One Heritage Group plc (OHG) One Heritage Group plc: Full year
results for the year ending 30 June 2022 25-Oct-2022 / 07:00
GMT/BST Dissemination of a Regulatory Announcement that contains
inside information in accordance with the Market Abuse Regulation
(MAR), transmitted by EQS Group. The issuer is solely responsible
for the content of this announcement.
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25 October 2022
ONE HERITAGE GROUP PLC
Full year results for the year ending 30 June 2022
One Heritage Group PLC (LSE: OHG), the UK-based residential
developer focused on the North of England, is pleased to announce
its audited results for the year ended 30 June 2022.
Financial highlights
-- 276% increase in revenue to GBP1.7 million from a combination
of the disposal of a co-living property inBurnley, and revenues
from development management, co-living, and property services.
-- Generated a loss at gross profit level of GBP0.7 million,
impacted by a delay in the completion of itsLincoln House, Bolton
development and an impairment of GBP1.3 million across two of its
development projects due toconstruction price increases.
-- Operating loss of GBP2.1 million (FY21: GBP0.8 million
loss)
-- Inventory increased from GBP7.2 million to GBP15.1 million
due to expenditure on four developments that areexpected to be
completed in the financial year to 30 June 2023.
-- Raised GBP1.5 million via an unsecured corporate bond in
March 2022.
-- Drew down GBP5.5 million in debt via Construction Finance
Facilities, which was used to pay for developmentexpenditure.
-- Utilisation of a further GBP5.4 million of the GBP7.5 million
facility with One Heritage PropertyDevelopment. At year end GBP7.2
million had been utilised leaving head room of GBP0.3million.
-- Net Debt has increased by GBP9.57 million from GBP5.38
million to GBP14.95 million.
Operating highlights
-- Construction is ongoing on three of the Group's development
projects totalling 68 residential units.
-- Signed a service agreement for co-living services and a
further development management agreement whichincreases the Group's
development management projects to four.
-- Latest development management agreement on the One Victoria,
Manchester development, was signed in April2022.
-- Outstanding planning applications for St Petersgate,
Stockport and Churchgate, Leicester were grantedapproval in
February 2022 and August 2022, respectively. An outstanding
application for Seaton House, Stockportexpected to be determined by
the end of 2022.
Post Period Events
-- Completed its first development, Lincoln House, Bolton post
year-end in August 2022, which has made apositive change to its
balance sheet.
-- A subscription at a price of 20.0 pence per share, with
existing and new investors, raised gross proceedsof approximately
GBP1,250,000 on 6 July 2022. One Heritage Property Development
Limited, the majority shareholder inthe Company, acquired 4,500,000
of the Subscription Shares.
-- A tenancy agreement, until August 2023 at the earliest, has
been signed with Bolton NHS Foundation Trustfor 62 of the 88
apartments at Lincoln House, Bolton.
Outlook
-- The Group is expecting to complete a further three of its
developments in the financial year.
-- Residential property services and co-living property services
are both expected to expand in the comingperiod following
completion of its developments and co-living properties under
construction.
-- The Group anticipates and is looking at ways to mitigate
against the continuation of cost pressuresthroughout the
forthcoming period.
Jason Upton, Chief Executive Officer said:
"I am immensely proud of our people and the progress that the
Group has made in what has been a challenging year for the
industry. Our annual report provides a comprehensive view of the
performance of the business and our strategy going forward with
four strategic priorities outlined. Our environment is challenging,
but there continues to be a lack of supply of quality residential
accommodation in the UK, especially within areas of the North of
England. We are particularly well-positioned to satisfy market
demand in our chosen sectors, and confident in delivering upon our
business strategy."
Contacts
One Heritage Group plc
Jason Upton
Chief Executive Officer
Email: jason.upton@one-heritage.com
Anthony Unsworth
Chief Financial Officer
Email: anthony.unsworth@one-heritage.com
Hybridan LLP (Financial Adviser and Broker)
Claire Louise Noyce
Email: claire.noyce@hybridan.com
Tel: +44 (0)203 764 2341
About One Heritage Group
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. In 2020 One Heritage Group PLC became one of the
first publicly listed residential developers with a focus on
co-living.
The Company is listed on the Standard List of the Main Market of
the London Stock Exchange, trading under the ticker OHG.
For further information, please visit the Company's website at
https://www.oneheritageplc.com/.
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 2022.
Chairman's statement
I am pleased to report good progress in our second full year of
trading, this despite there being a number of industry challenges,
which have combined to delay and, in two instances, impair our
development projects, and some internal challenges which have
caused us to change the way in which we deliver our developments
and co-living projects. The agile, measured and decisive way in
which we responded to these challenges puts us in a very good
position to continue to evolve and grow into a market leading full
service residential property developer in the North and the
Midlands.
It is a decisive moment in the life of a relatively young
property development company when it completes its first major
development. This moment has arrived for us with the practical
completion of Lincoln House Bolton, a former part-built office
building which we have transformed into residential use, providing
88 apartments.
This development marks the first of such 'developer as
principal' project completions with three more to follow during
calendar year 2023. Moreover, we have taken opportunities to add to
our development pipeline in Stockport and post year end in July
2022, Eccleshill in West Yorkshire.
I was also pleased to see the signing of a further development
management agreement, another core part of our business, on a 129
unit project in Manchester. We now have four of these management
agreements in place namely One Victoria, One Heritage Tower, North
Church House and the former Oldham County Court.
Ours is a people business, and from time to time, people come
and people go. During the period, at senior level, we were sorry to
say goodbye to our Finance Director Luke Piggin and Independent
Non-Executive Director Jeffrey Pym. In their places, without delay,
we hired Anthony Unsworth (Chief Financial Officer) and Jeremy
Earnshaw (Independent Non-Executive Director) and welcomed both to
the board of directors. Their positive influence and contributions
have been immediate and impressive. We also made further key hires
with a Head of Lettings, Head of Projects and an Acquisitions Lead
post year end June 2022. Our team overall has expanded and
strengthened to take advantage of the opportunities that lie ahead.
A creative and collaborative corporate culture is fast
emerging.
ESG is at the heart of our business and we are continuously
seeking to move forward in this area. I was delighted to agree and
publish our commitments to ESG during the period under review. We
now have the right foundations in place to build on this policy and
expect further improvements during the calendar year 2023.
I would like to thank our shareholders and other stakeholders
for their ongoing support. Additionally, I appreciate the efforts
of our Directors and Employees who continue to adapt to and learn
from the challenges they face. I am looking forward to the next
chapter in the Group's journey but recognise these are uncertain
times with rising energy prices, interest rates and the cost of
living. We are well positioned to continue to execute our strategy
and remain committed to providing residential accommodation and
property services to the highest standard possible.
David Izett
Chairman
24 October 2022
Chief Executive's statement
The Group has made positive progress with our strategy over the
period, despite the challenges caused by cost pressures and labour
shortages that continue to impact the industry. We have
demonstrated our resilience and agility to adapt to these
challenges to date but remain cautious during these uncertain
times.
The headline results for the Group again reflect our infancy as
a business and are partly a result of our first development,
Lincoln House in Bolton, being delayed until August 2022 which is
post year end. With the Group due to complete a further three
development projects before year end 30 June 2023, and having added
new development projects to our pipeline, along with new revenue
streams, we have strong foundations in place which will contribute
towards further growth over the forthcoming period. Our property
services division has undergone a restructure which saw the Group
dispose of its shares in One Heritage Complete in July 2022 for an
initial payment of GBP42,500 after legal costs and a further
GBP200,000 if certain performance milestones are achieved. One
Heritage Complete was a subsidiary of the Group (shareholding 47%),
which provided property management, lettings, refurbishment,
design, fit out and furnishing services. Following a strategic
review by the Group, we decided to bring these same services
in-house and they are now provided by One Heritage Property
Services Limited and One Heritage Construction Limited.
The Group signed a service agreement with Robin Hood Property
Development Limited in January 2022 for Co-Living services.
Furthermore, the Group also signed an additional Development
Management agreement for a 129-unit development called One Victoria
in Manchester City Centre. Both agreements demonstrate further
diversification of income for the Group.
At the start of the period under review, I set out a number of
key strategic priorities for the Group, which I touched on in our
interim results earlier this year. These objectives and the current
progress against each are set out below. 1. SUCCESSFULLY DELIVER
OUR DEVELOPMENT PROJECTS
Our first development reached practical completion in August
2022, Lincoln House, Bolton. Acquired in March 2020, this
part-built office building had been left unfinished and vacant for
nine years. Following our successful planning application in April
2021, we have transformed it into residential use providing 88
apartments with net revenue of GBP10 million.
We are expecting our Liberty House (Bank Street), Sheffield
development, a former courthouse with Grade II listed status being
converted into 23 apartments, to finish within the first half of
2023. As announced in our interim results, the Group terminated its
build contract with the principal contractor Emerald Construction
(North West) Limited ("Emerald"), due to poor performance. They
have since entered liquidation. It is important to add that the
Group had no cash tied up in Emerald. The outstanding works are now
being completed in-house by One Heritage Construction. However,
inflationary increases and additional works being required due to
the historic nature of the building, have meant a significant
increase in development costs. This cost increase has regrettably
resulted in an impairment of the asset.
Our Oscar House, Manchester development (27 Apartments) and our
St Petersgate, Stockport development (18 Apartments and one
Commercial Unit) are also forecasted to finish behind schedule in
the first half of 2023. Oscar House has experienced delays to date
due to design changes and procurement challenges, but recent
progress and the quality of work have been encouraging. Our St
Petersgate development is being delivered in-house by One Heritage
Construction due to the smaller size of the project (18
Apartments), however, along with Liberty House, has seen cost
challenges arising from inflationary increases in materials and
design changes which has also resulted in an impairment of the
asset. The absence of a principal contractor and a fixed cost
contract on both our Liberty House and St Petersgate projects has
been the sole contributing factor in the impairment of these
projects. Despite these setbacks, it is encouraging to see progress
on all our construction sites and the way in which the team have
overcome technical challenges. Our greatest test continues to be
mitigating against industry-wide cost pressures in respect of
building materials, which has consequently impacted two of our
developments (Liberty House and St Petersgate). Cost increases, to
some extent, have been offset by increases in values. For example,
value appreciation influenced our decision to remarket 47 units at
Lincoln House when a bulk purchaser failed to commit to the
purchase. The increase in property prices in the area, and the
reduced construction risk for buyers as the development is now
completed, means we should be able to increase GDV by around
GBP600,000.
The Group had two outstanding planning applications awaiting
determination at the start of the year. St Petersgate, Stockport
was granted approval in February 2022 and Churchgate, Leicester was
granted approval in August 2022 following several extensions of
time requests by the planning authority. An application was also
submitted in June 2022 for the Group's Seaton House, Stockport
development and a decision is expected later this year.
