from One Heritage Group Plc (isin : GB00BLF79495)
One Heritage Group plc: Full year results for the year ending 30 June 2023
One Heritage Group plc (OHG) 31 October 2023 ONE HERITAGE GROUP PLC (the “Company”) or (the “Group”) Full year results for the year ending 30 June 2023
One Heritage Group PLC (LSE: OHG), 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 2023 (FY 2023).
Financial highlights
Operating highlights
Post Period Events
Prospects
Jason Upton, Chief Executive Officer, commented:
“It has been a milestone year for the Group as we delivered our first wave of practical completions. The Group has also seen strong revenues, with the majority of units sold, whilst sales channels are focused on the remaining unsold residences.
The Group is also poised to complete all self-delivered projects in the short term, which have been problematic with cost control, and has now commenced all new projects using fixed price contracts to remove this risk. Our focused strategy, coupled with significant investment in experienced property development skills and resources, gives us confidence that current and future development projects will be delivered on a timely and cost-effective basis.
The North of England continues to prove itself as an attractive region for property investors given the growing demand for quality, affordable housing, which we are delivering. We look forward to continuing delivery of our strategic objectives in this coming year.”
Contacts
One Heritage Group plc Jason Upton Chief Executive Officer Email: jason.upton@one-heritage.com
Anthony Unsworth Chief Financial Officer Email: anthony.unsworth@one-heritage.com
Hybridan LLP (Financial Adviser and Broker) Claire Louise Noyce Email: claire.noyce@hybridan.com Tel: +44 (0)203 764 2341
Yellow Jersey PR (Financial PR) Charles Goodwin/Annabelle Wills/Bessie Elliot Email: oneheritage@yellowjerseypr.com Tel: +44 (0)203 004 9512
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.
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 2023.
Chairman’s statement
An inflationary environment and supply chain difficulties, caused by number of macro-economic and geopolitical factors, have had a significant and adverse bearing on the property development industry and we have not proved immune to this. Equally, however, as became evident as time passed, our acquisition and delivery strategies, with notable exceptions, have not served us well, in mitigating the inherent risks associated with property development. And so, while the Board was pleased to see the completion during the year of three direct development projects at Lincoln House, Bolton, Bank Street, Sheffield and Oscar House, Manchester and one development management project at Oldham, it is clearly disappointing to all concerned that two of the development projects (Bank Street and Oscar House) have been further impaired, as has St Petersgate, Stockport which awaits completion this quarter.
Having said this, I am pleased to see the energy and clarity of purpose with which the Executive Team has responded to the challenges we faced. New senior appointments both on the acquisition and delivery sides of the business are very welcome and significant initiatives have been introduced to good effect - namely a widening of our net in terms of target acquisitions to include housing as well as apartments and local authority and social housing partnering; and, in terms of delivery, third party outsourcing on fixed priced construction contracts in lieu of an in-house model.
The sales side of the development process has gone well and is testament to the quality of our product, its desirability to the rental market and the exceptional sales network that our parent company has built up in Asia. There remains strong appetite from the overseas investor for the right product, accompanied by good professional management services, particularly in our chosen geographies.
It’s important to note that of the original batch of properties purchased pre-January 2022, only St Petersgate, Stockport awaits completion and that Churchgate, Leicester and Seaton House, Stockport, both consented sites, are to be sold and not developed out by the Group following a reassessment of profitability. Construction is going well at the most recent purchase i.e. the site for housing at Victoria Road, Eccleshill and there are a number of encouraging discussions ongoing on other potential projects.
Our other principal source of revenue comes from our development management activities and I am pleased with the way that One Victoria, Manchester is shaping up and we are putting every effort in to are making sure that this business line grows in significance going forward.
Despite setbacks, I am confident that our revised strategies are fit for purpose, that we have the leadership and technical expertise to deliver them and that with the continued support of our major shareholder, our bottom line performance will greatly improve.
David Izett Chairman 31 October 2023
Chief Executive’s statement
Reflecting on the past financial year, I wish to acknowledge the hard work and commitment of our team particularly in respect of the four development projects – three direct developments and one development management project - completed during the period. Overall, after adapting our strategies in response to market conditions, strengthening our team, and refining our internal processes and delivery, I believe that we are in a much stronger position to deliver value for our shareholders in the future.
In 2021, in difficult market conditions leading to a reduction in the number of appropriate 3rd party contractor options and much higher pricing from those willing to quote, and following a contractor insolvency at Bank Street Sheffield and North Church House, Sheffield, we took the decision, essentially out of necessity, to take construction in house. We recognise that the performance of self-delivery projects has not gone to plan as costs have continued to increase to our detriment. It is important to note that the outstanding projects of North Church House, Sheffield and St Petersgate, Stockport where we are providing in house construction are due to complete this quarter and our delivery strategy will be focused on obtaining a fixed price contract for future projects.
