Note

Allreal Holding AG was founded on 17 May 1999. As a holding company it is not engaged in any operating activities. Its function is limited to managing and financing of the Allreal Group.

The Allreal Holding AG annual accounts have been prepared in accordance with the provisions of the Swiss Code of Obligations. They supplement the consolidated financial statements (pages 62 to 128) prepared in accordance with International Financial Reporting Standards (IFRS). Whereas the consolidated financial statements provide information about the business situation of the Group as a whole, the information in the annual accounts of Allreal Holding AG (pages 129 to 137) relates solely to the Group´s parent company. These annual accounts comply with the provisions set out in Art. 663e CO.

Other expense includes the normal administrative expenses incurred by a holding company (the Board of Directors´ fees, legal advice, insurance and capital taxes). The management fees paid to Allreal Generalunternehmung AG amount to CHF 0.6 million, unchanged from the previous year.

As there were no changes in the period under review, the balance sheet value of investments amounted to CHF 809.7 million, unchanged from the previous year.

Securities consist of 13 463 treasury shares (31.12.2010: 10 365), valued at the market price as at 31 December.

As at 31 December 2011, the share capital of Allreal Holding AG consisted of 13 664 271 registered shares with a par value of CHF 50 each. The premium paid in by means of capital increases and the conversion of convertible bonds is reported under reserves from contribution of capital.

The Board of Directors is authorised by the annual general meeting to increase the share capital – excluding the subscription rights of shareholders as applicable – until 26 March 2012 to acquire businesses, business units, investments or real estate through an exchange of shares, for financing or refinancing the acquisition of businesses, business units, investments or investment projects, or for the purpose of an international placement of shares worth up to CHF 200.0 million by issuing up to 4 000 000 registered shares each with a par value of CHF 50. In May 2010, the authorised capital was reduced by CHF 113.9 million from CHF 200.0 million to CHF 86.01 million (as at 31 December 2011) owing to the rights issue.

For the purpose of issuing convertible bonds, warrant bonds or other financial instruments, the annual general meeting of 31 March 2006 created – excluding the subscription rights of shareholders – conditional capital of up to CHF 125.0 million through the issue of up to 2 500 000 registered shares with a par value of CHF 50 each. Bearers of the convertible and/or warrant bonds are entitled to subscribe to the new shares. This conditional capital decreased by CHF 0.2 million to CHF 124.8 million (as at 31 December 2011) following the conversion of convertible bonds into shares.

Further, Allreal Holding AG has conditional capital of CHF 10.0 million (200 000 registered shares at a par value of CHF 50 each) at its disposal for the purposes of issuing options to the members of the Board of Directors and management. This conditional capital has not been drawn on.

In its final assessment of the reserves from contribution of capital, the Swiss Federal Tax Administration deducted the issuing expense of CHF 6.8 million associated with the capital increase in 2010; hence, the amount was reclassified as general reserves.

The bond may be redeemed early, and the bond terms customary for such capital market instruments shall apply. Specifically, this includes an option for premature redemption at any time at par, including accrued interest, provided that more than 85% of the original principal amount has been redeemed by Allreal. As at 31 December 2011 the conditions for premature redemption had not been met.

Until 19 September 2014, each bearer bond at CHF 5 000 par can be converted into 36.03603 registered shares of Allreal Holding AG. The bond may be redeemed early, and the bond terms customary for such capital market instruments shall apply. Specifically, this includes an option for premature redemption either at any time at par, including accrued interest, provided more than 85% of the original principal amount has been converted and/or redeemed, or if the registered share of Allreal Holding AG closes at no lower then CHF 180.40 on 20 trading days within a period of 30 consecutive trading days. As at 31 December 2011, the conditions for premature redemption had not been met.

As at 31 December, the following shareholders were entered in the share register of Allreal Holding AG as having a shareholding (direct and/or indirect) which exceeds a threshold of 3%:

The members of the Board of Directors received a fixed fee in the total amount of CHF 0.47 million (2010: CHF 0.47 million), which is paid out in cash after the annual accounts have been approved by the annual general meeting. These persons do not receive any other remuneration.

Since 1 January 2011, Group Management has consisted of four persons (2010: three). In the period under review, these persons received a total remuneration of CHF 3.62 million (2010: CHF 2.19 million), of which the highest remuneration of CHF 1.53 million (2010: CHF 1.13 million) was paid to Bruno Bettoni, Chief Executive Officer.

Variable bonuses will be paid out in cash in February 2012 after the annual accounts have been approved by the Board of Directors.

[1]Calculated at the market value on date of allocation

The remuneration of the Board of Directors is paid directly by Allreal Holding AG. The members of Group Management are employees of Allreal Generalunternehmung AG, a wholly owned subsidiary of Allreal Holding AG, which pays the remuneration of these persons. All amounts represent gross payments before the social insurance contributions paid by the remuneration recipients. The employer´s share of the social insurance contributions is not included.

In the period under review, neither loans nor other credits were granted to the members of the Board of Directors or the Group Management nor was remuneration paid to former members of management.

As at 31 December 2011, the following members of the Board of Directors and the Group Management were directly or indirectly invested in Allreal Holding AG:

The number of shares reported to be held by Erich Walser do not include the investment in the Helvetia Group, St. Gallen, in which company Erich Walser serves as chairman of the Board of Directors.

The shares held by the members of the Board of Directors and the Group Management correspond to 0.17% of the share capital of the company (31.12.2010: 0.17%).

Internal precautions have been taken in order to ensure that the annual accounts of Allreal Holding AG conform to the applicable accounting regulations and to guarantee proper company reporting. These precautions relate to modern accounting systems and procedures as well as the preparation of the annual accounts.

As holding company, Allreal Holding AG is mandated to manage the Allreal Group, whose financial reporting is summarised in consolidated financial statements. To this end, Allreal Holding AG relies on risk management and risk assessment within the Group as disclosed in the 2011 consolidated financial statements.

As at 31 December 2011, guarantees and sureties to third parties in connection with the financing of Allreal Group companies amounted to CHF 759.0 million (31.12.2010: CHF 648.2 million). Under the Swiss value added tax group taxation arrangement, Allreal Holding AG is jointly and severally liable for all value added tax obligations of the other Allreal Group companies.

There is no other information that must be disclosed under the provisions of Art. 663b CO.

The Board of Directors will submit the following proposal regarding the appropriation of the balance sheet profit to the annual general meeting:

As the statutory reserves exceed 50% of the share capital, no further allocation will be made.

The Board of Directors will propose to the annual general meeting of 30 March 2012 a distribution of capital of CHF 75.2 million by means of repayment of reserves from contribution of capital of CHF 5.50 per registered share.

Under the proposed appropriation of profit, the distribution does not make allowance for any new shares created through conversion (from conditional capital).

The distribution for the 2011 financial year as determined by the annual general meeting will be paid out to shareholders at the designated place of payment on or after 6 April 2012 free of charge and without deduction of withholding tax.

Baar, 10 February 2012

On behalf of the Board of Directors:
Dr. Thomas Lustenberger, Chairman