In July 2022, the Group announced the acquisition of land on
Victoria Road, Eccleshill, West Yorkshire. The land has planning
approval for 24 homes and will be the Group's first new build
housing development. We are pleased to add some diversification to
our development pipeline. The location of Eccleshill, between
Bradford and Leeds, is well suited for new build housing and demand
is already demonstrated with Barratt and Keepmoat having new build
housing developments close by. Below is a current summary of our
existing development projects as of 5 October 2022:
Project Location Residential Commercial Expected Net Reservations Previous Expected Expected
units units Revenue * (GBPm) Completion1 Completion
Lincoln House Bolton 88 0 10 52 Q3 2022 Complete
Churchgate Leicester 15 1 3.2 Development Not Q4 2023 H2 2024
Started
Oscar House Manchester 27 0 6.2 27 Q4 2022 H1 2023
(Chester Road)
Bank Street Sheffield 23 0 3.9 22 Q4 2022 H1 2023
St. Petersgate Stockport 18 1 3.1 18 Q4 2022 H1 2023
(Plus House)
Seaton House Stockport 30 0 5.6 Development Not Q4 2023 H2 2024
Started
Victoria Road Eccleshill 24 0 6.5 Development Not Q3 2024 H2 2024
Started
225 2 38.5
*Expected Net Revenue defined as expected Gross Sales less
Selling Costs
1 As at RNS Announcement in a Trading Update on 15th July
2022
Overall we have experienced delays across all of our projects
for a variety of reasons. Those projects within the construction
phase have primarily seen delays due to design changes and
procurement challenges, whereas projects pre-construction have been
impacted by planning delays. Considering the current economic and
market conditions, we are taking a cautious approach on our
projects that are yet to start construction. As such, Churchgate,
Seaton House and Victoria Road will commence construction later
than hoped. It is expected that we will invest further time and
resource in the design and procurement of these projects to
mitigate against the risk of future cost challenges.
Further to the above, we have made good progress with the
developments where we are acting as Development Manager. In April
2022, the Group signed its fourth Development Management agreement
for a 129-apartment development named One Victoria in central
Manchester. Works are expected to commence in Q4 2022 with
completion in Q3 2024. The project has a gross development value of
GBP43.3 million. This development is in addition to development
management projects at One Heritage Tower, Salford (542
apartments), Former Court House, Oldham (42 apartments) and Queen
Street, Sheffield (58 apartments). We are delighted to continue to
expand our development management services over the period and to
secure additional sources of revenue. As a result, projects under
our management have a Gross Development Value totalling GBP215
million. 2. Secure sales for our properties under construction
We continue to experience positive demand for our properties but
have adjusted our sales strategy over the period to delay some
sales to achieve a better balance between reducing sales risk (by
securing sales early) and selling later when values could be
higher. On reflection, both our Liberty House, Sheffield and St
Petersgate, Stockport developments were sold out too soon and, as a
result, we failed to fully benefit from sales price increases
offsetting rising development costs. In light of this, we have now
implemented new internal processes and controls to improve how we
launch a development for sales in the future. At Lincoln House,
Bolton we agreed to sell 47 units to a fund in Q4 2021 but due to
their failure to commit contractually, we decided to re market
these units in June 2022. The increase in property values, along
with the reduced construction risk for buyers with the development
near completion, indicated that around GBP600,000 of additional
revenue could be generated increasing Net Revenues from GBP9.4
million to GBP10 million.
Our sales network also expanded and partnerships strengthened
during the period. This has created a larger pool of buyers, from
Hong Kong to the Middle East and Africa. Whilst we continue to
experience the highest demand from Hong Kong due to the wider One
Heritage network, we will continue to build our network and
reputation overseas. In a time of rising interest rates, we benefit
from the fact that the majority of our purchasers are cash buyers.
Additionally, weak sterling has increased the purchasing power of
our overseas investors. 3. Continue to build our existing letting
and property management businesses through our focus on
Co-livingand newly completed developments
It was hugely disappointing that One Heritage Maintenance and
One Heritage Design, two subsidiaries of One Heritage Complete,
became insolvent in September 2021. The Group owned a 47% stake in
One Heritage Complete. We have subsequently taken steps to
undertake a strategic review and decided to bring the same services
in house and in so doing, incorporating One Heritage Property
Services and One Heritage Construction. Additionally, further steps
were taken to protect investors and landlords against further
consequential issues, which our majority shareholder supported
directly. Following a restructure, we agreed a sale of our 47%
ownership of One Heritage Complete in July 2022 for an initial
GBP42,500 after legal fees, which could generate a further
GBP200,000 if certain performance milestones are achieved.
We made some key hires within our property services division
during the period under review appointing a Property Operations
Director, and more recently in August 2022 a Head of Residential
Lettings. Both will oversee growth of our property services
activity. The Group already has in excess of 250 co-living rooms
under management and we will recruit further to effectively manage
the units from our completed developments.
Our presence in Hong Kong and recent demand from Hong Kong
nationals for UK residential property as a second residence, for
future migration or as investment, means the Group is well
positioned to support this demand. Operating under the brand 'Red
Brick', the Group has been providing a property sourcing service to
Hong Kong nationals and is seeing a steady month on month increase
in requests. This sourcing service is tailored to an individual's
requirement and identifies property across the whole of the UK,
with the Group receiving a fee for an initial search, and fee for
any properties purchased.
We are looking forward to further expansion of our property
services offer over the forthcoming period with more properties
under management and new opportunities being identified to generate
and diversify sources of income. Our new property services website
is due to be launched later in the year and further enhancements to
our services continue to be made as we aim to provide a first-class
service to both landlords and tenants. 4. Recruit exceptional
talent as we identify new opportunities in the market and take on
new projects
We have added some exceptional talent during the period and have
increased our headcount resulting in a move into larger office
space in July 2021. Further hires are anticipated over the
forthcoming period as we refine our delivery particularly in our
development team as we bring in-house certain outsourced services
such as project management and enhance our acquisition resource to
enable us to grow our pipeline. Two key development hires have been
made post year end namely a Head of Projects, as we place more
emphasis on delivery and closer control in the face of rising cost
pressures, and an Acquisitions Lead, to give greater emphasis on
our long-term development pipeline.
With the volume of workload and the number of financial
transactions increasing as a result of bringing more services
in-house, our finance function has also evolved. In June 2022 our
Finance Director, Mr Luke Piggin tendered his resignation. The
board were quick to react to identify and secure his replacement by
appointing Mr Anthony Unsworth who we were delighted to see join us
on 01 August 2022 as Chief Financial Officer. Anthony brings a
wealth of finance and industry experience having been Divisional
Finance Director, Partnerships North at Countryside Properties PLC
for 3 and a half years, and Finance Director North West for Barratt
Developments PLC for 11 years. Further appointments have been made
to our Finance Team in an experienced Financial Controller and a
Management Accountant.
We know that our new recruits will add significant value to the
company. However, at the same time, we continue to focus on our
cost base to ensure that we are operating cost-effectively whilst
sustaining performance levels.
Grow the pipeline of new development opportunities
It has been pleasing to add two new developments to our pipeline
with the acquisition of Seaton House, Stockport, and post year end
in July 2022, Victoria Road, Eccleshill, West Yorkshire. The delays
to our existing developments and industry challenges have meant
that we have remained cautious as to not over commit or commit too
early to acquisitions without the security of successfully
completing our existing projects. As we are expecting to have
completed four of our developments within the financial year end 30
June 2023, we have recently appointed an Acquisitions Lead as we
look to secure new projects to build our pipeline.
2023 STRATEGIC OBJECTIVES
The Group has evolved well over the period under review and
objectives will remain broadly similar for the forthcoming period.
We continue to focus on our developments including our pipeline,
delivery and sales, along with growing additional revenue streams.
With resource added and a solid infrastructure in place the Group's
objectives are focused on delivery to leverage the capacity now
available.
The following four objectives will be in place for the
forthcoming period. 1. Successfully deliver our development
projects 2. Secure sales for our properties under construction 3.
Grow the pipeline of new development opportunities 4. Create
diverse sources of revenue generated through the Group's service
provisions
Industry Overview
The outlook for the UK economy in the remainder of 2022 and 2023
is far from certain with a combination of inflationary pressures
driven by cost increases across energy and food, limited labour
availability and supply chain challenges. Key to the months ahead
will be Government economic policies and the Bank of England's
decisions around interest rates to control inflation. Revised
Office for National Statistics figures released in October showed
that UK gross domestic product for the three months to June this
year remained 0.2% below the level it achieved in the final quarter
of 2019 and is the only G7 economy that remains smaller than it was
before the pandemic. The ONS now says the economy grew 0.2 per cent
between the first and second quarters of 2022. Some details in the
data release revealed that households had been hurt by high
inflation. Real household disposable income fell 1.2 per cent in
the second quarter, the largest of the four successive drops as
fast-rising prices diminished the value of wages.
Since the recent mini budget, there has been significant turmoil
in financial markets. Many experienced investors are struggling to
see how the government would finance the GBP45bn in tax cuts and
GBP72bn of new borrowing, in the absence of a financial forecast or
fiscal strategy. The extreme volatility in the gilts market left
some pension funds facing a liquidity crisis, the Bank of England
launched a GBP65bn emergency intervention to stabilise markets.
Lending markets have also seen a shift in recent times. Following a
significant withdrawal of mortgage products whilst lenders digest
the impact of the mini-budget, new products have now emerged and
the interest rate on a typical five-year fixed rate has topped 6%
for the first time in 12 years. A significant proportion of the tax
cuts have since been reversed following a change in Chancellor with
a financial forecast yet to be announced.
The supply of land through the planning system is critical to
the housebuilding sector. The latest provisional figures show that
permission for 280,000 homes was given in the year to 30 June 2022,
down 16.2% from the 334,000 homes granted permission in the year to
30 June 20211 [Gov.uk planning application statistics for England].
It should be noted that the latest figures are often revised
upwards in later quarters. The latest figures for the year to March
2022 was for 307,000 homes, down 2.2% from the 314,000 homes
granted permission in the year to March 2021. The temporary
legislation allowing local authorities to hold virtual planning
committee meetings was removed in May 2021 and could have impacted
levels of approvals.
Savills' long term forecast to 2026 for the UK rental market is
projecting an increase in the capital value of the second-hand
market across the UK of 17.4%, and the two leading regions for
growth are the North West and Yorkshire with forecasted increases
of 24.3%. The rental value forecast is for an increase of 18.8%
over the five year period for the UK excluding London.
There was less Government support seen in the year to June 2022
for the housing market with the revised Help to Buy scheme not
available for reservations after 31 October 2022, and the SDLT
holiday, which was introduced in July 2020 began to taper in July
2021 before ending on 30 September 2021. The impacts of the SDLT
holiday have impacted mortgage approval levels, but they remain
ahead of those in the five-year period pre-pandemic. Of concern is
housing affordability, reflecting house price inflation since the
pandemic and the recent increase in interest rates. The Halifax
Mortgage Affordability Index has the purchase of a new home at 35%
of after-tax income, which is ahead of the long-term average at
32.7%. The full impact of the recent market turmoil is yet to be
seen.
Despite the mounting risks, one big positive for the sector
remains the fact that housing is chronically undersupplied in the
UK. Also, in the 12 months to 30 June 2022, the average UK house
price increased by 13.0% according to the Halifax. In the same
period, the average household rent has increased by 10.5%,
affecting every region of the UK according to the Home Let Rental
Index. New build housing additions were at 194,060 in the year to
31 March 2021 and this was lower than the pre pandemic levels of
219,120 (a decline of 11.4%) and below the Government target of
300,000 per year. Commentators are suggesting the levels in the
year to 31 March 2022 will be closer to pre pandemic levels. The
under supply of homes, has been a big driver of house price
inflation over the last 30 years.
There are changes impacting the housebuilding industry in the
coming years, which we are mindful of in our planning,
including:
-- The Government Help to Buy scheme will close on 31 March 2023
with reservations under the scheme closingin October 2022.
