02 October 2024
This announcement contains inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation No. 596/2016 as
it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
ONE HERITAGE GROUP PLC
(“OHG” or “the Company”)
Strategic Update and Market
Listing
One Heritage Group PLC ("OHG" or "the Company") the UK-based
residential developer, development manager and property manager,
focused on the North of England, is pleased to announce a
comprehensive restructuring plan, to include a rebrand, that will
position the Company for sustainable growth, financial stability,
and enhanced market presence.
Background
Since December 2020, the Company has been listed on the Main
Market of the London Stock Exchange (now the Equity Shares
(Transition) category for commercial companies
previously listed on
the standard listing segment). During this time, the Company has
focused on the development and redevelopment of new and existing
buildings (“Development Activities”) to create apartments, as well
as the refurbishment of existing properties (“Refurbishment
Activities”) to create Co-living accommodation. Additionally, OHG
has acted as development manager on behalf of third-party investors
in their development activities in the UK.
Newly developed and refurbished properties owned by the
Company were then sold or retained, with Co-living properties
primarily marketed to investors through the Hong Kong network of
One Heritage Property Development Limited (“OHPD”), the Company’s
majority shareholder. Schemes of apartments were sold either
through this network or via forward sale agreements with
institutional investors.
Since listing, OHG has successfully delivered over 150
residential properties as principal and over 100 properties as a
development manager. Additionally, it has developed over 70
Co-living projects and currently manages over 300 tenants across
its portfolio.
Over the last few years the external environment has
undergone significant changes. The property development market has
been adversely impacted by rising construction costs, increased
operational expenses, weakening investor demand and broader
macroeconomic uncertainties which, together, have created a
challenging environment. In response to this, OHG has taken
decisive steps to adapt and strategically realign its
operations.
A major change in OHG’s business model has been the move away
from in-house construction. Previously, projects such as St
Petersgate in Stockport and Bank Street in Sheffield were completed
by an in-house team. However, given the rising costs and risks
associated with self-delivery, the Company now engages third-party
construction firms under fixed-price contracts, mitigating the risk
of financial exposure.
As previously announced, the Company has also decided not to
proceed with the construction of two projects, Churchgate in
Leicester and Seaton House in Stockport on the grounds of
viability. Following a strategic review, the Company is also moving
away from providing Co-living services, which have been adversely
impacted by market challenges. Structural changes to right-size the
Company’s cost base have also been carried out recently.
Moreover, OHG has commenced the implementation of a
comprehensive restructuring plan that better positions it for
sustainable growth, as follows.
Key Strategic
Actions
1. Restructuring of Debt and Capital Allocation:
Strategic Investment in One
Victoria: On 01 October 2024, OHG exchanged contracts
unconditionally to acquire a 30% stake in the company that owns the
One Victoria project by purchasing shares to the value of £3
million from OHPD. The acquisition will be funded by drawing down
£3 million from the remaining shareholder loan facility, increasing
the facility from £11 million to £14 million (“Existing Facility”).
The completion date for the acquisition is 29 October 2024, which
may be extended or brought forward by agreement between the
parties, with a long stop date of 8 November 2024.
The One Victoria project in Manchester has a Gross
Development Value (GDV) of £39.5 million. The project, consisting
of 129 apartments and 2 commercial units, is scheduled for
completion in the second half of 2025. To date, 37 sales contracts
have been exchanged, 3 units are reserved, and 89 units remain
unsold. Construction finance is being drawn down to fund ongoing
construction costs, with Torsion Construction Limited serving as
the principal contractor.
Located in a prime area of Manchester, the One Victoria
project is designed to meet the growing demand for high-quality
residential and commercial spaces. As Development Manager, OHG will
continue to oversee the development of the project.
Sale of Completed
Inventory: Simultaneous to the investment in One
Victoria, Manchester, the Company has also exchanged contracts
unconditionally on 01 October 2024 for the sale of a portfolio of
completed residential and commercial properties, valued at £7
million, to OH UK Holdings Limited (“OHUK”), a company connected
with OHPD. This portfolio includes residential properties at Bank
Street, Sheffield, Lincoln House, Bolton and Oscar House,
Manchester, as well as the commercial unit at St Petersgate,
Stockport. The completion date for the sale is 29 October 2024,
which may be extended or brought forward by agreement between the
parties, with a long stop date of 8 November 2024.
With £2 million of debt linked to Oscar House as part of this
transaction, the net proceeds of the portfolio sale will reduce
from £7 million to £5 million and these proceeds will be utilised
to reduce the Existing Facility from £14 million to £9
million.
With lower debt levels, the Company will gain greater
financial flexibility, enabling it to respond more effectively to
market opportunities and economic fluctuations. OHG remains
committed to supporting OHPD by facilitating sales and managing
properties on their behalf.
Refinance of Existing Loan
Facility: As part of this restructuring, OHPD(UK)
entered into a new £7 million loan agreement with OHUK on 01
October 2024 at an interest rate of 6%, i.e., lower than the
previous rate of 7%, such facility to become available from the
date of the completion of the property transactions outlined above.
The loan has a repayment date of 31 December 2025, with an option
to extend for up to 36 months. OHUK is a related party, sharing the
same majority shareholders as OHG and OHPD.
