DJ Zentra Group plc: Full year results for the year ending 30 June 2024
Zentra Group plc (ZNT)
Zentra Group plc: Full year results for the year ending 30 June 2024
30-Oct-2024 / 07:00 GMT/BST
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30 October 2024
ZENTRA GROUP PLC
(the "Company") or (the "Group")
Full year results for the year ending 30 June 2024
Zentra Group PLC (LSE: ZNT), the UK-based residential developer, development manager and property manager focused on
the North of England, is pleased to announce its audited results for the year ended 30 June 2024 (FY 2024).
Financial highlights
-- Reduction in revenue of GBP0.94m, 6% on the prior year, from GBP15.59m to GBP14.65m, driven by a reduction in
sales completions from 71 to 52 during the period.
-- Impairment GBP0.82m compared with GBP1.09m in the prior year, a reduction of GBP0.27m. The impairment loss is
included in cost of sales.
- Previously reported factors have continued to impact developments, including increases in costs due
to rising material prices, sub-contractor prices, delays experienced and the cost of debt, as remaining self
delivery projects completed by year-end. The remaining project of Victoria Road Eccleshill, procured on a fixed
price contract, is within budget.
-- Gross profit of GBP0.18m, down by GBP0.41m or 69% on prior year mainly due to the reduction in sales
completions (FY 2023: gross profit of GBP0.59m).
-- Loss before tax of GBP3.56m (FY 2023: loss of GBP2.14m).
-- Basic loss per share of 8.7 pence (FY 2023: loss of 6.2 pence).
-- Net debt of GBP16.89m (FY2023: GBP16.94m). Repayment in the period of GBP1.0m of the GBP1.5m Corporate Bond which
matured in March 2024, with the reminder GBP0.5m rolled into a new loan note facility on the same terms for a further
12 months to March 2025.
-- A decrease in the One Heritage Property Development shareholder loan facility of GBP0.4m to GBP10.98m (FY
2023: GBP11.38m). During the year renegotiation took place of the facility termination date, which was extended to
December 2025, with the ability to extend for a further 3 years
Operating highlights
-- Practical completion of St Petersgate Stockport and North Church House Sheffield (as development
manager), bringing to an end the policy of self-delivery development.
-- A decision to move away from co-living activity due to uncertainties on returns.
-- Advancement of construction on Victoria Road, Eccleshill within budget by utilising a fixed price
contract procurement strategy, with practical completion occurring in October 2024.
-- Completed a Company strategic review, resulting in a number of financial and operational changes after
the financial year, including the alignment of overheads to current business position.
-- Scott Nicol appointed as Group Head of Investment, adding substantial knowledge and experience and Ben
Scandrett also came on board as Group Head of Development, overseeing all development activities, from pipeline
management to project delivery.
Post Period Events
-- Rebranding of One Heritage Group PLC to Zentra Group PLC reflecting a broader strategic realignment.
-- Unconditional exchange of contracts for the sale of our inventory valued at GBP7.0m.
-- The acquisition of a 30% stake in the One Victoria project in Manchester, where we also serve as
Development Manager.
-- Agreement of refinancing initiatives, including securing a new Related party GBP7.0m facility at a more
favourable 6% interest rate (down from 7%) and a GBP2.0m debt write-off of existing Group facilities reducing our
interest burden and increased financial flexibility.
-- Completion of the sale of the building Seaton House, Stockport for GBP0.6m together with exchange of
conditional contracts for the sale of the land to the rear for GBP0.4m.
-- Practical completion in October 2024 of 24 houses at Victoria Road, Eccleshill.
Outlook
-- The movement away from in-house delivery and Co-living are pivotal to allow the business to focus on the
securing of new business opportunities linked with the promotion of our two main brands of Zentra Living for
Apartments and Zentra Homes for single dwelling houses.
-- The robust review of financial and operational structures and steps put in place give the Company greater
operational and financial flexibility with the benefit of adding value for our shareholders.
Jason Upton, Chief Executive Officer, commented:
"Over the past year, the Company has faced economic and trading challenges, affecting both consumer confidence and our
cost base. It has also been a time of reflection and transition, with key decisions made to move away from
self-delivery, reduce our exposure to Co-living, and realign our cost base and staffing structure. These actions are
vital for restoring profitability and increasing shareholder returns.
The recent financial restructuring and inventory disposal have laid a strong foundation as we enter a new era with a
fresh identity and revised strategy under the Zentra brand. I look forward to leading the team through this exciting
chapter in the months ahead."
Contacts
Zentra Group PLC
Jason Upton
Chief Executive Officer
Email: jason.upton@zentragroup.co.uk
Robert Holbrook
Head of Finance
Email: robert.holbrook@zentragroup.co.uk
Hybridan LLP (Financial Adviser and Broker)
Claire Louise Noyce
Email: claire.noyce@hybridan.com
Tel: +44 (0)203 764 2341
About Zentra Group PLC
Zentra Group PLC (previously One Heritage Group PLC) is a property development and management Company. It focuses on
the residential sector primarily in the North of England, seeking out value and maximising opportunities for investors.
The Company is listed on the Standard List of the Main Market of the London Stock Exchange, trading under the ticker
ZNT.
For further information, please visit the Company's website at www.zentragroup.co.uk The previous website
www.oneheritageplc.com will automatically redirect to the new website.
References to page numbers throughout this announcement relates to the page numbers within the Annual Report of the
Company for the year ended 30 June 2024.
Chairman's statement
It is my pleasure to present this year's annual report, which covers a period of significant transformation for the
Group. The period under review has continued to be extremely challenging, with economic uncertainty and rising
construction costs and reduced investor appetite combining to adversely affect our business. However, 'out of adversity
comes opportunity' as the saying goes, and I am very pleased with the way that the executive team, post-period, has
executed opportunities to recapitalise the business and acquire a significant stake in a prime Manchester high-rise
apartment development.
During the year, we also made some difficult yet necessary decisions, including the reduction of our core cost base,
and the streamlining of operations to ensure a leaner and more focused Group. Importantly, our strategic shift away
from Co-Living and in-house construction has allowed us to concentrate on our core strength-residential
development-enabling us to respond more effectively to market opportunities and deliver predictable outcomes.
Looking ahead, I am optimistic about the prospects for the Group. The adjustments we have made to our structure and the
sharpening of our focus will better enable us to seize emerging opportunities in the residential development market.
Our continued emphasis on urban residential projects and new-build housing in high-demand areas, particularly in the
North West of England, aligns with our commitment to meeting the evolving needs of our customers while generating
strong returns for our shareholders.
I would like to take this opportunity to express my gratitude to our shareholders, employees, and other stakeholders
for their unwavering support throughout this period of transformation. As we embark on the next phase of our journey,
we do so with confidence, knowing that we have the right strategy, the right team, and the right foundations to deliver
long-term success for the Group.
David Izett
Chairman
29 October 2024
Chief Executive's statement
As I reflect on the past few years, it is clear that our journey has been shaped by a rapidly evolving environment that
has presented both opportunities and challenges. Since listing on the London Stock Exchange in December 2020, we have
navigated significant changes in the property development landscape, from rising construction costs and fluctuating
investor demand to broader macroeconomic uncertainties. These factors have affected the rate of sales and our
operational costs, forcing us to rethink our strategy and reposition ourselves for the future.
The external environment has undoubtedly been challenging, with construction costs escalating and the financial climate
becoming increasingly complex. Investor sentiment has also been tempered by economic volatility, further impacting the
speed at which we have been able to secure sales. Despite these headwinds, we have remained steadfast in our commitment
to delivering high-quality residential developments and managing our portfolio with discipline and foresight.
Recognising the need for decisive action, we initiated a strategic review earlier this year, which led to a
restructuring of the Group. During this review, an opportunity presented itself to complete several significant
transactions. Although the restructuring process presented challenges, it was crucial for securing the long-term
success of the business. The process began with the strategic review and culminated after the year-end with the
announcement of the exchange of contracts for the sale of our inventory valued at GBP7 million and our rebranding to
Zentra Group PLC, marking a key milestone in our evolution.
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The proposed restructuring will strengthen our financial position and better align our operations with current market opportunities. It also enabled us to refocus on our core strength - residential development - while stepping away from higher-risk areas like in-house construction and Co-Living services. By adopting a leaner, more efficient business model, centred on cost certainty through fixed-price contracts with third-party contractors, we have reduced financial exposure and mitigated the risks of rising construction costs, all while continuing to deliver the high-quality developments that define our company. Our decision to rebrand as Zentra Group is more than just a change in name; it reflects a broader strategic realignment. Zentra embodies the values of balance, harmony, and focus-principles that resonate with our renewed commitment to providing high-quality residential developments. This new identity allows us to distance ourselves from potential reputational risks with the One Heritage brand which is synonymous with financial services in Asia, allowing us to have our own identity and forge a fresh path forward, particularly in the UK market where our presence and reputation continue to grow. The restructuring also includes the acquisition of a 30% stake in the One Victoria project in Manchester, where we also serve as Development Manager. Scheduled for completion in H2 FY 2025, One Victoria will offer 129 apartments and 2 commercial units, further reinforcing our commitment to high-quality urban developments. This acquisition, along with our refinancing initiatives, including securing a new GBP7 million facility at a more favourable 6% interest rate (down from 7%) and a GBP2 million debt write-off, are major achievements that bring significant value to our shareholders. This refinancing arrangement is a significant milestone, allowing us to reduce our interest burden and increase financial flexibility. The new terms place the Group in a stronger position to navigate future market conditions while providing us with the resources to focus on key development projects. Executing such a comprehensive restructuring within the necessary timeframes was a challenging task, especially considering the complexities of aligning it with our financial results and market conditions. There were moments of uncertainty and in particular with respect to the timing of transactions, but we remained focused on creating long-term value for our shareholders. I firmly believe that the steps we have taken lay the groundwork for a stronger, more resilient company going forward. During the period under review, I am pleased we achieved several key milestones which included the construction on the One Victoria project in Manchester mentioned above. Additionally, we also commenced construction on our first new build housing project, consisting of 24 houses at Victoria Road in Eccleshill, West Yorkshire which reached practical completion post period in October. We also achieved practical completion of other significant projects, namely St. Petersgate Stockport and North Church House Queen Street Sheffield. Furthermore, we successfully repaid a GBP1.5 million corporate bond and secured a GBP0.5 million unsecured loan with an interest rate of 8%, maturing on March 15, 2025. These accomplishments reflect our ongoing commitment to delivering value and advancing our strategic objectives, positioning us for future growth. KEY PROJET ACHIEVEMENTS In detail: 1. St Petersgate, Stockport: In January, we achieved practical completion of this significant conversion project, which involved transforming a former office building into 18 high-quality residential apartments and a commercial unit. During the construction phase, the project encountered unexpected challenges, notably around the rooftop extension. Despite these hurdles, we successfully navigated the complexities to deliver the project on time. The residential units were all sold, showing strong demand for well-located housing in Stockport. Additionally, the commercial unit was fully let, contributing to a balanced mixed-use development that integrates residential and commercial space effectively, creating value for both residents and businesses. 2. Victoria Road, Eccleshill: In October 2024, we completed our first new-build housing development at Victoria Road. The development comprises 24 houses, marking a significant milestone in our story as we expand into the new-build sector. Sales efforts are currently underway, with a dual approach targeting both individual homebuyers and bulk sales to registered housing providers. 3. North Church House, Sheffield: In March, construction completed on the 58-unit development North Church House. As the development manager, we encountered several challenges in converting this former office building, particularly in installing a rooftop extension, which required careful planning and execution. Despite these obstacles, the project was executed successfully, resulting in a well-finished development that adds residential capacity in a prime urban location. This conversion showcases our expertise in adaptive re-use of commercial properties, contributing to sustainable urban regeneration. 4. One Victoria, Manchester: As well as exchanging contracts to acquire a 30% shareholding in the SPV that owns One Victoria with completion of this contract expected in October, the Group has retained its role as Development Manager for the project. This ongoing development consists of 129 high-quality residential apartments and two commercial units, strategically located in Manchester city centre. The project is progressing well, with construction expected to be completed in the second half of FY 2025. To ensure smooth financial progress, construction finance is being drawn down in stages to cover the ongoing construction costs. Torsion Construction Limited, a well-established contractor, is leading the construction efforts, leveraging their expertise to maintain progress on schedule. This development is an important part of the Group's broader growth strategy, further strengthening its presence in the Manchester property market. One Victoria is poised to provide valuable housing stock while also creating commercial opportunities that align with the city's economic growth. The project demonstrates the Group's capability in managing large-scale, mixed-use developments and its commitment to delivering projects that balance residential and commercial needs effectively. STRATEGIC OBJECTIVES FOR 2025 As we look to the future, we remain focused on our core strategic objectives, which will drive our continued growth and success: 1. Successfully Delivering Existing Development Projects Our development pipeline has been strengthened by the expected acquisition of a 30% equity stake in One Victoria, with our contract due to complete in October . This investment represents a significant addition to our portfolio. As Development Manager for One Victoria, we are committed to overseeing its successful completion, ensuring the delivery of 129 high-quality residential units and 2 commercial spaces. Completion of the development is on course for H2 FY 2025. 2. Securing Sales for our properties Direct Development Residential Commercial Gross Development Reservations* Exchanged Completed Expected Projects Units Units Value (GBPm) * Sales * Completion Lincoln House, 88 0 GBP10.1m 0 0 88 Completed Bolton Bank Street, 23 0 GBP3.9m 0 0 23 Completed Sheffield Oscar House, 27 0 GBP6.8m 0 0 27 Completed Manchester St Petersgate, 18 1 GBP2.9m 0 0 18 Completed Stockport Victoria Road, 24 0 GBP6.5m 2 0 0 Completed Eccleshill One Victoria, 129 2 GBP39.5m 8 38 0 H2 FY 2025 Manchester**
*As at 03 October 2024
** Exchanged unconditional contracts for 30% of the share capital of the company that owns the project.
We are pleased to announce post year end that in October, the completion of a GBP7 million bulk sale of our inventory took place, marking a significant achievement. This sale allows us to focus on new opportunities and further strengthens our financial position to execute our strategic objectives.
Sales at Victoria Road Eccleshill are now a priority following the project's practical completion. We have launched a targeted marketing campaign, partnering with local agents to promote the 24 units. In addition to individual buyer sales, we are in active negotiations with several registered housing providers and institutions for a bulk sale, offering another avenue to maximise value.
Our investment in One Victoria is also a key focus. So far, we have exchanged contracts on 38 units, and the newly completed showroom is expected to attract significant interest.
3. Expanding the Pipeline of New Development Opportunities
We are actively exploring new development opportunities, both as a direct developer and through partnerships with local authorities and housing providers. Expanding our pipeline is crucial to maintaining our growth momentum, and we are currently evaluating a number of promising projects. The restructuring of our team earlier this year has positioned us to be more agile and responsive in pursuing these opportunities. We anticipate providing further updates as these opportunities progress into contracted positions, aligning with our long-term strategic goals.
