruals basis and are payable on the Group’s borrowings and
lease liabilities. Also included are the amortisation of fees
associated with the arrangement of the financing.
Specific or general borrowing costs
are capitalised if they are directly attributable to the
acquisition, construction or production of qualifying assets which
are assets that necessarily take a substantial period to get ready
for sale. The Group considers that its inventories are qualifying
assets.
Foreign
currencies
These consolidated financial
statements are presented in Pound Sterling, which is the Group’s
functional currency.
The individual financial statements
of each Group company are presented in Pound Sterling, the currency
of the primary economic environment in which it operates (its
functional currency). Transactions in currencies other than the
functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each reporting
date, monetary assets and liabilities that are denominated in
foreign currencies other than the functional currency are
retranslated at the rates prevailing at the reporting
date.
Leases
The Group as a
lessee
The Group assesses at inception
whether a contract is, or contains, a lease. A lease exists if the
contract conveys the right to control the use of an identified
asset for a period of time in exchange for
consideration.
The Group assessment includes
whether:
-
the contract involves the use of an
identified asset;
-
the Group has the right to obtain
substantially all of the economic benefits from the use of the
asset throughout the contract period; and
-
the Group has the right to direct
the use of the asset.
At the commencement of a lease, the
Group recognises a right-of-use asset along with a corresponding
lease liability.
The lease liability is initially
measured at the present value of the remaining lease payments,
discounted using the Group’s incremental borrowing rate. The lease
term comprises the non-cancellable period of the contract, together
with periods covered by an option to extend the lease where the
Group is reasonably certain to exercise that option based on
operational needs and contractual terms. Subsequently, the lease
liability is measured at amortised cost by increasing the carrying
amount to reflect interest on the lease liability and reducing it
by the lease payments made. The lease liability is remeasured when
the Group changes its assessment of whether it will exercise an
extension or termination option.
Right-of-use assets are initially
measured at cost, comprising the initial measurement of the lease
liability adjusted for any lease payments made at or before the
commencement date, estimated asset retirement obligations, lease
incentives received and initial direct costs. Subsequently,
right-of-use assets are measured at cost, less any accumulated
depreciation and any accumulated impairment losses, and are
adjusted for certain remeasurements of the lease liability.
Depreciation is calculated on a straight-line basis over the length
of the lease.
Right-of-use assets are presented
within non-current assets in property, plant and equipment, and
lease liabilities are included in current liabilities (borrowings)
and non-current liabilities (borrowings) depending on the length of
the lease term.
Property, plant
and equipment
Property, plant and equipment are
stated at cost less accumulated depreciation, and accumulated
impairment losses.
Depreciation is recognised to write
off the cost or valuation of assets less their residual values over
their useful lives, using the straight-line
method.
The estimated useful lives,
residual values and depreciation method are reviewed at each year
end, with the effect of any changes in estimate accounted for on a
prospective basis.
The gain or loss on the disposal or
retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the
carrying amount of the asset as is recognised in the profit or
loss.
Depreciation is provided at the
following annual rates to write off each asset over its estimated
useful life:
Fixtures and
fittings 15% on cost
Office equipment 15% on cost
Motor vehicles 25% on cost
Impairment of
tangible and intangible assets
At each reporting date, the Group
reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the
extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs.
The recoverable amount is the
higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are
discounted to their present value, using a pre-tax discount rate
that reflects current market assessments and the risks specific to
the asset.
If the recoverable amount of an
asset or cash-generating unit is estimated to be less than its
carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount. An
impairment loss is recognised as an expense immediately in the
profit or loss.
Where an impairment loss
subsequently reverses, due to a change in circumstances or in the
estimates used to determine the asset’s recoverable amount, the
carrying amount of the asset or cash-generating unit is increased
to the revised estimate of its recoverable amount, so long as it
does not exceed the original carrying value prior to the impairment
being recognised. A reversal of an impairment loss is recognised as
income immediately in the statement of comprehensive
income.
Financial
instruments
Financial
assets
Financial assets are initially
recognised at fair value and subsequently classified into one of
the following measurement categories:
-
Measured at amortised
cost
-
Measured subsequently at fair value
through profit or loss (“FVTPL”)
The classification of financial
assets depends on the Group’s business model for managing the asset
and the contractual terms of the cash flows. Assets that are held
for the collection of contractual cash flows that represent solely
payments of principal and interest are measured at amortised cost,
with any interest income recognised in profit or loss using the
effective interest method.
Financial assets that do not meet
the criteria to be measured at amortised cost are classified by the
Group as measured at FVTPL. Fair value gains and losses on
financial assets measured at FVTPL are recognised in profit or loss
and presented within net operating expenses.
Impairment of
financial assets
The Group assesses on a
forward-looking basis the expected credit loss associated with its
financial assets carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant
increase in credit risk. For trade receivables, the Group applies
the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition
of the receivables.
Trade and other
receivables
Trade and other receivables are
measured at amortised cost, less any loss allowance.
Cash and cash
equivalents
Cash and cash equivalents comprise
cash held by the Group and short-term bank deposits with an
original maturity of three months or less from inception and are
subject to insignificant risk of changes in value.
Financial
liabilities
Financial liabilities are initially
recognised at fair value and measured at amortised cost.
Derecognition
Financial
assets
The Group derecognises a financial
asset when:
-
the contractual rights to the cash
flows from the financial asset expire; or
-
it transfers the rights to receive
the contractual cash flows in a transaction in which
either:
-
substantially all of the risks and
rewards of ownership of the financial asset are transferred;
or
-
the Group neither transfers nor
retains substantially all of the risks and rewards of ownership and
it does not retain control of the financial asset.
Financial
liabilities
The Group derecognises a financial
liability when its contractual obligations are discharged or
cancelled, or expire. The Group also derecognises a financial
liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new
financial liability based on the modified terms is recognised at
fair value.
On derecognition of a financial
liability, the difference between the carrying amount extinguished
and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or
loss.
Borrowings
Borrowings are allocated to either
specific or general borrowings and initially recognised at fair
value, net of transaction costs incurred and subsequently measured
at amortised cost. Specific or general borrowing costs are
capitalised if they are directly attributable to the acquisition,
construction or production of qualifying assets which are assets
that necessarily take a substantial period of time to get ready for
sale. These are added to the cost of those assets, until such time
as the assets are substantially ready for their intended use or
sale.
All other borrowing costs are
recognised in profit or loss in the period in which they are
incurred.
Trade and other
payables
Trade and other payables are
measured at amortised cost. When the acquisition of land has
deferred payment terms a land creditor is recognised. Payables are
discounted to present value when repayment is due more than one
year after initial recognition or the impact is
material.
Customer
deposits
Customer deposits are recorded as
deferred income on receipt and released to profit or loss when the
related revenue is recognised.
Equity
instruments
An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities. Equity instruments
issued by the Group are recorded as the proceeds are received, net
of direct issue costs.
Amortisation
Amortisation is charged to the
income statement on a straight-line basis over the estimated useful
lives of intangible assets unless such lives are indefinite.
Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet
date.
Inventory -
developments
Inventories are initially stated at
cost and held at the lower of this initial amount and net
realisable value. Costs comprise direct materials and, where
applicable, direct labour and those overheads that have been
incurred in bringing the inventories to their present location and
condition.
Net realisable value represents the
estimated selling price based on intended use less all estimated
costs of completion and costs to be incurred in marketing, selling
and distribution. Land is recognised in inventory when the
significant risks and rewards of ownership have been transferred to
the Group.
Non-refundable land option payments
are initially recognised in inventory. They are reviewed regularly
and written off to profit or loss when it is probable that the
option will not be exercised.
Taxation
The tax charge represents the sum
of the tax currently payable and deferred tax.
Current
tax
The tax currently payable is based
on taxable profit for the period. Taxable profit differs from
profit before tax as reported in the profit or loss because it
excludes items of income or expense that are taxable or deductible
in other years, and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively
enacted at the reporting date.
Deferred
tax
Deferred tax is the tax expected to
be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised.
Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.
Deferred tax liabilities are also
recognised for taxable temporary differences arising on investments
in subsidiaries and interests in joint ventures, except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax is measured on a
non-discounted basis using the tax rates and laws that have been
enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax is charged or credited to the profit or loss, except
when it relates to items charged or credited directly to other
comprehensive income or equity, in which case the deferred tax is
also dealt with in other comprehensive income or equity.
Share
capital
Ordinary shares are classified as
equity.
Any incremental costs directly
attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
-
Operating segments
The Group operates four segments:
Developments, Construction, Property Services and
Corporate.
The accounting policies of the
reportable segments are the same as the Group’s accounting policies
described in note 5.
All the revenues generated by the
Group were generated within the United Kingdom and further detail
is contained within note 7.
Segment information for these
businesses is presented below. Segment operating profit or loss is
used as a measure of performance as management believe this is the
most relevant information when evaluating the performance of a
segment.
