- Consolidated sales revenues decrease to EUR 12.9 million (previous year: EUR 23.8 million)
- Group EBIT is EUR -9.2 million (previous year: EUR -4.8 million)
- Significant improvement in the financing structure
- After a successful capital increase, consolidated balance sheet total increases by around EUR 20.2 million to EUR 168.3 million (previous year: EUR 148.1 million)
- Planning for 2025 anticipates consolidated sales revenues between EUR 9.0 million and EUR 11 million, together with a balanced group EBIT
Berlin, 30.04.2025 –The Grounds Real Estate Development AG (The Grounds / ISIN: DE000A40KXL9) closed the financial year 2024 with a consolidated loss of EUR ‑13.6 million (previous year: EUR -7.3 million), attributable mainly to a significant decline in sales. Firstly, residential property markets, which are the relevant market environment for The Grounds, were characterised – especially in the first few months of the reporting year – by the strong buyer reluctance already observable in the previous year. Secondly, delays in further project developments meant that fewer residential units could be offered for sale. As a consequence of this, the volume of sales in the area of site and portfolio development, and in individual privatisation, lay below the original expectations, and consolidated sales revenues in the reporting year reduced to around EUR 12.9 million (previous year: EUR 23.8 million).
Successful completion of the Property Garden and Maggie development projects
The majority of the consolidated sales revenues generated (EUR 8.1 million) resulted from the two development projects completed in the reporting year, namely Maggie in Berlin and Property Garden in Magdeburg, which were shown in the accounts according to the percentage-of-completion method. A further EUR 1.5 million of sales revenues originated from the sale of owner-occupied apartments in Dallgow-Döberitz and Am Hasenknie. Rental incomes amounted to around EUR 1.8 million. Value adjustments in the case of the real estate assets held as financial investment, which had still adversely affected the previous year’s result to the extent of about EUR 1.3 million, reduced to EUR 258 thousand, and thus played a much smaller role in the reporting year.
The group EBIT amounted to EUR -9.2 million (previous year: EUR -4.8 million). Consolidated profits after taxes totalled EUR -13.6 million (previous year: EUR -7.3 million). This corresponds to an earnings per share of EUR -0.59 (previous year: -0.40 EUR).
Significant strengthening of the equity base, and a new anchor shareholder
Compared to the end of the previous year, the balance sheet total of The Grounds increased by around EUR 20.2 million to EUR 168.3 million. This was primarily due to the significant increase in cash and cash equivalents and in subscribed capital resulting from the capital increase implemented in December 2024, which was associated with the engagement of a fund managed by H.I.G. Capital as a new anchor shareholder of The Grounds.
Non-current assets decreased to EUR 38.9 million (previous year: EUR 43.8 million). The main cause of this was firstly the full value adjustment, undertaken for reasons of prudence in view of the current market environment, of goodwill arising from the reverse acquisition in 2017 and from the company acquisition of Capstone Opportunities GmbH in 2020, which still amounted to EUR 1.9 million in the previous year. A second factor acting here was the sale of the shares in TGA Immobilien Erwerb 8 GmbH, and therewith indirectly the shares in the at-equity participation in the shareholding in HAT 3 Projektentwicklungsgesellschaft mbH, whose value on the balance sheet date of the previous year had been EUR 2.3 million.
The increase in current assets by EUR 25.0 million to EUR 129.4 million (previous year: EUR 104.4 million) was primarily due to the increase in cash and cash equivalents. Inventories, which include work in progress, properties under construction, properties ready for sale and advance payments, increased by EUR 1.1 million to EUR 92.6 million (previous year: EUR 91.5 million); the increase here is mainly attributable to real estate properties under construction.
As at the balance sheet date on 31 December 2024, The Grounds had at its disposal cash and cash equivalents amounting to EUR 27.6 million. The significant increase by EUR 24.6 million compared to the level at the end of the previous year (EUR 3.0 million ) is explained mainly by the inflow of issue proceeds from the capital increase of December 2024.
On the liabilities side in the reporting year, there was a significant change in the ratio of current to non-current liabilities, whereby the former decreased while the latter increased. This reflects the increase in the fourth quarter of 2023 in financing provided by H.I.G. from an original EUR 10 million to EUR 17 million, together with the change of a corporate bond to a zero coupon bond.
Due to the large increase in subscribed capital in the course of the capital increase, equity capital increased by EUR 29.7 million to EUR 50.7 million. Thus the equity ratio of The Grounds as at the balance sheet date was 30.1% (previous year: 14.2%).
Acquisition of two portfolios forms the prelude to future growth
Commenting on the 2024 Annual Financial Statement, Jacopo Mingazzini, CEO of The Grounds, says: “In 2024, in a continuingly challenging environment, the operational business performance of The Grounds remained fell short of our original plans, and thus annual sales and earnings lay only within the range of the adjusted forecast of August 2024. Nevertheless, we were able to successfully complete two projects and, through optimisation of our financing structure, create an important foundation for future growth. The purchased acquisition of two terraced and semi-detached house portfolios in Potsdam-Fahrland and Werder (Havel), which already took place in December 2024 and are to be followed by further acquisitions in the current financial year, marks a first step in this direction.”
Andrew Wallis, CFO of The Grounds, says: “After H.I.G. Capital had already provided financing for The Grounds amounting to EUR 10 million in 2023, and subsequently raised this to EUR 17 million, the strategic partnership thereby initiated in the second half-year of 2024 has also been sealed at the equity level. Capital measures resolved at the company’s ordinary Annual General Meeting in September were implemented as planned in the fourth quarter and, since the capital increase carried out in December after the previous capital reduction, a fund managed by H.I.G. Capital has participated in The Grounds as a new, strong majority shareholder. As a result, not only the company’s equity capital base but also its capital market viability have been sustainably strengthened.”
The Planning for 2025 anticipates that The Grounds will achieve consolidated sales revenues in the range between EUR 9.0 million and EUR 11.0 million in 2025, together with a balanced group EBIT. Moreover, this forecast also includes a gross profit contribution of EUR 2.5 million from the debtor warrant of the logistics properties in Hangelsberg sold at the end of 2020, which is expected to be received during 2025. On the other hand, the forecast includes neither the effects arising from further acquisitions, nor the sales revenues and effects on earnings from the Terra Homes, Börde Bogen and Central Offices project developments for which, according to current planning, partial realisation is not to be expected until the 2026 financial year.
The Annual Report for the 2024 financial year is now available immediately for download at Annual Reports » The Grounds Real Estate Development AG