While there is no doubt that external factors such as cost increases and delays have impacted us severely across a number of our projects, we also recognised that changes were required to our acquisition and delivery strategies to mitigate attendant risks to the development process leading to strong future performance.
Our acquisitions strategy has become more cautious over the past year to avoid some of the particular problems encountered on more challenging projects such as Bank Street and St Petersgate. A highly experienced Investment Director was appointed earlier in the year to head the acquisition team in order to build a more risk averse pipeline. Similarly, as mentioned above, our delivery strategy has evolved to an outsourced model to mitigate the risk of unforeseen cost increases. To lead this team, we have hired a Head of Projects to provide us with greater oversight and control of how projects are delivered. These two senior appointments add to the Interim Development Director appointed earlier in the year and have enabled us to create three specialist teams i.e., Acquisition, Technical and Delivery for future projects. We are delighted to have recruited great people for these roles and to have restructured our development team during the period, acknowledging where we went wrong and what we can do better.
Now that we have settled on a revised project delivery strategy, and we believe that the picture on costs is clearer, we are focusing our efforts on finding and securing new opportunities for direct development. We have also increased our efforts to source profitable deals as development manager or in Joint Ventures, along with establishing what we hope will be long term partnerships with local authorities and registered housing providers.
In order to measure our success as a business, in last year’s statement I highlighted four strategic objectives for the Group to perform against:
As mentioned above, this year has been marked by four project completions – three direct developments and one development management project.
The first completion in FY 2023 was our direct development of Lincoln House, Nelson Street, Bolton, previously a part-build office building, which we repurposed for residential use to provide 88 apartments. The gross floor area of the building is c., 60,500 square feet.
In March 2023, we completed our first development management project, a conversion of Oldham County Court, New Radcliffe Street, Oldham, into 42 residential apartments comprising a gross floor area of c., 33,400 square feet. This also marked the completion of the Group’s first partnership with a housing association, and all 42 apartments were let at affordable rents, boosting the availability of affordable housing in Oldham Town Centre.
In May 2023, we delivered our second direct development of 2023 calendar year at Liberty House, Bank Street, Sheffield. This was the conversion of a former Grade II Listed office building into an apartment block of 23 units, with a gross floor area of c., 21,000 square feet.
In quick succession to Liberty House, in June 2023, we announced the practical completion of our third direct development at Oscar House, Chester Road, Manchester. This is a six-storey apartment block of c., 19,700 square feet and comprises 27 units on a formerly unoccupied brownfield site.
Post-period end, we updated the market that the completion of 57 St Petersgate, Stockport, a conversion of a former office building, comprising 18 apartments, 1 commercial unit and c., 12,000 square feet, was delayed until later this calendar year, due to further challenges in respect of sub-contractor labour shortages.
As mentioned above and as announced in our interim results, after careful internal evaluation, we took the decision to cease providing in-house construction services to both our direct development and development management projects in favour of the appointment of a fixed-price principal contractor. This will take effect later this year, tying in with the completion of our direct development of 57 St Petersgate, Stockport and our development management project at North Church House, Queen Street, Sheffield which comprises 58 apartments in a former office building totalling c., 41,400 square feet.
As previously announced, principally as a result of an increase in costs due to rising material prices, sub-contractor prices and cost of debt, the Group impaired the value of its developments at Bank Street, St Petersgate, and Oscar House.
The Group has previously confirmed its decision to sell the consented development at Churchgate, Leicester, following a viability review based around its design and costs and has accepted an offer that is progressing through the due diligence and legal processes. We have also recently decided to sell the consented project at Seaton House, Stockport following a viability review.
In April 2023, we were pleased to commence the construction, as developer, of 24 houses at Victoria Road, Eccleshill, West Yorkshire, our first new build housing project. A principal contractor has been appointed with a fixed price build contract and completion is expected in H2 2024.
*As at 23 October 2023
We have continued to see strong demand for well-designed and well-located homes with 71 units (out of 125 available for sale) sold and legally completed during the period which increased to 102 at 23 October 2023.
Post period, the Group has exchanged contracts for the bulk sale of twenty apartments at Lincoln House, Bolton. The sales were contracted to complete in August 2023, but following buyer delays, the remaining units completed in October 2023. This, along with two further sales increases the number of completions at Lincoln House to 76 out of 88. Bank Street reported two further sales completions post year end. |