For the financial year to 30 June
2024
|
£ unless stated
|
Developments
|
Construction
|
Property services and
Lettings
|
Corporate
|
Total
|
|
Revenue – developments
|
9,335,251
|
4,889,675
|
313,228
|
112,000
|
14,650,154
|
|
Cost of sales -
developments
|
(8,839,354)
|
(4,656,096)
|
(162,213)
|
-
|
(13,657,663)
|
|
Impairment of inventory
|
(816,112)
|
-
|
-
|
-
|
(816,112)
|
|
Gross (loss)/profit
|
(320,215)
|
233,579
|
151,015
|
112,000
|
176,379
|
|
|
|
|
|
|
|
|
Depreciation
|
-
|
-
|
-
|
(104,750)
|
(104,750)
|
|
Administration expenses
|
(770,240)
|
-
|
(126,112)
|
(1,621,833)
|
(2,518,185)
|
|
Operating
(loss)/profit
|
(1,090,455)
|
233,579
|
24,903
|
(1,614,583)
|
(2,446,556)
|
|
Finance expense
|
(369,943)
|
-
|
-
|
(747,291)
|
(1,117,234)
|
|
Taxation
|
-
|
-
|
-
|
184,012
|
184,012
|
|
(Loss)/Profit for
the year
|
(1,460,398)
|
233,579
|
24,903
|
(2,177,862)
|
(3,379,778)
|
For the financial year to 30 June
2023
|
£ unless stated
|
Developments
|
Construction
|
Property services and
Lettings
|
Corporate
|
Total
|
|
Revenue – developments
|
10,689,920
|
4,448,376
|
333,299
|
120,333
|
15,591,928
|
|
Cost of sales -
developments
|
(9,580,942)
|
(4,235,478)
|
(89,839)
|
-
|
(13,906,259)
|
|
Impairment of inventory
|
(1,094,576)
|
-
|
-
|
-
|
(1,094,576)
|
|
Gross profit/(loss)
|
14,402
|
212,898
|
243,460
|
120,333
|
591,093
|
|
|
|
|
|
|
|
|
Depreciation
|
-
|
-
|
-
|
(103,984)
|
(103,984)
|
|
Administration expenses
|
(532,900)
|
-
|
(411,682)
|
(1,161,455)
|
(2,106,037)
|
|
Operating
(loss)/profit
|
(518,498)
|
212,898
|
(168,222)
|
(1,145,106)
|
(1,618,928)
|
|
Finance expense
|
(455,331)
|
-
|
-
|
(65,520)
|
(520,851)
|
|
Taxation
|
-
|
-
|
-
|
(250,473)
|
(250,473)
|
|
(Loss)/Profit for
the year
|
(973,829)
|
212,898
|
(168,222)
|
(1,461,099)
|
(2,390,252)
|
-
Revenue
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Revenue
|
|
|
|
|
Developments
|
|
9,335,251
|
10,689,920
|
|
Development sales
|
|
8,970,896
|
9,991,574
|
|
Development management
|
|
364,355
|
698,346
|
|
|
|
|
|
|
Construction
|
|
4,889,675
|
4,448,376
|
|
|
|
|
|
|
Property Services and
Lettings
|
|
313,228
|
333,299
|
|
Transaction services
|
|
9,728
|
81,500
|
|
Lettings services
|
|
303,500
|
251,799
|
|
|
|
|
|
|
Corporate
|
|
112,000
|
120,333
|
|
|
|
14,650,154
|
15,591,928
|
|
Cost of
sales
|
|
|
|
|
Developments
|
|
(9,655,466)
|
(10,675,518)
|
|
Development sales
|
|
(8,839,354)
|
(9,580,942)
|
|
Impairment (note 13)
|
|
(816,112)
|
(1,094,576)
|
|
|
|
|
|
|
Construction
|
|
(4,656,096)
|
(4,235,478)
|
|
Lettings services
|
|
(162,213)
|
(89,839)
|
|
|
|
(14,473,775)
|
(15,000,835)
|
|
|
|
|
|
|
Gross
profit
|
|
176,379
|
591,093
|
Developments
In the developments segment,
£8,705,526 revenue was generated from external parties through the
sale of 52 units in completed developments (2023: £9,766,522). The
Lincoln House development sold 23 units (2023: 52 units) during the
year generating revenue of £3,061,461(2023: £6,496,522). The Oscar
House development sold 10 units (2023: nil) generating £2,421,480
in revenue (2023: £nil). The St Petersgate development sold 17
units (2023: nil) generating £2,872,200 (2023: £nil) in revenue.
The Bank Street development sold 2 units (2023: 19 units)
generating £350,385 (2023: £3,270,000) in revenue. The remainder of
the revenue was earned from unrelated parties in the form of rental
income and related parties in the form of development management
fees.
Development management income
arises from four development management agreements with related
companies; One Heritage Tower Limited, ACT Property Holding
Limited, One Heritage Great Ducie Street Limited and One Heritage
North Church Limited:
-
One
Heritage Tower Limited: The
Group earned a management fee of 0.75% of costs incurred to date per month and a 10%
share of net profit generated by the development through the
agreement with One Heritage Tower Limited. The Group is also
entitled to 1% of any external debt or equity funding raised on
behalf of the development. In total £148,518 (30 June 2023:
£134,599) of revenue was generated in the year.
-
One
Heritage Great Ducie Street Limited: The Group earned a management fee of £206,160
(30 June 2023: £206,160) through the agreement with One Heritage
Great Ducie Street and £nil (30 June 2023: £225,500) for external
debt raised.
-
One
Heritage North Church Limited: The development agreement splits the fees
into three elements; 2% of total development cost (£9,677, 30 June
2023: £41,654), paid monthly over the period of the development,
15% of net profit, paid on completion and 1% on any debt finance
raised (£nil, 30 June 2023: £31,650).
-
ACT
Property Holding Limited:
The agreement has a 20% profit share of the net profit generated by
the development. The development generated £Nil (30 June 2023:
£58,783) of profit share for the Group.
With the exception of One Heritage North Church
Limited which completed in the year to 30 June 2024 and ACT
Property Holding Limited which completed in the year to 30 June
2023, the Group has not recognised any further revenue linked to
the profit share element of these agreement as the transaction
price is variable and the amount cannot be reliably determined at
this time. This is because the developments are in the early stages
of construction and there is too much uncertainty to reliably
estimate expected revenue.
Construction
Construction generates revenue from
two entities: Robin Hood Property Development Limited and One
Heritage North Church Limited. During the 2022 financial year, it
signed an agreement with Robin Hood Property Development Limited to
undertake works on Co-Living properties. The Group receives a cost
plus 5.0% margin on all works undertaken, recognising £863,681 (30
June 2023: £1,280,006) of revenue in the year. The Group has
undertaken work for One Heritage North Church Limited on a cost
plus 5.0% margin basis, this generated revenue of £4,021,266 (30
June 2023: £3,168,370) in the year.
The development and construction
revenues have been generated through related parties.
Property
Services and Lettings
Property Services generated revenue
from management fees that are based on a percentage of gross rental
collected for clients and through transaction fees for each
Co-Living property bought and sold for Robin Hood Property
Development Limited, a related party, generating £nil revenue in
the financial year (30 June 2023: £115,818).
It also includes any rental income collected
for properties owned by the Group.
Corporate
The Corporate revenue is from
contracts signed with Robin Hood Property Development Limited,
generating revenue of £100,000 (30 June 2023: £108,333) and One
Heritage Portfolio Rental Limited, recognising revenue of £12,000
(30 June 2023: £12,000) and is in consideration for a range of
administration services and use of the Company’s office.
Total revenue generated from Robin
Hood Property Development Limited, a related party, amounted to
£963,681 (30 June 2023: £1,280,006) for the year. This amounted to
7% (30 June 2023: 8%) of the total revenue of the Group. This was
derived from three segments of the Group, being construction,
property services and corporate (refer to note 7).
Revenue is measured based on the
consideration specified in a contract with a customer. The Group
recognises revenue when it transfers control over a good or service
to a customer.
The following table provides
information about the nature and timing of the satisfaction of
performance obligations in contracts with customers, including
significant payment terms, and related revenue recognition
policies.
|
Type of
product/service
|
Nature and timing
of satisfaction of performance obligations, including significant
payment terms
|
Revenue
recognition policies
|
|
Development management
|
Housing sales
Revenue from housing sales is
recognised in profit or loss when control is transferred to the
customer.
Development management recognition
is split into three elements: management fee, arrangement fees and
a profit share on a final transaction.
Management fee
The performance obligation is that
the Group remains the development manager on the site and
undertakes the scope of works in the agreement. Payment is due on a
monthly basis after the service has been undertaken.
Arrangement fee
The performance obligation is at
the point that the service is completed. Payment is due after
completion.
Profit share
Assuming that the Group has
performed the scope of works effectively (its performance
obligation), it is entitled to a share of the profits at the end of
the project. The payment for this is made at the end of the
project.
No warranties are
provided.
|
Revenue from housing sales is
recognised when title of the property passes to the customer on
legal completion and the performance obligation associated with the
sale is completed.
Revenue for the management fee is
recognised monthly as long as the Group continues to be the
development manager during the relevant calculation
period.
Assuming that the Group continues
to be the development manager the Group will look to recognise
income from a profit share once the costs and proceeds of a
particular site can be reliably estimated and unlikely to be
reversed.
|
|
Construction revenue
|
The Group operates contracts where
it charges based on a cost incurred plus margin basis. Revenue is
recognised at the point that the cost is incurred.
Payment is generally made within 30
days of the invoice being raised.
|
Revenue is recognised when the
associated cost is incurred.
|
|
Property Services –
Management fees and other
services
|
The Group offers property
management services to external landlords. These services are
linked to a percentage of the gross rental collected and any
additional services undertaken.
Management fee income is recognised
at the point that the service is provided.
Other income is recognised at the
point that the service is completed.
Payments for these services are
made within 90 days of the service being undertaken.
|
Revenue is recognised when service
is provided for management fees and at the point the service is
completed for other services.
|
|
Corporate revenue
|
The Group provides services, which
include administration, reporting, risk management, shared office
space and other services, to related parties. Revenue is recognised
for the period in which the service is undertaken.
|
Revenue is recognised monthly as
long as the Group continues to provide the service during the
relevant calculation period.
|
-
Administration expenses
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Staff costs
|
|
1,467,656
|
1,306,577
|
|
Depreciation and
amortisation
|
|
105,025
|
104,217
|
|
Auditors’ remuneration
|
|
126,592
|
103,431
|
|
Other administration
expenses
|
|
923,662
|
695,796
|
|
|
|
2,622,935
|
2,210,021
|
|
|
|
|
|
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Services provided by the
auditor
|
|
|
|
|
- Interim audit of parent company and
consolidated financial
statements
|
33,637
|
29,011
|
|
- Audit of parent company and consolidated
financial statements
|
92,955
|
74,420
|
|
|
126,592
|
103,431
|
|
|
|
|
-
Staff costs and employees
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2024
|
|
The aggregate remuneration
comprised:
|
|
|
|
|
- Wages and salaries
|
|
1,304,792
|
1,159,762
|
|
- National insurance
|
|
143,113
|
129,537
|
|
- Pension costs
|
|
19,751
|
17,278
|
|
|
|
1,467,656
|
1,306,577
|
|
|
|
|
|
|
Average number of
employees
|
|
30
|
28
|
-
Finance costs
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Interest charged on lease
liabilities
|
|
9,645
|
12,607
|
|
Interest paid on
borrowings
|
|
1,482,411
|
2,064,587
|
|
Amount capitalised*
|
|
(374,822)
|
^(1,556,343)
|
|
|
|
1,117,234
|
520,851
|
* The rate of interest used to
capitalise the general borrowings is 7%.