This new loan will be drawn down in full on completion and
used to partially repay the Existing
Facility. The balance of
approximately £2 million of the Existing Facility will then be
written off by OHPD as part of the restructuring, demonstrating
OHPD's commitment to OHG’s success and financial stability. The
Existing Facility will therefore be settled in full at completion
and terminated.
2. The Company’s Listed Status
The Company is advised that completion of the transactions
outlined above will highly likely
constitute a reverse takeover under the UK Listing Rules. The
Company is currently on the London Stock Exchange (“LSE”) Equity
Shares (Transition) category for commercial
companies.
Between now and the release later this
month of the Company’s Annual
Results to 30 June 2024 and the
completion of these transactions, the Company will continue to
explore its options regarding a transition to the Aquis Stock
Exchange, or the implementation of a Matched Bargain Facility or a
complete delisting. The AQSE growth-focused market appears to align
more closely with the Company’s current size and strategic
objectives, providing a platform that is better suited to support
its future ambitions. The Board remains committed to delivering the
best possible outcome for shareholders and will provide further
updates in due course.
3. Intention to rebrand to Zentra Group PLC
OHG will rebrand as Zentra Group PLC to reflect its renewed
strategic focus and to distance itself from any potential
reputational risks associated with the One Heritage brand in Asia,
which is tied to its majority shareholder. This new identity gives
the Company the flexibility to reshape its image in the UK market,
focusing solely on residential development to provide apartments
and single-dwelling houses.
The decision to rebrand as Zentra Group PLC stems from a
desire to establish an identity that resonates with the Company’s
strategic repositioning. The name "Zentra" was chosen to embody the
values of balance, harmony, and focus, with "Zen" symbolising a
sense of calm and mindful approach to property
development.
The Company is launching its new website today
at: www.zentragroup.co.uk The old
website www.oneheritageplc.com will automatically redirect to the new
website.
The Company intends to update the market when the name change
is formally effected, including details for trading in the
Company's shares under the new company name and new TIDM of " ZNT“,
whilst the Company's ISIN and SEDOL will remain
unchanged.
4. Operational Focus and Strategic Realignment:
Focus on Core Residential
Sectors: The Company will focus on two core
residential sectors by delivering apartments under its new "Living"
brand and houses under its new "Homes" brand while continuing to
provide property management services. This clearer focus enables
the Company to better position itself in the market and create
greater awareness of its brand proposition among stakeholders and
potential customers.
Having two distinct sub-brands allows the Company to tailor
its messaging and marketing efforts more effectively. The "Living"
brand will resonate with professionals seeking modern, vibrant
living spaces, while the "Homes" brand will appeal to families and
individuals looking for more traditional options. This dual
sub-branding strategy helps the Company meet the diverse demands of
the market while leveraging its expertise in residential property
development.
By establishing clear and distinct brands along with a
focused strategy, the Company is better positioned to navigate the
complexities of the residential property market. This new clarity
enhances its ability to communicate its vision, attract the right
customers, and deliver high-quality residential solutions that meet
the evolving needs of communities.
Exit from Co-living
Services: The Company has decided to fully exit the
Co-living sector. Rising construction costs and higher operating
expenses, particularly in areas like energy bills, have made the
Company’s Co-living product financially unviable.
The Company will also discontinue the management of Co-living
property, allowing the Company to focus on the property management
in its two core sectors. During this transitional period, the
Company will work closely with landlords of Co-living properties to
ensure a smooth handover to new property managers. The Company
remains committed to fulfilling its obligations and will oversee
the completion of all ongoing projects in the coming
months.
Operational Changes:
The Board has made key appointments to strengthen the
Company’s senior leadership team. Scott Nicol has been appointed as
Head of Investment and will oversee the commercial aspects of the
business, ensuring that the Company’s investments align with its
strategic goals. Ben Scandrett has been appointed as Head of
Development to lead the Company’s property development projects.
Additionally, Robert Holbrook, currently Interim Head of Finance,
will continue as Head of Finance in a part-time
capacity.
Update on Existing Projects (not included in the £7 million
sale of completed inventory):
Victoria Road, Eccleshill
Project: The near completion of the Victoria Road
housing project in Eccleshill is expected to generate cash flow in
Q1 2025 for the Company once sales complete.
Asset Retention and
Sales: The Company is prioritising the sale of assets
such as Churchgate, Leicester to further strengthen its financial
position. As announced 04 July 2024 the Company exchanged contracts
for the sale of the land to the rear of Seaton House, Stockport for
£400,000. The proceeds from these sales will be reinvested in the
Company’s development pipeline.
One Heritage Tower -
Sale: The Company has an ongoing development
management agreement and has agreed updated terms which includes a
3% fee of any land sale.
One Victoria -
Completion: As mentioned above, the One Victoria
project is expected to complete in H2 2025.
Conclusion
The restructuring of One Heritage Group PLC and its
rebranding to Zentra Group PLC represent a pivotal moment in the
Company’s journey. By realigning operations with the current market
environment, reducing the debt burden, and focusing on core
residential development strengths, the Company is positioning
itself for long-term success.
Contacts
One Heritage Group plc
Jason Upton
Chief Executive Officer
Email: jason.upton@one-heritage.com
Robert Holbrook
Head of Finance
Email: robert.holbrook@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/.
