Outlook

Thanks, especially, to the synergies resulting from the combination of the stable-income real estate portfolio with the activity of a general contractor, Allreal enjoys convincing preconditions for continued success in its business activity.

As a result of the very low vacancy rate, the very low number of rental agreements up for renewal and stable real-estate expenses, Allreal expects development of the Real Estate division to remain stable at a high level. This is of significance to shareholders, especially, as the level of profit distribution depends on the division’s operating net income. Projects resulting from own development and realisation as well as selective acquisitions continue to allow for an expansion of the portfolio by means of real estate profitable in the long term. The properties on Hardstrasse 301 and the Grünhof site real estate will be transferred to the portfolio of yield-producing properties in 2020. From 2021, these properties will generate a target rental income of CHF 6.6 million in total.

The declining order situation – albeit at a high level – increases pressure on margins obtained from construction services. This affects the entire industry, although to different degrees. The connected risks cannot be fully offset. However, the Projects & Development division is well positioned in the market, and it can therefore continue implementing profitable projects thanks to own development and calculation and to the experienced Realisation department which is specialised in the implementation of demanding new construction, renovation and conversion projects. The completed project volume will grow compared to the previous year as the order backlog increased to about CHF 820 million.

Allreal will change its method of preparing financial statements from IFRS to Swiss GAAP FER starting with the 2020 financial year. This helps the company simplify its financial reporting while maintaining the high level of transparency and significance. The step reduces the complexity of reporting. Owing to the changeover in its accounting methods, Allreal expects financial expenses in 2020 to decrease considerably.

Allreal estimates the continued business performance to be positive based on its proven and clearly defined business model, its financial prowess and the expected development in both divisions. For the 2020 financial year, Allreal expects to report operating net profit below the record level seen in the year under review owing to lower earnings resulting from the sales of development real estate in the Projects & Development division, but higher than in the 2018 financial year.