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Our proactive approach to seeking new development sites will allow us to continue delivering projects that meet market demand and generate value for our shareholders, while also addressing the broader housing needs of the communities in which we operate.
OUR PEOPLE
Our people remain central to everything we do, and this year has brought several key changes to our senior leadership team. Earlier in the year, we welcomed Robert Holbrook as Interim Head of Finance, who brings extensive financial expertise and deep experience in the property sector. Scott Nicol joined us as Group Head of Investment, adding substantial knowledge and experience that has already enhanced our commercial performance. His strategic insights have further strengthened our leadership team. Ben Scandrett also came on board as Group Head of Development, overseeing all development activities, from pipeline management to project delivery.
We remain dedicated to investing in our people and promoting a culture of inclusivity, innovation, and professional growth. As we continue to expand, our team will play a crucial role in driving our strategic objectives forward.
INDUSTRY OVERVIEW
Between June 2023 and June 2024, the UK economy expanded at a much faster rate than initially estimated. Revised figures show GDP growth of 0.3% during this period, tripling the earlier reported figure of 0.1%. This represents the strongest economic growth since the post-pandemic recovery in 2021 and early 2022, following two consecutive quarters of falling GDP in Q3 and Q4 of 2023, often termed a 'technical recession.' The Bank of England's reduction of its base rate from 5.25% to 5.00%, along with a decrease in inflation, offers positive signs for the housing market, though consumer caution remains. The policies of the new Labour government will be instrumental in restoring confidence.
Government intervention in both the housing market and the stagnating planning system will be critical to achieving the target of building 1.5 million homes over the next five years. A February 2024 report from the Competition and Markets Authority highlighted the planning system's inadequacy and the constraints it places on land supply needed to meet housing goals. While there have been reforms, including revisions to the National Planning Policy Framework (NPPF) and the reinstatement of local housing targets, it is hoped that new policies will address the systemic issues that have plagued the sector. Despite these challenges, the ambitious housing targets create significant opportunities for the Group to collaborate with local authorities, government bodies and NGOs, fostering an environment for growth.
In line with these reforms, biodiversity net gain legislation came into force in February 2024, and the Future Homes and Building Standards legislation is expected to be passed shortly. This will require new homes to reduce emissions by 75% to 80% compared to previous standards. While these regulations present challenges, they also establish a level playing field, allowing the Group to deliver high-quality developments in a competitive market.
Affordability remains a major concern, particularly for first-time buyers, as the cost of purchasing a home now accounts for over 40% of take-home pay. While recent reductions in the Bank of England's base rate have allowed lenders to lower the average mortgage rate (75% LTV) to 3.86%, nearly 1.00% lower than 12 months ago, the threat of further mortgage increases looms large for many homeowners whose fixed-rate deals are yet to expire.
The constrained supply of new homes for sale, along with structural shifts in consumer behaviour, has exacerbated the supply-demand imbalance in the rental market, supporting continued rental growth. In the 12 months to June 2024, average UK residential rents increased by 8.7%, only a slight decrease from the 8.9% rise in the previous year. This supply-demand imbalance is expected to persist, keeping rental values strong as potential homebuyers remain hesitant or unable to purchase homes.
The outlook for affordable housing is uncertain. The next Affordable Homes Program (AHP) in England has been delayed until spring 2025 due to ongoing economic challenges, financial uncertainties, and the need for critical repairs to existing stock, including cladding and damp issues. These factors have reduced housing associations' capacity to invest in new developments. The interim affordable housing grant introduced in October 2024 has offered temporary relief, enabling registered providers to continue work on some schemes. The Group is already engaged in discussions with several local authorities and housing associations to explore potential partnerships to support their development needs.
After several years of volatile inflation, with the peak during the Covid-19 pandemic, the past 12 months have seen a levelling off of construction cost inflation. Prices for 'all work' have entered a period of deflation, though this is likely a temporary correction following sustained price increases. While falling material costs offer some relief, the industry's capacity and workforce shortages remain key constraints. Attracting and retaining talent will be essential to managing future upward cost pressures and meeting government targets.
Against this backdrop, the latest BCIS residential forecast predicts that build costs will rise by 15% over the next five years, driven by pressures on materials and labour costs, the latter expected to increase by 16%. Additionally, BCIS forecasts a 24% growth in new work output over the same period, as pent-up demand fuels house price growth.
ESG (ENVIRONMENTAL, SOCIAL AND GOVERNANCE)
We remain dedicated to embedding ESG principles throughout our operations. Our ESG strategy focuses on ethical business practices, sustainable development, and strong community engagement. This year, we have furthered our commitment in the following ways:
1. Supporting Local Communities and Charitable Organisations
Supporting local communities remains central to our values, and this year we have continued to engage with and contributed to the communities in which we operate. Our strategy is under review and over the forthcoming financial year we will continue to support a range of local initiatives and charitable organisations that focus on social welfare, education, and housing. Our contributions will be not just financial; our team will actively participate in volunteer programmes which we support by offering our people up to 2 volunteer days paid per year. We are proud to work on established long-term partnerships with community organisations, which enable us to make a lasting positive impact on the areas surrounding our developments. Through these initiatives, we aim to foster stronger, more resilient communities, demonstrating our commitment to social responsibility beyond the confines of property development.
2. Employee Training and Development
We are committed to the professional growth and development of our employees, recognising that a highly skilled workforce is essential to our success. This year, we launched a new training system that facilitates regular e-learning across various disciplines, ensuring our team stays updated with best practices and compliance requirements. Additionally, we continue to support employees pursuing professional qualifications such as AAT and ACCA, offering both financial assistance and study leave to help them achieve their career goals. By investing in continuous learning and development, we ensure our team remains adaptable, capable, and ready to meet the challenges of a fast-evolving industry.
3. Equality, Diversity, and Inclusion
We remain fully committed to fostering a diverse and inclusive workplace where all employees feel valued and respected. Our ongoing efforts to promote equality across all levels of the business include fair recruitment practices, employee development opportunities, and fostering a culture that celebrates diversity in its many forms. Our recent application to become a full member of the Greater Manchester Good Employment Charter reflects this commitment to high standards in fair employment practices. Through this membership, we aim to reinforce our dedication to improving working conditions, promoting diversity, and ensuring an inclusive environment for all.
4. Environmental Impact
We are making progress in improving the environmental performance of our developments. Our approach includes working closely with contractors to monitor and manage waste, aiming to reduce landfill contributions and increase recycling rates. Additionally, we have been proactive in incorporating energy-efficient design features where practical, such as advanced insulation, energy-saving lighting, and sustainable materials, into our projects. These measures not only help us minimise our carbon footprint but also deliver cost-effective solutions that benefit both residents and investors. By prioritising sustainability, we align our business practices with broader environmental goals, contributing to a greener future while enhancing the long-term value of our developments.
TASK FORCE ON CLIMATE-RELATED DISCLOSURES (TCFD)
In response to growing global concerns over climate change, the Company is committed to implementing the Task Force on Climate-related Financial Disclosures (TCFD) framework. This initiative is central to our climate strategy and reflects our dedication to transparency in climate-related financial risks and opportunities.
Our TCFD implementation plan includes:
-- Governance: Establishing a dedicated committee to oversee climate-related risk management.
-- Risk Management: Conducting comprehensive climate risk assessments and integrating climate risks into ourbroader risk management framework.
-- Scenario Analysis: Developing models to assess the financial implications of different climate scenarioson our business.
-- Data Collection and Disclosure: Enhancing data collection systems to support accurate TCFD reporting.
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By adopting the TCFD framework, we are taking proactive steps to ensure our business remains resilient in the face of climate challenges while aligning with best practices in corporate governance.
OUTLOOK FOR 2025
The restructuring we recently announced has laid the foundation for a pathway to grow shareholder value. Through this transformation, we have made bold decisions to streamline our operations, reducing our overheads and core cost base by adjusting our headcount, renegotiating our core finance facility, and reducing our debt to a more manageable level. These decisive actions have resulted in a sharper, more focused approach to residential development-our primary strength and the area where we see the greatest opportunity for growth.
Our strategic decision to move away from Co-Living and in-house construction were critical steps, enabling us to fully concentrate on delivering high-quality residential projects, allowing for greater efficiency and more predictable outcomes. This targeted focus aligns with the evolving needs of the market and reinforces our commitment to generating long-term value for our shareholders.
After a turbulent few years marked by rising costs and uncertainty, we are beginning to see the tide turn. With the pressures of escalating costs easing and our business now operating under a leaner, more efficient structure, we are optimistic about the future. The fresh, new look of Zentra Group PLC, coupled with our refined structure, gives us the best opportunity to execute our strategy successfully. We believe that these changes will allow us to seize emerging opportunities and achieve sustained success, as we move forward with renewed energy and confidence.
Jason Upton
Chief Executive
29 October 2024
Group's Financial Review
Trading
For the twelve months ended 30 June 2024, revenue decreased by GBP0.94m (6%) to GBP14.65m (FY 2023: GBP15.59m). This primarily reflects a reduction in development sales and a reduction in the provision of management services.
FY 2024 FY 2023 Change Change
Revenue
GBPm GBPm GBPm %
Development sales 8.97 9.99 (1.02) (10)%
Co-Living project management fee 0.87 1.28 (0.41) (32)%
Construction 4.02 3.17 0.85 27%
Development management fee 0.36 0.70 (0.34) (48)%
Property services 0.32 0.33 (0.01) (3)%
Corporate 0.11 0.12 (0.01) (8)%
TOTAL 14.65 15.59 (0.94) (6)%
Development sales revenue from legal completions remained the largest contributor to Group revenue, accounting for 61% (FY 2023: 64%) of total revenue. Overall, there is a reduction in legal completions from 71 in FY 2023 to 52 in FY 2024 with St Petersgate Stockport and Oscar House Manchester both achieving practical completion in the year, and the remainder of revenue coming from completed developments. Lincoln House Bolton delivered GBP3.06m from 23 legal completions, St Petersgate Stockport legally completed 17 sales for GBP2.87m, 10 sales legally completed at Oscar House Manchester for GBP2.42m, with Bank Street Sheffield legally completing 2 sales equating to GBP0.35m.
Co-Living project management relates to the construction works undertaken on Co-Living properties where the Group receives a 5.0% cost plus margin on all works undertaken and generated revenue of GBP0.87m (FY 2023: GBP1.28m). In addition, construction services generated revenue of GBP4.02m in the period (FY 2023: GBP3.17m) from the management of construction activity at North Church House Sheffield on behalf of a related party.
There was a decrease in development management fee income to GBP0.36m (FY 2023: GBP0.70m) and this relates to management services provided on One Victoria, Manchester and the One Heritage Tower, Salford.
Property services delivered revenue of GBP0.32m (FY 2023: GBP0.33m). This was driven by management fees and transaction fees.
FY24 FY23 Change Change
Statement of Comprehensive Income
GBPm GBPm GBPm %
Revenue 14.65 15.59 (0.94) (6)%
Cost of sales (13.65) (13.91) 0.26
Cost of sales - Impairment (0.82) (1.09) 0.27
Gross Profit 0.18 0.59 (0.41) (69)%
Gross margin 1.20% 3.78%
Administration costs (2.62) (2.21) (0.41)
Operating Loss (2.44) (1.62) (0.82) (51)%
Finance expense (1.12) (0.52) (0.60)
(Loss) before taxation (3.56) (2.14) (1.42) (66)%
(Loss) per share (pence) (8.7) (6.2) (2.5) (40)%
The gross profit declined by GBP0.41m to GBP0.18m (FY 2023: profit GBP0.59m) due mainly to an overall reduction in legal completions and in particular those at Lincoln House, Bolton. The impairment charge in the period was GBP0.82m (FY 2023: GBP1.09m) with the majority of the charge arising from the completion of works at St Petersgate, the final project to be completed using in-house construction services. The benefits of the decision to cease this activity has been shown at Victoria Road, Eccleshill where the site will complete within cost budget following the appointment of a principal contractor on a fixed price basis.
The gross margin was 1.20% (FY 2023: 3.78%), this reduction being predominantly due to the reduced legal completions on Lincoln House offset by a reduced impairment charge in the year.
Administrative expenses were GBP2.62m in the period (FY 2023: GBP2.21m). This represents an overall GBP0.41m increase in overheads arising from a number of factors: a higher salary cost of GBP0.11m driven by an increase in average headcount to 30 employees (FY 2023: 28) and an increase in professional and consultancy costs. Post year-end, a review of overheads was undertaken and a cost cutting exercise has been implemented including a series of redundancies with headcount realigned to the current position in terms of development streams.
The operating loss increased by GBP0.82m to a loss of GBP2.44m (FY 2023: loss of GBP1.62m). Finance costs were GBP1.12m (FY 2023: GBP0.52m). The increase in finance cost is attributable to the holding costs associated with unsold units on completed sites. Where practical, these units have been rented to generate a revenue stream to offset the holding costs. The pre taxation loss amounts to GBP3.56m (FY 2023: GBP2.14m). The basic loss per share was 8.7 pence (FY 2023: loss 6.2 pence).
Balance Sheet
Development Inventory has decreased by GBP3.30m from GBP16.57m to GBP13.27m. The key balances are at St Petersgate GBP0.3m (FY 2023: GBP2.7m), Oscar House GBP4.49m (FY 2023: GBP6.42m) and Lincoln House GBP1.10m (FY 2023: GBP3.6m), where the projects are completed and sales have taken place. The inventory balance at Victoria Road, Eccleshill is GBP5.23m (FY 2023: GBP1.80m), with practical completion being achieved post year end in October 2024.
The negative equity position has increased by GBP3.38m from GBP0.57m to negative equity of GBP3.95m due to the impaired inventory position generating insufficient profit to cover the operational and financing costs of the business. The monetisation of impaired assets and the recycling of the funds generated into new developments will improve this position over time, and in this regard the regearing of borrowings together with the sale of stock properties to a related party at market value post year end (as outlined in the post balance sheet events note contained within the financial statements) is a great step towards rebuilding the balance sheet. No dividends have been declared in this year due to continuing loss-making position.
Reported Net Assets per share decreased by 8.7p in the period to negative 10.2p (FY 2023: negative 1.5p).
Liquidity
There was no raising of Capital in the year through the issue of shares and the focus has been on paying down development related borrowings and where appropriate putting new lines of funding in place that give improved terms.
Net Debt has decreased marginally from GBP16.94m to GBP16.89m. This movement includes:
-- Interest payment of GBP1.48m;
-- A refinance of Oscar House, Manchester in line with the revised sales and letting strategy on improvedterms to the previous loan of GBP2.4m;
-- Investment in Victoria Road Eccleshill from equity but also a GBP3.85m debt facility with Hampshire TrustBank of which GBP2.82m was drawn down at 30th June 2024.