-- New building regulations with Parts L, F, O and S required on
new developments from the 15 June 2022 andall developments from 14
June 2023 covering carbon emission reductions of 31% from previous
standards.
-- From mid-November legislation will require all national
developments to deliver a biodiversity net gainof 10%. This means
our developments will need to create a 10% measurable improvement
in the biodiversity of thesite developed relative to the site had
development not occurred: and
-- From 2025, the Future Homes Standard will require new homes
to produce 75-80% less carbon emissions thanstandards applicable
during FY22.
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE EVALUATION
(ESG)
We announced in November 2021 our ESG policy which outlined our
commitments to conducting our business activities ethically and
responsibly, and our commitment to embedding ESG initiatives both
in our day-to-day operations and across our developments. An update
on each commitment is outlined below. 1. Supporting local
communities and charitable organisations, particularly in regions
where our developmentsare located.
We are pleased to have supported a number of local charities
including homelessness charities in Manchester; Lifeshare, and
Mustard Tree which our employees raised over GBP2,000 for and
contributed to initiatives such as food collections. Further
fundraising saw contributions made to charities which include
Worldwide Radiology and RAF Benevolent Fund. We continue to offer
all employees up to two days paid leave towards charitable
commitments per year. 2. Investing in the training and education of
our workforce, as well as engaging with local schools andcolleges
to support students with their career pathways.
Investment was made in training, with employees being funded
towards AAT and CIMA qualifications, and external training provided
throughout the year to all staff.
A presentation was held for Manchester University by our
Development Director to their students, discussing the business and
providing career advice for property development. Additionally, a
Development Surveyor attended a discussion at Trafford College
which was focused on the United National Climate Change Conference
(COP26) and careers, attendees were from six schools and sixth
forms in the local area. 3. Being an inclusive employer, committed
to encouraging equality, diversity and inclusion.
We were pleased to support International Women's Day earlier in
the year with Women making up over 60% of our workforce.
Furthermore, we have become a supporter of the Greater Manchester
Good Employment Charter and expect to become a full member in 2023
following an assessment. We value the importance placed on the
value and quality of the workplace, along with providing
opportunities for our people to grow, develop and thrive; the
Greater Manchester Good Employment charter is aligned towards these
values.
Changes have been made to our recruitment process with external
recruiters expected to remove personal details prior to interview
shortlists to encourage fairness. 4. Tackling the UK's shortage of
quality residential accommodation.
In August 2022, we saw our first development complete in Bolton
offering high quality accommodation in an area that lacks
residential housing. We are delighted to have entered an agreement
with Bolton NHS foundation who will house key workers in 62 of the
88 apartments for at least the next 12 months.
Our Co-Living properties, which include bills within rental
payments for tenants, are providing affordable accommodation which
is significant considering the current cost of living crisis
including rising energy costs. Co-Living room rates average around
GBP420 a month inclusive of internet and bills. Running costs of a
traditional property would likely exceed this amount which makes
Co-Living affordable and an essential accommodation class we remain
committed to provide. 5. Considering its environmental impact,
seeking ways to improve the environmental performance of our
developments and reduce our carbon footprint.
Increases to material costs have caused additional pressure
which has impacted the whole industry, and decisions will have
greater commercial emphasis when looking at initiatives to improve
environmental performance. Despite these pressures, the Group has
taken steps to establish an internal committee to review its
environmental impact, and objectives placed which include actions
to improve energy rating and energy saving in particular.
Considering the energy price crisis at present, there is an even
greater urgency for enhancements to improve energy efficiency,
which will in turn reduce energy usage. 6. Raising the awareness of
our tenants and occupiers in respect of how they can reduce their
environmentalimpact.
We are working closely with our building managers on the
strategy to engage our tenants and occupiers relating to
environmental impact. To encourage the right behaviours,
environmental impact is considered within our design at an early
stage, which has resulted in changes such as a bio diverse (brown)
roof on our Queen Street, Sheffield development, energy efficient
lighting, and recycling areas. 7. Engaging with its tenants,
investors, and principal advisors to ensure awareness of their
expectations and responding accordingly.
We believe in building a culture which has ESG at its core, this
has resulted in changes across all areas of the business and how
decisions are made. Processes incorporate ESG which include budget
allowances where appropriate, lessons learnt exercises, and regular
audits of the advisors and consultants the Group uses to ensure
they are aligned with our values and expectations. 8. Upholding the
Quoted Companies Alliance Corporate Governance Code (QCA).
Further details can be found on page 18. 9. Reviewing One
Heritage's ESG strategy and initiatives against the United Nation's
Sustainable DevelopmentGoals, and monitoring and reporting on
this.
The Group is reviewing ways to monitor and report effectively
against the United Nation's Sustainable Development Goals. A
further update will be provided next year in relation to how the
Group intends to do this.
Outlook
In our last annual report, I provided an update on building
material price increases and a year later we continue to face the
same challenge which shows little sign of immediate improvement.
This is further exacerbated by current economic pressures,
including an energy price crisis. The Group is preparing for cost
pressures to continue throughout the forthcoming period and is
looking at ways to mitigate against this e.g. taking steps to
diversify revenue sources for the Group. As development profits are
impacted by cost increases and other changes in the market,
consistent sources of additional revenue continue to be sought and
generated from services the Group provides such as development
management and Co-Living construction in particular. These revenue
sources are important in that they help us maintain a resilient and
sustainable business. As such, they constitute a clear strategic
objective for the period.
With our first, and largest, development completed, along with a
further three developments expected within our year end 30 June
2023, the Group will have strong cash reserves which we intend to
deploy into new development opportunities. Our financial position
was further supported in July 2022 where we raised GBP1.25m through
a subscription which demonstrates the continued support for the
company's strategy.
The North of England continues to be our core market, but we are
evaluating other areas of England such as towns and cities in the
Midlands, that offer similar characteristic to the North in terms
of values and expected economic growth. We remain positive on the
outlook for the sector of the UK housing market in which we
operate. We understand the challenges ahead and are agile enough to
adapt where necessary. Moreover, the diversity of revenue sources
that the Group now has offers us a further degree of insulation
against the economic and industry challenges we may face.
Jason Upton
Chief Executive
24 October 2022
Group's Financial Review
Trading
Our development projects continue primarily to demonstrate the
effectiveness of the business strategy. Many of the development
units under construction have been sold off plan ahead of
completion, and on the majority of projects, One Heritage Group PLC
expects to generate very healthy profits. We have however
experienced some setbacks on specific developments where, despite
implementing mitigating strategies, originally anticipated costs
have increased, and construction delays have impacted overall
returns. Unit sales however have been maintained at very positive
levels, evidencing the success of the geographical focus of the
Group. As the business progresses in to its third full year of
operation, we are confident that the development programme will
continue to deliver the planned investment returns.
The financial results for the year ended 30 June 2022 are the
second full year of trading and continue to reflect the start of
the journey for the Group following incorporation on 21 July 2020
and subsequent placing and full listing on 23 December 2020. More
significant revenues are expected in the new financial year,
starting with the completion of our first development, Lincoln
House, Bolton which practically completed in August 2022 and had
recorded 22 legal completions by 30 September 2022.
Current year Revenue increased by GBP1,283k (276.3%) from
GBP464k to GBP1,747k. The disposal of Nicholas Street Developments,
a related party, generated GBP650k of revenue in the year. The
remaining increase in Revenue is primarily due to the volume of
refurbishment activity taking place within Co-Living, converting
purchased houses to Houses of Multiple Occupancy (HMO) prior to
making the property available for letting. The PLC generates a 5%
profit on cost of this activity, and overall Construction activity
accounted for GBP665k of total Revenue in the year.
Gross Profit has decreased from GBP438k to a loss of GBP705k.
The disposal of Nicholas Street delivered a profit of GBP189k in
the year. An impairment to inventory has been recognised in the
year at Bank Street GBP880k and St Petersgate GBP418k, a total
impact of GBP1,298k. The Bank Street development has experienced
significant delays and unforeseen costs, due to the non-performance
and subsequent liquidation of the previous contractor. This,
coupled with the increase in rising material costs, created a
significant increase in total cost to complete for this
development. The development has 23 units generating net revenue of
approximately GBP3.9m, with one unit remaining to be sold. It is
expected that the development will complete in H1 2023. The St
Petersgate development has experienced the same setbacks as those
of Bank Street on rising material cost. The development has 18
units, all of which have been sold, generating net revenue of
GBP3.9 m. It is expected that this development will complete in H1
2023. The remaining impact was the insolvency in the year of One
Heritage Maintenance and One Heritage Design, in which the Group
owned a stake. Following a strategic review, the same services were
brought in house to control the pipeline of Co-Living properties
and an agreement was signed with Robin Hood Limited in December
benefitting the Group with management fees and transaction fees.
Unfortunately this liquidation and period of change resulted in
activity delays and a reduction in fees.
Operating Loss has increased by GBP1,328k, from GBP783k to
GBP2,111k (169.5%), predominantly due to the Impairment of
Inventory. Administration expenses increased in the year by
GBP(479)k due to the increased headcount from 11 to 22 to ensure
controlled growth of the business. The reversal of a write-down in
investment in associate benefitting profit by GBP74k in the year
(2021: a loss of GBP239k)
Overall the Group generated a pre-tax loss of GBP2,135k (2021: a
loss of GBP809k) impacted by the above factors but mitigated by a
profit on the disposal of Nicholas Street. The weighted average
number of shares in issue in the years to June 2021 and June 2021
was 26,204,555 and 32,428,333 respectively. Underlying basic
earnings per share for the year was (6.6p), a 112.4% decrease
compared to the prior period (2021:(3.1p)).
As the Group commences the new financial year, there is a clear
focus on the core operational areas of Developments, Co-Living, and
Property Services. Roles and responsibilities across the business
are aligned to the sources of revenues and profits. With a growing
pipeline of developments and the strengthening of the teams to
deliver, the Group is in a strong position to achieve controlled
growth and shareholder returns
Balance Sheet
The Balance Sheet structure reflects the anticipated impacts of
forward funding development projects with a combination of
increased debt and equity instruments. Ahead of completing
significant developments in the financial year that commenced on 1
July 2022, the Group increased its borrowing levels in accordance
with the strategy adopted by the group, supported by focused equity
placements where appropriate. As the Group continues to progress,
and with development projects reaching completion and realising
sales, the Balance Sheet will in due course reflect the positive
cash impact of such transactions.
Net assets have decreased by GBP2,135k from GBP2,709k to 574k
due to an increase in borrowings funding future growth, but also
recognising the prudent impairment of assets as described earlier.
The completion of the properties at Lincoln House, Bolton that have
taken place in September and October 2022 have commenced a
significant shift in the balance sheet as the Group moves to
returning profits. As anticipated, no dividends have been declared
in this year or the previous year with losses being reported in the
first two year's trading.
Developments Inventory has increased by GBP7,901k from GBP7,226k
to GBP15,128k. This is predominantly due to expenditure on the 4
developments that are expected to complete in the financial year to
30 June 2023, being Lincoln House, Bank Street, St Petersgate and
Oscar House. The other movements relate to the following
acquisitions and disposals in the year:
-- Acquisition of Seaton House, Stockport on 11 January 2022,
where we paid an initial 10% deposit ofGBP67,500. The remainder is
to be paid in the current calendar year;
-- Disposal of Nicholas Street, a trading property, on the 10
May 2022
On 8 July 2022, post the current balance sheet date, Group also
acquired land on Victoria Road Bradford.
