Dusseldorf, Berlin, Frankfurt After the presentation of unaudited consolidated financial statements for 2021, investors are turning away from the shares of the real estate investor Adler Group: On Monday morning, the stock of the SDax-listed company fell by 44 percent. At times, the share was even 46 percent lower. At noon, the price is just over four euros.
At a press conference in the morning, the Chairman of the Adler Board of Directors, Stefan Kirsten, commented on the chaotic and dramatic developments. There is nothing to sugarcoat, said the manager. Only 5.5 hours would have been missing last Saturday, then the group would have “driven against the wall”. “It was a pretty close race,” Kirsten said.
Adler published its annual financial statements for 2021 just five hours before midnight on Saturday. A look at the terms of the bond 20/25 (ISIN XS2010029663) shows why the deadline was so important: It states that the issuers must submit an annual report “with audited consolidated financial statements” to the issuer within 120 days of the end of each financial year got to. Kirsten was accordingly important to emphasize: “There was an examination. We have a certified degree.”
April 30 stands for a new beginning at the Adler Group, said Kirsten. The group cleared out the balance sheet, reduced debt “significantly” and increased the cash position. He has over half a billion euros in liquidity. Despite losing billions, the company is well positioned. Kirsten announced that the group’s “Byzantine structure” would be “transformed into an economic entity”.
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The auditing company KPMG had denied Adler the attestation on Friday evening. As a result, all the members of the board offered to resign, with the exception of the head of the board of directors who had only been in office for a short time. Four members had to leave. The rest are to remain in office until the Annual General Meeting at the end of June and stand for re-election.
The figures presented on Saturday evening showed a loss of 1.17 billion euros, which was mainly due to high depreciation at the Consus Real Estate subsidiary.
Kirsten emphasized that KPMG cannot form an opinion. “That does not mean that our balance sheet or income statement is not in order.” There is no negative statement, underlined the Chairman of the Board of Directors and added: “If there had been a material point for an objection, KPMG would have raised it in the ‘Disclaimer of Opinion’. They don’t. There is nothing.”
The all-clear on the liquidity cushion
Nevertheless, Kirsten had already emphasized over the weekend that the KPMG refusal notice reflects a high level of mistrust between the company and the auditors. Above all, it should now be difficult for Adler to obtain new capital. “We also need to be aware that as long as we have a disclaimer of opinion, the banking and capital markets are closed to us,” Kirsten said. With a view to the liquidity cushion, he gave the all-clear: “We have no worries at this point.”
According to Kirsten, who has only been in office as head of the executive committee since February and is therefore unburdened for earlier events, it was only logical that the board of directors had offered his resignation. When asked, Kirsten confirmed that Adler would examine any claims for damages against those responsible from the old management.
However, he was neither willing nor able to accept all resignations. After all, Adler needs a functioning team. The work with the previous co-CEO Thierry Beaudemoulin will continue for the time being. However, the shareholders should have the last word on the future management staff at the general meeting at the end of June.
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Until then, Adler wants to at least initiate further changes. There is an international search for a new CFO. According to Kirsten, Adler will significantly strengthen compliance in the company. They want to improve the flow of information, ensure uniform rules in the group and better management and control.
KPMG’s main reason for refusing the attestation was that Adler’s management had refused access to certain information. All obstacles to an unqualified audit opinion for the year 2022 are to be removed from the auditors.
Meanwhile, Adler shareholders cannot hope that Vonovia SE will come to the aid of the ailing competitor. Europe’s largest housing group, which holds around a fifth of the Adler Group, again rejected an increase in its shares on Monday.
The participation is a “pure financial investment”, the group repeated on request. The share in Adler would make up “not even 0.25 percent of the total assets” of the group. “Given the very small size, there is no reason to rush a decision,” it said.
The most recent market reaction does not change that. Vonovia’s room for maneuver is also limited by the unusually high level of debt that the group had to take on when it took over Deutsche Wohnen.
More: One billion euros loss: write-downs at Consus ruin the Adler Group’s 2021 consolidated balance sheet