- Consolidated sales revenues decline to EUR 8.7 million (First half / 2023: EUR 16.2 million)
- Group EBIT of EUR -4.3 million following EUR 0.4 million in the first half of 2023
- Consolidated balance sheet total reduced by around EUR 8.1 million to EUR 139.5 million (31 December 2023: EUR 147.8 million)
- EBIT for the whole year expected to be between EUR -7 million and EUR -9 million
Berlin, 26.09.2024 – The Grounds Real Estate Development AG (The Grounds / ISIN: DE000A2GSVV5) closed the first half-year of 2024 with a consolidated loss. The main reasons for this were declining sales and impairment losses. From January to June 2024, The Grounds generated turnover revenues of EUR 8.7 million (First half / 2023: EUR 16.2 million), of which EUR 7.8 million was sales revenues (H1/2023: EUR 15.3 million). The majority (EUR 6.4 million) came from the Property Garden project in Magdeburg and Maggie project in Berlin-Lichtenberg, which were recognised according to the percentage-of-completion method. In addition, rental revenue and other income totalling EUR 871 thousand were generated.
Group EBIT for the first half-year was negative at EUR -4.3 million (H1/2023: EUR 0.4 million). A consolidated result remaining after taxes totalled EUR -8.1 million (H1/2023: EUR -1.1 million), corresponding to earnings per share of EUR -0.30 (H1/2023: EUR -0.05).
The balance sheet total of The Grounds has decreased by around EUR 8.3 million to around EUR 139.5 million since the balance sheet date of the previous financial year (EUR 147.8 million). On the assets side of the balance sheet, non-current assets primarily included shares in companies accounted for using the equity method, which fell by EUR 2.3 million. Deferred income tax receivables also decreased by around EUR 931 thousand due to the realisation of the Property Garden project in Magdeburg and as a result of the release of hidden reserves. Under current assets, inventories decreased by EUR 1.5 million, trade receivables by EUR 1.2 million, and cash and cash equivalents by EUR 1.7 million compared to the respective values as at 31 December 2023.
On the liabilities side, equity in particular fell significantly from EUR 24.8 million to EUR 16.8 million due to the negative consolidated result for the first half-year of 2024. Consequently, the equity ratio also fell to 12.1% (31 December 2023: 16.8%).
The reason for the significant increase in non-current liabilities from EUR 16.5 million to EUR 48.0 million is in particular the bonds item with a volume of EUR 30.7 million, which did not yet exist in the long-term balance sheet item on 31 December 2023. It reflects, under non-current liabilities, the reclassifications made in 2024 of financing made available through H.I.G., together with the convertible bond converted into a bond. Non-current financial liabilities also increased by EUR 1.9 million, while deferred income tax liabilities fell by around EUR 963 thousand. Conversely, the reclassification of the two bonds to non-current liabilities in particular led to a reduction in current liabilities from EUR 106.4 million to EUR 74.6 million. At the end of the reporting period, The Grounds had available cash and cash equivalents amounting to EUR 1.3 million (31/12/2023: EUR 3.0 million).
Jacopo Mingazzini, Management Board of The Grounds, comments as follows on the course of the first half of 2024: “Compared to the 2023 financial year, we are not yet able to report any significant improvement in operating business performance, and a stable economic upturn is still not in sight in Germany. Nevertheless, at least some of the influencing factors that have had a massive negative impact on the German property industry since 2022 are now showing a positive trend. Thus the inflation rate has normalised significantly in recent months. In June and September 2024, the European Central Bank decided to reduce key interest rates for the first time since 2019, and transaction activity on the property markets picked up noticeably in the first half of 2024 following the massive slump in 2023. Depending on the location and market segment, price declines have weakened or turned into sideways movements; rental prices in the tight housing markets of Germany’s major metropolises and conurbations recorded further increases, which were once again strongest in Berlin. Although all of this has not yet allowed us to follow the 2022 trend in our sales, recent market developments justify the assumption that the interest of potential residential unit and owner-occupied home buyers will increase again in the future and lead to the conclusion of more sales contracts. It is pleasing to note that, in the first half of the year and despite the unfavourable environment, we were able to sell all of the housing units in our project in the Margaretenstrasse in Berlin-Lichtenberg, and also to conclude further sales contracts in Dallgow-Döberitz. We will need to build on this in the coming months.”
The capital measures approved at the Annual General Meeting on 19 September 2024 marked a significant milestone in the implementation of the announced partnership with H.I.G Capital, and thus a decisive intermediate step for future growth can be achieved at the same time.
In connection with the publication of the half-year report for 2024, The Grounds has confirmed its already revised forecast for the current financial year, which assumes a negative EBIT of between EUR -7 million and EUR -9 million based on annual sales of between EUR 10 million and EUR 12 million.
The half-year report for the first half of 2024 is now immediately available for download at https://www.thegroundsag.com/en/investor-relation/financial-reports-and-presentations/half-year-reports/.