-- The repayment of GBP1.0m of the GBP1.5m Corporate Bond which matured in March 2024, with the remaining GBP0.5mrolled into a new loan note facility on the same terms for a further 12 months to March 2025.
-- A decrease in the One Heritage Property Development shareholder loan facility of GBP0.4m to GBP10.98m (FY2023: GBP11.38). During the year renegotiation took place of the facility termination date which was extended toDecember 2025, with the ability to extend for a further 3 years. As detailed in the post balance sheet events note,post year-end, the sale of completed stock and a regear of the Group's funding position has seen this liabilityreduce to GBP7m with an improved debt servicing cost of 6%.
Net Cash inflow used in operating activities was GBP1.61m, primarily due to the cashing in of stock inventory, albeit at nominal profit.
In summary, the Company's operational and financial performance will improve as it divests itself of the legacy sites and recycles cash into new developments which will be carefully sourced and managed to improve operational efficiency. The operational and financial restructures which have taken place post year end, will accelerate this strategy and put the Group on a stronger financial footing.
Risk Management and Principal Risks
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The ability of the Group to operate effectively and achieve its strategic objectives is subject to a range of potential risks and uncertainties. The Board and the broader management team take a pro-active approach to identifying and assessing internal and external risks. The potential likelihood and impact of each risk is assessed and mitigation policies are set against them that are judged to be appropriate to the risk level. Management constantly updates plans and these are monitored by the Audit and Risk Committee and reported to the Board.
The principal risks that the Board sees as impacting the Group in the coming period are divided into six categories, and these are set out below together with how the Company mitigates such risks.
1. Strategy: Government regulation, planning policy and land availability.
2. Delivery: Inadequate controls or failures in compliance will impact the Group's operational and financial performance.
3. Operations: Availability and cost of raw materials, sub-contractors, and suppliers.
4. People and culture: Attracting and retaining high-calibre employees.
5. Finance & Liquidity: Availability of finance and working capital.
6. External Factors: Economic environment, including housing demand and mortgage availability.
1. Strategy: Government regulation, planning policy and land availability
A risk exists that changes in the regulatory environment may affect the conditions and time taken to obtain planning approval and technical requirements including changes to Building Regulations or Environmental Regulations, increasing the challenge of providing quality homes where they are most needed. Such changes may also impact our ability to meet our margin or site return on capital employed (ROCE) hurdle rates (this ratio can help to understand how well a company is generating profits from its capital as it is put to use). An inability to secure sufficient consented land and strategic land options at appropriate cost and quality in the right locations to enhance communities, could affect our ability to grow sales volumes and/or meet our margin and site ROCE hurdle rates. The Group mitigates against these risks by liaising regularly with experts and officials to understand where and when changes may occur. In addition, the Group monitors proposals by Government to ensure the achievement of implementable planning consents that meet local requirements and that exceed current and expected statutory requirements. The Group regularly reviews land currently owned, committed and pipeline prospects, underpinned with robust key business control where all land acquisitions are subject to formal appraisal and approved by the senior executive team.
2. Delivery: Inadequate controls or failures in compliance will impact the Group's operational and financial performance
A risk exists of failure to achieve excellence in construction, such as design and construction defects, deviation from environmental standards, or through an inability to develop and implement new and innovative construction methods. This could increase costs, expose the Group to future remediation liabilities, and result in poor product quality, reduced selling prices and sales volumes.
To mitigate this, the Group liaises with technical experts to ensure compliance with all regulations around design and materials, along with external engineers through approved panels. It also has detailed build programmes supported by a robust quality assurance.
3. Operations: Availability and cost of raw materials, sub-contractors, and suppliers
A risk exists that not adequately responding to shortages or increased costs of materials and skilled labour or the failure of a key supplier, may lead to increased costs and delays in construction. It may also impact our ability to achieve disciplined growth in the provision of high-quality homes.
The Group no-longer participates in in-house construction of residential development projects. It is reducing its exposure to providing services for the development of Co-Living projects for related parties and has also chosen an approach to the delivery of our development projects by appointing a principal contractor after a period of due diligence, which we believe will deliver the best shareholder value through cost certainty.
4. People and culture: Attracting and retaining high-calibre employees
A risk exists that increasing competition for skills may mean we are unable to recruit and/or retain the best people. Having sufficient skilled employees is critical to delivery of the Company's strategy, whilst maintaining excellence in all of our other strategic priorities.
To mitigate this the Company has a number of People Strategy programmes which include development, training and succession planning, remuneration benchmarking against competitors, and monitoring of employee turnover, absence statistics and feedback from exit interviews.
5. Finance & Liquidity: Availability of finance and working capital
A risk exists that lack of sufficient borrowing and surety facilities to settle liabilities and/or an ability to manage working capital, may mean that we are unable to respond to changes in the economic environment, and take advantage of appropriate land buying and operational opportunities to deliver strategic priorities.
To minimise this risk, the Group has a disciplined operating framework with an appropriate capital structure together with forecasting of working capital and external funding requirements. Management have stress tested the Group's resilience to ensure the funding available is sufficient. This process has regular management and Board attention to review the most appropriate funding strategy to drive the Company's growth ambitions. We have regular Treasury updates, and we gain market intelligence and availability of finance from in-house and experienced sector Treasury advisers.
6. External Factors: Economic environment, including housing demand and mortgage availability
A risk exists that changes in the world and UK macroeconomic environment may lead to falling demand or tightened mortgage availability, upon which most of our customers are reliant, thus potentially reducing the affordability of our homes. This could result in reduced sales volumes and affect our ability to deliver targeted returns.
To mitigate this risk, the Group partners with a network of overseas agents, tapping into overseas investor and private individual demand and in particular in Hong Kong, China and Singapore with the majority of overseas purchasers being cash buyers. The Group continually monitors the market at Board, Executive Committee, and team levels, leading to amendments in the Group's forecasts and planning, as necessary. In addition, there are comprehensive sales policies, regular reviews of pricing in local markets and development of good relationships with mortgage lenders. This is underpinned by a disciplined operating framework with an appropriate capital structure.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Company financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and applicable law and have elected to prepare the parent Company financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of the Group's profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable, relevant, and reliable; - for the Group financial statements, state whether they have been prepared in accordance withinternational accounting standards in conformity with the requirements of the Companies Act 2006 and, as regardsthe Group financial statements, International Financial Reporting Standards; - 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.
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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 position,and 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
29 October 2024
Independent Auditor's Report to the Members of Zentra Group PLC (previously One Heritage Group PLC)
Our opinion
We have audited the consolidated financial statements and Company financial statements of Zentra Group PLC (previously One Heritage Group PLC) (the "Company") and its subsidiaries (together, the "Group"), which comprise the consolidated statement of financial position and Company's balance sheet as at 30 June 2024, the consolidated statement of comprehensive income, the consolidated and Company's statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory information.
In our opinion:
-- the financial statements give a true and fair view of the state of the Group's and of the Company'saffairs as at 30 June 2024 and of the Group's loss for the year then ended;
-- the Group financial statements are properly prepared in accordance with UK-adopted internationalaccounting standards;
-- the parent Company financial statements have been properly prepared in accordance with UK accountingstandards, including FRS 101 Reduced Disclosure Framework; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to public interest entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements and company financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the consolidated financial statements and company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters were as follows (unchanged from 2023):
The risk Our response
Our audit procedures included:
Internal Controls:
Documenting and assessing the design and
implementation of the processes and
controls regarding impairment of inventory;
Challenging management's assumptions and
inputs:
We critically assessed the appropriateness
of key assumptions and the commercial
Estimation uncertainty: viability of sites as determined by
management through comparison against
The carrying value of inventory is determined by historic data and consideration of current
reference to a number of assumptions such as sales market conditions;
values, costs to complete that are inherent in site
forecasts and the level of provisioning, if any, Assessing impairment model:
required for impairment. These assumptions are
inherently subjective and therefore may be open to For incomplete development sites we
management bias. compared the actual costs incurred to date
Impairment of to the budgeted costs to complete where
inventory - The effect of these matters is that, as part of our relevant and agreed the budgeted costs to
developments risk assessment, we determined that the assumptions construction contracts where they had been
used in the impairment assessment have a high degree signed or completion of works statements
2024: GBP13,273,743 of estimation uncertainty, with a potential range of from contractors;
(2023 GBP16,566,922) reasonable outcomes greater than our materiality for
the financial statements as a whole, and possibly Forecast sales for each development site
Refer to the Audit and many times that amount. were vouched to pre-sales and bookings
Risk Committee Report where available and, where not available,
on page 28, note 5 Risk: to budgeted sales listings (and assessed
accounting policy and for reasonableness based on market prices
note 13 disclosures. There is a risk that the carrying value of inventory for similar developments);
is overstated. The carrying value of inventory is
assessed by management for impairment by reference For each incomplete development we
to current market information and assumptions. In recalculated the impairment charge by
performing the assessment, management undertake deducting the estimated costs to complete
quarterly valuations to determine the expected from the estimated selling price, and where
outcome of each development and hence identify if complete, we compared actual costs incurred
any impairment is required. to estimated selling prices;
Assessing disclosures:
We considered the adequacy of the group's
disclosures about the economic and
operational circumstances impacting the
carrying value of inventory property.
Our results:
We found the results of our testing and
related disclosures in respect of the
impairment to be satisfactory and the
carrying value of inventory recognised to
be acceptable.
The risk Our response
Our audit procedures included:
Consideration of whether these risks could
plausibly affect the liquidity of the Group and
Company in the going concern period by assessing
the Directors' sensitivities over the level of
available financial resources indicated by the
Group's and Company's financial forecasts taking
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account of severe, but plausible, adverse effects
that could arise from these risks individually and
Disclosure quality: collectively.
Our procedures also included:
The financial statements explain how the Funding assessment:
Board has formed a judgement that it is
appropriate to adopt the going concern . Understanding the impact of the proposed
basis of preparation for the Group and restructure to be implemented post year end on the
parent Company. financial position and forecasts of the Group, and
obtaining the signed agreements implementing those
That judgement is based on an evaluation arrangements;
of the inherent risks to the Group's and
Company's business model and how those . Agreeing the committed level of funding from
risks might affect the Group's and current lenders in note 17 and new funding secured
Company's financial resources or ability in note 23 to the facility agreements and
to continue operations over a period of at confirmed the balance drawn and undrawn as at the
least a year from the date of approval of year end;
the financial statements.
. Agreeing post year-end receipts from sale of
units in completed developments to bank
statements, repayment of the related construction
Risk: finance loans or restructure agreements (as
described in note 23);
The risks most likely to adversely affect
the Group's and Company's available . Assessing whether the forecast proceeds from the
Going concern financial resources over this period were: sale of developments projected to complete in the
forecast period to 31 December 2025 (net of
. The implementation of the post year end repayment of related construction finance loans),
restructure of the group's inventory and supplemented by continued financial support from
Refer to the Audit and debt financing (as described in note 23); the Company's parent company and related company
Risk Committee Report on are sufficient to provide the Group and Company
page 28 and notes 3 and 1 . Continued support from a related company with sufficient liquidity to meet committed
disclosures in the Group (in the nature of a confirmation from a expenditure in the forecast period up to 31
and Company financial related company that their loan, due to December 2025;
statements respectively. mature in December 2025, will not be
demanded for repayment until such a time Sensitivity analysis:
that the Group can afford to repay them
without impacting on its going concern); . Considering sensitivities over the level of
available financial resources indicated by the
. The refinancing of a previous Group's and Company's financial forecasts taking
construction loan on improved terms to account of plausible (but not unrealistic) adverse
match forecast completion dates of the effects that could arise from these risks
related developments; and individually and collectively. We did this by
stress testing the identified critical factors,
. The timely completion and sale of namely delaying the timing of the planned sales of
property developments. developments by 3 months;
There are also less predictable but Evaluating Directors' intent:
realistic second order impacts, such as
the erosion of customer or supplier . Evaluating the achievability of the actions the
confidence, which could result in a rapid Directors consider they would take to improve the
reduction of available financial position should the risks materialise, which
resources. included realising property sales via auction and
availing the group of the financial support
The risk for our audit was whether or not commitment from a related entity, taking into
those risks were such that they amounted account the extent to which the Directors can
to a material uncertainty that may have control the timing and outcome of these;
cast significant doubt about the ability
of the Group and the Company to continue Assessing transparency:
as a going concern. Had they been such,
then that fact would have been required to . Considering whether the going concern disclosure
have been disclosed. in notes 3 and 1 to the group and company
financial statements respectively give a full and
accurate description of the Directors' assessment
of going concern, including the identified risks
and dependencies.
Our results:
We found the going concern basis of preparation
without any material uncertainty to be appropriate
and the related disclosure in notes 3 and 1 of the
Group and Company financial statements
respectively adequately describe the judgements,
assumptions and dependencies.
The risk Our response
Our audit procedures included:
Test of details:
Comparing the carrying amount of 100% of the
parent Company's loans to and investments in
Recoverability of subsidiaries with the relevant subsidiaries'
parent Company's loans Low risk, high value: balance sheet and budgets for the underlying
to and investment in development properties to identify whether
subsidiaries The carrying value of the parent Company's loans their financial position supported the
to and investment in subsidiaries represents 99% carrying amount of the parent Company's loans
Loans to subsidiaries of the parent Company's total assets. The to and investments in those subsidiaries and
GBP1,604,331 (2023 assessment of carrying value is not at a high risk evaluating budgeted forecasts in line with
GBP3,033,711) and of significant misstatement or subject to our knowledge of the entity. This procedure
investment in significant judgement as the carrying value is was also relevant for our assessment of going
subsidiaries GBPnil supported by the net asset value of the concern.
(2023 GBP1,007,732) subsidiaries and the profits forecast to be made
on sale of the development properties owned by the Assessing disclosures:
Refer to the Audit and subsidiaries (which are stated at cost in the
Risk Committee Report financial statements). However, due to its We have also considered the adequacy of the
on page 28, note 1 materiality in the context of the parent Company Company's disclosure of the circumstances
accounting policy and financial statements, this is considered to be the identified by management in respect of the
notes 3 and 4 area that had the greatest effect on our overall carrying value of the investments and
disclosures in the parent Company audit. intercompany loan receivable from the
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Company financial subsidiary.
statements.
Our results:
The results of our testing were satisfactory
and we found the carrying value and
associated disclosure of the investment in
subsidiary, following the provision
recognised by management, and recoverability
of parent Company's loans to be acceptable.
Our application of materiality and an overview of the scope of our audit
Materiality for the consolidated financial statements as a whole was set at GBP120,000 (2023: GBP147,000), determined with reference to a benchmark of group total assets of GBP14,853,264 (2023: GBP19,251,448), of which it represents approximately 0.81% (2023: 0.76%).