^ The prior year presentation on
interest capitalised to inventory in financial year has been
restated from £2,139,232 to £1,556,343 to correct a misstatement of
the amount shown as capitalised in the year in the table to note
10; this has a consequential impact on the interest paid on
borrowings.
In the Statement of Cash Flows,
financing activities (interest paid) and operating activities
(movement in inventory) have been restated by £582,889 to reflect
the capitalisation of interest to inventory. As a result, the
movement in inventory has changed to £117,179 (previously £700,068)
and interest paid in financing activities has changed from
£2,647,476 to £2,064,587. Consequently, cash outflow from
operations has changed to £1,151,634 (previously £568,744) and cash
from financing activities has changed to £489,386 generated
(previously £93,504 used).
There is no impact on profit or
loss, nor the carrying value of inventory.
-
Taxation
The Group has generated a loss in
the year and the prior year.
Tax losses
carried forward
Tax losses for which no deferred
tax asset was recognised expire as follows:
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Tax (losses)
|
|
(3,563,790)
|
(2,390,252)
|
|
|
|
|
|
|
Accumulated carried forward
losses
|
|
8,975,800
|
5,412,010
|
|
|
|
|
|
The carried forward losses do not
expire as they relate to trading activity that is expected to
continue.
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Income tax expense recognised in
the period
|
|
(184,012)
|
(250,473)
|
Reconciliation
of effective tax rate
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Loss for the year
|
|
(3,563,790)
|
(2,139,779)
|
|
|
|
|
|
|
Tax using the UK corporate tax rate
of 25% (2023: 20.5%(blended rate))
|
|
(891,742)
|
(438,655)
|
|
Gross non-deductible
expenses
|
|
52,707
|
555,748
|
|
Current year losses for which no
deferred tax asset was recognised
|
|
717,931
|
133,380
|
|
Adjustments to tax charge in
respect of previous periods
|
|
(183,596)
|
-
|
|
Adjustments to tax charge in
respect of previous periods’ deferred tax
|
|
120,688
|
-
|
|
Total taxation
(credit) /charge
|
|
(184,012)
|
250,473
|
-
Property, plant and equipment
As at 30 June 2024
|
£ unless stated
|
Right
of use
|
Office
Equipment
|
Fixtures and fittings
|
Plant and equipment
|
Total
|
|
Cost
|
|
|
|
|
|
|
At 30 June 2023
|
442,612
|
29,462
|
73,594
|
2,076
|
547,744
|
|
Additions
|
-
|
4,164
|
120
|
-
|
4,284
|
|
Disposals
|
-
|
-
|
-
|
(1,586)
|
(1,586)
|
|
At 30 June 2024
|
442,612
|
33,626
|
73,714
|
490
|
550,442
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
At 30 June 2023
|
236,134
|
9,400
|
23,138
|
444
|
269,116
|
|
Charge for the period
|
88,522
|
4,117
|
11,591
|
520
|
104,750
|
|
Disposals
|
-
|
-
|
-
|
(628)
|
(628)
|
|
At 30 June 2024
|
324,656
|
13,517
|
34,729
|
336
|
373,238
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
|
|
|
|
|
At 30 June 2023
|
206,478
|
20,062
|
50,456
|
1,632
|
278,628
|
|
At 30 June
2024
|
117,956
|
20,109
|
38,985
|
154
|
177,204
|
As at 30 June 2023
|
£ unless stated
|
Right
of use
|
Office
Equipment
|
Fixtures and fittings
|
Plant and equipment
|
Total
|
|
Cost
|
|
|
|
|
|
|
At 30 June 2022
|
442,612
|
23,182
|
72,664
|
1,149
|
539,607
|
|
Additions
|
-
|
6,280
|
930
|
927
|
8,137
|
|
At 30 June 2023
|
442,612
|
29,462
|
73,594
|
2,076
|
547,744
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
At 30 June 2022
|
147,612
|
5,019
|
12,472
|
29
|
165,132
|
|
Charge for the period
|
88,522
|
4,381
|
10,666
|
415
|
103,984
|
|
At 30 June 2023
|
236,134
|
9,400
|
23,138
|
444
|
269,116
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
|
|
|
|
|
At 30 June 2022
|
295,000
|
18,163
|
60,192
|
1,120
|
374,475
|
|
At 30 June
2023
|
206,478
|
20,062
|
50,456
|
1,632
|
278,628
|
Right of use
asset
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Amount
recognised in the statement of financial position:
|
|
|
|
|
Right of use
|
|
|
|
|
Buildings
|
|
202,754
|
206,478
|
|
|
|
202,754
|
206,478
|
|
Lease liability
|
|
|
|
|
Non-current
|
|
116,131
|
193,109
|
|
Current
|
|
86,623
|
86,623
|
|
|
|
202,754
|
279,732
|
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Amount
recognised in the statement of comprehensive income:
|
|
|
|
|
Depreciation on right of use
building
|
|
88,522
|
88,522
|
|
Interest expense
|
|
9,645
|
12,607
|
|
Amount
recognised in the statement of cash flow:
|
|
|
|
|
Lease payments made
|
|
86,623
|
86,623
|
Break
options
The lease for the office has an
option to break the lease after 5 years. The right-of-use asset has
been calculated on the assumption that the break clause is taken
up.
-
Inventory - developments
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Residential developments
|
|
|
|
|
- Land
|
|
3,427,634
|
4,895,358
|
|
- Construction and development
costs
|
|
8,406,730
|
9,547,628
|
|
- Capitalised interest
|
|
1,439,379
|
2,123,936
|
|
|
|
13,273,743
|
16,566,922
|
The key estimates related to
carrying value of inventory in relation to all development projects
are estimated selling prices of inventory based on recent
transactions and market information, and construction costs to
complete based on current arrangements with contractors including
contingencies.
Further to the impairment review
which took place in previous financial years, due to expenditure
exceeding estimates, the Group has further impaired the value of
its Bank Street, Oscar House and St Petersgate developments. The
impairment totalled £1,443,989 at 30 June 2024 (£2,392,136 at 30
June 2023) and the charge for the year was £620,874 (30 June 2023:
£1,094,576).
As a result of the decision to
dispose of the Group’s interests in Churchgate and Seaton House,
both of these developments were written down to their estimated net
realisable value resulting in an impairment charge of £152,941 (30
June 2023: £nil). The estimated net realisable value of Seaton
House is based on an unconditional contract of sale (less estimated
costs of sale).
The estimated net realisable value
of Churchgate is based upon the value previously achieved in the
market (less estimated costs of disposal).
-
Investment in associate
Reconciliation
of investment in associate
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Opening
|
|
-
|
50,000
|
|
Reversal of write down of
investment in associate
|
|
-
|
-
|
|
Sale of investment in
associate
|
|
-
|
(50,000)
|
|
Closing
|
|
-
|
-
|
Following the
insolvency of two subsidiaries of the associate, One Heritage
Complete Limited, the Group made the decision to write down the
full value of its investment in associate in the 30 June 2022 annual
financial statements. On 6 July 2022, the Group agreed to sell its
47.0% stake in One Heritage Complete Limited for
£50,000.
-
Trade and other receivables
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Trade receivables^
|
|
25,407
|
52,676
|
|
Other debtors
|
|
392,827
|
1,132,525
|
|
Prepaid sales fees and
commissions*
|
|
55,200
|
474,289
|
|
Other prepayments and accrued
income*
|
|
385,219
|
94,399
|
|
VAT receivable
|
|
35,206
|
51,636
|
|
Related party
receivables^
|
|
418,617
|
294,644
|
|
|
|
1,312,476
|
2,100,169
|
^Related party receivables of
£186,441 which were included within trade receivables have been
reclassified for ease of comparison.
*Prepayments of £94,399 which were
included within prepaid sales fees and commissions have been
reclassified for ease of comparison.
At 30 June 2024 the Group was due
£418,677 (30 June 2023: £294,644) from related parties, including
£248,564 (30 June 2023: £30,161) from Robin
Hood Developments Limited, £48,163 (30 June 2023: £14,192) from One
Heritage Tower Limited, £40,173 (30 June 2023: £nil) from One
Heritage Property Services Limited, £28,990 (30 June 2023: £209,168) from One Heritage
North Church Limited and £21,985 (30 June 2023: £216) from One Heritage
Great Ducie Street Limited and other related parties £30,802 (30
June 2023: £40,907). All related party balances have been reviewed
and considered recoverable. Further details of related parties can
be found in note 22.
Other debtors include £252,980 (30
June 2023: £413,304) which relates to taxation due under the
Construction Industry Scheme and £64,950 (30 June 2023: £630,980)
of customer deposits held by third party solicitors for the benefit
of the Group.
The prepaid sales fees and
commissions relate to the sales agent’s fees and commissions paid
on units from developments that have been exchanged but not yet
completed.
Management consider that the credit
quality of the various receivables is good in respect of the
amounts outstanding, there have been no increases in credit risk
and therefore credit risk is considered to be low. Therefore, no
expected credit loss provision has been recognised.
-
Capital management
The Group defines capital as the
Group’s shareholder equity and borrowings. The Group’s policy is to
maintain a strong capital base so as to maintain, investor,
creditor and market confidence and to sustain future development of
the business. Management monitors the return on capital, as well as
the level of external debt in the business.
