The Management Board

Preface of the Management Board

Ladies and Gentlemen,

Fiscal 2018 was another year marked by fundamental changes in society and the economy, with digitalisation, innovation, start-ups and a working world in flux featuring prominently. For years now, Aareon has been driving digitalisation in the housing industry with the aim of helping its customers achieve their corporate goals through process optimisation, more services and new business models. This transformation can generate greater benefit for those involved – whether property companies, tenants or property owners. We gained a head start in this process by creating Aareon Smart World, our digital ecosystem, and gearing our range of products and services to the future on the basis of our ERP solutions. In doing so, we have set a new benchmark for digital connectivity in the property industry and related sectors.

Innovation – investments in the future

Our partnerships in R&D form the solid foundation underpinning our portfolio of digital solutions. In view of its crucial importance, we invested a total € 34.9 million in R&D in the reporting period (previous year: € 30.9 million). Key success factors in our R&D activities are the innovative, user-centric approach we take when collaborating with our customers – e.g. in pilot projects, design thinking workshops and innovation partnerships – and the way our experts at different international locations share and pool their knowledge. In our InnovationLabs, we test new technologies – such as traffic-safety drones, chatbots for communication with tenants, virtual reality applications or voice-controlled intelligent personal assistants like Alexa. The focus is on assessing the potential benefits and technical integratability of such innovations.

In order to analyse more closely how property companies innovate, and to gain important insights for our R&D activities, we commissioned forsa, a market research and opinion-polling company, to perform a survey of customers in Germany, France, the UK, the Netherlands and Sweden in autumn 2018. One thing the survey underscored was the importance of enhancing tenant satisfaction by means of customer portals and apps. Another finding was the high popularity of building information modelling and data analyses, e.g. for predictive maintenance.

The start-up scene – close contacts provide valuable impetus

The market for providers of digital solutions has changed. Now, large numbers of prop-techs offer individual solutions. The new economy is providing impetus of a novel kind, and Aareon enjoys close contacts with this scene. As a strategic partner of blackprint PropTech Booster, which supports promising start-ups in the property industry, we are in constant dialogue with prop-techs. It is an ideal environment in which both start-ups and established enterprises can profit from one another. We are also collaborating with prop-techs across the entire Aareon Group so as to enhance the utility of our Aareon Smart World ecosystem. These partnerships can include pilot projects that embrace a user-oriented process of experience, learning and development from which all those taking part can benefit. Aareon established a new structure in 2018 to test out its own business ideas in the market: Ampolon Ventures, the brand of AV Management GmbH. An integral part of the prop-tech scene, it aims to set up new joint ventures and forge partnerships with ambitious company founders.

ERP solutions – the core of Aareon Smart World

Country-specific ERP systems form the linchpin of Aareon Smart World, where they are linked to digital solutions, and we are investing in their ongoing development. In the reporting period, the focus was on products like RELion (Germany, Austria) and its integration in Aareon Smart World, new releases of Wodis Sigma (Germany), PortalImmo and Prem’Habitat (France), and on enhancing the Xpand solution in Sweden. In the Netherlands, we invested in adapting Tobias AX to run on the latest Microsoft® release (365). Our ERP product in the UK is being expanded to include web browser functions (QL.web). With more than 1,000 customers, Wodis Sigma has consolidated its standing as the industry benchmark in Germany. We continued to expand our customer base for SAP® solutions/Blue Eagle and implemented our first SAP® S/4HANA projects.

With one eye on the commercial property market, Aareon Nederland B.V. acquired all the shares in Kalshoven Automation B.V., Amsterdam, in 2017. The company markets REMS, an ERP solution. In Germany, we strengthened our presence in this market segment in 2017 by acquiring the sales companies mse Augsburg GmbH (Augsburg) and mse Immobiliensoftware GmbH (Hamburg) and the development company mse RELion GmbH (Augsburg), all three of which offer the RELion ERP solution. At the same time, we gained a foothold in the Austrian market. In 2018, we completed the integration of these new companies – and their ERP solutions – into the Aareon Group.

Aareon Smart World – robust demand for digital solutions

Business volumes for digital solutions continued to grow strongly. In particular, the company pursued the coordinated development of Aareon CRM at different locations in Germany and abroad, with the goal of simplifying the management of relationships with tenants and property owners. Marketing of the Aareon CRM app in Germany has been a success. We also offered our clients workshops focusing on external marketing (i.e. to tenants and property owners) because the more people that use the app, the greater the value added for housing companies.