Materiality for the Company financial statements was set at GBP20,000 (2023: GBP40,000), determined with reference to a benchmark of Company total assets of GBP2,093,631 (2023: GBP4,354,322), of which it represents approximately 0.92% (2023: 0.83%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the consolidated financial statements as a whole. Performance materiality for Group was set at 65% (2023: 65%) of materiality for the consolidated financial statements as a whole, which equates to GBP78,000 (2023: GBP95,500), which is lower than the maximum of 75% per our methodology. This was to take into account the Group nature of the audit and resulting increased level of aggregation risk from consolidation of the subsidiaries. For the Company, performance materiality was set at 75% (2023: 75%), which equates to GBP15,000 (2023: GBP30,000). We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding GBP6,000 (2023: GBP7,350), for the consolidated financial statements and GBP1,000 (2023: GBP2,000) for the Company financial statements, in addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Group was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above.
The group team performed the audit of the Group as if it was a single aggregated set of financial information. The audit was performed using the materiality level set out above and covered 100% of total group revenue, total group profit before tax, and total group assets and liabilities.
Going concern
The Directors have prepared the consolidated financial statements and Company financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the consolidated financial statements and the Company financial statements (the "going concern period").
An explanation of how we evaluated the Directors' assessment of going concern is set out in the related key audit matter in the key audit matters section of this report.
Our conclusions based on this work:
-- we consider that the Directors' use of the going concern basis of accounting in the preparation of theconsolidated financial statements and Company financial statements is appropriate;
-- we have not identified, and concur with the Directors' assessment that there is not, a materialuncertainty related to events or conditions that, individually or collectively, may cast significant doubt on theGroup and the Company's ability to continue as a going concern for the going concern period; and
-- we have nothing material to add or draw attention to in relation to the Directors' statement in the notesto the consolidated financial statements and Company financial statements on the use of the going concern basis ofaccounting with no material uncertainties that may cast significant doubt over the Group and the Company's use ofthat basis for the going concern period, and that statement is materially consistent with the consolidatedfinancial statements and Company financial statements and our audit knowledge. See the Key Audit Matter withrespect 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 asenquiring 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 anyidentified entries to supporting documentation; and
-- incorporating an element of unpredictability in our audit procedures.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the consolidated financial statements and Company financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Group's regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.
The Group is subject to laws and regulations that directly affect the consolidated financial statements and Company financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the consolidated financial statements and Company financial statements, for instance through the imposition of fines or litigation or impacts on the Group and the Company's ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the regulated nature of the Group's activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the consolidated financial statements and Company financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the consolidated financial statements and Company financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
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In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
The Directors' Report and Strategic Report
The Directors are responsible for the Strategic Report and the Directors' Report. Our opinion on the consolidated financial statements and Company financial statements do not cover those reports and we do not express an audit opinion thereon.
Our responsibility is to read the Strategic Report and the Directors' Report and, in doing so, consider whether, based on our consolidated financial statements and Company financial statements audit work, the information therein is materially misstated or inconsistent with the consolidated financial statements and Company financial statements or our audit knowledge. Based solely on that work:
-- we have not identified material misstatements in the Strategic Report and the Directors' Report;
-- in our opinion the information given in those reports for the financial year is consistent with theconsolidated financial statements and Company financial statements; and
-- in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
-- adequate accounting records have not been kept, or returns adequate for our audit have not been receivedfrom branches not visited by us; or
-- the parent Company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 36, the Directors are responsible for: the preparation of the consolidated financial statements and Company financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of consolidated financial statements and Company financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and Company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements and Company financial statements. A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/ auditorsresponsibilities.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and its members, as a body, for our audit work, for this report, or for the opinions we have formed.
Edward Houghton (Senior Statutory Auditor)
For and on behalf of KPMG Audit LLC (Statutory Auditor)
Chartered Accountants
Isle of Man
29 October 2024
Consolidated statement of comprehensive income
For the year ended 30 June 2024
Year to Year to
GBP unless stated Notes
30 June 2024 30 June 2023
Revenue 6,7 14,650,154 15,591,928
Revenue - developments 14,650,154 15,591,928
Cost of sales (14,473,775) (15,000,835)
Cost of sales - developments (13,657,663) (13,906,259)
Cost of sales - write down of inventory 13 (816,112) (1,094,576)
Gross profit 176,379 591,093
Administration expenses 8 (2,622,935) (2,210,021)
Operating (loss) for the year (2,446,556) (1,618,928)
Finance expense 10 (1,117,234) (520,851)
(Loss) before taxation for the year (3,563,790) (2,139,779)
Taxation 11 184,012 (250,473)
(Loss) after tax and comprehensive income for the year (3,379,778) (2,390,252)
Weighted average shares in issue over the period 38,678,333 38,657,785
(Loss) per share (GBpence) (8.7) (6.2)
Diluted (loss) per share (GBpence) (8.7) (6.2)
The accompanying notes on pages 51 to 78 form an integral part of the financial statements.
Consolidated statement of financial position
As at 30 June 2024
30 June 2024
GBP unless stated Notes 30 June 2023
ASSETS
Non-current assets
Property, plant and equipment 12 177,204 278,628
Intangible assets 1,680 1,913
178,884 280,541
Current assets
Cash and cash equivalents 88,161 303,816
Inventory - developments 13 13,273,743 16,566,922
Trade and other receivables 15 1,312,476 2,100,169
14,674,380 18,970,907
TOTAL ASSETS 14,853,264 19,251,448
LIABILITIES
Non-current liabilities
Borrowings 17 11,097,615 11,572,047
11,097,615 11,572,047
Current liabilities
Trade and other payables 18 1,826,470 2,579,643
Borrowings 17 5,877,673 5,668,474
7,704,143 8,248,117
TOTAL LIABILITIES 18,801,758 19,820,164
EQUITY
Share capital 21 386,783 386,783
Share premium 21 4,753,325 4,753,325
Retained earnings (9,088,602) (5,708,824)
TOTAL EQUITY (3,948,494) (568,716)
TOTAL LIABILITIES AND EQUITY 14,853,264 19,251,448
Shares in issue 38,678,333 38,678,333
Net asset value per share (GBpence) (10.2) (1.5) These financial statements were approved by the board of directors on 29 October 2024 and were signed on its behalf by:
Jason David Upton
Company registration number: 12757649
The accompanying notes on pages 51 to 78 form an integral part of the financial statements.
Consolidated statement of cash flows
For the year ended 30 June 2024
Year to
Restated Year to
GBP unless stated Notes 30 June 2024
30 June 2023
Cash flows from operating activities
Loss for the year before tax (3,563,790) (2,139,779)
Adjustments for:
Finance expense 10 1,117,234 520,851
Profit on disposal of associate 14 - 50,000
Loss on disposal of fixed assets 1,002 -
Depreciation of property, plant and equipment 8, 12 104,750 103,984
Amortisation of intangible asset 8 411 411
Movement in working capital:
Decrease/(increase) in trade and other receivables 787,693 (188,818)
Decrease/(increase) in inventories^ 3,667,813 117,179
(Decrease)/Increase in trade and other payables (502,261) 384,538
Cash inflow/ (outflow) from operations 1,612,852 (1,151,634)
Taxation paid (66,934) -
Net cash generated from/(used in operating) activities 1,545,918 (1,151,634)
Cash flows from investing activities
Purchases of property, plant and equipment 12 (4,284) (8,137)
Net cash used in investing activities (4,284) (8,137)
Cash flows from financing activities
Issue of share capital 21 - 1,247,100
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October 30, 2024 03:00 ET (07:00 GMT)
DJ Zentra Group plc: Full year results for the year -10-
Interest paid^ 10,17 (1,482,411) (2,064,587) Proceeds from borrowings* 17 5,572,200 8,725,789 Borrowings repaid* 17 (4,559,386) (9,535,263) Proceeds of related party borrowing* 17 10,149,165 12,177,035 Related party borrowings repaid* 17 (11,350,234) (9,974,065) Payments made in relation to lease liabilities 12 (86,623) (86,623) Net cash (used in)/generated from financing activities (1,757,289) 489,386 Net change in cash and cash equivalents (215,655) (670,385) Opening cash and cash equivalents 303,816 974,201 Closing cash and cash equivalents 88,161 303,816
^ Restated. Refer note 10.
* Restated. Refer note 17.
The accompanying notes on pages 51 to 78 form an integral part of the financial statements.
Consolidated statement of changes in equity
For the year ended 30 June 2024
Share Share Retained Total
GBP unless stated
capital premium earnings Equity
Balance at 01 July 2023 386,783 4,753,325 (5,708,824) (568,716)
Loss for the period - - (3,379,778) (3,379,778)
Total comprehensive income for the year - - (3,379,778) (3,379,778)
Balance at 30 June 2024 386,783 4,753,325 (9,088,602) (3,948,494)
For the year ended 30 June 2023
Share Share Retained Total
GBP unless stated
capital premium earnings Equity
Balance at 01 July 2022 324,283 3,568,725 (3,318,572) 574,436
Loss for the period - - (2,390,252) (2,390,252)
Total comprehensive income for the year 324,283 3,568,725 (5,708,824) (1,815,816)
Issue of share capital 62,500 1,187,500 - 1,250,000
Cost of share issue - (2,900) - (2,900)
Balance at 30 June 2023 386,783 4,753,325 (5,708,824) (568,716)
The accompanying notes on pages 51 to 78 form an integral part of the financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2024 1. Reporting entity
Zentra Group PLC (the "Company")(Company number: 12757649) is a public limited company, limited by shares, incorporated in England and Wales under the Companies Act 2006. The address of its registered office and its principal place of trading is 80 Mosley Street, Manchester, M2 3FX. The principal activity of the company and subsidiaries is that of property development.
These consolidated financial statements ("Financial Statements") as at the end of the financial year to 30 June 2024 comprise of the Company and its subsidiaries. A full list of companies consolidated in these Financial Statements can be found in Note 25. 2. Measuring convention
The financial statements are prepared on the historical cost basis except for 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 pages79 to 87. The significant accounting policies are set out in note 5. The accounting policies have been applied consistently to all periods presented in these group Financial Statements.
They were authorised for issue by the Company's Board of Director on 29 October 2024.
Segment reporting
The Group operates in three operating segments, each managed by a senior manager who sits on the Group's management team. In addition to these, there is a corporate segment which covers central operations. The following is a summary of the operations for each reportable segment.
Reportable Operations
segments
Developments Internally managed development activities including the sales of completed developments and Co-Living
property management fee
Construction Construction services provided to an internally owned and managed development
Property 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 Director and the Department Directors. The information presented to Senior Management Team includes reports from all functions of the business as well as strategy, financial planning, succession planning, organisational development and Company wide policies.
There are various levels of integration between Development and Construction. This integration involves the services that Construction undertakes on the developments on behalf of the Development segment.
The Group's primary measure of financial performance for segments is the operating profit or loss in the period.
Going concern
Notwithstanding net current liabilities of GBP6.3m (excluding inventory balances totalling GBP13.3m) as at 30 June 2024 (2023: GBP5.8m (excluding inventory balances totalling GBP16.6m), a loss for the year then ended of GBP3.4m (2023: GBP2.4m) and operating cash inflow for the year of GBP1.5m (2023: outflow GBP1.2m), the financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The Directors have prepared a cash flow forecast on a consolidated basis for the period to 31 December 2025 which indicates that, taking account of reasonably possible downsides, the Group will have sufficient funds to meet its liabilities including loans and loan note, as they fall due for that period using the proceeds from:
-- existing resources held by the Group (including funds drawn down on external loan facilities and the loanfacility to be provided by OH UK Holdings Limited("OHUK") as detailed in notes 19 and 23);
-- the implementation of the proposed restructure of the Group outlined in note 23, which includes therefinancing of Group shareholder loan with a related party, the disposal of completed inventory, the acquisition ofan equity stake in the One Victoria, Manchester property development project, the waiver of a portion of theexisting shareholder loan and the provision of continuing shareholder financial support via related party;
-- the forecast continued sale of development property inventory (net of repayment of related constructionfinance loans (note 19)); being the Seaton House Stockport, Churchgate Leicester and Victoria Road, Eccleshill andsales of units in the One Victoria development property on completion in line with management estimates for timingand quantum;
-- in the event of need the Directors consider that mitigating actions are required, actions available tothe Group would include realising development property inventory via auction and/or refinancing of the postrestructure of the remaining 3rd party loan due to expire in March 2025 and also the Loan Note due to expire inMarch 2025;
-- in the event of need, continued financial support from both also its parent company, One HeritageProperty Development Limited ("OHPD"), and OHUK to meet its liabilities as they fall due for that period. OHUK haveconfirmed that their loans due to mature in December 2025 will not be demanded for repayment until such a time thatthe Group can afford to repay them without impacting on its going concern. OHUK have also confirmed the potentialto draw down on additional flexible funding support of up to GBP1.0m.
As with any company placing reliance on other group/related entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Consequently, and based upon events after the reporting date referenced in Note 23, the Directors are confident that the Company and its subsidiaries will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis. 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.
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DJ Zentra Group plc: Full year results for the year -11-
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 four ofthe developments. - Going concern: The directors have concluded that it is appropriate to prepare the financial statements ona going concern basis and have disclosed the key assumptions on which they have done so, being the continuedavailability of third party and related party funding facilities and management of the Company and its subsidiariesare not aware of any material uncertainties that may cast significant doubt on the Company and its subsidiariesability to continue as going concerns. Therefore, the Group financial statements continue to be prepared on thegoing concern basis. For detail refer note 3 going concern.
Measurement of fair values
A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Group has an established control framework with respect to the measurement of fair values. The board has overall responsibilities for overseeing all significant fair value measurements.
The board in conjunction with departmental directors regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker prices or pricing services, is used to measure fair values, then the board assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of the Standards, including the level in the fair value hierarchy in which the valuations should be classified.
Significant valuation issues are reported to the Group's audit committee.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in fair value hierarchy based on the inputs used in the valuation techniques as follows:
-- Level 1: quotes prices (unadjusted) in active markets for identical assets and liabilities.
-- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset 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. Material accounting policies
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group 'controls' any entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Interests in equity-accounts investees
The Group's interests in equity-accounted investees comprise interests in associates.
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.
Interests in associates are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases.
Earnings per share and net asset value per share
Basic earnings per share amounts are calculated by dividing net profit or loss for the year attributable to the owners of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit or loss attributable to the owners of the Company (after adjusting for interest on the convertible notes) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Net asset value per share amounts is calculated by dividing net assets of the Company at the reporting date by the weighted average number of ordinary shares outstanding during the year. Revenue
Revenue is recognised when the performance obligation associated with the sale is completed or as the performance obligation is completed over time where appropriate. The transaction price comprises the fair value of the consideration received or receivable, net of value added tax, rebates and discounts and after eliminating sales within the Group. Revenue and gross profit are recognised as follows (note 7): 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.
