DJ One Heritage Group plc: Strategic Update and Market Listing
One Heritage Group plc (OHG)
One Heritage Group plc: Strategic Update and Market Listing
02-Oct-2024 / 07:00 GMT/BST
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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 GBP3 million from OHPD. The
acquisition will be funded by drawing down GBP3 million from the remaining shareholder loan facility, increasing the
facility from GBP11 million to GBP14 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 GBP39.5 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 GBP7 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 GBP2 million of debt linked to Oscar House as part of this transaction, the net proceeds of the portfolio sale will
reduce from GBP7 million to GBP5 million and these proceeds will be utilised to reduce the Existing Facility from GBP14
million to GBP9 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 GBP7 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 GBP2 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 GBP7 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 GBP400,000. 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/.
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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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ISIN: GB00BLF79495
Category Code: UPD
TIDM: OHG
LEI Code: 2138008ZZUCCE4UZHY23
OAM Categories: 2.2. Inside information
3.1. Additional regulated information required to be disclosed under the laws of a Member State
Sequence No.: 350294
EQS News ID: 2000017
End of Announcement EQS News Service
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