Successful 2015 financial year

• Gratifying net profit
• Gainful divestment of yield-producing properties
• Focus on projects with good profit potential
• Proposal for a higher profit distribution of CHF 5.75 per share

Net profit including revaluation effect for the 2015 financial year amounted to CHF 121.9 million, or 16.8% above that of the previous year. The clearly higher rental income and earnings from the sale of yield-producing properties, especially, contributed to the good result.

The investment real estate portfolio as at 31 December 2015 experienced a positive value adjustment of CHF 15.8 million. When excluding the revaluation effect, operating net profit is stated as CHF 109.7 million.

Earnings from rent and administration of properties and the project volume processed by the Projects & Development division resulted in an overall performance of CHF 793.9 million.

As employees leaving the company have not been replaced owing to the lower project volume, the number of full-time positions in the period under review decreased by 10.3% to 312 on the cut-off date.

Allreal share with a cash yield of 4.3%

On 31 December 2015, the Allreal share closed at CHF 133.60, or 2.6% below the comparable price the previous year. The price change experienced in the period under review and the pay-out of CHF 5.50 per share resulted in an overall performance of 1.5%. At the Shareholder Meeting scheduled for 15 April 2016, the Board of Directors will propose a higher distribution of CHF 5.75 per share. The pay-out is tax-free for private investors and corresponds to a cash yield of 4.3% compared to the closing price on 31 December 2015.

Real Estate division with gratifying growth

Compared to the previous year, earnings from the rental of yield-producing properties grew by 9.9% to CHF 174.9 million. This clear increase essentially reflects the fact that in 2015 more yield-producing properties have become income relevant for the first time and across the entire reporting period.

The net yield of 4.2% reported for the 2015 financial year reflects the reduction in the cumulated vacancy rate by 0.4 percentage points to 7.5% when compared to the previous year and a real-estate expense rate of 18.2%.

In the period under review, a fully rented commercial building in Dübendorf joined the portfolio of yield-producing properties. The divestment of two commercial properties and one residential building in 2015 resulted in high earnings before tax of CHF 21.1 million.

When taking into consideration additions and departures, the portfolio of yield-producing real estate on the cut-off date comprised 19 residential and 43 commercial buildings.

Owing to reclassification in the year under review, an office building located on Schiffbauplatz in Zurich-West was added to the portfolio of investment real estate under construction. On the cut-off date the portfolio of investment real estate under construction comprised two buildings.

The valuation by an external estimator of the 64 buildings included in the portfolio of investment real estate resulted in a positive change in value of CHF 15.8 million.

When taking into consideration the changes in the portfolio and the positive value correction, the value of the portfolio amounted to CHF 3.53 billion.

Projects & Development division with good operating performance

Earnings from operations in the Projects & Development division in 2015 of CHF 78.8 million are reported 23.3% below the previous year despite an increase in earnings from third-party projects by CHF 2.7 million. 2014 was characterised by the divestment of a larger development property and a distinctly higher number of own projects.

Despite a lower workforce, operating expenses of CHF 61.1 million for 2015 are shown as CHF 1.4 million above the comparable value the previous year. This is due to an expense of CHF 1.5 million connected with accounting standard IAS 19 (staff pension obligation). In the 2014 financial year, owing to the application of IAS 19, a one-time positive effect of CHF 4.5 million had become effective. This resulted in normalised personnel expenses for 2015 of CHF 6.0 million below those for the previous year.

Earnings before interest and taxes (EBIT) reported for 2015 amounted to CHF 21.6 million.

The projects processed by the Project Development department in the period under review correspond to a potential order volume of CHF 1.0 billion. Currently the largest project is a significant development of a new urban quarter in close proximity to the Bülach railway station comprising 450 rental and condominium apartments and commercial and trade space at an investment volume of over CHF 300 million. Construction start depends on the planning permission process and is expected for the second half of 2016.

In 2015, Allreal‘s restriction to implementing only projects with foreseeable risks and good profit potential and a lower number of own projects resulted in a decline of the completed project volume by 29.6% to CHF 612.9 million, of which 23.8% applied to own projects and 76.2% to third-party projects.

Secured order backlog on the cut-off date amounted to about CHF 815 million, representing full utilisation for a period of clearly more than 12 months.

Sound and well-hedged financing

Compared to 2014, financial debt in the period under review grew by 1.5% to CHF 1.78 billion.

Two debenture loans of CHF 220 million in total were successfully placed in March 2015: CHF 120 million at 0.75% and time to maturity of six years; and CHF 100 Million at 1.375% and time to maturity of ten years. The loans are required to facilitate the financing of current own projects and the acquisition of additional buildings and land.

The introduction of negative interest resulted in higher financial expenses for interest swaps and a climb of the average interest rate for debt to 2.15%. At the same time, compared to the previous year, the average duration of the fixed interest rate grew by two months to 52 months.

As at 31 December 2015, Allreal had at its disposal short-term disposable credit limits of CHF 554 million, representing a debt capacity of some CHF 1.25 billion.

Equity ratio on the cut-off date is reported at 48.2% and net gearing at 88.0%.

Good conditions for the continuation of successful business activity

Thanks to its proven strategy, sound financing, and the measures taken to secure profitability in the long term, the Allreal Group directed by Roger Herzog since 1 May 2015 possesses intact conditions for the continuation of successful business activity.

Based on careful assessment of risks and opportunities, Allreal expects operating net profit for the 2016 financial year to more or less correspond to that of the previous year.

The Board of Directors and Group Management wish to take this opportunity to thank all staff members for their contribution to the sound financial results and our shareholders for their trust and support.