Cost of sales
The Group determines the value of inventory charged to cost of sales based on the total budgeted cost of developing a site. Once the total expected costs of development are established, they are allocated to individual plots to achieve a standard build cost per plot. Cost of sales represent cost for purchase of land, construction costs, consultant costs, utilities cost and other related direct costs.
To the extent that additional costs or savings are identified as the site progresses, these are recognised over the remaining plots unless they are specific to a particular plot, in which case they are recognised in profit or loss at the point of sale.
Operating profit/(loss)
Operating profit/(loss) is the Group's total earnings from its core business functions for a given period, excluding the deduction of interest and taxes, the gain/(loss) on sale of subsidiaries and gain/(loss) on sale of fixed assets.
Financial guarantees
A financial guarantee contract is initially recognised at fair value. At the end of each subsequent reporting period, financial guarantees are measured at the higher of: - The amount of the loss allowance, and - The amount initially recognised less cumulative amortisation, where appropriate.
The amount of the loss allowance at each subsequent reporting period equals the 12-month expected credit losses. However, where there has been a significant increase in the risk that the specified debtor will default on the contract, the calculation is for lifetime expected credit losses.
Finance income
Interest income on bank deposits is recognised on an accruals basis. Also included in interest receivable are interest and interest-related payments the Group receives on other receivables and external loans.
Finance costs
Borrowing costs are recognised on an accruals basis and are payable on the Group's borrowings and lease liabilities. Also included are the amortisation of fees associated with the arrangement of the financing.
Specific or general borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of qualifying assets which are assets that necessarily take a substantial period to get ready for sale. The Group considers that its inventories are qualifying assets.
Foreign currencies
These consolidated financial statements are presented in Pound Sterling, which is the Group's functional currency.
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The individual financial statements of each Group company are presented in Pound Sterling, the currency of the primary economic environment in which it operates (its functional currency). Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies other than the functional currency are retranslated at the rates prevailing at the reporting date.
Leases
The Group as a lessee
The Group assesses at inception whether a contract is, or contains, a lease. A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group assessment includes whether: - the contract involves the use of an identified asset; - the Group has the right to obtain substantially all of the economic benefits from the use of the 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 in property, plant and equipment, and lease liabilities are included in current liabilities (borrowings) and non-current liabilities (borrowings) depending on the length of the lease term.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation, and accumulated impairment losses.
Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
The gain or loss on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset as is recognised in the profit or loss.
Depreciation is provided at the following annual rates to write off each asset over its estimated useful life:
Fixtures and fittings 15% on cost
Office equipment 15% on cost
Motor vehicles 25% on cost
Impairment of tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments and the risks specific to the asset.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately in the profit or loss.
Where an impairment loss subsequently reverses, due to a change in circumstances or in the estimates used to determine the asset's recoverable amount, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, so long as it does not exceed the original carrying value prior to the impairment being recognised. A reversal of an impairment loss is recognised as income immediately in the statement of comprehensive income.
Financial instruments
Financial assets
Financial assets are initially recognised at fair value and subsequently classified into one of the following measurement categories:
-- Measured at amortised cost
-- Measured subsequently at fair value through profit or loss ("FVTPL")
The classification of financial assets depends on the Group's business model for managing the asset and the contractual terms of the cash flows. Assets that are held for the collection of contractual cash flows that represent solely payments of principal and interest are measured at amortised cost, with any interest income recognised in profit or loss using the effective interest method.
Financial assets that do not meet the criteria to be measured at amortised cost are classified by the Group as measured at FVTPL. Fair value gains and losses on financial assets measured at FVTPL are recognised in profit or loss and presented within net operating expenses.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss associated with its financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Trade and other receivables
Trade and other receivables are measured at amortised cost, less any loss allowance.
Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less from inception and are subject to insignificant risk of changes in value.
Financial liabilities
Financial liabilities are initially recognised at fair value and measured at amortised cost.
Derecognition
Financial assets
The Group derecognises a financial asset when: - the contractual rights to the cash flows from the financial asset expire; or - it transfers the rights to receive the contractual cash flows in a transaction in which either: - substantially all of the risks and rewards of ownership of the financial asset are transferred; or - the Group neither transfers nor retains substantially all of the risks and rewards of ownership and itdoes not retain control of the financial asset.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
Borrowings
Borrowings are allocated to either specific or general borrowings and initially recognised at fair value, net of transaction costs incurred and subsequently measured at amortised cost. Specific or general borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of qualifying assets which are assets that necessarily take a substantial period of time to get ready for sale. These are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Trade and other payables
Trade and other payables are measured at amortised cost. When the acquisition of land has deferred payment terms a land creditor is recognised. Payables are discounted to present value when repayment is due more than one year after initial recognition or the impact is material.
Customer deposits
Customer deposits are recorded as deferred income on receipt and released to profit or loss when the related revenue is recognised.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded as the proceeds are received, net of direct issue costs.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date.
Inventory - developments
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Inventories are initially stated at cost and held at the lower of this initial amount and net realisable value. Costs comprise direct materials and, where applicable, direct labour and those overheads that have been incurred in bringing the inventories to their present location and condition.
Net realisable value represents the estimated selling price based on intended use less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Land is recognised in inventory when the significant risks and rewards of ownership have been transferred to the Group.
Non-refundable land option payments are initially recognised in inventory. They are reviewed regularly and written off to profit or loss when it is probable that the option will not be exercised.
Taxation
The tax charge represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the profit or loss because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are also recognised for taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is measured on a non-discounted basis using the tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is charged or credited to the profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity.
Share capital
Ordinary shares are classified as equity. Any incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. 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 and further detail is contained within note 7.
Segment information for these businesses is presented below. Segment operating profit or loss is used as a measure of performance as management believe this is the most relevant information when evaluating the performance of a segment.
For the financial year to 30 June 2024
GBP unless stated Developments Construction Property services and Lettings Corporate Total Revenue - developments 9,335,251 4,889,675 313,228 112,000 14,650,154 Cost of sales - developments (8,839,354) (4,656,096) (162,213) - (13,657,663) Impairment of inventory (816,112) - - - (816,112) Gross (loss)/profit (320,215) 233,579 151,015 112,000 176,379 Depreciation - - - (104,750) (104,750) Administration expenses (770,240) - (126,112) (1,621,833) (2,518,185) Operating (loss)/profit (1,090,455) 233,579 24,903 (1,614,583) (2,446,556) Finance expense (369,943) - - (747,291) (1,117,234) Taxation - - - 184,012 184,012 (Loss)/Profit for the year (1,460,398) 233,579 24,903 (2,177,862) (3,379,778)
For the financial year to 30 June 2023
GBP unless stated Developments Construction Property services and Lettings Corporate Total
Revenue - developments 10,689,920 4,448,376 333,299 120,333 15,591,928
Cost of sales - developments (9,580,942) (4,235,478) (89,839) - (13,906,259)
Impairment of inventory (1,094,576) - - - (1,094,576)
Gross profit/(loss) 14,402 212,898 243,460 120,333 591,093
Depreciation - - - (103,984) (103,984)
Administration expenses (532,900) - (411,682) (1,161,455) (2,106,037)
Operating (loss)/profit (518,498) 212,898 (168,222) (1,145,106) (1,618,928)
Finance expense (455,331) - - (65,520) (520,851)
Taxation - - - (250,473) (250,473)
(Loss)/Profit for the year (973,829) 212,898 (168,222) (1,461,099) (2,390,252) 7. Revenue
GBP unless stated 30 June 2024 30 June 2023
Revenue
9,335,251 10,689,920
Developments
Development sales 8,970,896 9,991,574
Development management 364,355 698,346
Construction 4,889,675 4,448,376
Property Services and Lettings 313,228 333,299
Transaction services 9,728 81,500
Lettings services 303,500 251,799
Corporate 112,000 120,333
14,650,154 15,591,928
Cost of sales
(9,655,466) (10,675,518)
Developments
Development sales (8,839,354) (9,580,942)
Impairment (note 13) (816,112) (1,094,576)
Construction (4,656,096) (4,235,478)
Lettings services (162,213) (89,839)
(14,473,775) (15,000,835)
Gross profit 176,379 591,093
Developments
In the developments segment, GBP8,705,526 revenue was generated from external parties through the sale of 52 units in completed developments (2023: GBP9,766,522). The Lincoln House development sold 23 units (2023: 52 units) during the year generating revenue of GBP3,061,461(2023: GBP6,496,522). The Oscar House development sold 10 units (2023: nil) generating GBP2,421,480 in revenue (2023: GBPnil). The St Petersgate development sold 17 units (2023: nil) generating GBP2,872,200 (2023: GBPnil) in revenue. The Bank Street development sold 2 units (2023: 19 units) generating GBP350,385 (2023: GBP3,270,000) in revenue. The remainder of the revenue was earned from unrelated parties in the form of rental income and related parties in the form of development management fees.
Development management income arises from four development management agreements with related companies; One Heritage Tower Limited, ACT Property Holding Limited, One Heritage Great Ducie Street Limited and One Heritage North Church Limited:
-- One Heritage Tower Limited: The Group earned a management fee of 0.75% of costs incurred to date permonth and a 10% share of net profit generated by the development through the agreement with One Heritage TowerLimited. The Group is also entitled to 1% of any external debt or equity funding raised on behalf of thedevelopment. In total GBP148,518 (30 June 2023: GBP134,599) of revenue was generated in the year.
-- One Heritage Great Ducie Street Limited: The Group earned a management fee of GBP206,160 (30 June 2023:GBP206,160) through the agreement with One Heritage Great Ducie Street and GBPnil (30 June 2023: GBP225,500) for externaldebt raised.
-- One Heritage North Church Limited: The development agreement splits the fees into three elements; 2% oftotal development cost (GBP9,677, 30 June 2023: GBP41,654), paid monthly over the period of the development, 15% of netprofit, paid on completion and 1% on any debt finance raised (GBPnil, 30 June 2023: GBP31,650).
-- ACT Property Holding Limited: The agreement has a 20% profit share of the net profit generated by thedevelopment. The development generated GBPNil (30 June 2023: GBP58,783) of profit share for the Group.
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With the exception of One Heritage North Church Limited which completed in the year to 30 June 2024 and ACT Property Holding Limited which completed in the year to 30 June 2023, the Group has not recognised any further revenue linked to the profit share element of these agreement as the transaction price is variable and the amount cannot be reliably determined at this time. This is because the developments are in the early stages of construction and there is too much uncertainty to reliably estimate expected revenue.
Construction
Construction generates revenue from two entities: Robin Hood Property Development Limited and One Heritage North Church Limited. During the 2022 financial year, it signed an agreement with Robin Hood Property Development Limited to undertake works on Co-Living properties. The Group receives a cost plus 5.0% margin on all works undertaken, recognising GBP863,681 (30 June 2023: GBP1,280,006) of revenue in the year. The Group has undertaken work for One Heritage North Church Limited on a cost plus 5.0% margin basis, this generated revenue of GBP4,021,266 (30 June 2023: GBP3,168,370) in the year.
The development and construction revenues have been generated through related parties.
Property Services and Lettings
Property Services generated revenue from management fees that are based on a percentage of gross rental collected for clients and through transaction fees for each Co-Living property bought and sold for Robin Hood Property Development Limited, a related party, generating GBPnil revenue in the financial year (30 June 2023: GBP115,818).
It also includes any rental income collected for properties owned by the Group.
Corporate
The Corporate revenue is from contracts signed with Robin Hood Property Development Limited, generating revenue of GBP100,000 (30 June 2023: GBP108,333) and One Heritage Portfolio Rental Limited, recognising revenue of GBP12,000 (30 June 2023: GBP12,000) and is in consideration for a range of administration services and use of the Company's office.
Total revenue generated from Robin Hood Property Development Limited, a related party, amounted to GBP963,681 (30 June 2023: GBP1,280,006) for the year. This amounted to 7% (30 June 2023: 8%) of the total revenue of the Group. This was derived from three segments of the Group, being construction, property services and corporate (refer to note 7).
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when it transfers control over a good or service to a customer.
The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and related revenue recognition policies.
Type of Nature and timing of satisfaction of performance
product/ obligations, including significant payment terms Revenue recognition policies
service
Housing sales
Revenue from housing sales is recognised in profit
or loss when control is transferred to the customer.
Development management recognition is split into
three elements: management fee, arrangement fees and
a profit share on a final transaction.
Management fee
The performance obligation is that the Group remains
the development manager on the site and undertakes
the scope of works in the agreement. Payment is due Revenue from housing sales is recognised when title
on a monthly basis after the service has been of the property passes to the customer on legal
undertaken. completion and the performance obligation associated
with the sale is completed.
Development Revenue for the management fee is recognised monthly
management as long as the Group continues to be the development
manager during the relevant calculation period.
Arrangement fee
Assuming that the Group continues to be the
The performance obligation is at the point that the development manager the Group will look to recognise
service is completed. Payment is due after income from a profit share once the costs and
completion. 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 property management services to
external landlords. These services are linked to a
percentage of the gross rental collected and any
additional services undertaken.
Management fee income is recognised at the point
Property that the service is provided.
Services -
Revenue is recognised when service is provided for
Management management fees and at the point the service is
fees and Other income is recognised at the point that the completed for other services.
other service is completed.
services
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 relevant
Revenue is recognised for the period in which the calculation period.
service is undertaken. 8. Administration expenses
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Staff costs 1,467,656 1,306,577
Depreciation and amortisation 105,025 104,217
Auditors' remuneration 126,592 103,431
Other administration expenses 923,662 695,796
2,622,935 2,210,021
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Services provided by the auditor
- Interim audit of parent company and consolidated financial
33,637 29,011
statements
- Audit of parent company and consolidated financial statements 92,955 74,420
126,592 103,431
9. Staff costs and employees
Year to Year to
GBP unless stated
30 June 2024 30 June 2024
The aggregate remuneration comprised:
- Wages and salaries 1,304,792 1,159,762
- National insurance 143,113 129,537
- Pension costs 19,751 17,278
1,467,656 1,306,577
Average number of employees 30 28 10. Finance costs
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Interest charged on lease liabilities 9,645 12,607
Interest paid on borrowings 1,482,411 2,064,587
Amount capitalised* (374,822) ^(1,556,343)
1,117,234 520,851
* The rate of interest used to capitalise the general borrowings is 7%.
^ The prior year presentation on interest capitalised to inventory in financial year has been restated from GBP2,139,232 to GBP1,556,343 to correct a misstatement of the amount shown as capitalised in the year in the table to note 10; this has a consequential impact on the interest paid on borrowings.