Reported Net Assets per closing shares in issue of 1.8p
represents a 78.9% decrease from 8.4p at 30 June 2022.
Liquidity
The capital structure of the Group continued to evolve with the
issuance of a corporate bond and the signing of new construction
debt facilities in the period. These additional sources of finance
create further diversity in the Group's financing options, reducing
refinancing risk in the future, and also create a path to lower
finance costs in the future.
Net Debt has increased by GBP9,571k from GBP5,376k to
GBP14,947k. This increase is supporting the planned growth of the
Group and includes:
-- Issuance and admission of a GBP1,500k unsecured Corporate
Bond on the Standard List of the Main Market ofthe London Stock
Exchange;
-- Signing of a construction finance facility to cover the
remaining construction costs of our LincolnHouse, Bolton
development. This development has seen the first tranche of units
legally completing in September;
-- Utilisation of a further GBP5,442k of the GBP7,500k facility
with One Heritage Property Development. At yearend GBP 7,190k had
been utilised leaving head room of GBP 309k;
-- The repayment of a loan of GBP 1,135k;
-- During the period the Group drew down a further GBP5.5
million in debt via Construction Finance Facilitieswhich was used
to pay for development expenditure and operating costs;
-- The repayment of the profit participation loan with Robin
Hood Property Development Limited and thesigning of a new service
agreement on 23 December 2021. This agreement covers a combination
of management,transaction, sourcing and construction services and
will provide regular income to the Group. The new agreementalso
allows the Group to provide services in-house in relation to its
development projects and forms part of therestructure of services
previously provided by One Heritage Complete Limited.
In summary, Net Cash outflow used in operating activities was
GBP9,028k, primarily due to the reported loss of GBP2,135k and the
increase in inventories of GBP6,454k relating to developments being
completed in the year to 30 June 2023.
Anthony Unsworth
Chief Financial Officer
24 October 2022
Statement of Directors' Responsibilities
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 Group 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. In addition the Group financial statements
are required under the UK Disclosure Guidance and Transparency
Rules to be prepared in accordance with International Financial
Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
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
withinternational accounting standards in conformity with the
requirements of the Companies Act 2006 and, as regardsthe group
financial statements, International Financial Reporting Standards
adopted pursuant to Regulation (EC) No1606/2002 as it applies in
the European Union; ? for the parent Company financial statements,
state whether applicable UK accounting standards have beenfollowed,
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 parentCompany 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 standardsand Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial positionand loss of the Company. ? The
Annual Report includes a fair review of the development and
performance of the business and thefinancial position of the
Company, together with a description of the principle risks and
uncertainties that itfaces.
By order of the Board
Jason Upton
Chief Executive Officer
24 October 2022
Independent Auditor's Report to the Members of One Heritage
Group PLC Our opinion
We have audited the financial statements of One Heritage Group
plc (the "Company") and its subsidiaries (together, the "Group"),
which comprise the consolidated statement of financial position and
the Company's balance sheet as at 30 June 2022, the consolidated
statements of comprehensive income, changes in equity and cash
flows and the Company's statement of changes in equity for the year
ended 30 June 2022, and notes, comprising significant 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'saffairs as at 30 June 2022 and of the
Group's loss for the year then ended; ? the Group financial
statements have been properly prepared in accordance with
UK-adopted internationalaccounting standards; ? the parent Company
financial statements have been properly prepared in accordance with
UK accountingstandards, including FRS 101 Reduced Disclosure
Framework; and ? the financial statements have been prepared in
accordance with the requirements of the Companies Act2006. 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 believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the
audit committee.
We were first appointed as auditor by the directors on 25
January 2021. The period of total uninterrupted engagement is for
the 2 financial years ended 30 June 2022. We have fulfilled our
ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the FRC
Ethical Standard as applied to listed public interest entities. No
non-audit services prohibited by that standard were provided. 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 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. We summarise below
the key audit matters, in decreasing order of audit significance,
in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public
interest entities, our results from those procedures. These are
unchanged from 2021. These matters were addressed, and our results
are based on procedures undertaken, in the context of, and solely
for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate
opinion on these matters.
The risk Our response
Our audit procedures included:
Control design:
Documenting and assessing the design and
implementation of the processes and
controls regarding impairment of
inventory;
Challenging managements' assumptions and
inputs:
Estimation uncertainty We critically assessed the appropriateness
of key assumptions and the commercial
There is a risk that the carrying value of inventory viability of sites as determined by
is overstated. The carrying value of inventory is management through comparison against
assessed by management for impairment by reference to historic data and consideration of current
current market information and assumptions. In market conditions;
performing the assessment, management undertake
quarterly valuations to determine the expected outcome
of each development and hence identify if any
Impairment of impairment is required. Assessing impairment model:
inventory -
developments and The carrying value of inventory is determined by For each development site we compared the
trading property reference to a number of assumptions such as sales actual costs incurred to date to the
values, costs to complete that are inherent in site budgeted costs and agreed the budgeted
GBP15,127,758 (2021 forecasts and the level of provisioning, if any, costs to construction contracts where they
GBP7,226,496) required for impairment. These assumptions are had been signed;
inherently subjective and therefore may be open to
Refer to the Audit management bias to over or understate inventory.
Committee Report on
page 29, note 5 The effect of these matters is that, as part of our Forecast sales for each development site
accounting policy and risk assessment, we determined that the assumptions were vouched to pre-sales and bookings
note 13 disclosures. used in the impairment assessment have a high degree where available and, where not available,
of estimation uncertainty, with a potential range of to budgeted sales listings (and assessed
reasonable outcomes greater than our materiality for for reasonableness based on market prices
the financial statements as a whole, and possibly many for similar developments);
times that amount.
For each development we recalculated the
impairment charge by deducting the
estimated costs to complete from the
estimated selling price;
Assessing disclosures:
We assessed the adequacy of the related
disclosures in the Financial Statements.
Our results:
The results of our testing were
satisfactory and we found the carrying
value of inventory recognised to be
acceptable.
The risk Our response
Our audit procedures included:
We considered 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:
-- Agreeing the committed level of
funding from the Company's parent company
(One Heritage Property Development
Limited, Hong Kong) to the facility
agreement and confirmed the balance drawn
and undrawn as at the year end;
-- Inspecting the financial
support provided by the Company's parent
company and related company (confirming
deferral of repayment of respective loans
until the Group can afford to repay them
without impacting its going concern);
-- Assessing the ability of the
Disclosure quality Company's parent company to meet the
committed facility by examining the
The financial statements explain how the Board has latest unaudited management accounts of
formed a judgement that it is appropriate to adopt the ultimate parent company and a letter
the going concern basis of preparation for the of support which had been provided by the
Group and parent Company. ultimate parent company to the Company's
parent company;
That judgement is based on an evaluation of the -- Assessing the appetite of the
inherent risks to the Group's and Company's parent company to meet any further
business model and how those risks might affect the funding requests by examining the history
Group's and Company's financial resources or of requests made and funding received in
ability to continue operations over a period of at the year and post year end;
least a year from the date of approval of the -- Inspecting the indication to
financial statements. extend maturity received from the lenders
regarding the two construction loans due
to be repaid in November 2022 and
December 2022;
The risks most likely to adversely affect the -- Agreeing post year-end receipts
Group's and Company's available financial resources from sale of units in completed
over this period were: developments to bank statements or
repayment of the related construction
-- Continued support from the parent finance loans;
company and related company (in the nature of a -- Assessing whether the forecast
Going concern confirmation from each company that their proceeds from the sale of developments
respective loans, due to mature in December projected to complete in the forecast
Refer to Audit 2022 and January 2023, will not be demanded for period to 31 December 2023 (net of
Committee Report on repayment until such a time that the Group can repayment of related construction finance
page 29 and note 3 afford to repay them without impacting on its loans), supplemented by continued
disclosures in the going concern); financial support from the Company's
Group financial -- The extension of the maturity of the parent company and related company (as
statements. two construction loans due to be repaid in detailed above) are sufficient to provide
November 2022 and December 2022 to match the Group and Company with sufficient
forecast completion dates of the related liquidity to meet committed expenditure
developments; and in the forecast period up to 31 December
-- The timely completion and sale of 2023);
property developments.
Sensitivity analysis:
There are also less predictable but realistic
second order impacts, such as the erosion of -- Considering sensitivities over
customer or supplier confidence, which could result the level of available financial
in a rapid reduction of available financial resources indicated by the Group's and
resources. Company's financial forecasts taking
account of plausible (but not
The risk for our audit was whether or not those unrealistic) adverse effects that could
risks were such that they amounted to a material arise from these risks individually and
uncertainty that may have cast significant doubt collectively. We did this by stress
about the ability of the Group and the Company to testing the identified critical factors,
continue as a going concern. Had they been such, namely delaying the timing of the planned
then that fact would have been required to have sales of developments by 3 months;
been disclosed.
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
delaying the planned development of
properties, 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 note 3 to the
financial statements gives 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
disclosure in note 3 without any material
uncertainty to be acceptable.
Recoverability of
parent Company's Our audit procedures included:
loans to and
investment in Test of details:
subsidiaries
Low risk, high value Comparing the carrying amount of 100% of the
Loans to subsidiaries parent Company's loans to and investments in
GBP2,183,153 (2021: The carrying value of the parent Company's loans to subsidiaries with the relevant subsidiaries'
GBP1,070,770) and and investment in subsidiaries represents 99% of balance sheet and budgets for the underlying
investment in the parent Company's total assets. The assessment development and trading properties to
subsidiaries of carrying value is not at a high risk of identify whether their financial position
GBP2,750,100 (2021: significant misstatement or subject to significant supported the carrying amount of the parent
GBP2,750,100). judgement as the carrying value is supported by the Company's loans to and investments in those
net asset value of the subsidiaries and the profits subsidiaries and evaluating budgeted
Refer to the Audit forecast to be made on sale of the development and forecasts in line with our knowledge of the
Committee Report on trading properties owned by the subsidiaries (which entity. This procedure was also relevant for
page 14, note 1 are stated at cost in the financial statements). our assessment of going concern.
accounting policy and However, due to its materiality in the context of
notes 2 and 3 the parent Company financial statements, this is Our results:
disclosures in the considered to be the area that had the greatest
Company financial effect on our overall parent Company audit. The results of our testing were satisfactory
statements. and we found the carrying value of the parent
Company's loans to and investment in
subsidiaries recognised 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 GBP163,000 (2021: GBP65,000), determined with reference
to a benchmark of Group total assets of GBP18,440,109 (2021:
GBP8,938,904), of which it represents approximately 0.88% (2021:
0.73%).
Materiality for the Company financial statements was set at
GBP42,000 (2021: GBP33,000), determined with reference to a
benchmark of Company total assets of GBP5,067,679 (2021:
GBP3,865,852), of which it represents approximately 0.83% (2021:
0.85%).
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 financial statements as a whole. Performance
materiality for the Group was set at 65% of materiality for the
financial statements as a whole, which equates to GBP106,000 (2021:
GBP42,000). The level of performance materiality for the Group has
been set at 65% (2021: GBP65%), 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% (2021: 75%), which equates
to GBP32,000 (2021: GBP24,000).