The Group monitors capital using a
ratio of ‘net debt’ to shareholder equity. Net debt is calculated
as total liabilities (as shown in the statement of financial
position) less cash and cash equivalents. The Group’s policy is to
keep the ratio below 3.0. In the current and prior year the ratio
is significantly higher than the policy due to the negative equity
and the impairment of developments.
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Total borrowings
|
|
16,975,288
|
17,240,521
|
|
Less: cash and cash
equivalents
|
|
(88,161)
|
(303,816)
|
|
Net debt
|
|
16,887,127
|
16,936,705
|
|
Total equity
|
|
(3,948,494)
|
(568,716)
|
|
Net debt to
equity ratio
|
|
N/A
|
N/A
|
-
Loans and borrowings
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Non-current
|
|
|
|
|
Lease liability (note 12)
|
|
116,131
|
193,109
|
|
Related party borrowings
|
|
10,981,484
|
11,378,938
|
|
|
|
11,097,615
|
11,572,047
|
|
Current
|
|
|
|
|
Lease liability (note 12)
|
|
86,623
|
86,623
|
|
Loan
|
|
5,791,050
|
5,581,851
|
|
|
|
5,877,673
|
5,668,474
|
|
|
|
|
|
|
Total borrowings
|
|
16,975,288
|
17,240,521
|
As sales on the One Heritage Oscar
House Limited development incurred delays, the company refinanced
the project settling the previous debt of £4.1m with Hampshire
Trust Bank Limited, which in turn was repaid on 22 December 2023,
through an agreement being entered into with a new lender, 365
Funding Limited, on improved terms for £3.25m, for a period of 18
months to provide appropriate funding until all the remaining units
are legally completed and handed over to customers; £2,579,084 was
drawn down at 30 June 2024 (30 June 2023: £nil).
On 9 November 2023, One Heritage
Victoria Road Limited, entered into a loan agreement with Hampshire
Trust Bank Limited. This was for a gross amount of construction
finance totalling £3,846,700 of which £2,819,956 has been drawn
down at 30 June 2024 (30 June 2023: £nil). The loan has a term of
16 months and is to be drawn down on a monthly basis to fund
construction costs. It has a covenant that is linked to the
underlying development, to not exceed a loan to Gross Development
Value of 61% which has been complied with during the reporting
period.
On 18 March 2022 the
Company had a £1.5 million corporate bond admitted to the Standard
List of the London Stock Exchange. This had a 2-year term and an
8.0% coupon which is paid on 30 June and 31 December each year. The
Company incurred listing costs of £102,040 which were capitalised
and released over the term of the Bond. On maturity, £1.0m of the Bond
was repaid with the remaining £0.5m being converted to a Loan Note
with a term of 12 months and 8% interest maturing 15 March
2025.
Related party
borrowings
On 31 July 2023 the
shareholder loan facility was increased by £1.7m, to £14.0m. This
facility can be drawn down as required, has an interest rate of
7.0% and was repayable on 31 December 2024. In January 2024, the Company’s
current shareholder agreement, initially executed on 21 September
2020, underwent an amendment. The principal modification confirms
the full balance of any drawdown is due on 31 December 2028. The
balance on this loan at 30 June 2024 was £10,981,484 (30 June 2023:
£11,378,938). As outlined in note 23, subsequent to the balance
sheet date, the shareholder loan facility was subject to
refinancing with a related party.
Terms and
repayment schedule
The terms and conditions of
outstanding loans are as follows:
|
|
|
|
|
30 June 2024
|
30 June 2023
|
|
£ unless stated
|
Currency
|
Nominal interest rate
|
Maturity
Date
|
Fair
value
|
Carrying amount
|
Fair
value
|
Carrying
Amount
|
|
Hampshire Trust Bank
Limited
|
GBP
|
10.8%
|
Mar 25
|
2,819,956
|
2,819,956
|
-
|
-
|
|
Funding 365
|
GBP
|
9.6%
|
Jun 25
|
2,471,094
|
2,471,094
|
-
|
-
|
|
Hampshire Trust Bank
Limited
|
GBP
|
9.3%
|
Apr 24
|
-
|
-
|
4,118,054
|
4,118,054
|
|
One Heritage Property
Development
|
GBP
|
7.0%
|
Dec 25
|
10,981,484
|
10,981,484
|
11,378,938
|
11,378,938
|
|
Loan Note
|
GBP
|
8.0%
|
Mar 25
|
500,000
|
500,000
|
-
|
-
|
|
Corporate bond
|
GBP
|
8.0%
|
Mar 24
|
-
|
-
|
1,463,797
|
1,463,797
|
|
|
|
|
|
16,772,534
|
16,772,534
|
16,960,789
|
16,960,789
|
Reconciliation of movements of
liabilities to cash flows from financing activities
|
|
|
Liabilities
|
|
|
|
£ unless stated
|
Other loans and
borrowings
|
Lease
liabilities
|
Share capital/
Premium
|
Total
|
|
Balance as at 01
July 2023
|
16,960,789
|
279,732
|
5,140,108
|
22,380,629
|
|
Changes from
financing cash flows
|
|
|
|
|
|
Proceeds from loans and
borrowings
|
5,572,200
|
-
|
-
|
5,572,200
|
|
Repayment of loans and
borrowings
|
(4,559,386)
|
-
|
-
|
(4,559,386)
|
|
Proceeds from related party
borrowings
|
10,149,165
|
-
|
-
|
10,149,165
|
|
Repayment of related party
borrowings
|
(11,350,234)
|
-
|
-
|
(11,350,234)
|
|
Interest paid
|
(1,482,411)
|
-
|
-
|
(1,482,411)
|
|
Payment of lease
liabilities
|
-
|
(86,623)
|
-
|
(86,623)
|
|
Total changes
from financing cash flows
|
(1,670,666)
|
(86,623)
|
-
|
(1,757,289)
|
|
Other
changes
|
|
|
|
|
|
Liability
related
|
|
|
|
|
|
Capitalised borrowing
costs
|
374,822
|
-
|
-
|
374,822
|
|
Interest expense
|
1,107,589
|
9,645
|
-
|
1,117,234
|
|
Total
liability-related other changes
|
1,482,411
|
9,645
|
|
1,492,056
|
|
Total
equity-related other changes
|
-
|
-
|
-
|
-
|
|
Balance as at 30
June 2024
|
16,772,534
|
202,754
|
5,140,108
|
22,115,396
|
| |
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
£ unless stated
|
^Other loans and
borrowings
|
Lease
liabilities
|
Share capital/
Premium
|
Total
|
|
Balance as at 01
July 2022
|
15,567,293
|
353,748
|
3,893,008
|
19,814,049
|
|
Changes from
financing cash flows
|
|
|
|
|
|
Proceeds from issue of share
capital
|
-
|
-
|
1,247,100
|
1,247,100
|
|
Proceeds from loans and
borrowings*
|
8,725,789
|
-
|
-
|
8,725,789
|
|
Repayment of loans and
borrowings*
|
(9,535,263)
|
-
|
-
|
(9,535,263)
|
|
Proceeds from related party
borrowings*
|
12,177,035
|
-
|
-
|
12,177,035
|
|
Repayment of related party
borrowings*
|
(9,974,065)
|
-
|
-
|
(9,974,065)
|
|
Interest paid^
|
(2,064,587)
|
-
|
-
|
(2,064,587)
|
|
Payment of lease
liabilities
|
-
|
(86,623)
|
-
|
(86,623)
|
|
Total changes
from financing cash flows
|
(671,091)
|
(86,623)
|
1,247,100
|
489,386
|
|
Other
changes
|
-
|
-
|
-
|
-
|
|
Liability
related
|
|
|
|
|
|
Capitalised borrowing
costs^
|
1,556,343
|
-
|
-
|
1,556,343
|
|
Interest expense
|
508,244
|
12,607
|
-
|
520,851
|
|
Total
liability-related other changes
|
2,064,587
|
12,607
|
-
|
2,077,194
|
|
Total
equity-related other changes
|
-
|
-
|
-
|
-
|
|
Balance as at 30
June 2023
|
16,960,789
|
279,732
|
5,140,108
|
22,380,629
|
|
^ Restated. Refer Note
10.
* Restated to correct
misallocations between the respective items. There were no changes
to financing cash flows as a result.
|
-
Trade and other payables
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Trade payables
|
|
653,156
|
778,994
|
|
Accruals
|
|
918,264
|
192,439
|
|
Customer deposits
|
|
67,950
|
1,302,276
|
|
Related party payable
|
|
79,915
|
17,482
|
|
Other payable
|
|
19,891
|
-
|
|
Tax payable
|
|
(440)
|
250,473
|
|
PAYE payable
|
|
87,734
|
37,979
|
|
|
|
1,826,470
|
2,579,643
|
Trade payables and accruals relate
to amounts payable at the reporting date for services received
during the period.
The Group has received deposits and
reservation fees in relation to its developments, these totalled
£67,950 (30 June 2023: £1,302,276). These relate to units that were
exchanged on and are repayable. The deposits will be repayable if
significant property damage occurs, and reinstatement is not
possible.
At 30 June 2024 the Group owed
£79,914 (30 June 2023: £17,481) to related parties. Further details
of related parties can be found in note 22 to the financial
statements.
The Group has financial risk
management policies in place to ensure that all payables are paid
within the credit timeframe.
-
Financial instruments - fair value and risk
management
Fair values
For all financial assets and
financial liabilities not measured at fair value, the carrying
amount is a reasonable approximation of fair value.
Financial risk
management
The Group has exposure to the
following risks arising from financial instruments:
-
Credit risk
-
Liquidity risk
-
Market risk
Risk management
framework
The Company’s Board of Directors
has overall responsibility for the establishment and oversight of
the Company’s risk management framework. The Board of Directors has
established the risk management committee, which is responsible for
developing and monitoring the Company’s risk management policies.
The committee reports regularly to the Board of Directors on its
activities.