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DJ Zentra Group plc: Full year results for the year -15-
In the Statement of Cash Flows, financing activities (interest paid) and operating activities (movement in inventory) have been restated by GBP582,889 to reflect the capitalisation of interest to inventory. As a result, the movement in inventory has changed to GBP117,179 (previously GBP700,068) and interest paid in financing activities has changed from GBP2,647,476 to GBP2,064,587. Consequently, cash outflow from operations has changed to GBP1,151,634 (previously GBP568,744) and cash from financing activities has changed to GBP489,386 generated (previously GBP93,504 used).
There is no impact on profit or loss, nor the carrying value of inventory. 11. Taxation
The Group has generated a loss in the year and the prior year.
Tax losses carried forward
Tax losses for which no deferred tax asset was recognised expire as follows:
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Tax (losses) (3,563,790) (2,390,252)
Accumulated carried forward losses 8,975,800 5,412,010
The carried forward losses do not expire as they relate to trading activity that is expected to continue.
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Income tax expense recognised in the period (184,012) (250,473)
Reconciliation of effective tax rate
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Loss for the year (3,563,790) (2,139,779)
Tax using the UK corporate tax rate of 25% (2023: 20.5%(blended rate)) (891,742) (438,655)
Gross non-deductible expenses 52,707 555,748
Current year losses for which no deferred tax asset was recognised 717,931 133,380
Adjustments to tax charge in respect of previous periods (183,596) -
Adjustments to tax charge in respect of previous periods' deferred tax 120,688 -
Total taxation (credit) /charge (184,012) 250,473 12. Property, plant and equipment
As at 30 June 2024
Right Office
GBP unless stated Fixtures and fittings Plant and equipment Total
of use Equipment
Cost
At 30 June 2023 442,612 29,462 73,594 2,076 547,744
Additions - 4,164 120 - 4,284
Disposals - - - (1,586) (1,586)
At 30 June 2024 442,612 33,626 73,714 490 550,442
Accumulated depreciation
At 30 June 2023 236,134 9,400 23,138 444 269,116
Charge for the period 88,522 4,117 11,591 520 104,750
Disposals - - - (628) (628)
At 30 June 2024 324,656 13,517 34,729 336 373,238
Carrying amount
At 30 June 2023 206,478 20,062 50,456 1,632 278,628
At 30 June 2024 117,956 20,109 38,985 154 177,204
As at 30 June 2023
Right Office
GBP unless stated Fixtures and fittings Plant and equipment Total
of use Equipment
Cost
At 30 June 2022 442,612 23,182 72,664 1,149 539,607
Additions - 6,280 930 927 8,137
At 30 June 2023 442,612 29,462 73,594 2,076 547,744
Accumulated depreciation
At 30 June 2022 147,612 5,019 12,472 29 165,132
Charge for the period 88,522 4,381 10,666 415 103,984
At 30 June 2023 236,134 9,400 23,138 444 269,116
Carrying amount
At 30 June 2022 295,000 18,163 60,192 1,120 374,475
At 30 June 2023 206,478 20,062 50,456 1,632 278,628
Right of use asset
GBP unless stated 30 June 2024 30 June 2023
Amount recognised in the statement of financial position:
Right of use
Buildings 202,754 206,478
202,754 206,478
Lease liability
Non-current 116,131 193,109
Current 86,623 86,623
202,754 279,732
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Amount recognised in the statement of comprehensive income:
Depreciation on right of use building 88,522 88,522
Interest expense 9,645 12,607
Amount recognised in the statement of cash flow:
Lease payments made 86,623 86,623
Break options
The lease for the office has an option to break the lease after 5 years. The right-of-use asset has been calculated on the assumption that the break clause is taken up. 13. Inventory - developments
GBP unless stated 30 June 2024 30 June 2023
Residential developments
- Land 3,427,634 4,895,358
- Construction and development costs 8,406,730 9,547,628
- Capitalised interest 1,439,379 2,123,936
13,273,743 16,566,922
The key estimates related to carrying value of inventory in relation to all development projects are estimated selling prices of inventory based on recent transactions and market information, and construction costs to complete based on current arrangements with contractors including contingencies.
Further to the impairment review which took place in previous financial years, due to expenditure exceeding estimates, the Group has further impaired the value of its Bank Street, Oscar House and St Petersgate developments. The impairment totalled GBP1,443,989 at 30 June 2024 (GBP2,392,136 at 30 June 2023) and the charge for the year was GBP620,874 (30 June 2023: GBP1,094,576).
As a result of the decision to dispose of the Group's interests in Churchgate and Seaton House, both of these developments were written down to their estimated net realisable value resulting in an impairment charge of GBP152,941 (30 June 2023: GBPnil). The estimated net realisable value of Seaton House is based on an unconditional contract of sale (less estimated costs of sale). The estimated net realisable value of Churchgate is based upon the value previously achieved in the market (less estimated costs of disposal). 14. Investment in associate
Reconciliation of investment in associate
GBP unless stated 30 June 2024 30 June 2023 Opening - 50,000 Reversal of write down of investment in associate - - Sale of investment in associate - (50,000) Closing - -
Following the insolvency of two subsidiaries of the associate, One Heritage Complete Limited, the Group made the decision to write down the full value of its investment in associate in the 30 June 2022 annual financial statements. On 6 July 2022, the Group agreed to sell its 47.0% stake in One Heritage Complete Limited for GBP50,000. 15. Trade and other receivables
GBP unless stated 30 June 2024 30 June 2023
Trade receivables^ 25,407 52,676
Other debtors 392,827 1,132,525
Prepaid sales fees and commissions* 55,200 474,289
Other prepayments and accrued income* 385,219 94,399
VAT receivable 35,206 51,636
Related party receivables^ 418,617 294,644
1,312,476 2,100,169 ^Related party receivables of GBP186,441 which were included within trade receivables have been reclassified for ease of comparison.
*Prepayments of GBP94,399 which were included within prepaid sales fees and commissions have been reclassified for ease of comparison.
At 30 June 2024 the Group was due GBP418,677 (30 June 2023: GBP294,644) from related parties, including GBP248,564 (30 June 2023: GBP30,161) from Robin Hood Developments Limited, GBP48,163 (30 June 2023: GBP14,192) from One Heritage Tower Limited, GBP40,173 (30 June 2023: GBPnil) from One Heritage Property Services Limited, GBP28,990 (30 June 2023: GBP209,168) from One Heritage North Church Limited and GBP21,985 (30 June 2023: GBP216) from One Heritage Great Ducie Street Limited and other related parties GBP30,802 (30 June 2023: GBP40,907). All related party balances have been reviewed and considered recoverable. Further details of related parties can be found in note 22.
Other debtors include GBP252,980 (30 June 2023: GBP413,304) which relates to taxation due under the Construction Industry Scheme and GBP64,950 (30 June 2023: GBP630,980) of customer deposits held by third party solicitors for the benefit of the Group.
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The prepaid sales fees and commissions relate to the sales agent's fees and commissions paid on units from developments that have been exchanged but not yet completed.
Management consider that the credit quality of the various receivables is good in respect of the amounts outstanding, there have been no increases in credit risk and therefore credit risk is considered to be low. Therefore, no expected credit loss provision has been recognised. 16. Capital management
The Group defines capital as the Group's shareholder equity and borrowings. The Group's policy is to maintain a strong capital base so as to maintain, investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of external debt in the business.
The Group monitors capital using a ratio of 'net debt' to shareholder equity. Net debt is calculated as total liabilities (as shown in the statement of financial position) less cash and cash equivalents. The Group's policy is to keep the ratio below 3.0. In the current and prior year the ratio is significantly higher than the policy due to the negative equity and the impairment of developments.
GBP unless stated 30 June 2024 30 June 2023
Total borrowings 16,975,288
17,240,521
Less: cash and cash equivalents (88,161) (303,816)
Net debt 16,887,127 16,936,705
Total equity (3,948,494) (568,716)
Net debt to equity ratio N/A N/A 17. Loans and borrowings
GBP unless stated 30 June 2024 30 June 2023
Non-current
Lease liability (note 12) 116,131 193,109
Related party borrowings 10,981,484 11,378,938
11,097,615 11,572,047
Current
Lease liability (note 12) 86,623 86,623
Loan 5,791,050 5,581,851
5,877,673 5,668,474
Total borrowings 16,975,288 17,240,521
As sales on the One Heritage Oscar House Limited development incurred delays, the company refinanced the project settling the previous debt of GBP4.1m with Hampshire Trust Bank Limited, which in turn was repaid on 22 December 2023, through an agreement being entered into with a new lender, 365 Funding Limited, on improved terms for GBP3.25m, for a period of 18 months to provide appropriate funding until all the remaining units are legally completed and handed over to customers; GBP2,579,084 was drawn down at 30 June 2024 (30 June 2023: GBPnil).
On 9 November 2023, One Heritage Victoria Road Limited, entered into a loan agreement with Hampshire Trust Bank Limited. This was for a gross amount of construction finance totalling GBP3,846,700 of which GBP2,819,956 has been drawn down at 30 June 2024 (30 June 2023: GBPnil). The loan has a term of 16 months and is to be drawn down on a monthly basis to fund construction costs. It has a covenant that is linked to the underlying development, to not exceed a loan to Gross Development Value of 61% which has been complied with during the reporting period.
On 18 March 2022 the Company had a 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 Company incurred listing costs of GBP102,040 which were capitalised and released over the term of the Bond. On maturity, GBP1.0m of the Bond was repaid with the remaining GBP0.5m being converted to a Loan Note with a term of 12 months and 8% interest maturing 15 March 2025.
Related party borrowings
On 31 July 2023 the shareholder loan facility was increased by GBP1.7m, to GBP14.0m. This facility can be drawn down as required, has an interest rate of 7.0% and was repayable on 31 December 2024. In January 2024, the Company's current shareholder agreement, initially executed on 21 September 2020, underwent an amendment. The principal modification confirms the full balance of any drawdown is due on 31 December 2028. The balance on this loan at 30 June 2024 was GBP10,981,484 (30 June 2023: GBP11,378,938). As outlined in note 23, subsequent to the balance sheet date, the shareholder loan facility was subject to refinancing with a related party.
Terms and repayment schedule
The terms and conditions of outstanding loans are as follows:
30 June 2024 30 June 2023
Nominal interest Maturity Fair Carrying Fair Carrying
GBP unless stated Currency rate amount
Date value value Amount
Hampshire Trust Bank Limited GBP 10.8% Mar 25 2,819,956 2,819,956 - -
Funding 365 GBP 9.6% Jun 25 2,471,094 2,471,094 - -
Hampshire Trust Bank Limited GBP 9.3% Apr 24 - - 4,118,054 4,118,054
One Heritage Property GBP 7.0% Dec 25 10,981,484 10,981,484 11,378,938 11,378,938
Development
Loan Note GBP 8.0% Mar 25 500,000 500,000 - -
Corporate bond GBP 8.0% Mar 24 - - 1,463,797 1,463,797
16,772,534 16,772,534 16,960,789 16,960,789
Reconciliation of movements of liabilities to cash flows from financing activities
Liabilities
Lease Share capital/
GBP unless stated Other loans and borrowings Total
liabilities Premium
Balance as at 01 July 2023 16,960,789 279,732 5,140,108 22,380,629
Changes from financing cash flows
Proceeds from loans and borrowings 5,572,200 - - 5,572,200
Repayment of loans and borrowings (4,559,386) - - (4,559,386)
Proceeds from related party borrowings 10,149,165 - - 10,149,165
Repayment of related party borrowings (11,350,234) - - (11,350,234)
Interest paid (1,482,411) - - (1,482,411)
Payment of lease liabilities - (86,623) - (86,623)
Total changes from financing cash flows (1,670,666) (86,623) - (1,757,289)
Other changes
Liability related
Capitalised borrowing costs 374,822 - - 374,822
Interest expense 1,107,589 9,645 - 1,117,234
Total liability-related other changes 1,482,411 9,645 1,492,056
Total equity-related other changes - - - -
Balance as at 30 June 2024 16,772,534 202,754 5,140,108 22,115,396
Liabilities
Lease Share capital/
GBP unless stated ^Other loans and borrowings Total
liabilities Premium
Balance as at 01 July 2022 15,567,293 353,748 3,893,008 19,814,049
Changes from financing cash flows
Proceeds from issue of share capital - - 1,247,100 1,247,100
Proceeds from loans and borrowings* 8,725,789 - - 8,725,789
Repayment of loans and borrowings* (9,535,263) - - (9,535,263)
Proceeds from related party borrowings* 12,177,035 - - 12,177,035
Repayment of related party borrowings* (9,974,065) - - (9,974,065)
Interest paid^ (2,064,587) - - (2,064,587)
Payment of lease liabilities - (86,623) - (86,623)
Total changes from financing cash flows (671,091) (86,623) 1,247,100 489,386
Other changes - - - -
Liability related
Capitalised borrowing costs^ 1,556,343 - - 1,556,343
Interest expense 508,244 12,607 - 520,851
Total liability-related other changes 2,064,587 12,607 - 2,077,194
Total equity-related other changes - - - -
Balance as at 30 June 2023 16,960,789 279,732 5,140,108 22,380,629
^ Restated. Refer Note 10.
* Restated to correct misallocations between the respective items. There were no changes to financing cash flows as a
result.
18. Trade and other payables
GBP unless stated 30 June 2024 30 June 2023
Trade payables 653,156 778,994
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DJ Zentra Group plc: Full year results for the year -17-
Accruals 918,264 192,439
Customer deposits 67,950 1,302,276
Related party payable 79,915 17,482
Other payable 19,891 -
Tax payable (440) 250,473
PAYE payable 87,734 37,979
1,826,470 2,579,643
Trade payables and accruals relate to amounts payable at the reporting date for services received during the period.
The Group has received deposits and reservation fees in relation to its developments, these totalled GBP67,950 (30 June 2023: GBP1,302,276). These relate to units that were exchanged on and are repayable. The deposits will be repayable if significant property damage occurs, and reinstatement is not possible.
At 30 June 2024 the Group owed GBP79,914 (30 June 2023: GBP17,481) to related parties. Further details of related parties can be found in note 22 to the financial statements.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. 19. Financial instruments - fair value and risk management
Fair values
For all financial assets and financial liabilities not measured at fair value, the carrying amount is a reasonable approximation of fair value.
Financial risk management
The Group has exposure to the following risks arising from financial instruments:
-- Credit risk
-- Liquidity risk
-- Market risk
Risk management framework
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Board of Directors has established the risk management committee, which is responsible for developing and monitoring the Company's risk management policies. The committee reports regularly to the Board of Directors on its activities.
The Group's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls to monitor risks. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Company's audit committee oversees how management monitors compliance with the Company's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
Credit risk
Credit risk is the risk of financial loss where counterparties are not able to meet their obligations. Group policy is that surplus cash, when not used to repay borrowings, is placed on deposit with the Group's main relationship banks and with other banks or money market funds based on a minimum credit rating and maximum exposure.
The significant concentrations of credit risk are to related parties (refer note 22).
