Note

Allreal Holding AG, domiciled in Baar, Canton Zug, 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 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 54 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 138 to 146) relates solely to the Group’s parent company.

Dividends received from the subsidiary companies are booked to the accounts of Allreal Holding AG upon payment.

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

In the first half of 2012, Allreal acquired 100% of the share capital of Hammertor AG, Cham, for a purchase price of CHF 8.1 million. Accordingly, the total balance sheet value of investments increased by this amount to CHF 817.8 million.

Securities consist of 7 661 treasury shares (31.12.2011: 13 463), valued at the market price as at 31 December.

As at 31 December 2012, the share capital of Allreal Holding AG consisted of 15 941 649 registered shares with a par value of CHF 50 each. It was last increased in May 2012, by CHF 113.9 million from CHF 683.2 million to CHF 797.1 million. 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 28 March 2014 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 (authorised capital). In May 2012, the authorised capital was reduced by CHF 113.9 million from CHF 200.0 million to CHF 86.1 million (as at 31 December 2012) 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 2012) 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.

With the distribution on treasury shares, the amounts not paid out in 2011 and 2012 totalling CHF 0.4 million were allocated to the 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 early 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 2012, the conditions for early redemption had not been met.

Until 19 September 2014, each bearer bond at CHF 5 000 par can be converted into 36.79447 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 early 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 176.65 on 20 trading days within a period of 30 consecutive trading days. As at 31 December 2012, the conditions for early redemption had not been met.

In accordance with the terms of the bond issue, the capital increase resulted in the subscription ratio being adjusted from 36.03604 to 36.79447 registered shares per bearer bond at par value CHF 5 000. In other words, the conversion price was adjusted from CHF 138.75 to CHF 135.89.

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 receive a fixed fee in the total amount of CHF 0.47 million (2011: 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.

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.

Following Patrick Krähenmann’s departure as Head of Projects & Development in 2012, the number of persons in Group Management decreased to three. In the period under review, Group Management received remuneration totalling CHF 3.16 million (2011: CHF 3.62 million), out of which the highest total remuneration of CHF 1.37 million (2011: CHF 1.53 million) was paid to Bruno Bettoni, Chief Executive Officer.

Variable bonuses will be paid out in cash in February 2013 after the annual accounts have been approved by the Board of Directors.

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

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 these bodies.

As at 31 December 2012, the following members of the Board of Directors and Group Management were directly or indirectly invested in Allreal Holding AG:

The shareholding in the Helvetia Group, St. Gallen, in which Dr. Ralph-Thomas Honegger holds the office of Chief Investment Officer (CIO) and member of the Executive Management, is not included in the table.

The shares held by the members of the Board of Directors and the Group Management correspond to 0.15% of the share capital of the company (31.12.2011: 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 2012 consolidated financial statements.

As at 31 December 2012, guarantees and sureties to third parties in connection with the financing of Allreal Group companies amounted to CHF 781.50 million (31.12.2011: CHF 759.0 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.

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

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 5 April 2013 a distribution of capital of CHF 87.7 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 2012 financial year as determined by the annual general meeting will be paid out to shareholders at the designated place of payment on or after 12 April 2013 free of charge and without deduction of withholding tax.

Baar, 11 February 2013

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