Energy suppliers are important partners of the property industry. In Germany, Aareon provides solutions that optimise processes for both sides, offering its clients in the energy supply industry a comprehensive portfolio of services. Several customers have already opted for Aareon’s new Vacancy Management solution, which links up housing companies, energy suppliers and heat metering services.

The EU’s General Data Protection Regulation – requirements met ahead of schedule

In the digital age, data protection and security are more relevant than ever. After all, data – and the information it contains – has virtually replaced oil as the driver of the economy. Aareon places great emphasis on ensuring the highest levels of data protection and security at its Data Centre, home to the Aareon Cloud. That is why we implemented the requirements of the EU’s General Data Protection Regulation well before the transition date of 25 May 2018. A certificate issued in 2017 by TÜV Rheinland i-sec GmbH, a tech­nical inspection agency, verified that, especially in the area of order processing, Aareon has effectively put in place technical and organisational measures aimed at protecting personal data and data that could be related to individuals.

Renewed growth in revenues and EBIT

In fiscal 2018, EBIT was 5.9 % higher at € 35.9 million (2017: € 33.9 million). We grew Aareon Group revenues by 6.9 % to € 236.6 million (previous year: € 221.3 million). The main factors in this growth were substantial revenue increases and efficiency gains, especially in Germany, France and the UK, and the acquisitions made during the prior year (sales companies of mse and Kalshoven Automation). The International Business segment accounted for 37.1 % of consolidated revenues (previous year: 36.3 %). Demand for digital solutions rose across the Group.

New working world – digitalisation only possible with people

In 2018, the work4future project initiated the previous year focused on preparations for a digital collaboration tool, slated for launch in 2019. The goal goes beyond finding a technical communication solution; it is all about collaboration, networking, transparency, sharing ideas and, above all, achieving a cultural transformation across the entire company. work4future supports this digital transformation process – because we cannot make the most of the opportunities offered by digitalisation without our employees’ support. We reviewed the flexibility or our working-time models in the light of our employees’ requirements and, in 2018, signed a new company-wide agreement on off-site working options.

Outlook for 2019 – investing in the future

We will continue investing in our customers’ digital future and work to ensure the ERP solutions offered by the Aareon Group are future-proof. We intend to expand our range of digital solutions, making use of the latest technological options where appropriate. We will continue our partnerships with prop-techs and company founders: Ampolon Ventures launched its first joint venture in Q1 2019. Fine-tuning of our Group structure will continue, not only to further strengthen the Aareon Group’s market orientation, but also to do justice to the specific conditions for growth in ERP and digital solutions.

Our aim in Germany is to enhance our position in the market by building on the successes our digital Change Management solution – and the rest of our product portfolio – have enjoyed with the energy supply industry. We want to concentrate our commercial property market expertise more effectively within the Aareon Group, leveraging it to strengthen our market position.

To achieve our goals, we are relying on close cooperation with our customers, business partners, employees and our shareholder, the Aareal Bank Group. Only with a shared, customer-centric mindset can we create solutions that add value for all concerned. We expressly thank our customers and all those involved for the inspiration they have given us. By our own understanding, we are our customers’ partner for digitalisation, providing them with enduring and holistic support throughout the transformation process. We want to continue pursuing this goal with you in 2019.

Kind regards,

Dr. Manfred Alflen

Sabine Fischer

Dr. André Rasquin

Christian M. Schmahl

Management Board

Dr. Manfred Alflen
Chairman of the Management Board
International Business Development; Human Resources & Organisation; Legal, Risk Management & Compliance; Data Protection & Data Security; Internal Audit; Corporate Marketing & Communications; Board Office; International Business; Strategy (2nd from left)

Sabine Fischer
Chief Operating Officer
ERP Systems and Digital Systems of Aareon Smart World; Aareon IT Service Centre and IT Outsourcing Services; Support and Consulting Services; phi-Consulting; IT Solutions for Energy Suppliers (3rd from left)

Dr. André Rasquin
Chief Sales Officer
Central Sales; Regional Sales; Solution Sales & Sales Management; Advisory Board work; Strategic Product Marketing; BauSecura product; mse Corporate Group (RELion product) (1st from left)

Christian M. Schmahl
Chief Financial Officer
International Finance; Controlling; Accounting; Contract & Receivables Management; Central Purchasing; Facility & Fleet Management (4th from left)