We reported to the Audit Committee any corrected or uncorrected
identified misstatements exceeding GBP8,000 (2021: GBP3,000) for
the consolidated financial statements and GBP2,000 (2021: GBP1,600)
for the Company financial statements, in addition to other
identified misstatements that warranted reporting on qualitative
grounds.
Our audit of the Group and Company 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 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 financial statements (the "going
concern period").
An explanation of how we evaluated management's 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 financial statements is
appropriate; and
- 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's or Company's ability to continue
as a going concern for the going concern period. 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 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 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 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 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 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. Other information
The directors are responsible for the other information, which
comprises the strategic report, the directors' report and the other
information included in the annual report, but does not include the
financial statements and our auditor's report thereon. Our opinion
on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
Strategic report and directors' report
Based solely on our work on the other information:
-- 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 thefinancial statements; and
-- in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors' remuneration report
In our opinion the part of the Directors' Remuneration Report to
be audited has been properly 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 receivedfrom branches not
visited by us; or
-- the parent Company financial statements and the part of the
Directors' Remuneration Report to be auditedare 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 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 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 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 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
Heritage Court
41 Athol Street
Douglas
Isle of Man
24 October 2022
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
For the year ended 30 June 2022
Year to Year to
GBP unless stated Notes
30 June 2022 30 June 2021
Revenue 7 1,747,221 464,367
Revenue - developments 1,097,221 464,367
Revenue - trading property 650,000 -
Cost of sales (2,452,644) (26,400)
Cost of sales - developments (694,531) (26,400)
Cost of sales - trading property (460,553) -
Cost of sales - Impairment of inventory 13 (1,297,560) -
Gross profit (705,423) 437,967
Reversal/(write-down) in investment in associate 15 74,368 (239,316)
Other income 2,386 21,223
Administration expenses 8 (1,481,896) (1,002,892)
Operating (loss) for the year (2,110,565) (783,018)
Profit on disposal of subsidiary - 26,423
Gain on disposal of fixed asset 5,096 -
Finance expense 10 (29,466) (52,382)
(Loss) before taxation for the year (2,134,935) (808,977)
Taxation 11 - -
(Loss) after taxation for the year (2,134,935) (808,977)
Other comprehensive income - -
COMPREHENSIVE INCOME attributable to shareholders (2,134,935) (808,977)
Weighted average shares in issue over the period 32,428,333 26,204,555
(Loss) per share (GBp) (6.6) (3.1)
Diluted (loss) per share (GBp) (6.6) (3.1)
The accompanying notes on pages 51 to 76 form an integral part
of the financial statements.
Consolidated statement of financial position
As at 30 June 2022
30 June 2022
GBP unless stated Notes 30 June 2021
ASSETS
Non-current assets
442,706
Property, plant and equipment 12 374,475
Intangible assets 2,324 -
376,799 442,706
Current assets
Cash and cash equivalents 974,201 204,147
Inventory - developments 13 15,127,758 6,790,676
Inventory - trading property 14 - 435,820
Investment in associate 15 50,000 -
Financial assets at fair value through profit or loss 16 - 397,796
Trade and other receivables 17 1,911,351 667,759
18,063,310 8,496,198
TOTAL ASSETS 18,440,109 8,938,904
LIABILITIES
Non-current liabilities
Borrowings 19 6,679,902 2,276,079
6,679,902 2,276,079
Current liabilities
Trade and other payables 20 1,944,632 649,351
Borrowings 19 9,241,139 3,304,103
11,185,771 3,953,454
TOTAL LIABILITIES 17,865,673 6,229,533
EQUITY
Share capital 23 324,283 324,283
Share premium 23 3,568,725 3,568,725
Retained earnings (3,318,572) (1,183,637)
TOTAL EQUITY 574,436 2,709,371
TOTAL LIABILITIES AND EQUITY 18,440,109 8,938,904
Shares in issue 32,428,333 32,428,333
Net asset value per share (GBp) 1.8 8.4
These financial statements were approved by the board of
directors on 21 October 2022 and were signed on its behalf by:
Jason David Upton
Company registration number: 12757649
The accompanying notes on pages 51 to 76 form an integral part
of the financial statements.
Consolidated statement of cash flows
For the year ended 30 June 2022
Year to
Year to
GBP unless stated Notes 30 June 2022
30 June 2021
Cash flows from operating activities
Loss for the year/period before tax (2,134,935) (808,977)
Adjustments for:
(Reversal)/write-down in equity accounted investee (74,368) 239,316
Finance expense 10 29,466 52,382
Profit on disposal of subsidiary - (26,423)
Profit on disposal of fixed assets (5,096) -
Depreciation of property, plant and equipment 108,983 42,106
Movement in working capital:
Increase in trade and other receivables (1,583,472) (166,439)
Increase in inventories (6,443,437) (5,564,921)
Increase in trade and other payables 1,074,785 71,719
Cash from operations (9,028,074) (6,161,237)
Income taxation paid 11 - -
Dividend received from associate - 43,564
Net cash used in operating activities (9,028,074) (6,117,673)
Cash flows from investing activities
Disposal of subsidiaries, net of cash and cash equivalents - (66,030)
Purchases of property, plant and equipment (56,313) (31,048)
Disposal of property, plant and equipment 18,333 -
Net cash used in investing activities (37,980) (97,078)
Financing cash flows
Issue of share capital - 1,538,400
Cost of share issue - (395,492)
Interest paid (1,044,771) (460,253)
Proceeds from borrowings 7,131,436 10,667
Proceeds of related party borrowing 4,583,667 5,046,710
Borrowings repaid (770,000) -
Payments made in relation to lease liabilities (64,224) (32,932)
Net cash generated from financing activities 9,836,108 5,707,100
Net change in cash and cash equivalents 770,054 (507,651)
Opening cash and cash equivalents 204,147 711,798
Closing cash and cash equivalents 974,201 204,147
The accompanying notes on pages 51 to 76 form an integral part
of the financial statements.
Consolidated statement of changes in equity
For the year ended 30 June 2022
Share Share Retained Total
GBP unless stated
capital premium earnings Equity
Balance at 01 July 2021 324,283 3,568,725 (1,183,637) 2,709,371
Loss for the period - - (2,134,935) (2,134,935)
Other comprehensive income for the year - - - -
Total comprehensive income for the year 324,283 3,568,725 (3,318,572) 574,436
Issue of share capital - - - -
Cost of share issue - - - -
Balance at 30 June 2022 324,283 3,568,725 (3,318,572) 574,436
For the year ended 30 June 2021
Share Share Retained Total
GBP unless stated
capital premium earnings Equity
Balance at 01 July 2020 (unaudited) - - (374,660) (374,660)
Loss for the period - - (808,977) (808,977)
Other comprehensive income for the year - - - -
Total comprehensive income for the year - - (1,183,637) (1,183,637)
Issue of share capital 324,283 3,964,217 - 4,288,500
Cost of share issue - (395,492) - (395,492)
Balance at 30 June 2021 324,283 3,568,725 (1,183,637) 2,709,371
The accompanying notes on pages 51 to 76 form an integral part
of the financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2022 1. Reporting entity
One Heritage 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
is that of property development.
These consolidated financial statements ("Financial Statements")
as at the end of the financial year to 30 June 2022 comprise of the
Company and its subsidiaries. A full list of companies consolidated
in these Financial Statements can be found in Note 28. 2. Measuring
convention
The financial statements are prepared on the historical cost
basis except that the following assets and liabilities are stated
at their fair value: financial assets at fair value through profit
or loss. 3. 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 pages 77 to 83. 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 21 October 2022.
Segment reporting
During the financial year the Group has begun operating with
distinct Segments, having previously managed the Group as one
distinct entity. This has been driven by the Group incorporating
entities to manage construction and property services, which were
previously outsourced. As a result, the Group is not reporting
comparable information for the operating segments in the
business.
The Group operates in four operating segments, each managed by a
Director 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 Operations
segments
Developments Internally financed and managed development activities
Construction Construction services provided to internally owned and managed developments, as well as Co-living
construction services offered to related parties.
Property Property letting and management services
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 Directors 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 Group-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 GBP8.3 million
(excluding inventory balances totalling GBP15.1 million) as at 30
June 2022, a loss for the year then ended of GBP2.1 million and
operating cash outflows for the year of GBP9.0million, 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 for the period
to 31 December 2023 which indicates that, taking account of
reasonably possible downsides, the Group will have sufficient
funds, through the proceeds from sale of four developments (net of
repayment of related construction finance loans (note 19)),
supplemented by continued financial support from its parent
company, One Heritage Property Development Limited ("OHPD"), and a
related party, One Heritage SPC Limited ("OHSPC"), to meet its
liabilities as they fall due for that period. OHPD and OHSPC have
confirmed that their respective loans due to mature in December
2022 and November 2022 will not be demanded for repayment until
such a time that the Group can afford to repay them without
impacting on its going concern. With respect to the two
construction loans due to be repaid in November 2022 and December
2022 (note 19), the counterparties have indicated their intention
to extend the maturity of the loans to match forecast completion
dates of the related developments.
As with any company placing reliance on other group/related
entities for financial support or third-party loan counterparties
extending the maturity dates in line with their indications, 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, the directors are confident that the Group will
have sufficient funds to continue to meet its 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. 4. 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 lowerof cost and net realisable value. The
Group applies judgement to determine the net realisable value of
developmentsat a point in time that the property is partly
developed and compares that to the carrying value. The Group
hasundertaken an impairment review of all of the Inventory and
determined that an impairment is appropriate on two ofthe
developments.
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 Finance Director has overall
responsibilities for overseeing all significant fair value
measurements,
The Finance Director 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 Finance Director 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 orliability, 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 (unobservableinputs)
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. 5. Significant accounting policies
Business Combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement.
Assets acquired and liabilities assumed are generally measured
at their acquisition-date fair values.
Associates are all entities over which the Group has significant
influence but not control or joint control. This is generally the
case where the group holds between 20% and 50% of the voting
rights. Investments in associates are accounted for using the
equity method of accounting, after initially being recognised at
cost.
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): a. 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. b. 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. c. Construction services
The Group primarily operates under cost plus margin agreements
and therefore revenue is recognised when the relevant cost has been
incurred. d. 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 e. Other income
The Group generates rental income from Trading Properties. This
has been recognised as other income rather than revenue as it is
not expected to be a recurring source of income and is not a main
trading activity of the Group.
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.
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.
Finance charges, including premiums payable on settlement or
redemption, and direct issue costs, are accounted for on an
accruals basis in profit or loss using the effective interest
method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they
arise.
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. The group
considers that its inventories are qualifying assets.
Foreign currencies
These consolidated financial statements are presented in Pound
sterling, which is the Company's functional and presentational
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 statement of financial statement 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
assetthroughout 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, and
lease liabilities are included in current liabilities and
non-current liabilities 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 so as 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 and loss.
Depreciation is provided at the following annual rates in order
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 and 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")
-- Measured subsequently at fair value through other
comprehensive income ("FVOCI")
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
rate 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.
The Group currently has no financial assets measured at
FVOCI.
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
subsequently classified into one of the following measurement
categories:
-- Measured at amortised cost
-- Measured subsequently at fair value through profit or
loss
Non-derivative financial liabilities are measured at FVTPL when
they are considered held for trading or designated as such on
initial recognition.
The Group has no non-derivative financial liabilities measured
at FVTPL.
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 itdoes not retain control of the
financial asset.
