The maidan annual report for the financial period ended 30 June 2021 saw the NAV per share of 8.4p compared to a listing price of 10p on 23 December 2020. This was a consequence of the Group continuing spend on scaling the business and the developments not expecting to complete until the next financial year. During the reporting period the Group recognised a loss of GBP0.8 million, which reflects the salaries, professional fees and other corporate expenses incurred in the period and the impairment of GBP0.2 million that was recognised in relation to our investment in associate. These were offset to some extent by the performance of the Co-living side of the business, which generated a gross profit of GBP314,000.
Restructuring and capital raises
In advance of the Group listing on the London Stock Exchange, a restructuring was undertaken. This involved transferring out two subsidiaries, One Heritage Tower Limited and Harley Street Developments Limited for a gain of GBP26,423, a debt for equity swap which saw One Heritage Property Development Limited in Hong Kong convert GBP2.75 million of debt into 20.7 million shares and then the acquisition of One Heritage Property Development (UK) Limited, known as the Trading Group, by One Heritage Group plc.
The Company was pleased to list on 23 December 2020 where investors acquired 9,300,000 shares at 10p per share. This was followed up with a placing and subscription on 11 February 2021 where the Company sold an additional 1,828,333 shares at 30p each, which demonstrated investors believe in the strategy of the Group.
Acquisitions of new properties AND SIGNING OF A DEVELOPMENT MANAGEMENT AGREEMENT
Following the listing of the Group we have been pleased to complete on two acquisitions, with Bank Street Sheffield acquired for GBP800,000 and Plus House in Stockport acquired for GBP725,000. On top of these acquisitions the Group has spent a further GBP1.7 million, including capitalised finance costs, on the developments since the end of the calendar year with the aim to complete the majority of our existing developments by the end of the next financial year.
The Company was also pleased to sign a development management agreement with One Heritage North Church Limited, to redevelop an existing office into 58 self-contained apartments. This contributed GBP15,000 of revenue in the financial period, as the agreement was signed just before the period end.
The Group is fortunate to have a supportive majority shareholder, One Heritage Property Development Limited, which increased the shareholder facility by GBP2.5 million to GBP7.5 million, on the same terms as the existing facility with an early repayment date on 31 December 2022 for the extended amount. As at 30 June 2021, the Group had drawdown GBP1.3 million of the facility. This facility has been provided to ensure that we are able to continue with developments if other financing is not available.
Two construction finance agreements were signed in May and June 2021. These agreements cover the construction finance costs of the developments in One Heritage Bank Street Limited and One Heritage Oscar House Limited, and allow the Group to drawdown a gross amount of GBP5.5 million for a period of 18 months.
The Group's policy is to capitalise finance costs from external loan facilities against the underlying developments and during the financial period to 30 June 2021, GBP0.3 million was capitalised. The remaining finance costs recognised on the income statement relate to amounts that were not capitalised and the finance lease on the office.
Scaling the business
The loss per share of 3.1p was primarily driven by administration costs in the business. Salary costs contributing 68.2% of the total as the Group increased the number of staff to 20 at the end of the financial period. The Group also moved into a larger office space in the same building at the end of the period and the Group recognised a right of use asset of GBP288,463, which will be depreciated over the five year lease term. Other key costs recognised relate to professional and corporate expenses, some of which relate to being a public listed company versus previously operating as a private company.
ONE HERITAGE COMPLETE
The Group has a 47% share in One Heritage Complete Limited, which has five subsidiaries with various stakes between 51% and 93%. These entities have their own management team and finance function. After the end of the financial year, information came to light that One Heritage Maintenance Limited had become insolvent due to a combination of structurally high costs, onerous contracts it had signed and liabilities in excess of its assets and as such has been placed in liquidation. At the same time, the management of One Heritage Maintenance had received loans from other subsidiaries. As a result of this action, another entity One Heritage Design Limited also became insolvent and was put into liquidation. Given this situation, the Group took the decision to impair the stake in One Heritage Complete Limited to zero, as there was significant uncertainty on the ability of the Group to realise value from this entity in the future.
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 Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and applicable law and 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. In addition the Group financial statements are required under the UK Disclosure Guidance and Transparency Rules to be prepared in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
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 adopted pursuant to Regulation (EC) No1606/2002 as it applies in the European Union; ? 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.
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.
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 positionand 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
Chief Executive Officer
19 October 2021
Consolidated statement of comprehensive income
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