The Group’s risk management
policies are established to identify and analyse the risks faced by
the Company, to set appropriate risk limits and controls to monitor
risks. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Group’s activities.
The Company, through its training and management standards and
procedures, aims to maintain a disciplined and constructive control
environment in which all employees understand their roles and
obligations.
The Company’s audit committee
oversees how management monitors compliance with the Company’s risk
management policies and procedures and reviews the adequacy of the
risk management framework in relation to the risks faced by the
Company.
Credit
risk
Credit risk is the risk of
financial loss where counterparties are not able to meet their
obligations. Group policy is that surplus cash, when not used to
repay borrowings, is placed on deposit with the Group’s main
relationship banks and with other banks or money market funds based
on a minimum credit rating and maximum exposure.
The significant concentrations of
credit risk are to related parties (refer note 22).
Management consider that the credit
quality of the various receivables is good in respect of the
amounts outstanding and therefore credit risk is considered to be
low.
The carrying amount of financial
assets represents the Group’s maximum exposure to credit risk at
the reporting date assuming that any security held has no
value.
Cash and cash
equivalents
The Group held cash and cash
equivalents of £88,161 at 30 June 2024 (30 June 2023:
£303,816).
|
Bank
|
Amount
held
|
Standard and
Poor’s
|
Moody’s
|
Fitch
|
|
Barclays Bank UK Plc
|
86,428
|
A
|
A1
|
A+
|
|
Revolut Bank
|
1,513
|
-
|
-
|
-
|
The Group also held petty cash of
£220 as at 30 June 2024 (30 June 2023: £241).
Guarantees
The Company’s policy is to provide
financial guarantees only for subsidiaries’ liabilities. At 30 June
2024, the Company has issued a guarantee to certain banks in
respect of credit facilities granted to One Heritage Oscar House
Limited for £2,471,094 (30 June 2023: £4,118,054) and One Heritage
Victoria Road Limited for £769,000 plus interest, fees and expenses
(30 June 2023: £nil). Refer to note 5 and 10 of the Group financial
statements.
Liquidity
risk
Liquidity risk is the risk that the
Group does not have sufficient financial resources available to
meet its obligations as they fall due. The Group manages liquidity
risk by continuously monitoring forecast and actual cash flows,
matching the expected cash flow timings of financial assets and
liabilities with the use of cash and cash equivalents, borrowings,
overdrafts and committed revolving credit facilities with a minimum
of 12 months to maturity.
Future borrowing requirements are
forecast on a monthly basis and funding headroom is maintained
above forecast peak requirements to meet unforeseen events. At 30
June 2024, the Group’s borrowings and facilities had a range of
maturities with an average life of 11.5 months.
In addition to fixed term
borrowings, the Group has access to a shareholder loan facility. At
the reporting date, the total unused committed amount available for
general purposes was £3.02million and cash and cash equivalents
were £0.09m (refer to note 23 which outlines a restructure of
shareholder loan facilities which took place after the reporting
date).
The maturity profile of the
anticipated future cash flows including interest, using the latest
applicable relevant rate, based on the earliest date on which the
Group can be required to pay financial liabilities on an
undiscounted basis, is as follows:
|
As at 30 June 2024
|
|
|
|
|
|
|
|
|
£ unless stated
|
Carrying amount
|
Total
|
On
demand
|
Within 1 year
|
1-2
years
|
2-5
years
|
5+
Years
|
|
Non-derivative
financial liabilities
|
|
|
|
|
|
|
|
|
Secured bank debt
|
2,819,956
|
3,164,281
|
-
|
3,164,281
|
-
|
-
|
-
|
|
Secured other debt
|
2,471,094
|
2,471,094
|
-
|
2,471,094
|
-
|
-
|
-
|
|
Unsecured loan note
|
500,000
|
530,000
|
-
|
530,000
|
-
|
-
|
-
|
|
Other borrowings
|
10,981,484
|
12,193,530
|
-
|
-
|
12,193,530
|
-
|
-
|
|
Lease payables
|
202,754
|
202,754
|
-
|
86,623
|
116,131
|
-
|
-
|
|
Trade payables
|
1,826,470
|
1,826,470
|
-
|
1,826,470
|
-
|
-
|
-
|
|
|
18,801,758
|
20,388,129
|
-
|
8,078,468
|
12,309,661
|
-
|
-
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2023^
|
|
|
|
|
|
|
|
£ unless stated
|
Carrying amount
|
Total
|
On
demand
|
Within 1 year
|
1-2
years
|
2-5
years
|
5+
Years
|
|
Non-derivative
financial liabilities
|
|
|
|
|
|
|
|
|
Secured bank debt
|
4,118,054
|
4,268,240
|
-
|
4,268,240
|
-
|
-
|
-
|
|
Unsecured corporate bond
|
1,463,797
|
1,543,797
|
-
|
1,543,797
|
-
|
-
|
-
|
|
Other borrowings
|
11,378,938
|
12,634,852
|
-
|
-
|
12,634,852
|
-
|
-
|
|
Lease payables
|
279,732
|
279,732
|
-
|
86,623
|
193,109
|
-
|
-
|
|
Trade payables
|
2,579,644
|
2,579,644
|
-
|
2,579,644
|
-
|
-
|
-
|
|
|
19,820,165
|
21,306,265
|
-
|
8,478,304
|
12,827,961
|
-
|
-
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
^Restated. The profile of financial
liabilities as at 30 June 2023 have been restated to now include
principal and interest to be accrued and paid.
The secured bank debt contains loan
covenants, disclosed in note 17. A future breach of covenant may
require the Group to repay the loan earlier than indicated in the
above table.
Market
risk
Market risk is the risk that
changes in market prices will affect the Group’s income. The
objective of market risk management is to manage and control risk
exposures within acceptable exposures within acceptable parameters,
while optimising the return. The Group does not hold any equity
positions and trade in foreign currencies. It therefore considers
the market risk to be low.
Interest rate
risk management
The Group has a policy to have
fixed interest rate borrowings where possible. Where this is not
possible, the Group will look to hedge interest variability if cost
effective.
Interest rate
sensitivity
The Group currently has one
variable interest rate arrangement in respect of a loan from
Hampshire Trust Bank and therefore an element of future returns are
sensitive to movements in the interest rates in the next financial
period on existing borrowing obligations.
If interest rates on the loans had
been 1% per cent higher/lower and all other variables were held
constant, the interest charge incurred by the Group in the year
ended 30 June 2024 would have (increased)/decreased by
(£8,563)/£8,637.
-
Directors’ remuneration
|
£ unless stated
Year ended 30 June
|
Salary
2024
|
Salary
2023
|
Taxable benefits
2024
|
Taxable
benefits
2023
|
Pension
benefits
2024
|
Pension
benefits
2023
|
Total
remuneration
2024
|
Total
remuneration
2023
(r)
|
|
Jason Upton
Bonus
|
116,667
-
|
95,833
500
|
385
|
208
|
1,321
|
1,321
|
118,373
|
97,862
|
|
Yiu Tak Cheung*
Bonus
|
12,500
-
|
15,000
500
|
416
|
-
|
-
|
-
|
12,916
|
15,500
|
|
Anthony Unsworth*
Bonus
|
82,051
-
|
115,794
250
|
629
|
340
|
881
|
1,211
|
83,561
|
117,595
|
|
Stuart Ormisher^
|
19,833
|
-
|
47
|
-
|
-
|
-
|
19,880
|
-
|
|
David Izett
|
30,000
|
29,167
|
-
|
-
|
-
|
-
|
30,000
|
29,167
|
|
Jeremy Earnshaw
|
25,000
|
25,000
|
-
|
-
|
-
|
-
|
25,000
|
25,000
|
|
|
286,051
|
282,044
|
1,477
|
548
|
2,202
|
2,532
|
289,730
|
285,124
|
*remuneration for period from
1st
July 2023 to date of
leaving
^ remuneration for period
8th
February 2024 to 24 March
2024
(r) Restated. The total
remuneration as at 30 June 2023 have been restated to include
taxable benefits and bonus.
Bonus
payments
During the year Jason Upton
received a bonus payment of £nil (FY 2023: £500), Yiu Tak Cheung
£nil (FY 2023: £500) and Anthony Unsworth £nil (FY 2023: £250). All
bonus payments received in FY23 were discretionary and in line with
bonus payments made to all members of staff.
Pension
benefits
Pension benefits comprise Employer
contributions into the Group’s defined contribution pension
scheme.
-
Share capital
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Share capital (1p per
share)
|
|
386,783
|
386,783
|
|
Share premium
|
|
4,753,325
|
4,753,325
|
|
|
|
5,140,108
|
5,140,108
|
All shares issued by the Company
are ordinary shares and have equal voting and distribution rights.
The total shares in issue as at 30 June 2024 is 38,678,333 (30 June
2023: 38,678,333) and are fully paid up.
-
Related parties
Parent and
ultimate controlling party
At the reporting date 65.15% of the
shares are held by One Heritage Property Development Limited, which
is incorporated in Hong Kong. One Heritage Holding Group Limited,
incorporated in the British Virgin Island, is considered the
ultimate controlling party through its 100% ownership of One
Heritage Property Development Limited.
Transactions
with key management
Key management personnel
compensation comprised the following:
|
£ unless stated
|
|
Year to
30 June 2024
|
Year to
30 June 2023
|
|
Short term employee
benefits
|
|
490,045
|
412,851
|
|
|
|
490,045
|
412,851
|
Compensation of the Group’s key
management personnel is short term employee benefits.
Key management
personnel transactions
The key management control 2.8% (30
June 2023: 2.8%) of the voting shares of the Company.
Other related
party activity
Details of related party balances
as at the Reporting Date are disclosed in notes 15 and 18; details
of revenue derived from related parties is disclosed in note 7.