The Group enters into transactions whereby it transfers assets
recognised in its statement of financial position but retains
either all or substantially all of the risks and rewards of the
transferred assets. In these cases, the transferred assets are not
derecognised.
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 as revenue upon legal completion.
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 Company 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.
Inventory - trading properties
Trading property comprises those properties that in the
Directors' view are not held for long-term rental income or capital
appreciation and are expected to be disposed of within one year of
the reporting date or to be refurbished with the intention to
sell.
Trading property is carried at the lower of cost and net
realisable value. Net realisable value is the estimated selling
price based on intended use in the ordinary course of business,
less the estimated costs of completion and selling costs.
The amount of any write down of trading property to net
realisable value is recognised as an expense in the period the
write down occurs. Should a valuation uplift occur in a subsequent
period, the amount of any reversal shall be recognised as a
reduction in the previous write down in the period in which the
uplift occurs. This may not exceed the property's cost.
The sale of trading property is recognised as revenue when the
buyer obtains control of the property. Total costs incurred in
respect of trading property are recognised simultaneously as a cost
of sale.
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 and 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 and 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. 6. 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.
The revenue generated from Robin Hood Property Development
Limited, a related party, amounted to GBP590,952 for the year. This
amounted to 34% of the total revenue of the Group. This was derived
from three segments of the Group, see note 7.
Segment information for these businesses are 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 2022
GBP unless stated Developments Construction Property services Corporate Total
Revenue - developments 227,334 665,224 158,449 46,214 1,097,221
Revenue - trading property 650,000 - - - 650,000
Cost of sales - developments - (618,496) (76,035) - (694,531)
Cost of sales - trading property (460,553) - - - (460,553)
Gross profit 416,781 46,728 82,414 46,214 592,137
Reversal in investment in associate - - - 74,368 74,368
Impairment of inventory (1,297,560) - - - (1,297,560)
Other income - - - 2,386 2,386
Administration expenses (320,868) (64,000) (210,250) (773,232) (1,368,350)
Other expenses - - - (113,546) (113,546)
Operating loss (1,201,647) (17,272) (127,836) (763,810) (2,110,565)
Gain on disposal of fixed asset - - - 5,096 5,096
Finance expense - - - (29,466) (29,466)
(Loss) for the year (1,201,647) (17,272) (127,836) (788,180) (2,134,935)
GBP unless stated Developments Construction Property services Corporate Total
Total assets 15,850,135 95,639 8,864 2,369,253 18,323,891
Total liabilities (16,191,597) (44,113) (5,876) (1,507,869) (17,749,455)
Net assets (341,462) 51,526 2,988 861,384 574,436 7. Revenue
GBP unless stated 30 June 2022 30 June 2021
Revenue
Developments 227,334 124,199
Trading property 650,000 -
Construction, Property Services & Corporate 869,887 340,168
Construction 665,224 -
Property services 158,449 -
Corporate 46,214 -
1,747,221 464,367
Cost of sales
Developments* (1,297,560) -
Trading property (460,553) -
Construction, Property Services & Corporate (694,531) (26,400)
Construction (618,496) -
Property services (76,035) -
Corporate - -
(2,452,644) (26,400)
Gross (loss)/profit (705,423) 437,967
Developments consist of three development management agreements
with One Heritage Tower Limited, ACT Property Holding Limited and
One Heritage North Church Limited. The Group earns a management fee
of 0.75% GBP123,150 (2021: GBP101,467) 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. The ACT Property
Holding Limited agreement has a 20% profit share of the net profit
generated by the development.
The One Heritage North Church Limited agreement splits the fees
into three: 1. 2% of total development cost (GBP104,184: 2021:
GBP7,732) , paid monthly over the period of the development; 15% of
net profit, paid on completion; 1% on any debt finance raised.
During the year the Group earned a 1.0% fee GBPnil (2021:
GBP15,000) in relation to the signing of the One Heritage North
Church Limited Investment Agreement, agreed by the parties.
The Group has not recognised any 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.
Also included in the developments is the sale of the Nicholas
Street trading property for GBP650,000. See note 14. The cost of
sale was GBP460,553.
Construction generates revenue from two entities; Robin Hood
Property Development Limited and One Heritage North Church Limited.
During the 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 GBP534,619 of revenue in the year. The
Group has undertaken work for One Heritage North Church Limited on
a cost plus 7.0% margin basis, this generated revenue of GBP130,605
in the year.
The development and construction revenues have been generated
through related parties. Further details can be found in note
24.
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
(GBP55,057: 2021: GBPnil). Included in this is rent received from
Nicholas Street Developments Limited, a related party (GBP56,333:
2021: GBPnil). The Group entered into a profit participation
agreement with Robin Hood Property Development Limited and earned
GBP26,163 for the year (2021: GBPnil). This agreement terminated in
the year and was replaced by a management agreement.
It also includes any rental income collected for properties
owned by the Group.
The Corporate revenue is from contracts signed with Robin Hood
Property Development Limited and One Heritage Portfolio Rental
Limited and is in consideration for a range of administration
services and use of the Group's office. This is clarified as
related party. Further details can be found in note 24.
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 Nature and timing of satisfaction of performance
product/ obligations, including significant payment terms Revenue recognition policies
service
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 Revenue for the management fee is recognised
monthly basis after the service has been undertaken. monthly as long as the group continues to be the
development manager during the relevant
calculation period.
Development Arrangement fee
management
The performance obligation is at the point that the Assuming that the Group continues to be the
service is completed. Payment is due after completion. 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.
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.
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.
Construction Revenue is recognised when the associated cost is
revenue incurred.
Payment is generally made within 30 days of the
invoice being raised.
The Group offers a profit participation loan (the
obligation) to the relevant entity and in return it
expects 15.0% of the net profit on completed property
transactions (its compensation). These are defined as
the Proceeds, less the acquisition and project costs.
Completed transactions are defined as at exchange,
Property where the rights and responsibilities of the property
Services - fall to another party.
Revenue is recognised on completion of a property
Profit sale where it is irreversible.
participation
loan The payment for these amounts are made after the
calendar quarters the amount relates to.
No warranties are provided.
The profit participation loan was repaid during the
year.
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.
Property Management fee income is recognised at the point that
Services - the service is provided.
Revenue is recognised when service is provided for
Management management fees and at the point the service is
fees and completed for other services.
other Other income is recognised at the point that the
services service is completed.
Payments for these services are made within 90 days of
the service being undertaken.
The Group provides services, which include
Corporate administration, reporting, risk management, shared Revenue is recognised monthly as long as the Group
revenue office space and other services, to related parties. continues to provide the service during the
Revenue is recognised for the period in which the relevant calculation period.
service is undertaken.
*Representing impairment of inventory (see note 13) 8.
Administration expenses
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Staff costs 908,946 544,980
Depreciation 108,983 42,106
Auditors' remuneration 81,106 62,500
Other administration expenses 382,861 353,306
1,481,896 1,002,892
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Services provided by the auditor
- Interim audit of parent company and consolidated financial
20,441 19,665
statements
- Audit of parent company and consolidated financial statements 56,925 42,835
- Audit of parent company and consolidated financial statements
3,740 -
(under-provision in respect of prior year)
81,106 62,500 9. Staff costs and employees
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
The aggregate remuneration comprised:
- Wages and salaries 816,982 488,082
- National insurance 78,414 51,679
- Pension costs 13,550 5,219
Average number of employees 23 11 10. Finance costs
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Interest charged on lease liabilities 15,263 6,207
Interest paid on borrowings 1,036,278 460,253
Amount capitalised in disposed subsidiaries - (68,000)
Amount capitalised (1,022,075) (346,078)
29,466 52,382 11. Income tax expense
The Group has generated a loss in the year and the prior year,
and therefore has not recognised any taxation charge or credit.
Tax losses carried forward
Tax losses for which no deferred tax asset was recognised expire
as follows:
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Tax (losses) (2,209,303) (569,661)
Accumulated carried forward losses 3,021,758 812,455
The carried forward losses do not expire as they relate to
trading activity that is expected to continue.
Reconciliation of effective tax rate
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Loss for the year/period (2,134,935) (808,977)
Total tax expense - -
Loss excluding taxation (2,134,935) (808,977)
Tax using the UK corporate tax rate of 19% 405,633 153,706
Current year losses for which no deferred tax asset was recognised (419,763) (108,236)
Non-deductible expenses - (45,470)
Non-taxable income 14,130 -
Total taxation expense - - 12. Property, plant and equipment
As at 30 June 2022
Right Office Motor
GBP unless stated Fixtures and fittings Plant and equipment Total
of use Equipment vehicles
Cost
At 30 June 2021 442,612 14,073 28,933 34,634 - 520,252
Additions - 9,109 43,731 - 1,149 53,989
Disposals - - - (34,634) - (34,634)
At 30 June 2022 442,612 23,182 72,664 - 1,149 539,607
Accumulated depreciation
At 30 June 2021 59,090 1,678 2,543 14,235 - 77,546
Charge for the period 88,522 3,341 9,929 7,162 29 108,983
Disposal - - - (21,397) - (21,397)
At 30 June 2022 147,612 5,019 12,472 - 29 165,132
Carrying amount
At 30 June 2021 383,522 12,395 26,390 20,399 - 442,706
At 30 June 2022 295,000 18,163 60,192 - 1,120 374,475
As at 30 June 2021
Right Office Motor
GBP unless stated Fixtures and fittings Total
of use Equipment vehicles
Cost
At 30 June 2020 154,149 4,169 8,433 33,990 200,741
Additions 288,463 9,904 20,500 644 319,511
At 30 June 2021 442,612 14,073 28,933 34,634 520,252
Accumulated depreciation
At 30 June 2020 28,261 407 1,107 5,665 35,440
Charge for the period 30,829 1,271 1,436 8,570 42,106
At 30 June 2021 59,090 1,678 2,543 14,235 77,546
Carrying amount
At 30 June 2020 125,888 3,762 7,326 28,325 165,301
At 30 June 2021 383,522 12,395 26,390 20,399 442,706
Right of use asset
GBP unless stated 30 June 2022 30 June 2021
Amount recognised in the statement of financial position:
Right of use
Buildings 295,000 383,522
295,000 383,522
Lease liability
Non-current 267,125 337,742
Current 86,623 64,967
353,748 402,709
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Amount recognised in the profit and loss:
Depreciation on right of use building 88,522 30,829
Interest expense 15,263 6,207
Amount recognised in the statement of cash flow:
Lease payments made 64,224 32,932
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. 13. Inventory -
developments
GBP unless stated 30 June 2022 30 June 2021
Residential developments
- Land 4,394,799 4,112,644
- Construction and development costs 9,322,221 2,277,902
- Capitalised interest 1,410,738 400,130
15,127,758 6,790,676
The Group has a non-refundable right to purchase land at
Churchgate, Leicester, which will result in the Group paying an
additional GBP120,000 on the successful approval of planning on the
property. The Group has recognised GBP246,523 (30 June 2021:
GBP131,235) in inventory in relation to this in the period.
During the year, the Group has taken the decision to impair the
value of its Bank Street and St Petersgate developments, which are
owned by wholly owned subsidiaries, One Heritage Bank Street
Limited and One Heritage St Petersgate Limited. This was a
consequence of significant cost pressures and issues with the
previous contractors. The impairment totalled GBP1,297,560 in the
year (2021: GBPnil). 14. Inventory - trading properties
GBP unless stated 30 June 2022 30 June 2021
Opening 435,820 1,179,657
Disposals (444,331) (768,651)
Additions 8,511 24,814
Closing - 435,820
The Group disposed of Nicholas Street Development Limited during
the financial year. This entity held the Nicholas Street property.
