02 October 2024

This announcement contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation No. 596/2016 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

ONE HERITAGE GROUP PLC

(“OHG” or “the Company”)

Strategic Update and Market Listing

One Heritage Group PLC ("OHG" or "the Company") the UK-based residential developer, development manager and property manager, focused on the North of England, is pleased to announce a comprehensive restructuring plan, to include a rebrand, that will position the Company for sustainable growth, financial stability, and enhanced market presence.

Background

Since December 2020, the Company has been listed on the Main Market of the London Stock Exchange (now the Equity Shares (Transition) category for commercial companies previously listed on the standard listing segment). During this time, the Company has focused on the development and redevelopment of new and existing buildings (“Development Activities”) to create apartments, as well as the refurbishment of existing properties (“Refurbishment Activities”) to create Co-living accommodation. Additionally, OHG has acted as development manager on behalf of third-party investors in their development activities in the UK.

Newly developed and refurbished properties owned by the Company were then sold or retained, with Co-living properties primarily marketed to investors through the Hong Kong network of One Heritage Property Development Limited (“OHPD”), the Company’s majority shareholder. Schemes of apartments were sold either through this network or via forward sale agreements with institutional investors.

Since listing, OHG has successfully delivered over 150 residential properties as principal and over 100 properties as a development manager. Additionally, it has developed over 70 Co-living projects and currently manages over 300 tenants across its portfolio.

Over the last few years the external environment has undergone significant changes. The property development market has been adversely impacted by rising construction costs, increased operational expenses, weakening investor demand and broader macroeconomic uncertainties which, together, have created a challenging environment. In response to this, OHG has taken decisive steps to adapt and strategically realign its operations.

A major change in OHG’s business model has been the move away from in-house construction. Previously, projects such as St Petersgate in Stockport and Bank Street in Sheffield were completed by an in-house team. However, given the rising costs and risks associated with self-delivery, the Company now engages third-party construction firms under fixed-price contracts, mitigating the risk of financial exposure.

As previously announced, the Company has also decided not to proceed with the construction of two projects, Churchgate in Leicester and Seaton House in Stockport on the grounds of viability. Following a strategic review, the Company is also moving away from providing Co-living services, which have been adversely impacted by market challenges. Structural changes to right-size the Company’s cost base have also been carried out recently.

Moreover, OHG has commenced the implementation of a comprehensive restructuring plan that better positions it for sustainable growth, as follows.

Key Strategic Actions

1. Restructuring of Debt and Capital Allocation:

Strategic Investment in One Victoria: On 01 October 2024, OHG exchanged contracts unconditionally to acquire a 30% stake in the company that owns the One Victoria project by purchasing shares to the value of £3 million from OHPD. The acquisition will be funded by drawing down £3 million from the remaining shareholder loan facility, increasing the facility from £11 million to £14 million (“Existing Facility”). The completion date for the acquisition is 29 October 2024, which may be extended or brought forward by agreement between the parties, with a long stop date of 8 November 2024.

The One Victoria project in Manchester has a Gross Development Value (GDV) of £39.5 million. The project, consisting of 129 apartments and 2 commercial units, is scheduled for completion in the second half of 2025. To date, 37 sales contracts have been exchanged, 3 units are reserved, and 89 units remain unsold. Construction finance is being drawn down to fund ongoing construction costs, with Torsion Construction Limited serving as the principal contractor.

Located in a prime area of Manchester, the One Victoria project is designed to meet the growing demand for high-quality residential and commercial spaces. As Development Manager, OHG will continue to oversee the development of the project.

Sale of Completed Inventory: Simultaneous to the investment in One Victoria, Manchester, the Company has also exchanged contracts unconditionally on 01 October 2024 for the sale of a portfolio of completed residential and commercial properties, valued at £7 million, to OH UK Holdings Limited (“OHUK”), a company connected with OHPD. This portfolio includes residential properties at Bank Street, Sheffield, Lincoln House, Bolton and Oscar House, Manchester, as well as the commercial unit at St Petersgate, Stockport. The completion date for the sale is 29 October 2024, which may be extended or brought forward by agreement between the parties, with a long stop date of 8 November 2024.

With £2 million of debt linked to Oscar House as part of this transaction, the net proceeds of the portfolio sale will reduce from £7 million to £5 million and these proceeds will be utilised to reduce the Existing Facility from £14 million to £9 million.

With lower debt levels, the Company will gain greater financial flexibility, enabling it to respond more effectively to market opportunities and economic fluctuations. OHG remains committed to supporting OHPD by facilitating sales and managing properties on their behalf.

Refinance of Existing Loan Facility: As part of this restructuring, OHPD(UK) entered into a new £7 million loan agreement with OHUK on 01 October 2024 at an interest rate of 6%, i.e., lower than the previous rate of 7%, such facility to become available from the date of the completion of the property transactions outlined above. The loan has a repayment date of 31 December 2025, with an option to extend for up to 36 months. OHUK is a related party, sharing the same majority shareholders as OHG and OHPD.

This new loan will be drawn down in full on completion and used to partially repay the Existing Facility.  The balance of approximately £2 million of the Existing Facility will then be written off by OHPD as part of the restructuring, demonstrating OHPD's commitment to OHG’s success and financial stability. The Existing Facility will therefore be settled in full at completion and terminated.

