Consolidated statement of comprehensive income

The 2015 financial year closed with operating net profit of CHF 109.7 million, which is slightly more than the previous year (2014: CHF 109.1 million).

Rental income in the Real Estate division increased to CHF 174.9 million (2014: CHF 159.2 million) owing to expansion of the portfolio in the previous years. Like-for-like rental growth came to –0.8%. The cumulative vacancy rate was reduced by 0.4 percentage points to 7.5% of target rental income. Due to the increase in value-enhancing investments, real estate expenses of 18.2% of rental income were 2.4 percentage points higher than the previous year. The higher real estate expenses were the main reason for the fall in the net yield to 4.2% (2014: 4.5%).

The sale of three yield-producing properties for CHF 116.0 million resulted in a book gain totalling CHF 21.1 million, which is 23% more than the market values as at 31 December 2014.

The valuation of investment real estate led to an upward revaluation of CHF 15.8 million and was distributed among the categories residential real estate (CHF 32.1 million), commercial real estate (CHF –30.1 million) and investment real estate under construction (CHF 13.8 million). While the valuation of the residential real estate is positively influenced by the persisting pressure on yields, the estimates of the market value of the commercial real estate reflect the rising vacancies and the stagnant to slightly falling rental prices.

With a completed project volume of CHF 612.9 million (2014: CHF 871 million), the Projects & Development division reported income from business activity of CHF 78.8 million. As a result of the 29.6% fall in the completed project volume, fee income, earnings from construction activity and capitalised company-produced assets decreased by CHF 7.3 million to CHF 59.9 million. The sale of development real estate generated a profit before tax of CHF 18.0 million (2014: CHF 34.6 million).

Operating expenses increased by CHF 2.2 million to CHF 69.4 million in the period under review. The previous year’s figure reflected the positive impact of a one-off effect (CHF 4.5 million) arising from the treatment of staff pension provision (IAS 19). Adjusted for the treatment of staff pension provision, operating expenses were reduced by 9%.

Net financial expense (CHF 41.8 million) was impacted not only by a year-on-year decline in capitalised building loan interest of around CHF 1.3 million, but also by negative interest amounting to CHF 5.5 million and an ineffective portion of the change in the market value of interest rate swaps amounting to CHF 51.0 million.

Operating tax expense of CHF 25.9 million represented 19.1% of net profit before tax. Of this amount, CHF 14.9 million was attributable to current taxes and CHF 11.0 million to deferred taxes. CHF 3.6 million in deferred taxes was charged to the income statement from the revaluation of investment real estate.

Consolidated balance sheet and consolidated statement of changes in shareholders’ equity

As at 31 December 2015, the market value of the investment real estate amounted to CHF 3525.2 million (31.12.2014: CHF 3513.6 million). The 0.3% increase in the value of the real estate portfolio was attributable to investments, purchases and sales (CHF –4.2 million) and revaluation (CHF 15.8 million).

Interest-bearing financial assets increased by CHF 0.9 million to CHF 143.4 million. The largest single position consists of tenant fit-outs at the Toni and Dreieck sites which were prefinanced by Allreal and will be amortised by the canton of Zurich over the rental contract periods.

On the balance sheet date, the book value of the development real estate amounted to CHF 295.5 million. In 2015, ownership of development real estate in an amount of CHF 126.3 million was transferred to third parties, CHF 79.6 million of which was from the Guggach project in Zurich. In addition to the development reserves (CHF 71.4 million) and buildings under construction (CHF 171.4 million), completed real estate (CHF 52.7 million) accounts for a substantial proportion of this balance sheet item. However, during the period under review, sales reduced the reported value of completed real estate by a significant CHF 47.3 million.

As at the balance sheet cut-off date, deferred taxes amounted to CHF 121.2 million (31.12.2014: CHF 103.9 million) and other liabilities decreased to CHF 200.9 million (31.12.2014: CHF 268.3 million).