Management consider that the credit quality of the various receivables is good in respect of the amounts outstanding and therefore credit risk is considered to be low.
The carrying amount of financial assets represents the Group's maximum exposure to credit risk at the reporting date assuming that any security held has no value.
Cash and cash equivalents
The Group held cash and cash equivalents of GBP88,161 at 30 June 2024 (30 June 2023: GBP303,816).
Bank Amount held Standard and Poor's Moody's Fitch Barclays Bank UK Plc 86,428 A A1 A+ Revolut Bank 1,513 - - -
The Group also held petty cash of GBP220 as at 30 June 2024 (30 June 2023: GBP241).
Guarantees
The Company's policy is to provide financial guarantees only for subsidiaries' liabilities. At 30 June 2024, the Company has issued a guarantee to certain banks in respect of credit facilities granted to One Heritage Oscar House Limited for GBP2,471,094 (30 June 2023: GBP4,118,054) and One Heritage Victoria Road Limited for GBP769,000 plus interest, fees and expenses (30 June 2023: GBPnil). Refer to note 5 and 10 of the Group financial statements.
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial resources available to meet its obligations as they fall due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows, matching the expected cash flow timings of financial assets and liabilities with the use of cash and cash equivalents, borrowings, overdrafts and committed revolving credit facilities with a minimum of 12 months to maturity.
Future borrowing requirements are forecast on a monthly basis and funding headroom is maintained above forecast peak requirements to meet unforeseen events. At 30 June 2024, the Group's borrowings and facilities had a range of maturities with an average life of 11.5 months.
In addition to fixed term borrowings, the Group has access to a shareholder loan facility. At the reporting date, the total unused committed amount available for general purposes was GBP3.02million and cash and cash equivalents were GBP0.09m (refer to note 23 which outlines a restructure of shareholder loan facilities which took place after the reporting date).
The maturity profile of the anticipated future cash flows including interest, using the latest applicable relevant rate, based on the earliest date on which the Group can be required to pay financial liabilities on an undiscounted basis, is as follows:
As at 30 June 2024
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 2,819,956 3,164,281 - 3,164,281 - - -
Secured other debt 2,471,094 2,471,094 - 2,471,094 - - -
Unsecured loan note 500,000 530,000 - 530,000 - - -
Other borrowings 10,981,484 12,193,530 - - 12,193,530 - -
Lease payables 202,754 202,754 - 86,623 116,131 - -
Trade payables 1,826,470 1,826,470 - 1,826,470 - - -
18,801,758 20,388,129 - 8,078,468 12,309,661 - -
As at 30 June 2023^
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 4,118,054 4,268,240 - 4,268,240 - - -
Unsecured corporate bond 1,463,797 1,543,797 - 1,543,797 - - -
Other borrowings 11,378,938 12,634,852 - - 12,634,852 - -
Lease payables 279,732 279,732 - 86,623 193,109 - -
Trade payables 2,579,644 2,579,644 - 2,579,644 - - -
19,820,165 21,306,265 - 8,478,304 12,827,961 - -
^Restated. The profile of financial liabilities as at 30 June 2023 have been restated to now include principal and interest to be accrued and paid.
The secured bank debt contains loan covenants, disclosed in note 17. A future breach of covenant may require the Group to repay the loan earlier than indicated in the above table.
Market risk
Market risk is the risk that changes in market prices will affect the Group's income. The objective of market risk management is to manage and control risk exposures within acceptable exposures within acceptable parameters, while optimising the return. The Group does not hold any equity positions and trade in foreign currencies. It therefore considers the market risk to be low.
Interest rate risk management
The Group has a policy to have fixed interest rate borrowings where possible. Where this is not possible, the Group will look to hedge interest variability if cost effective.
Interest rate sensitivity
The Group currently has one variable interest rate arrangement in respect of a loan from Hampshire Trust Bank and therefore an element of future returns are sensitive to movements in the interest rates in the next financial period on existing borrowing obligations.
If interest rates on the loans had been 1% per cent higher/lower and all other variables were held constant, the interest charge incurred by the Group in the year ended 30 June 2024 would have (increased)/decreased by (GBP8,563)/ GBP8,637. 20. Directors' remuneration
Taxable Pension
Pension Total Total
GBP unless stated Salary Salary Taxable benefits benefits benefits
benefits remuneration remuneration
Year ended 30 June 2024 2023 2024 2023 2023
2024 2024 2023 (r)
Jason Upton 116,667 95,833
385 208 1,321 1,321 118,373 97,862
Bonus - 500
Yiu Tak Cheung* 12,500 15,000
416 - - - 12,916 15,500
Bonus - 500
Anthony Unsworth* 82,051 115,794
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DJ Zentra Group plc: Full year results for the year -18-
629 340 881 1,211 83,561 117,595
Bonus - 250
Stuart Ormisher^ 19,833 - 47 - - - 19,880 -
David Izett 30,000 29,167 - - - - 30,000 29,167
Jeremy Earnshaw 25,000 25,000 - - - - 25,000 25,000
286,051 282,044 1,477 548 2,202 2,532 289,730 285,124
*remuneration for period from 1st July 2023 to date of leaving
^ remuneration for period 8th February 2024 to 24 March 2024
(r) Restated. The total remuneration as at 30 June 2023 have been restated to include taxable benefits and bonus.
Bonus payments
During the year Jason Upton received a bonus payment of GBPnil (FY 2023: GBP500), Yiu Tak Cheung GBPnil (FY 2023: GBP500) and Anthony Unsworth GBPnil (FY 2023: GBP250). All bonus payments received in FY23 were discretionary and in line with bonus payments made to all members of staff.
Pension benefits
Pension benefits comprise Employer contributions into the Group's defined contribution pension scheme. 21. Share capital
GBP unless stated 30 June 2024 30 June 2023
Share capital (1p per share) 386,783 386,783
Share premium 4,753,325 4,753,325
5,140,108 5,140,108
All shares issued by the Company are ordinary shares and have equal voting and distribution rights. The total shares in issue as at 30 June 2024 is 38,678,333 (30 June 2023: 38,678,333) and are fully paid up. 22. Related parties
Parent and ultimate controlling party
At the reporting date 65.15% of the shares are held by One Heritage Property Development Limited, which is incorporated in Hong Kong. One Heritage Holding Group Limited, incorporated in the British Virgin Island, is considered the ultimate controlling party through its 100% ownership of One Heritage Property Development Limited.
Transactions with key management
Key management personnel compensation comprised the following:
Year to Year to
GBP unless stated
30 June 2024 30 June 2023
Short term employee benefits 490,045 412,851
490,045 412,851
Compensation of the Group's key management personnel is short term employee benefits.
Key management personnel transactions
The key management control 2.8% (30 June 2023: 2.8%) of the voting shares of the Company.
Other related party activity
Details of related party balances as at the Reporting Date are disclosed in notes 15 and 18; details of revenue derived from related parties is disclosed in note 7. Below is a table that sets out the entities that are related parties to the Group:
Company Notes Description
7, 15
7, 15
7, 15
7, 15
ACT Property Developments Limited
Bee Kitchens Limited Common directors, owned by the beneficial owners of the Group
7, 15
Common directors, owned by the beneficial owners of the Group
Black Square Property Solutions Limited Common directors, owned by the beneficial owners of the Group
7, 15
Great Ducie Building Management Limited Common directors, owned by the beneficial owners of the Group
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
7, 15
Nicholas Street Developments Limited Common director, owned by the beneficial owners of the Group
North Church Building Management Limited Common director, owned by the beneficial owners of the Group
7, 15
OH Lincoln House Property Limited Common director, owned by the beneficial owners of the Group
OH Oscar House Property Limited Common director, owned by the beneficial owners of the Group
OH Portfolio Rental 1 Limited Common director, owned by the beneficial owners of the Group
7, 15
Common directors, owned by the beneficial owners of the Group
OH Property Development Hong Kong Common directors, owned by the beneficial owners of the Group
7, 15
One Heritage Alexander House Limited Common directors, owned by the beneficial owners of the Group
One Heritage Blackley Mere Limited Common directors, owned by the beneficial owners of the Group
7, 15
One Heritage Great Ducie Street Limited
7, 15
7, 15
7, 15
7, 15
One Heritage North Church Limited 7,15 Common directors, majority stake held by the beneficial owners of the
Group
7, 15
One Heritage Property Development
Limited Common director, owned by the beneficial owners of the Group
One Heritage Property Holding Limited Common director, owned by the beneficial owners of the Group
7, 15
One Heritage Property Management Limited 7,15
Common director, owned by the beneficial owners of the Group
One Heritage Property Rental
Common director, owned by the beneficial owners of the Group
7, 15
One Heritage Property Services Limited
7,15 Common directors, part owned by the beneficial owners of the Group
One Heritage Tower Limited
7,15
Robin Hood Property Development Limited Common directors, owned by the beneficial owners of the Group
Sakura Liverpool Limited Common directors, owned by the beneficial owners of the Group
7, 15 23. Events after the reporting date
On 4 July 2024 the One Heritage Seaton House Limited completed the sale of the building of Seaton House, Stockport for GBP0.6m together and exchanged conditional contracts for the sale of the land to the rear for GBP0.4m. The completion of the conditional sale is subject to the buyer obtaining planning approval and overall total gross proceeds would therefore be GBP1.0m on which the Group would recognise a loss after selling costs of GBP0.15m which has been provided for as part of the impairment review undertaken at 30 June 2024 as outlined in note 13.
On 1 October 2024, the Group exchanged contracts unconditionally to acquire a 30% stake in the company that owns the One Victoria project by purchasing shares to the value of GBP3.0m from One Heritage Property Development Limited Hong Kong ("OHPD"). The acquisition will be funded by drawing down GBP3.0m from the remaining shareholder loan facility ("Existing Facility"). The completion date for the acquisition is 29 October 2024, which may be extended or brought forward by agreement between the parties, with a long stop date of 8 November 2024.
Simultaneous to the investment in One Victoria, Manchester, the Group has also exchanged contracts unconditionally on 1 October 2024 for the sale of a portfolio of completed residential and commercial properties, valued at GBP7.0m, to OH UK Holdings Limited ("OHUK"), a company connected with OHPD. This portfolio includes residential properties at Bank Street, Sheffield, Lincoln House, Bolton and Oscar House, Manchester, as well as the commercial unit at St Petersgate, Stockport. The completion date for the sale is 29 October 2024, which may be extended or brought forward by agreement between the parties, with a long stop date of 8 November 2024. With GBP2.0m of debt linked to Oscar House as part of this transaction, the net proceeds of the portfolio sale will reduce from GBP7.0m million to GBP5.0m million and these proceeds will be utilised to reduce the Existing Facility from GBP14.0m million to GBP9.0m.
As part of this restructuring, One Heritage Property Developments Limited ("OHPD(UK)") entered into a new GBP7.0m loan agreement with OHUK on 1 October 2024 at an interest rate of 6%, i.e., lower than the previous rate of 7%, such facility to become available from the date of the completion of the property transactions outlined above. The loan has a repayment date of 31 December 2025, with an option to extend for up to 36 months. OHUK is a related party, sharing the same majority shareholders as the Company and OHPD. This new loan will be drawn down in full on completion and used to partially repay the Existing Facility. The balance of approximately GBP2.0m of the Existing Facility will then be written off by OHPD as part of the restructuring, and the Existing Facility will therefore be settled in full at completion and terminated.
On 28 October 2024 One Heritage Bank Street Limited and One Heritage Lincoln House Limited and the related party OH UK Holdings 2 Limited entered into a 12-month loan facility agreement with Hilco Real Estate Finance UK Ltd of GBP2.33m secured upon the completed properties held by those companies, of which GBP1.6m is attributable to Bank Street Sheffield and Lincoln House Bolton. 24. New Standards and amendments to Standards
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There are no new or amended standards that are expected to have a significant impact on the Group's consolidated financial statements when adopted.
New standards and amendments issued but not effective for the current annual period
The following standards and interpretations had been issued but not yet mandatory for annual reporting periods ending June 30, 2024.
Description
-- Non-current liabilities with Covenants - Amendments to IAS 1 (effective for annual periods beginning onor after 1 January 2024)
-- Classification of Liabilities as Current or Noncurrent - Amendments to IAS 1 (effective for annualperiods beginning on or after 1 January 2024)
The Group anticipates that these new standards, interpretations, and amendments will be adopted in the financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, may have no material impact on the financial statements in the period of initial application. 25. Disclosures relating to subsidiary undertakings
The Company's subsidiaries and other related undertakings at 30 June 2024 are listed below. All Group entities are included in the consolidated financial results. All companies listed below undertake all of their activity in the United Kingdom.
The share capital of each of the companies, where applicable, comprises ordinary shares unless otherwise stated.
Company name Business activity Company number Ownership One Heritage Property Development (UK) Limited Property developer 11982934 100.0% One Heritage Churchgate Limited Development company 12114319 100.0% One Heritage Lincoln House Limited Development company 12434625 100.0% One Heritage Bank Street Limited Development company 12763845 100.0% One Heritage Oscar House Limited Development company 11331256 100.0% One Heritage St Petersgate Limited Development company 13154858 100.0% One Heritage Red Brick Limited Property services 13178461 100.0% One Heritage Property Services Limited Property services 13426415 100.0% One Heritage Seaton House Limited Development company 13520340 100.0% One Heritage Construction Limited Construction company 13761479 100.0% One Heritage Victoria Road Limited Development company 14172104 100.0% St Petersgate Building Management Limited Dormant 13979905 100.0% Oscar House Building Management Limited Dormant 13981057 100.0% Liberty House Building Management Limited Dormant 13986387 100.0% Lincoln House Building Management Limited Dormant 12710283 100.0%
There are loans between these entities, which are all interest free and repayable on demand. 26. Audit exemption taken for subsidiaries
The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue of Section 479A of that Act.