This property was valued at GBP650,000 by Management, with the net
proceeds received adjusted to reflect the other assets and
liabilities in Nicholas Street Development Limited at the date of
disposal. Nicholas Street Development Limited was sold to One
Heritage Property Rental Limited, a related party. 15. Investment
in associate
On 17 March 2019, the Group invested GBP258,512 to acquire a
47.0% stake in One Heritage Complete Limited. One Heritage Complete
provides letting and facilities and property management for
investors in Co-living properties. On 05 October 2021 two
subsidiaries of One Heritage Complete Limited, namely One Heritage
Maintenance Limited and One Heritage Design Limited were put into
liquidation and the investment in associate was written down to nil
in the 30 June 2021 annual financial statements.
Reconciliation of investment in associate
GBP unless stated 30 June 2022 30 June 2021
Opening - 258,512
(Reversal)/write down of investment in associate 50,000 (239,316)
Dividend received - (19,196)
Closing 50,000 -
Following the insolvency of two subsidiaries of our associate,
One Heritage Complete Limited, the Group made the decision to write
down the full value of our investment in associate and make a
provision against GBP24,368 of dividends received in the year to 30
June 2021. Following the end of the financial year end, the Group
agreed to sell our 47.0% stake in One Heritage Complete Limited for
GBP50,000. Furthermore, the Group has decided that the GBP24,368
provision against prior dividends were no longer required and
reversed this in the current financial year. 16. Financial assets
at FVTPL
GBP unless stated 30 June 2022 30 June 2021
Opening 397,796 897,002
Drawdown - -
Repayment (423,959) (839,374)
Profit recognised in the period 26,163 340,168
- 397,796
During the year, the profit participation loan with Robin Hood
Property Development Limited was cancelled and the outstanding
funds due were repaid.
These financial assets are considered due from related parties,
further details can be found in note 24. 17. Trade and other
receivables
GBP unless stated 30 June 2022 30 June 2021
Trade receivables 776,570 150,052
Other debtors 140,544 206,168
Prepaid sales fees and commissions 843,835 -
VAT receivable 109,811 292,204
Related party receivable 40,591 19,335
1,911,351 667,759
Loan facility fees of GBP146,276 (30 June 2021: GBP178,743) were
paid to cover the negotiation and arrangement of facilities which
will be offset against the respective loans when drawn. Such fees
are deferred if it is probable that a facility will be drawn down.
Loan fees totalling GBP146,276 (2021: GBP178,743) were transferred
to borrowing in the financial year.
Trade receivables includes GBP50,980 (30 June 2021: GBP121,760)
due from One Heritage Tower Limited, GBP154,089 (30 June 2021:
GBP27,278) due from One Heritage North Church Limited, GBP3,221 (30
June 2021: GBPnil) due from One Heritage Great Ducie Street
Limited, GBP565,880 (30 June 2021: GBPnil) due from Robin Hood
Property Development Limited and GBP2,400 (30 June 2021: GBPnil)
due from One Heritage Property Rental Limited, whom are all related
parties.
These financial assets are considered due from related parties,
further details can be found in note 24.
The prepaid sales fees and commissions relate to the sales
agents fees and commissions paid on units from developments that
have been exchanged but not yet completed. These relate to units
exchanged on the Lincoln House, St Petersgate, Bank Street and
Oscar House developments.
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. 18. 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 year the ratio is significantly higher than the policy
due to the delays in completion of three of the developments from
the expected completion dates of June 2022 to August 2022 and March
2023 respectively, as well as the impairment of two developments.
The Group's net debt to equity at 26 (30 June 2021: 2.0) was as
follows:
GBP unless stated 30 June 2022 30 June 2021
Total borrowings 15,921,041 5,580,182
Less: cash and cash equivalents (974,201) (204,147)
Net debt 14,946,840 5,376,035
Total equity 574,436 2,709,371
Net debt to equity ratio 26.0 2.0 19. Loans and borrowings
GBP unless stated 30 June 2022 30 June 2021
Non-current
Lease liability (Note 12) 267,125 337,742
Related party borrowings 5,000,000 1,748,927
Loan 1,412,777 189,410
6,679,902 2,276,079
Current
Lease liability (Note 12) 86,623 64,967
Related party borrowings 3,425,190 2,469,136
Loan 5,729,326 770,000
9,241,139 3,304,103
15,921,041 5,580,182
On 23 November 2021, the Group repaid its loan of GBP770,000 to
Wright (Holdings) Pension Scheme in advance of its maturity date.
This was a requirement for the Group to be able to sign the
facility with Shawbrook Bank Limited.
On 16 December 2021 a subsidiary, One Heritage Lincoln House
Limited, signed a loan agreement with Shawbrook Bank Limited. This
was for a gross amount of construction finance totalling GBP3.5
million. This had a term of 20 months and is to be drawn down to
fund costs incurred by the development in that subsidiary. As at 30
June 2022, the balance of the loan was GBP2,436,564. The Group
incurs an interest cost on drawdown funds of 6.25% plus three month
SONIA. On signing of the agreement the Group paid an arrangement
fee of GBP35,000 and will pay an exit fee of GBP43,875 on final
repayment. The loan has two covenants that are linked to the
underlying development, the loan to development cost of 44% and a
loan to value of 45%, which have both been complied with during the
reporting period.
On 20 May 2021 a subsidiary, One Heritage Oscar House Limited,
signed a loan agreement with Lyell Trading Limited. This was for a
gross amount of construction finance totalling GBP4 million. This
had a term of 18 months and is to be drawn down to fund costs
incurred by the development in that subsidiary. As at 30 June 2022,
the balance of the loan was GBP2,166,706. The loan bears interest
at 9.6% per year. The loan has two covenants that are linked to the
underlying development, the loan to development cost of 71% and a
loan to value of 65%, which have both been complied with during the
reporting period.
On 01 June 2021 a subsidiary, One Heritage Bank Street Limited,
signed a loan agreement with Together Commercial Finance Limited.
This was for a gross amount of construction finance totalling GBP2
million. This had a term of 18 months and is to be drawn down to
fund costs incurred by the development in that subsidiary. As at 30
June 2022, the balance of the loan was GBP1,126,056. The loan bears
interest at 0.85% monthly at a variable rate, based on the Bank of
England base rate. The loan has two covenants that are linked to
the underlying development, the loan to development cost of 70% and
a loan to value of 70%, which have both been complied with during
the reporting period.
On 18 March 2022 the Group had a GBP1.5 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 Group incurred listing costs of
GBP102,040 which were capitalised and released over the term of the
Bond.
Related party borrowings
On 22 July 2020 and 11 August 2020 the Trading Group received
loans worth GBP1,135,000 and GBP1,007,000 respectively from One
Heritage SPC. The loan advanced on 22 July 2020 was repaid during
the year with the accrued interest. As at 30 June 2022, GBP227,776
of interest had been accrued against the remaining loan. The
remaining loan is repayable in January 2023.
The Group signed a GBP5.0 million loan facility with One
Heritage Property Development Limited on 21 September 2020. This
can be drawn down as required and is to be repaid on 31 December
2024. The facility has an interest rate of 7.0%. On 18 February
2021 the facility was increased by GBP2.5 million to GBP7.5
million, this additional amount can only be drawn to fund property
development activities where obtaining project financing is delayed
or unavailable. The balance on this loan at 30 June 2022 was
GBP5,000,000 (30 June 2021: GBPnil) and GBP2,190,414 (30 June 2021:
GBP1,748,852) for the facilities that mature on 31 December 2024
and 31 December 2022 respectively.
Terms and repayment schedule
The terms and conditions of outstanding loans are as
follows:
30 June 2022 30 June 2021
Maturity Fair Carrying Fair Carrying
GBP unless stated Currency Nominal interest rate amount
Date value value Amount
Wright (Holdings) Pension Scheme GBP 12.0% Mar 22 - - 770,000 770,000
ACT Property Holding GBP 0.0% n/a - - 92,285 92,285
One Heritage SPC GBP 12.0% Jan 22 - - 1,262,992 1,262,992
One Heritage SPC GBB 12.0% Jan 23 1,234,776 1,234,776 1,113,935 1,113,935
Lyell Trading Limited GBP 9.6% Nov 22 2,166,706 2,166,706 139,360 139,360
Together Commercial Finance GBP 10.7% Dec 22 1,126,056 1,126,056 50,050 50,050
Shawbrook Bank* GBP 6.3% Aug 23 2,436,564 2,436,564 - -
One Heritage Property GBP 7.0% Dec 24 5,000,000 5,000,000 - -
Development
One Heritage Property GBP 7.0% Dec 22 2,190,414 2,190,414 1,748,852 1,748, 852
Development
Corporate bond GBP 8.0% Mar 24 1,412,777 1,412,777 - -
15,567,293 15,567,293 5,177,474 5,177,474
*The Shawbrook bank is repayable on the earlier of completion or
August 2023. As the development reached practical completion in
August 2022, the loan is repayable before August 2023 and as such
is classified as a current liability.
Reconciliation of movements of liabilities to cash flows from
financing activities
Liabilities Equity
Other loans and Lease Share capital/ Retained
GBP unless stated borrowings earnings Total
liabilities Premium
Balance as at 01 July 2021 5,177,473 402,709 3,893,008 - 9,473,190
Changes from financing cash flows
Proceeds from issue of share - - - - -
capital
Proceeds from loans and borrowings 6,182,693 - - - 6,182,693
Proceeds from related party 4,207,126 - - - 4,207,126
borrowings
Payment of lease liabilities - (64,224) - - (64,224)
Total changes from financing cash 10,389,819 (64,224) - - 10,325,595
flows
Other changes
Liability related
New leases - - - - -
Capitalised borrowing costs 1,022,075 - - - 1,022,075
Interest expense 14,203 15,263 - - 29,466
Interest paid (1,036,278) - - - (1,036,278)
Total liability-related other - 15,263 - - 15,263
changes
Total equity-related other changes - - - - -
Balance as at 30 June 2022 15,567,293 353,748 - 19,814,049
3,893,008
Liabilities Equity
Lease Share
GBP unless stated Other loans and capital/ Retained Total
borrowings liabilities earnings
Premium
Balance as at 01 July 2020 16,745,192 140,971 - - 16,886,163
Changes from financing cash flows
Proceeds from issue of share capital - - 3,893,008 - 3,893,008
Proceeds from loans and borrowings 189,410 - - - 189,410
Proceeds from related party borrowings 2,283,328 - - - 2,283,328
Payment of lease liabilities - (32,932) - - (32,932)
Total changes from financing cash flows 2,472,738 (32,932) 3,893,008 - 6,332,814
Changes arising from obtaining or losing control of (13,972,457) - - - (13,972,457)
subsidiaries or other businesses
Other changes - - - - -
Liability related
New leases - 288,463 - - 288,463
Capitalised borrowing costs 346,078 - - - 346,078
Interest expense 46,175 6,207 - - 52,382
Interest paid (460,253) - (460,253)
Total liability-related other changes (68,000) 294,670 - - 226,670
Total equity-related other changes - - - - -
Balance as at 30 June 2021 5,177,473 402,709 3,893,008 - 9,473,190 20. Trade and other payables
GBP unless stated 30 June 2022 30 June 2021
Trade payables 794,181 549,317
Accruals and prepayments 115,392 56,341
Customer deposits 1,012,222 -
Provision - 24,368
PAYE payable 22,837 19,325
1,944,632 649,351
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 GBP1,012,222 (30 June 2021:
GBP25,000). 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.