The period under review saw equity increase by CHF 39.9 million to CHF 1994.7 million as at the balance sheet cut-off date (31.12.2014: CHF 1954.0 million). Positive factors included the net profit of CHF 121.9 million, changes in the staff pension fund (CHF 8.9 million) and the upward revaluation of the interest rate swaps (CHF 1.2 million). By contrast, equity was impacted by payments to shareholders (CHF −87.5 million) and the acquisition of treasury shares (CHF –4.4 million).

Consequently, net asset value (NAV after deferred tax) per share rose by CHF 2.80 to CHF 125.35.

Consolidated cash flow statement

A stable business performance led to an increase in operating cash flow before changes in net working capital to CHF 152.3 million (2014: CHF 159.2 million). Taking into account the CHF 53.6 million increase in net working capital, cash flow amounted to CHF 98.7 million, which was used partly to pay net financial expenses due (CHF 38.0 million) and current taxes (CHF 28.7 million). This resulted in a cash flow from operating activities of CHF 33.7 million (2014: CHF 158 million).

Investments in investment real estate under construction (CHF 16.7 million) and yield-producing properties (CHF 73.4 million) were offset by sales of yield-producing properties totalling CHF 115.3 million. Net investment amounted to CHF 2.1 million in financial assets (financing of tenant fit-outs) and CHF 0.4 million in other property, plant and equipment. This resulted in a total cash flow from investment activities of CHF 22.7 million (2014: CHF –198.5 million).

Financing liabilities increased by CHF 26.9 million. Factoring in the payout to shareholders
(CHF –87.5 million) and the increase in treasury shares (CHF –4.4 million) produced a net cash outflow from financing activities of CHF –64.9 million (2014: cash inflow of CHF 46.9 million).

The change in cash in the period under review amounted to CHF –8.5 million (2014: CHF 6.9 million).

Financial situation

Allreal’s investment and financing guidelines and the borrowing level stipulated by the credit agreements with the banks were complied with for the entire period under review. As at 31 December 2015, the consolidated equity ratio amounted to 48.2% (minimum 35%), net gearing 88.0% (maximum 150%), the interest coverage ratio 4.3 (minimum 2.0) and the borrowing level against investment and development real estate 46.5% (maximum 70%).

As at the balance sheet cut-off date, average interest on financial liabilities was 2.15%, with a slightly longer interest lock-in period of 52 months (31.12.2014: 1.93%/50 months). During the period under review, net financial debt increased by CHF 35.8 million to CHF 1754.2 million.

Allreal’s financing strategy is aimed at refinancing more than one third of all financial debt via the capital market. As at the balance sheet cut-off date, there were five bond issues outstanding totalling CHF 645 million, corresponding to 36.3% of all financial liabilities.

Guaranteeing a high degree of financial flexibility, immediately available credit lines amounted to CHF 554 million as at the balance sheet cut-off date. With borrowing capacity at around CHF 1.25 billion, Allreal has a stable financial base.

Annual financial statement of Allreal Holding AG

Net profit decreased year-on-year by CHF 18.6 million to CHF 28.9 million. At CHF 30.0 million dividend income was down by CHF 8.0 million on the previous year and financial income amounted to CHF 20.3 million (2014: CHF 24.0 million). As a result of the first-time application of Switzerland’s new financial reporting legislation, participating interests were subjected to individual valuation, resulting overall in a 9.2 million impairment taken to income. Financial expense stood at CHF 10.2 million (2014: CHF 11.7 million). Other expenses decreased to CHF 2.0 million (2014: CHF 2.8 million).

Total assets increased by around CHF 158.0 million to CHF 2.02 billion owing to higher financial liabilities. In the first half of 2015, a CHF 100 million 1.375% bond issue 2015−2025 and a CHF 120 million 0.75% bond issue 2015–2021 were issued.
 
As at 31 December 2015, equity amounted to CHF 1363.5 million (31.12.2014: CHF 1426.4 million), CHF 232.7 million of which was allocated to reserves from contribution of capital, which may be paid out tax-free to private shareholders.

The CHF 62.9 million decrease in equity is attributable to CHF 28.9 million in net profit for 2015, offset by CHF 87.5 million in reserves paid out in April 2015 and the purchase of treasury shares for around CHF 4.3 million.

Diagramme