Below is a table that sets out the entities that are related
parties to the Group:
|
Company
|
Notes
|
Description
|
|
ACT Property Developments
Limited
Bee Kitchens Limited
Black Square Property Solutions
Limited
Great Ducie Building Management
Limited
Harley Street Developments
Limited
Mosley Property Limited
Nicholas Street Developments
Limited
North Church Building Management
Limited
OH Lincoln House Property
Limited
OH Oscar House Property
Limited
OH Portfolio Rental 1
Limited
OH Property Development Hong
Kong
One Heritage Alexander House
Limited
One Heritage Blackley Mere
Limited
One Heritage Great Ducie Street
Limited
|
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
7, 15
|
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
|
|
One Heritage North Church
Limited
|
7,15
|
Common directors, majority stake
held by the beneficial owners of the Group
|
|
One Heritage Property Development
Limited
One Heritage Property Holding
Limited
|
7, 15
7, 15
|
Common director, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
|
|
One Heritage Property Management
Limited
One Heritage Property
Rental
|
7,15
7, 15
|
Common director, owned by the
beneficial owners of the Group
Common director, owned by the
beneficial owners of the Group
|
|
One Heritage Property Services
Limited
One Heritage Tower
Limited
|
7,15
|
Common directors, part owned by the
beneficial owners of the Group
|
|
Robin Hood Property Development
Limited
Sakura Liverpool Limited
|
7,15
7, 15
|
Common directors, owned by the
beneficial owners of the Group
Common directors, owned by the
beneficial owners of the Group
|
-
Events after the reporting
date
On 4 July 2024 the One Heritage
Seaton House Limited completed the sale of the building of Seaton
House, Stockport for £0.6m together and exchanged conditional
contracts for the sale of the land to the rear for £0.4m. The
completion of the conditional sale is subject to the buyer
obtaining planning approval and overall total gross proceeds would
therefore be £1.0m on which the Group would recognise a loss after
selling costs of £0.15m which has been provided for as part of the
impairment review undertaken at 30 June 2024 as outlined in note
13.
On 1 October 2024, the Group
exchanged contracts unconditionally to acquire a 30% stake in the
company that owns the One Victoria project by purchasing shares to
the value of £3.0m from One Heritage Property Development Limited
Hong Kong (“OHPD”). The acquisition will be funded by drawing down
£3.0m from the remaining shareholder loan facility (“Existing
Facility”). The completion date for the acquisition is 29 October
2024, which may be extended or brought forward by agreement between
the parties, with a long stop date of 8 November 2024.
Simultaneous to the investment in
One Victoria, Manchester, the Group has also exchanged contracts
unconditionally on 1 October 2024 for the sale of a portfolio of
completed residential and commercial properties, valued at £7.0m,
to OH UK Holdings Limited (“OHUK”), a company connected with OHPD.
This portfolio includes residential properties at Bank Street,
Sheffield, Lincoln House, Bolton and Oscar House, Manchester, as
well as the commercial unit at St Petersgate, Stockport. The
completion date for the sale is 29 October 2024, which may be
extended or brought forward by agreement between the parties, with
a long stop date of 8 November 2024. With £2.0m of debt linked to
Oscar House as part of this transaction, the net proceeds of the
portfolio sale will reduce from £7.0m million to £5.0m million and
these proceeds will be utilised to reduce the Existing Facility
from £14.0m million to £9.0m.
As part of this restructuring, One
Heritage Property Developments Limited (“OHPD(UK)”) entered into a
new £7.0m loan agreement with OHUK on 1 October 2024 at an interest
rate of 6%, i.e., lower than the previous rate of 7%, such facility
to become available from the date of the completion of the property
transactions outlined above. The loan has a repayment date of 31
December 2025, with an option to extend for up to 36 months. OHUK
is a related party, sharing the same majority shareholders as the
Company and OHPD. This new loan will be drawn down in full on
completion and used to partially repay the Existing
Facility.
The balance of approximately £2.0m
of the Existing Facility will then be written off by OHPD as part
of the restructuring, and the Existing Facility will therefore be
settled in full at completion and terminated.
On 28 October 2024
One Heritage Bank Street Limited and One Heritage Lincoln House
Limited and the related party OH UK Holdings 2 Limited entered
into a 12-month loan facility agreement with Hilco Real
Estate Finance UK Ltd of £2.33m secured upon the completed
properties held by those companies, of which £1.6m is attributable
to Bank Street Sheffield and Lincoln House Bolton.
-
New Standards and amendments to Standards
There are no new or amended
standards that are expected to have a significant impact on the
Group’s consolidated financial statements when adopted.
New standards
and amendments issued but not effective for the current annual
period
The following standards and
interpretations had been issued but not yet mandatory for annual
reporting periods ending June 30, 2024.
Description
-
Non-current liabilities with
Covenants - Amendments to IAS 1 (effective for annual periods
beginning on or after 1 January 2024)
-
Classification of Liabilities as
Current or Noncurrent – Amendments to IAS 1 (effective for annual
periods beginning on or after 1 January 2024)
The Group anticipates that these
new standards, interpretations, and amendments will be adopted in
the financial statements as and when they are applicable and
adoption of these new standards, interpretations and amendments,
may have no material impact on the financial statements in the
period of initial application.
-
Disclosures relating to subsidiary undertakings
The Company’s subsidiaries and
other related undertakings at 30 June 2024 are listed below. All
Group entities are included in the consolidated financial
results.
All companies listed below
undertake all of their activity in the United Kingdom.
The share capital of each of the
companies, where applicable, comprises ordinary shares unless
otherwise stated.
|
Company name
|
Business activity
|
Company number
|
Ownership
|
|
One Heritage Property Development
(UK) Limited
|
Property developer
|
11982934
|
100.0%
|
|
One Heritage Churchgate
Limited
|
Development company
|
12114319
|
100.0%
|
|
One Heritage Lincoln House
Limited
|
Development company
|
12434625
|
100.0%
|
|
One Heritage Bank Street
Limited
|
Development company
|
12763845
|
100.0%
|
|
One Heritage Oscar House
Limited
|
Development company
|
11331256
|
100.0%
|
|
One Heritage St Petersgate
Limited
|
Development company
|
13154858
|
100.0%
|
|
One Heritage Red Brick
Limited
|
Property services
|
13178461
|
100.0%
|
|
One Heritage Property Services
Limited
|
Property services
|
13426415
|
100.0%
|
|
One Heritage Seaton House
Limited
|
Development company
|
13520340
|
100.0%
|
|
One Heritage Construction
Limited
|
Construction company
|
13761479
|
100.0%
|
|
One Heritage Victoria Road
Limited
|
Development company
|
14172104
|
100.0%
|
|
St Petersgate Building Management
Limited
|
Dormant
|
13979905
|
100.0%
|
|
Oscar House Building Management
Limited
|
Dormant
|
13981057
|
100.0%
|
|
Liberty House Building Management
Limited
|
Dormant
|
13986387
|
100.0%
|
|
Lincoln House Building Management
Limited
|
Dormant
|
12710283
|
100.0%
|
There are loans between these
entities, which are all interest free and repayable on
demand.
-
Audit exemption taken for subsidiaries
The following subsidiaries are
exempt from the requirements of the Companies Act 2006 relating to
the audit of individual accounts by virtue of Section 479A of that
Act.
|
Company name
|
Company number
|
|
One Heritage Property Development
(UK) Limited
|
11982934
|
|
One Heritage Churchgate
Limited
|
12114319
|
|
One Heritage Lincoln House
Limited
|
12434625
|
|
One Heritage Bank Street
Limited
|
12763845
|
|
One Heritage Oscar House
Limited
|
11331256
|
|
One Heritage St Petersgate
Limited
|
13154858
|
|
One Heritage Red Brick
Limited
|
13178461
|
|
One Heritage Property Services
Limited
|
13426415
|
|
One Heritage Seaton House
Limited
|
13520340
|
|
One Heritage Construction
Limited
|
13761479
|
|
One Heritage Victoria Road
Limited
|
14172104
|
|
St Petersgate Building Management
Limited
|
13979905
|
|
Oscar House Building Management
Limited
|
13981057
|
|
Liberty House Building Management
Limited
|
13986387
|
|
Lincoln House Building Management
Limited
|
12710283
|
Company balance sheet
As at 30 June 2024
|
£ unless stated
|
Notes
|
As at 30 June
2024
|
As at 30 June
2023
|
|
INTANGIBLE ASSETS
|
|
|
|
|
Intangible assets
|
|
1,680
|
1,913
|
|
|
|
1,680
|
1,913
|
|
TANGIBLE ASSETS
|
|
|
|
|
Investments
|
2
|
-
|
1,007,732
|
|
|
|
-
|
1,007,732
|
|
OTHER NON-CURRENT ASSETS
|
|
|
|
|
Debtors
|
3
|
1,604,331
|
3,033,711
|
|
|
|
1,604,331
|
3,033,711
|
|
CURRENT ASSETS
|
|
|
|
|
Debtors
|
4
|
487,620
|
302,351
|
|
Cash at bank
|
|
-
|
8,615
|
|
|
|
487,620
|
310,966
|
|
Creditors:
amounts falling within one
year
|
5
|
(2,101,141)
|
(5,191,231)
|
|
Net current
(liabilities)
|
|
(1,613,521)
|
(4,880,265)
|
|
Total assets less
current liabilities
|
|
(7,510)
|
(836,909)
|
|
|
|
|
|
|
Net
liabilities
|
|
(7,510)
|
(836,909)
|
|
|
|
|
|
|
CAPITAL AND RESERVES
|
|
|
|
|
Called up share capital
|
6
|
386,783
|
386,783
|
|
Share premium account
|
|
4,753,325
|
4,753,325
|
|
Profit and loss account
|
|
(5,147,618)
|
(5,977,017)
|
|
Shareholders’
deficit
|
|
(7,510)
|
(836,909)
|
These financial statements were
approved by the board of directors on 29 October 2024 and were
signed on its behalf by:
Jason David Upton
Company registration number:
12757649
The accompanying notes on pages 81
to 87 form an integral part of the financial statements
Company statement of changes in
equity
For the year ended 30 June
2024
|
£ unless stated
|
|
Called up
share capital
|
Share
premium
|
Profit and loss account
|
Shareholders
Funds
|
|
Balance at 1 July
2023
|
|
386,783
|
4,753,325
|
(5,977,017)
|
(836,909)
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
-
|
-
|
829,399
|
829,399
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
|
386,783
|
4,753,325
|
(5,147,618)
|
(7,510)
|
|
|
|
|
|
|
|
|
Balance at 30
June 2024
|
|
386,783
|
4,753,325
|
(5,147,618)
|
(7,510)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
For the year ended 30 June
2023
|
£ unless stated
|
|
Called up
share capital
|
Share
premium
|
Profit and loss account
|
Shareholders
Funds
|
|
Balance at 1 July
2022
|
|
324,283
|
3,568,725
|
(294,081)
|
3,598,927
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
-
|
-
|
(5,682,936)
|
(5,682,936)
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
|
324,283
|
3,568,725
|
(5,977,017)
|
(2,084,009)
|
|
|
|
|
|
|
|
|
Issue of share capital
|
|
62,500
|
1,187,500
|
-
|
1,250,000
|
|
Cost of share issuance
|
|
-
|
(2,900)
|
-
|
(2,900)
|
|
|
|
|
|
|
|
|
Balance at 30
June 2023
|
|
386,783
|
4,753,325
|
(5,977,017)
|
(836,909)
|
The accompanying notes on pages
81 to 87 form an integral part of the financial
statements.