During the prior year the Group made a provision against the
dividends received from an associate. This was reversed in the
current year.
The company has financial risk management policies in place to
ensure that all payables are paid within the credit timeframe. 21.
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 Groups risk management
framework. The Board of Directors has established the risk
management committee, which is responsible for developing and
monitoring the Groups 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 Group, 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 Group, 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 Group audit committee oversees how management monitors
compliance with the Group's risk management policies and
procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
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 24).
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 GBP974,201 at 30
June 2022 (30 June 2021: GBP204,147).
Bank Amount held Standard and Poor's Moody's Fitch
Barclays Bank UK Plc 965,800 A A1 A+
Revolut Bank 7,729 - - -
The Group also held petty cash of GBP672 as at 30 June 2022 (30
June 2021: GBP634).
Guarantees
The Group's policy is to provide financial guarantees only for
subsidiaries' liabilities. At 30 June 2022, the Company has issued
a guarantee to certain banks in respect of credit facilities
granted to One Heritage Oscar House Limited GBP2,185,772 (30 June
2021: GBP122,447), see note 19.
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 2022, the Group's borrowings
and facilities had a range of maturities with an average life of 26
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 GBP0.3million
and cash and cash equivalents were GBP974,201.
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 2022
On 1-2 2-5 5+
GBP unless stated Carrying amount Total Within 1 year
demand years years Years
Non-derivative financial liabilities
Secured bank debt 7,142,103 7,677,341 - 5,887,687 1,789,563 - -
Other borrowings 8,425,190 9,113,289 - 3,588,289 5,525,000 - -
Lease payables 353,748 399,502 - 99,228 189,070 111,204 -
Trade payables 1,944,632 1,944,632 - 1,944,632 - - -
17,865,673 19,134,764 - 11,519,836 7,503,633 111,204 -
As at 30 June 2021
On 1-2 2-5 5+
GBP unless stated Carrying amount Total Within 1 year
demand years years Years
Non-derivative financial liabilities
Secured bank debt 959,410 959,410 959,410 - - - -
Other borrowings 4,218,063 4,836,075 - 2,619,845 2,216,230
Lease payables 402,709 486,482 - 86,980 99,228 300,274 -
Trade payables 649,351 649,351 - 649,351 - - -
6,229,533 6,931,318 959,410 3,356,176 99,228 300,274 2,216,230
The secured bank debt contains loan covenants, disclosed in Note
19. 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, loans with variable
interest rates 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 two variable interest rate arrangements
and therefore 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 Group's loss for
the year ended 30 June 2022 would (increase)/decrease by
(GBP309,618)/GBP238,365. This is mainly attributable to the Group's
exposure to interest rates on its variable rate borrowings. 22.
Directors' remuneration
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
During the period remuneration payable to directors was as follows:
Jason Upton 76,321 45,118
Yiu Tak Cheung 15,000 10,742
Jeffrey Pym 19,172 73,487
David Izett 25,000 13,173
Jeremy Earnshaw 6,181 -
141,674 142,520
Apart from Jason Upton who received a pension of GBP1,321 for
the year, the Directors did not receive any other benefits or
post-employment remuneration. 23. Share capital
GBP unless stated 30 June 2022 30 June 2021
Share capital (1p per share) 324,283 324,283
Share premium 3,568,725 3,568,725
3,893,008 3,893,008
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 2022 is 32,428,333 (30
June 2021: 32,428,333) and are fully paid up. 24. Related
parties
Parent and ultimate controlling party
At the reporting date 63.8% of the shares are held by One
Heritage Property Development Limited, which is incorporated in
Hong Kong. No 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.
Transactions with key management
Key management personnel compensation comprised the
following:
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
Short term employee benefits 311,061 215,511
311,061 215,511
Compensation of the Group's key management personnel is short
term employee benefits.
Key management personnel transactions
The key management control 31% (30 June 2021: 31%) of the voting
shares of the Company.
Other related party activity
Below is a table that sets out the entities that are related
parties to the Group:
Company Note Description
ACT Property Developments Limited Common directors
Harley Street Developments Limited Common directors, owned by the beneficial owners of the Group
Mosley Property Limited Common directors, owned by the beneficial owners of the Group
One Heritage Great Ducie Street Limited Common directors, owned by the beneficial owners of the Group
One Heritage North Church Limited Common directors, majority stake held by the beneficial owners of the
Group
One Heritage Property Development Common director, owned by the beneficial owners of the Group
Limited
One Heritage Property Management Limited Common director, owned by the beneficial owners of the Group
One Heritage SPC Managed by the beneficial owners of the Group
One Heritage Tower Limited Common directors, part owned by the beneficial owners of the Group
Robin Hood Property Development Limited Common directors, owned by the beneficial owners of the Group 25. Events after the reporting date
On 07 July 2022 the Group issued 6,250,000 new ordinary shares
of 1.0 pence each at an issue price of 20.0 pence per share,
raising gross proceeds of GBP1,250,000.
On 12 July 2022 the Group completed the acquisition of
development land on Victoria Road, Eccleshill, West Yorkshire for
GBP1,000,000. This was acquired through One Heritage Victoria Road
Limited, a wholly owned subsidiary of the Group.
On 14 October 2022 the Group facility was increased by GBP2
million. This can be drawn down as required, has an interest rate
of 7.0% and is repayable on demand. This additional amount can only
be drawn to fund property development activities where obtaining
project financing is delayed or unavailable. 26. 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. 27. Disclosures relating to subsidiary
undertakings
The Company's subsidiaries and other related undertakings at 30
June 2022 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. 28. 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 2022
As at 30 June As at 30 June
GBP unless stated Notes
2022 2021
INTANGIBLE ASSETS
Trademark 2,324 -
2,324 2,324
TANGIBLE ASSETS
Investments 2 2,750,100 2,750,100
2,750,100 2,750,100
CURRENT ASSETS
Debtors 3 2,310,872 1,115,752
Cash at bank 4,383 -
2,315,255 1,115,752
Creditors: amounts falling within one year 4 (55,975) (95,998)
Net current assets 2,259,280 1,019,754
Total assets less current liabilities 5,011,704 3,769,854
Creditors: amounts due after one year 5 (1,412,777) -
Net assets 3,598,927 3,769,854
CAPITAL AND RESERVES
Called up share capital 6 324,283 324,283
Share premium account 3,568,725 3,568,725
Profit and loss account (294,081) (123,154)
Shareholders' funds 3,598,927 3,769,854
These financial statements were approved by the board of
directors on 21 October 2022 and were signed on its behalf by:
Jason David Upton
Company registration number: 12757649
The accompanying notes on pages 79 to 83 form an integral part
of the financial statements.
Company statement of changes in equity
For the year ended 30 June 2022
Called up Share Shareholders
GBP unless stated Profit and loss account
share capital premium Funds
Balance at incorporation 324,283 3,568,725 (123,154) 3,769,854
Loss for the period - - (170,927) (170,927)
Other comprehensive income for the period - - - -
Total comprehensive income for the period 324,283 3,568,725 (294,081) 3,598,927
Transactions with owners, recorded directly in equity - - - -
Issue of share capital - - - -
Cost of share issuance - - - -
Balance at 30 June 2022 324,283 3,568,725 (294,081) 3,598,927
For the year ended 30 June 2021
Called up Share Shareholders
GBP unless stated Profit and loss account
share capital premium Funds
Balance at incorporation 100 - - 100
Loss for the period - - (123,154) (123,154)
Other comprehensive income for the period - - - -
Total comprehensive income for the period 100 - (123,154) (123,054)
Transactions with owners, recorded directly in equity
Issue of share capital 324,183 3,964,217 - 4,288,400
Cost of share issuance - (395,492) - (395,492)
Balance at 30 June 2021 324,283 3,568,725 (123,154) 3,769,854
The accompanying notes on pages 79 to 83 form an integral part
of the financial statements.
Notes to the Company financial statements
For the period ended to 30 June 2021 1. 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; ?
Disclosures of transactions with a management entity that provides
key management personnel services tothe 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 combinationsundertaken by the Company in the current and
prior periods; and ? Certain disclosures required by IFRS 13 Fair
Value Measurement and the disclosures required by IFRS 7Financial
Instrument Disclosures.
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.
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.
Foreign currencies
These financial statements are presented in Pound sterling,
which is the Company's functional and presentational 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 statement of financial statement date,
monetary assets and liabilities that are denominated in foreign
currencies other than the functional currency are retranslated at
the rates prevailing at the statement of financial statement
date.
Non-monetary assets and liabilities carried at fair value that
are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Gains
and losses arising on retranslation are included in the net profit
or loss for the period.
Investment in subsidiary
Investment in and loans to subsidiaries are stated at 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").
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. 2. Investment in subsidiaries
GBP unless stated 30 June 2022 30 June 2021
One Heritage Property Development (UK) Limited 2,750,100 2,750,100
2,750,100 2,750,100
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. There are no indicators of
impairment.
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% 3. Debtors
30 June 2022 30 June 2021
GBP unless stated
Intercompany loan 2,183,153 1,070,770
Trade and other receivables 90,000 11,521
Tax receivable 37,719 33,461
2,310,872 1,115,752
The Intercompany loan payable by One Heritage Property
Development (UK) Limited and 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. There are no indicators of impairment
and therefore no expected credit losses. 4. Creditors: amounts
failing within one year
GBP unless stated 30 June 2022 30 June 2021
Trade and other payables 16,393 39,958
Accruals 37,500 56,040
Tax payable 2,082 -
55,975 95,998 5. Creditors: amounts due after one year
GBP unless stated 30 June 2022 30 June 2021
Corporate bond 1,412,777 -
1,412,777 -
On 18 March 2022 the Group had a GBP1.5 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 Group incurred listing costs of
GBP102,040, which were capitalised and released over the term of
the Bond. 6. Called up share capital
Ordinary
GBP unless stated
Shares
Issued share capital as at 30 June 2022 32,428,333
32,428,333
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.
The Company has not issued any share capital in the year to 30
June 2022. 7. 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 8. Post balance sheet events
On 18 March 2022 the Group had a GBP1.5 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. 9. Related party disclosures
The Directors of the Company were paid through One Heritage
Property Development (UK) Limited, a subsidiary.
Year to Year to
GBP unless stated
30 June 2022 30 June 2021
During the period remuneration payable to directors was as follows:
Jason Upton 76,321 45,118
Yiu Tak Cheung 15,000 10,742
Jeffrey Pym 19,172 73,487
David Izett 25,000 13,173
Jeremy Earnshaw 6,181 -
141,674 142,520
Parent and ultimate controlling party
At the reporting date 63.8% of the shares are held by One
Heritage Property Development Limited, which is incorporated in
Hong Kong. Keith Crews held 9.6% of the shares at the reporting
date.
No 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.
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00BLF79495
Category Code: FR
TIDM: OHG
LEI Code: 2138008ZZUCCE4UZHY23
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 196491
EQS News ID: 1470415
End of Announcement EQS News Service
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October 25, 2022 02:00 ET (06:00 GMT)
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