Company name Company number One Heritage Property Development (UK) Limited 11982934 One Heritage Churchgate Limited 12114319 One Heritage Lincoln House Limited 12434625 One Heritage Bank Street Limited 12763845 One Heritage Oscar House Limited 11331256 One Heritage St Petersgate Limited 13154858 One Heritage Red Brick Limited 13178461 One Heritage Property Services Limited 13426415 One Heritage Seaton House Limited 13520340 One Heritage Construction Limited 13761479 One Heritage Victoria Road Limited 14172104 St Petersgate Building Management Limited 13979905 Oscar House Building Management Limited 13981057 Liberty House Building Management Limited 13986387 Lincoln House Building Management Limited 12710283
Company balance sheet
As at 30 June 2024
As at 30 June As at 30 June
GBP unless stated Notes
2024 2023
INTANGIBLE ASSETS
Intangible assets 1,680 1,913
1,680 1,913
TANGIBLE ASSETS
Investments 2 - 1,007,732
- 1,007,732
OTHER NON-CURRENT ASSETS
Debtors 3 1,604,331 3,033,711
1,604,331 3,033,711
CURRENT ASSETS
Debtors 4 487,620 302,351
Cash at bank - 8,615
487,620 310,966
Creditors: amounts falling within one year 5 (2,101,141) (5,191,231)
Net current (liabilities) (1,613,521) (4,880,265)
Total assets less current liabilities (7,510) (836,909)
Net liabilities (7,510) (836,909)
CAPITAL AND RESERVES
Called up share capital 6 386,783 386,783
Share premium account 4,753,325 4,753,325
Profit and loss account (5,147,618) (5,977,017)
Shareholders' deficit (7,510) (836,909)
These financial statements were approved by the board of directors on 29 October 2024 and were signed on its behalf by:
Jason David Upton
Company registration number: 12757649
The accompanying notes on pages 81 to 87 form an integral part of the financial statements
Company statement of changes in equity
For the year ended 30 June 2024
Called up Share Shareholders
GBP unless stated Profit and loss account
share capital premium Funds
Balance at 1 July 2023 386,783 4,753,325 (5,977,017) (836,909)
Profit for the period - - 829,399 829,399
Total comprehensive income for the period 386,783 4,753,325 (5,147,618) (7,510)
Balance at 30 June 2024 386,783 4,753,325 (5,147,618) (7,510)
For the year ended 30 June 2023
Called up Share Shareholders
GBP unless stated Profit and loss account
share capital premium Funds
Balance at 1 July 2022 324,283 3,568,725 (294,081) 3,598,927
Loss for the period - - (5,682,936) (5,682,936)
Total comprehensive income for the period 324,283 3,568,725 (5,977,017) (2,084,009)
Issue of share capital 62,500 1,187,500 - 1,250,000
Cost of share issuance - (2,900) - (2,900)
Balance at 30 June 2023 386,783 4,753,325 (5,977,017) (836,909)
The accompanying notes on pages 81 to 87 form an integral part of the financial statements.
Notes to the Company financial statements
For the year ended to 30 June 2024 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; and - Disclosures of transactions with a management entity that provides key management personnel services tothe Company.
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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; - Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7Financial Instrument Disclosures; and - Certain disclosures required by IAS 36 Impairment of Assets
Going concern
Notwithstanding net current liabilities of GBP6.3m (excluding inventory balances totalling GBP13.3m) as at 30 June 2024 (2023: GBP5.8m (excluding inventory balances totalling GBP16.6m), a loss for the year then ended of GBP3.4m (2023: GBP2.4m) and operating cash inflow for the year of GBP1.5m (2023: outflow GBP1.2m), the financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The Directors have prepared a cash flow forecast on a consolidated basis for the period to 31 December 2025 which indicates that, taking account of reasonably possible downsides, the Group will have sufficient funds to meet its liabilities including loans and loan note, as they fall due for that period using the proceeds from:
-- existing resources held by the Group (including funds drawn down on external loan facilities and the loanfacility to be provided by OH UK Holdings Limited("OHUK") as detailed in notes 19 and 23);
-- the implementation of the proposed restructure of the Group outlined in note 23, which includes therefinancing of Group shareholder loan with a related party, the disposal of completed inventory, the acquisition ofan equity stake in the One Victoria, Manchester property development project, the waiver of a portion of theexisting shareholder loan and the provision of continuing shareholder financial support via related party;
-- the forecast continued sale of development property inventory (net of repayment of related constructionfinance loans (note 19)); being the Seaton House Stockport, Churchgate Leicester and Victoria Road, Eccleshill andsales of units in the One Victoria development property on completion in line with management estimates for timingand quantum;
-- in the event of need the Directors consider that mitigating actions are required, actions available tothe Group would include realising development property inventory via auction and/or refinancing of the postrestructure of the remaining 3rd party loan due to expire in March 2025 and also the Loan Note due to expire inMarch 2025;
-- in the event of need, continued financial support from both also its parent company, One HeritageProperty Development Limited ("OHPD"), and OHUK to meet its liabilities as they fall due for that period. OHUK haveconfirmed that their loans due to mature in December 2025 will not be demanded for repayment until such a time thatthe Group can afford to repay them without impacting on its going concern. OHUK have also confirmed the potentialto draw down on additional flexible funding support of up to GBP1.0m.
As with any company placing reliance on other group/related entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Consequently, and based upon events after the reporting date referenced in Note 23, the Directors are confident that the Company and its subsidiaries will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
The above should be read in conjunction with note 3 to the consolidated financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
Measuring convention
The financial statements are prepared on the historical cost.
Significant judgements
The significant judgements with regard to going concern are the forecast timing of development property inventory realisations by subsidiaries and continued provision of third party loan facilities to subsidiaries and in the event it is needed the ability of the Company to be able to drawdown on the facility provided its related party OH UK Holdings Limited. Management of the Company is not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern. Therefore, the parent company financial statements continue to be prepared on the going concern basis. For detail refer note 1 going concern.
Financial guarantees
A financial guarantee contract is initially recognised at fair value. At the end of each subsequent reporting period, financial guarantees are measured at the higher of: - The amount of the loss allowance, and - The amount initially recognised less cumulative amortisation, where appropriate.
The amount of the loss allowance at each subsequent reporting period equals the 12-month expected credit losses. However, where there has been a significant increase in the risk that the specified debtor will default on the contract, the calculation is for lifetime expected credit losses.
Investment in subsidiary
Investment in subsidiaries are stated at cost less impairment and loans to subsidiaries are stated at amortised cost less impairment.
Impairment
The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the Cash-Generating Unit "CGU").
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 2. Investment in subsidiaries
GBP unless stated 30 June 2024 30 June 2023
One Heritage Property Development (UK) Limited - 1,007,732
- 1,007,732
The Company assesses the subsidiaries for any indicators of impairment by looking at the individual performance of the underlying entities, including their budgets, development progress and forecast profitability.
Due to losses in the underlying subsidiaries, the investment in subsidiaries were impaired in the prior year by GBP1,742,368 and in the current year by GBP2,750,100 in order to reflect the estimated recoverable amount based on the net asset value of the subsidiary entity and net realisable value of inventory. The impairment was recognised in the current year as a consequence of the losses and impairment to inventory recognised by subsidiary entities. The carrying amount is considered to reflect the fair value less costs of disposal and is considered a level 3 asset in the fair value hierarchy.
The share capital of each of the companies, where applicable, comprises ordinary shares unless otherwise stated.
Company name Jurisdiction Company number Ownership One Heritage Property Development (UK) Limited England and Wales 11982934 100.0%
Below is a list of the key subsidiaries of One Heritage Property Development (UK) Limited.
Company name Jurisdiction Company number Ownership One Heritage Churchgate Limited England and Wales 12114319 100.0% One Heritage Lincoln House Limited England and Wales 12434625 100.0% One Heritage Bank Street Limited England and Wales 12763845 100.0% One Heritage Oscar House Limited England and Wales 11331256 100.0% One Heritage St Petersgate Limited England and Wales 13154858 100.0% One Heritage Red Brick Limited England and Wales 13178461 100.0% One Heritage Property Services Limited England and Wales 13426415 100.0% One Heritage Seaton House Limited England and Wales 13520340 100.0% One Heritage Construction Limited England and Wales 13761479 100.0% One Heritage Victoria Road Limited England and Wales 14172104 100.0% St Petersgate Building Management Limited England and Wales 13979905 100.0% Oscar House Building Management Limited England and Wales 13981057 100.0%
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DJ Zentra Group plc: Full year results for the year -21-
Liberty House Building Management Limited England and Wales 13986387 100.0%
Lincoln House Building Management Limited England and Wales 12710283 100.0% 3. Debtors: amounts receivable after one year
30 June 2024 30 June 2023
GBP unless stated
Intercompany loan 1,604,331 3,033,711
1,604,331 3,033,711
The Intercompany loan payable by One Heritage Property Development (UK) Limited is interest free and payable on demand.
The Company assesses the intercompany loans for any indicators of impairment by looking at the individual performance of the underlying entities, including their budgets, development progress and forecast profitability and provisions made accordingly where recoverability is in doubt. 4. Debtors: amounts receivable within one year
30 June 2024 30 June 2023
GBP unless stated
Intercompany loan 10,102 -
Trade and other receivables 450,000 270,000
Other debtors 3,258 -
Prepayments 24,260 32,351
487,620 302,351 5. Creditors: amounts falling within one year
GBP unless stated 30 June 2024 30 June 2023
Trade and other payables 15,888 15,000
Accruals 123,616 76,780
Loan note 500,000 -
Corporate bond - 1,463,797
Parental guarantee and loan provision (refer to note 9) 1,440,485 3,635,109
Other creditors 19,891 -
Amounts owed to related parties 1,261 -
Tax payable - 545
2,101,141 5,191,231
On 18 March 2022 the Company had a GBP1.5 million corporate bond admitted to the Standard List of the London Stock Exchange. This had a 2 year term and a 8.0% coupon which is paid on 30 June and 31 December each year. The Company incurred listing costs of GBP102,040 which were capitalised and released over the term of the Bond. On maturity, GBP1.0m of the Bond was repaid with the remaining GBP0.5m being converted to a Loan Note with a term of 12 months and 8% interest maturing 15 March 2025. 6. Called up share capital
Ordinary
GBP unless stated
Shares
Issued share capital as at 30 June 2024 and 30 June 2023 38,678,333
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. 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. Events after the reporting date
On 4 July 2024 the One Heritage Seaton House Limited completed the sale of the building of Seaton House, Stockport for GBP0.6m together and exchanged conditional contracts for the sale of the land to the rear for GBP0.4m. The completion of the conditional sale is subject to the buyer obtaining planning approval and overall total gross proceeds would therefore be GBP1.0m on which the Company would recognise a loss after selling costs of GBP0.15m which has been provided for as part of the impairment review undertaken at 30 June 2024 as outlined in note 13.
On 1 October 2024, the Company exchanged contracts unconditionally to acquire a 30% stake in the company that owns the One Victoria project by purchasing shares to the value of GBP3.0m from One Heritage Property Development Limited Hong Kong ("OHPD"). The acquisition will be funded by drawing down GBP3.0m from the remaining shareholder loan facility ("Existing Facility"). The completion date for the acquisition is 29 October 2024, which may be extended or brought forward by agreement between the parties, with a long stop date of 8 November 2024.
Simultaneous to the investment in One Victoria, Manchester, the Company has also exchanged contracts unconditionally on 1 October 2024 for the sale of a portfolio of completed residential and commercial properties, valued at GBP7.0m, to OH UK Holdings Limited ("OHUK"), a company connected with OHPD. This portfolio includes residential properties at Bank Street, Sheffield, Lincoln House, Bolton and Oscar House, Manchester, as well as the commercial unit at St Petersgate, Stockport. The completion date for the sale is 29 October 2024, which may be extended or brought forward by agreement between the parties, with a long stop date of 8 November 2024. With GBP2.0m of debt linked to Oscar House as part of this transaction, the net proceeds of the portfolio sale will reduce from GBP7.0m million to GBP5.0m million and these proceeds will be utilised to reduce the Existing Facility from GBP14.0m million to GBP9.0m.
As part of this restructuring, One Heritage Property Developments Limited ("OHPD(UK)") entered into a new GBP7.0m loan agreement with OHUK on 1 October 2024 at an interest rate of 6%, i.e., lower than the previous rate of 7%, such facility to become available from the date of the completion of the property transactions outlined above. The loan has a repayment date of 31 December 2025, with an option to extend for up to 36 months. OHUK is a related party, sharing the same majority shareholders as the Company and OHPD. This new loan will be drawn down in full on completion and used to partially repay the Existing Facility. The balance of approximately GBP2.0m of the Existing Facility will then be written off by OHPD as part of the restructuring, and the Existing Facility will therefore be settled in full at completion and terminated.
On 28 October 2024 One Heritage Bank Street Limited and One Heritage Lincoln House Limited and the related party OH UK Holdings 2 Limited entered into a 12 month loan facility agreement with Hilco Real Estate Finance UK Ltd of GBP2.33m secured upon the completed properties held by those companies, of which GBP1.6m is attributable to Bank Street Sheffield and Lincoln House Bolton. 9. Related party disclosures
Directors' remuneration
The Directors of the Company were paid through One Heritage Property Development (UK) Limited, a subsidiary.
Taxable Pension
Pension Total Total
GBP unless stated Salary Salary Taxable benefits benefits benefits
benefits remuneration remuneration
Year ended 30 June 2024 2023 2024 2023 2023
2024 2024 2023 (r)
Jason Upton 116,667 95,833
385 208 1,321 1,321 118,373 97,862
Bonus - 500
Yiu Tak Cheung* 12,500 15,000
416 - - - 12,916 15,500
Bonus - 500
Anthony Unsworth* 82,051 115,794
629 340 881 1,211 83,561 117,595
Bonus - 250
Stuart Ormisher^ 19,833 - 47 - - - 19,880 -
David Izett 30,000 29,167 - - - - 30,000 29,167
Jeremy Earnshaw 25,000 25,000 - - - - 25,000 25,000
286,051 282,044 1,477 548 2,202 2,532 289,730 285,124
*remuneration for period from 1st July 2023 to date of leaving
^ remuneration for period 8th February 2024 to 24 March 2024
(r) Restated. The total remuneration as at 30 June 2023 have been restated to include taxable benefits and bonus.
Bonus payments
During the year Jason Upton received a bonus payment of GBPnil (FY 2023: GBP500), Yiu Tak Cheung GBPnil (FY 2023: GBP500) and Anthony Unsworth GBPnil (FY 2023: GBP250). All bonus payments received in FY23 were discretionary and in line with bonus payments made to all members of staff.
Pension benefits
Pension benefits comprise Employer contributions into the Group's defined contribution pension scheme.
Guarantees
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The Company's policy is to provide financial guarantees only for subsidiaries' liabilities. At 30 June 2024, the Company has issued a guarantee to certain banks in respect of credit facilities granted to One Heritage Oscar House Limited for GBP2,471,094 (30 June 2023: GBP4,118,054) and One Heritage Victoria Road Limited for GBP679,000 plus interest, fees and expenses (30 June 2023: GBPnil). Refer to note 5 and 10 of the Company financial statements.
Parent and ultimate controlling party
At the reporting date 65.15% of the shares are held by One Heritage Property Development Limited, which is incorporated in Hong Kong. One other shareholder holds more than 5.0% of the shares in the Company.
One Heritage Holding Group Limited, incorporated in the British Virgin Island, is considered the ultimate controlling party through its 100% ownership of One Heritage Property Development Limited.
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ISIN: GB00BLF79495 Category Code: ACS TIDM: ZNT LEI Code: 2138008ZZUCCE4UZHY23 OAM Categories: 1.1. Annual financial and audit reports Sequence No.: 355868 EQS News ID: 2018469 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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