2. The Company’s Listed Status

The Company is advised that completion of the transactions outlined above will highly likely constitute a reverse takeover under the UK Listing Rules. The Company is currently on the London Stock Exchange (“LSE”) Equity Shares (Transition) category for commercial companies. 

Between now and the release later this month of the Company’s Annual Results to 30 June 2024 and the completion of these transactions, the Company will continue to explore its options regarding a transition to the Aquis Stock Exchange, or the implementation of a Matched Bargain Facility or a complete delisting. The AQSE growth-focused market appears to align more closely with the Company’s current size and strategic objectives, providing a platform that is better suited to support its future ambitions. The Board remains committed to delivering the best possible outcome for shareholders and will provide further updates in due course.

3. Intention to rebrand to Zentra Group PLC

OHG will rebrand as Zentra Group PLC to reflect its renewed strategic focus and to distance itself from any potential reputational risks associated with the One Heritage brand in Asia, which is tied to its majority shareholder. This new identity gives the Company the flexibility to reshape its image in the UK market, focusing solely on residential development to provide apartments and single-dwelling houses.

The decision to rebrand as Zentra Group PLC stems from a desire to establish an identity that resonates with the Company’s strategic repositioning. The name "Zentra" was chosen to embody the values of balance, harmony, and focus, with "Zen" symbolising a sense of calm and mindful approach to property development.

The Company is launching its new website today at: www.zentragroup.co.uk  The old website www.oneheritageplc.com will automatically redirect to the new website.

The Company intends to update the market when the name change is formally effected, including details for trading in the Company's shares under the new company name and new TIDM of " ZNT“, whilst the Company's ISIN and SEDOL will remain unchanged.

4. Operational Focus and Strategic Realignment:

Focus on Core Residential Sectors: The Company will focus on two core residential sectors by delivering apartments under its new "Living" brand and houses under its new "Homes" brand while continuing to provide property management services. This clearer focus enables the Company to better position itself in the market and create greater awareness of its brand proposition among stakeholders and potential customers.

Having two distinct sub-brands allows the Company to tailor its messaging and marketing efforts more effectively. The "Living" brand will resonate with professionals seeking modern, vibrant living spaces, while the "Homes" brand will appeal to families and individuals looking for more traditional options. This dual sub-branding strategy helps the Company meet the diverse demands of the market while leveraging its expertise in residential property development.

By establishing clear and distinct brands along with a focused strategy, the Company is better positioned to navigate the complexities of the residential property market. This new clarity enhances its ability to communicate its vision, attract the right customers, and deliver high-quality residential solutions that meet the evolving needs of communities.

Exit from Co-living Services: The Company has decided to fully exit the Co-living sector. Rising construction costs and higher operating expenses, particularly in areas like energy bills, have made the Company’s Co-living product financially unviable.

The Company will also discontinue the management of Co-living property, allowing the Company to focus on the property management in its two core sectors. During this transitional period, the Company will work closely with landlords of Co-living properties to ensure a smooth handover to new property managers. The Company remains committed to fulfilling its obligations and will oversee the completion of all ongoing projects in the coming months.

Operational Changes:

The Board has made key appointments to strengthen the Company’s senior leadership team. Scott Nicol has been appointed as Head of Investment and will oversee the commercial aspects of the business, ensuring that the Company’s investments align with its strategic goals. Ben Scandrett has been appointed as Head of Development to lead the Company’s property development projects. Additionally, Robert Holbrook, currently Interim Head of Finance, will continue as Head of Finance in a part-time capacity.

Update on Existing Projects (not included in the £7 million sale of completed inventory):

Victoria Road, Eccleshill Project: The near completion of the Victoria Road housing project in Eccleshill is expected to generate cash flow in Q1 2025 for the Company once sales complete.

Asset Retention and Sales: The Company is prioritising the sale of assets such as Churchgate, Leicester to further strengthen its financial position. As announced 04 July 2024 the Company exchanged contracts for the sale of the land to the rear of Seaton House, Stockport for £400,000. The proceeds from these sales will be reinvested in the Company’s development pipeline.

One Heritage Tower - Sale: The Company has an ongoing development management agreement and has agreed updated terms which includes a 3% fee of any land sale. 

One Victoria - Completion: As mentioned above, the One Victoria project is expected to complete in H2 2025.

Conclusion

The restructuring of One Heritage Group PLC and its rebranding to Zentra Group PLC represent a pivotal moment in the Company’s journey. By realigning operations with the current market environment, reducing the debt burden, and focusing on core residential development strengths, the Company is positioning itself for long-term success.

Contacts

One Heritage Group plc

Jason Upton

Chief Executive Officer

Email: jason.upton@one-heritage.com

Robert Holbrook

Head of Finance

Email: robert.holbrook@one-heritage.com

Hybridan LLP (Financial Adviser and Broker)

Claire Louise Noyce

Email : claire.noyce@hybridan.com

Tel: +44 (0)203 764 2341

About One Heritage Group

One Heritage Group PLC is a property development and management Company. It focuses on the residential sector primarily in the North of England, seeking out value and maximising opportunities for investors. In 2020 One Heritage Group PLC became one of the first publicly listed residential developers with a focus on co-living.

The Company is listed on the Standard List of the Main Market of the London Stock Exchange, trading under the ticker OHG. 

For further information, please visit the Company’s website at https://www.oneheritageplc.com/.