Notes to the Company financial
statements
For the year ended to 30 June
2024
-
Accounting policies
The following accounting policies
have been applied consistently in dealing with items which are
considered material in relation to the financial statements, except
as noted below.
General
information
One Heritage Group plc is a public
limited company, limited by shares, incorporated in England and
Wales under the Companies Act 2006 on 21 July 2020. The address of
its registered office and principal place of trading is 80 Mosley
Street, Manchester, M2 3FX. The principal activity of the Company
is a property development holding company. The Company does not
have any employees and is funded through the issuance of share
capital to investors.
Basis of
preparation
These financial statements were
prepared in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework (“FRS 101”).
In preparing these financial
statements, the Company applies the recognition, measurement and
disclosure requirements of international accounting standards in
conformity with the requirements of the Companies Act 2006
(“Adopted IFRSs”) but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been
taken.
Under Section s408 of the Companies
Act 2006 the Company is exempt from the requirement to present its
own profit and loss account.
In these financial statements, the
Company has applied the exemptions available under FRS 101 in
respect of the following disclosures:
-
Cash Flow Statement and related
notes;
-
Certain disclosures regarding
revenue;
-
Certain disclosures regarding
leases;
-
Disclosures in respect of
transactions with wholly owned subsidiaries;
-
Disclosures in respect of capital
management;
-
The effects of new but not yet
effective IFRSs;
-
Disclosures in respect of the
compensation of Key Management Personnel; and
-
Disclosures of transactions with a
management entity that provides key management personnel services
to the Company.
As the consolidated financial
statements include the equivalent disclosures, the Company has also
taken the exemptions under FRS 101 available in respect of the
following disclosures:
-
Certain disclosures required by
IFRS 3 Business Combinations in respect of business combinations
undertaken by the Company in the current and prior
periods;
-
Certain disclosures required by
IFRS 13 Fair Value Measurement and the disclosures required by IFRS
7 Financial Instrument Disclosures; and
-
Certain disclosures required by IAS
36 Impairment of Assets
Going
concern
Notwithstanding net current
liabilities of £6.3m (excluding inventory balances totalling
£13.3m) as at 30 June 2024 (2023: £5.8m (excluding inventory
balances totalling £16.6m), a loss for the year then ended of £3.4m
(2023: £2.4m) and operating cash inflow for the year of £1.5m
(2023: outflow £1.2m), the financial statements have been prepared
on a going concern basis which the directors consider to be
appropriate for the following reasons.
The Directors have prepared a cash
flow forecast on a consolidated basis for the period to 31 December
2025 which indicates that, taking account of reasonably possible
downsides, the Group will have sufficient funds to meet its
liabilities including loans and loan note, as they fall due for
that period using the proceeds from:
-
existing resources
held by the Group (including funds drawn down on external loan
facilities and the loan facility to be provided by OH UK Holdings
Limited(“OHUK”) as detailed in notes 19 and 23);
-
the implementation
of the proposed restructure of the Group outlined in note 23, which
includes the refinancing of Group shareholder loan with a related
party, the disposal of completed inventory, the acquisition of an
equity stake in the One Victoria, Manchester property development
project, the waiver of a portion of the existing shareholder loan
and the provision of continuing shareholder financial support via
related party;
-
the forecast
continued sale of development property inventory (net of repayment
of related construction finance loans (note 19)); being the Seaton
House Stockport, Churchgate Leicester and Victoria Road, Eccleshill
and sales of units in the One Victoria development property on
completion in line with management estimates for timing and
quantum;
-
in the event of need
the Directors consider that mitigating actions are required,
actions available to the Group would include realising development
property inventory via auction and/or refinancing of the post
restructure of the remaining 3rd
party loan due to
expire in March 2025 and also the Loan Note due to expire in March
2025;
-
in the event of
need, continued financial support from both also its parent
company, One Heritage Property Development Limited (“OHPD”), and
OHUK to meet its liabilities as they fall due for that period. OHUK
have confirmed that their loans due to mature in December 2025 will
not be demanded for repayment until such a time that the Group can
afford to repay them without impacting on its going concern. OHUK
have also confirmed the potential to draw down on additional
flexible funding support of up to £1.0m.
As with any company placing
reliance on other group/related entities for financial support, the
Directors acknowledge that there can be no certainty that this
support will continue although, at the date of approval of these
financial statements, they have no reason to believe that it will
not do so.
Consequently, and based upon events
after the reporting date referenced in Note 23, the Directors are
confident that the Company and its subsidiaries will have
sufficient funds to continue to meet their liabilities as they fall
due for at least 12 months from the date of approval of the
financial statements and therefore have prepared the financial
statements on a going concern basis.
The above should be read in
conjunction with note 3 to the consolidated financial
statements.
The accounting policies set out
below have, unless otherwise stated, been applied consistently to
all periods presented in these financial statements.
Measuring
convention
The financial statements are
prepared on the historical cost.
Significant
judgements
The significant judgements with
regard to going concern are the forecast timing of development
property inventory realisations by subsidiaries and continued
provision of third party loan facilities to subsidiaries and in the
event it is needed the ability of the Company to be able to
drawdown on the facility provided its related party OH UK Holdings
Limited. Management of the Company is not aware of any material
uncertainties that may cast significant doubt on the Company’s
ability to continue as a going concern. Therefore, the parent company financial
statements continue to be prepared on the going concern basis. For
detail refer note 1 going concern.
Financial
guarantees
A financial guarantee contract is
initially recognised at fair value. At the end of each subsequent
reporting period, financial guarantees are measured at the higher
of:
-
The amount of the loss allowance,
and
-
The amount initially recognised
less cumulative amortisation, where appropriate.
The amount of the loss allowance at
each subsequent reporting period equals the 12-month expected
credit losses. However, where there has been a significant increase
in the risk that the specified debtor will default on the contract,
the calculation is for lifetime expected credit losses.
Investment in
subsidiary
Investment in subsidiaries are
stated at cost less impairment and loans to subsidiaries are stated
at amortised cost less impairment.
Impairment
The carrying amounts of the
Company’s non-financial assets are reviewed at each reporting date
to determine whether there is any indication of impairment. If any
such indication exists, then the asset’s recoverable amount is
estimated.
The recoverable amount of an asset
or cash-generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. For the purpose of impairment testing, assets that
cannot be tested individually are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or groups of assets (the Cash-Generating Unit
“CGU”).
An impairment loss is recognised if
the carrying amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in profit or
loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to
the units, and then to reduce the carrying amounts of the other
assets in the unit (group of units) on a pro rata basis.
In respect of other assets,
impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or
no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
-
Investment in subsidiaries
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
One Heritage Property Development
(UK) Limited
|
|
-
|
1,007,732
|
|
|
|
-
|
1,007,732
|
The Company assesses the
subsidiaries for any indicators of impairment by looking at the
individual performance of the underlying entities, including their
budgets, development progress and forecast
profitability.
Due to losses in the underlying
subsidiaries, the investment in subsidiaries were impaired in the
prior year by £1,742,368 and in the current year by £2,750,100 in
order to reflect the estimated recoverable amount based on the net
asset value of the subsidiary entity and net realisable value of
inventory. The impairment was recognised in the current year as a
consequence of the losses and impairment to inventory recognised by
subsidiary entities. The carrying amount is considered to reflect
the fair value less costs of disposal and is considered a level 3
asset in the fair value hierarchy.
The share capital of each of the
companies, where applicable, comprises ordinary shares unless
otherwise stated.
|
Company name
|
Jurisdiction
|
Company number
|
Ownership
|
|
One Heritage Property Development
(UK) Limited
|
England and Wales
|
11982934
|
100.0%
|
Below is a list of the key
subsidiaries of One Heritage Property Development (UK)
Limited.
|
Company name
|
Jurisdiction
|
Company number
|
Ownership
|
|
One Heritage Churchgate
Limited
|
England and Wales
|
12114319
|
100.0%
|
|
One Heritage Lincoln House
Limited
|
England and Wales
|
12434625
|
100.0%
|
|
One Heritage Bank Street
Limited
|
England and Wales
|
12763845
|
100.0%
|
|
One Heritage Oscar House
Limited
|
England and Wales
|
11331256
|
100.0%
|
|
One Heritage St Petersgate
Limited
|
England and Wales
|
13154858
|
100.0%
|
|
One Heritage Red Brick
Limited
|
England and Wales
|
13178461
|
100.0%
|
|
One Heritage Property Services
Limited
|
England and Wales
|
13426415
|
100.0%
|
|
One Heritage Seaton House
Limited
|
England and Wales
|
13520340
|
100.0%
|
|
One Heritage Construction
Limited
|
England and Wales
|
13761479
|
100.0%
|
|
One Heritage Victoria Road
Limited
|
England and Wales
|
14172104
|
100.0%
|
|
St Petersgate Building Management
Limited
|
England and Wales
|
13979905
|
100.0%
|
|
Oscar House Building Management
Limited
|
England and Wales
|
13981057
|
100.0%
|
|
Liberty House Building Management
Limited
|
England and Wales
|
13986387
|
100.0%
|
|
Lincoln House Building Management
Limited
|
England and Wales
|
12710283
|
100.0%
|
-
Debtors: amounts receivable after one
year
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Intercompany loan
|
|
1,604,331
|
3,033,711
|
|
|
|
1,604,331
|
3,033,711
|
The Intercompany loan payable by
One Heritage Property Development (UK) Limited is interest free and
payable on demand.
The Company assesses the
intercompany loans for any indicators of impairment by looking at
the individual performance of the underlying entities, including
their budgets, development progress and forecast profitability and
provisions made accordingly where recoverability is in
doubt.
-
Debtors: amounts receivable within one year
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Intercompany loan
|
|
10,102
|
-
|
|
Trade and other
receivables
|
|
450,000
|
270,000
|
|
Other debtors
|
|
3,258
|
-
|
|
Prepayments
|
|
24,260
|
32,351
|
|
|
|
487,620
|
302,351
|
-
Creditors: amounts falling within one year
|
£ unless stated
|
|
30 June 2024
|
30 June 2023
|
|
Trade and other payables
|
|
15,888
|
15,000
|
|
Accruals
|
|
123,616
|
76,780
|
|
Loan note
|
|
500,000
|
-
|
|
Corporate bond
|
|
-
|
1,463,797
|
|
Parental guarantee and loan
provision (refer to note 9)
|
|
1,440,485
|
3,635,109
|
|
Other creditors
|
|
19,891
|
-
|
|
Amounts owed to related
parties
|
|
1,261
|
-
|
|
Tax payable
|
|
-
|
545
|
|
|
|
2,101,141
|
5,191,231
|
On 18 March 2022 the Company had a
£1.5 million corporate bond admitted to the Standard List of the
London Stock Exchange. This had a 2 year term and a 8.0% coupon
which is paid on 30 June and 31 December each year. The Company
incurred listing costs of £102,040 which were capitalised and
released over the term of the Bond. On maturity, £1.0m of the Bond
was repaid with the remaining £0.5m being converted to a Loan Note
with a term of 12 months and 8% interest maturing 15 March
2025.
-
Called up share capital
|
£ unless stated
|
|
Ordinary
Shares
|
|
Issued share capital as at 30 June
2024 and 30 June 2023
|
|
38,678,333
|
|
|
|
|
The holders of ordinary shares are
entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the
Company.
-
Audit exemption taken for subsidiaries
The following subsidiaries are
exempt from the requirements of the Companies Act 2006 relating to
the audit of individual accounts by virtue of Section 479A of that
Act. Under the Act the Company has undertaken guarantees for all
outstanding liabilities to which the subsidiary company is subject
at the end of the financial year to which the guarantee relates,
until they are satisfied in full.
|
Company name
|
Company number
|
|
One Heritage Property Development
(UK) Limited
|
11982934
|
|
One Heritage Churchgate
Limited
|
12114319
|
|
One Heritage Lincoln House
Limited
|
12434625
|
|
One Heritage Bank Street
Limited
|
12763845
|
|
One Heritage Oscar House
Limited
|
11331256
|
|
One Heritage St Petersgate
Limited
|
13154858
|
|
One Heritage Red Brick
Limited
|
13178461
|
|
One Heritage Property Services
Limited
|
13426415
|
|
One Heritage Seaton House
Limited
|
13520340
|
|
One Heritage Construction
Limited
|
13761479
|
|
One Heritage Victoria Road
Limited
|
14172104
|
|
St Petersgate Building Management
Limited
|
13979905
|
|
Oscar House Building Management
Limited
|
13981057
|
|
Liberty House Building Management
Limited
|
13986387
|
|
Lincoln House Building Management
Limited
|
12710283
|
-
Events after the reporting date
On 4 July 2024 the One Heritage
Seaton House Limited completed the sale of the building of Seaton
House, Stockport for £0.6m together and exchanged conditional
contracts for the sale of the land to the rear for £0.4m. The
completion of the conditional sale is subject to the buyer
obtaining planning approval and overall total gross proceeds would
therefore be £1.0m on which the Company would recognise a loss
after selling costs of £0.15m which has been provided for as part
of the impairment review undertaken at 30 June 2024 as outlined in
note 13.
On 1 October 2024, the Company
exchanged contracts unconditionally to acquire a 30% stake in the
company that owns the One Victoria project by purchasing shares to
the value of £3.0m from One Heritage Property Development Limited
Hong Kong (“OHPD”). The acquisition will be funded by drawing down
£3.0m from the remaining shareholder loan facility (“Existing
Facility”). The completion date for the acquisition is 29 October
2024, which may be extended or brought forward by agreement between
the parties, with a long stop date of 8 November 2024.
Simultaneous to the investment in
One Victoria, Manchester, the Company has also exchanged contracts
unconditionally on 1 October 2024 for the sale of a portfolio of
completed residential and commercial properties, valued at £7.0m,
to OH UK Holdings Limited (“OHUK”), a company connected with OHPD.
This portfolio includes residential properties at Bank Street,
Sheffield, Lincoln House, Bolton and Oscar House, Manchester, as
well as the commercial unit at St Petersgate, Stockport. The
completion date for the sale is 29 October 2024, which may be
extended or brought forward by agreement between the parties, with
a long stop date of 8 November 2024. With £2.0m of debt linked to
Oscar House as part of this transaction, the net proceeds of the
portfolio sale will reduce from £7.0m million to £5.0m million and
these proceeds will be utilised to reduce the Existing Facility
from £14.0m million to £9.0m.
As part of this restructuring, One
Heritage Property Developments Limited (“OHPD(UK)”) entered into a
new £7.0m loan agreement with OHUK on 1 October 2024 at an interest
rate of 6%, i.e., lower than the previous rate of 7%, such facility
to become available from the date of the completion of the property
transactions outlined above. The loan has a repayment date of 31
December 2025, with an option to extend for up to 36 months. OHUK
is a related party, sharing the same majority shareholders as the
Company and OHPD. This new loan will be drawn down in full on
completion and used to partially repay the Existing
Facility.
The balance of approximately £2.0m
of the Existing Facility will then be written off by OHPD as part
of the restructuring, and the Existing Facility will therefore be
settled in full at completion and terminated.
On 28 October 2024
One Heritage Bank Street Limited and One Heritage Lincoln House
Limited and the related party OH UK Holdings 2 Limited entered
into a 12 month loan facility agreement with Hilco Real Estate
Finance UK Ltd of £2.33m secured upon the completed properties held
by those companies, of which £1.6m is attributable to Bank Street
Sheffield and Lincoln House Bolton.
-
Related party disclosures
Directors’
remuneration
The Directors of the Company were
paid through One Heritage Property Development (UK) Limited, a
subsidiary.
|
£ unless stated
Year ended 30 June
|
Salary
2024
|
Salary
2023
|
Taxable benefits
2024
|
Taxable
benefits
2023
|
Pension
benefits
2024
|
Pension
benefits
2023
|
Total
remuneration
2024
|
Total
remuneration
2023
(r)
|
|
Jason Upton
Bonus
|
116,667
-
|
95,833
500
|
385
|
208
|
1,321
|
1,321
|
118,373
|
97,862
|
|
Yiu Tak Cheung*
Bonus
|
12,500
-
|
15,000
500
|
416
|
-
|
-
|
-
|
12,916
|
15,500
|
|
Anthony Unsworth*
Bonus
|
82,051
-
|
115,794
250
|
629
|
340
|
881
|
1,211
|
83,561
|
117,595
|
|
Stuart Ormisher^
|
19,833
|
-
|
47
|
-
|
-
|
-
|
19,880
|
-
|
|
David Izett
|
30,000
|
29,167
|
-
|
-
|
-
|
-
|
30,000
|
29,167
|
|
Jeremy Earnshaw
|
25,000
|
25,000
|
-
|
-
|
-
|
-
|
25,000
|
25,000
|
|
|
286,051
|
282,044
|
1,477
|
548
|
2,202
|
2,532
|
289,730
|
285,124
|
*remuneration for period from
1st
July 2023 to date of
leaving
^ remuneration for period
8th
February 2024 to 24 March
2024
(r) Restated. The total
remuneration as at 30 June 2023 have been restated to include
taxable benefits and bonus.
Bonus payments
During the year Jason Upton
received a bonus payment of £nil (FY 2023: £500), Yiu Tak Cheung
£nil (FY 2023: £500) and Anthony Unsworth £nil (FY 2023: £250). All
bonus payments received in FY23 were discretionary and in line with
bonus payments made to all members of staff.
Pension benefits
Pension benefits comprise Employer
contributions into the Group’s defined contribution pension
scheme.
Guarantees
The Company’s policy is to provide
financial guarantees only for subsidiaries’ liabilities. At 30 June
2024, the Company has issued a guarantee to certain banks in
respect of credit facilities granted to One Heritage Oscar House
Limited for £2,471,094 (30 June 2023: £4,118,054) and One Heritage
Victoria Road Limited for £679,000 plus interest, fees and expenses
(30 June 2023: £nil). Refer to note 5 and 10 of the Company
financial statements.
Parent and
ultimate controlling party
At the reporting date 65.15% of the
shares are held by One Heritage Property Development Limited, which
is incorporated in Hong Kong. One other shareholder holds more than
5.0% of the shares in the Company.
One Heritage Holding Group Limited,
incorporated in the British Virgin Island, is considered the
ultimate controlling party through its 100% ownership of One
Heritage Property Development Limited.