NOTES to the consolidated financial statements
Significant accounting and valuation policies
Investis Holding SA (“the Company”) is based in Zurich, Switzerland. Its shares (IREN) have been traded on the SIX Swiss Exchange since 30 June 2016. The unaudited consolidated financial statements as at 30 June 2019 include Investis Holding SA and all its direct or indirect subsidiaries and joint ventures (Investis Group), as well as its shareholdings in associated companies.
The business activities of the Investis Group include the long-term holding of residential and commercial properties, as well as the provision of comprehensive real estate services in the areas of property management and facility services.
Consolidation and accounting Principles
The unaudited interim consolidated financial statements of Investis Holding SA have been prepared in accordance with Swiss GAAP FER 31 “Complementary recommendation for listed companies” and the special provisions for real estate companies set out in Art. 17 of the SIX Swiss Exchange’s Directive on Financial Reporting. They give a true and fair view of the assets, liabilities and earnings of Investis Holding SA.
The consolidation and accounting policies applied to the present consolidated financial statements are unchanged from those applied to the 2018 consolidated financial statements.
These interim financial statements do not contain all the information and disclosures required for annual financial reporting and should therefore be read in conjunction with the consolidated financial statements as at 31 December 2018.
Real estate valuation method
The properties held for investment purposes were valued on the basis of the fair value assessments (update valuations) performed by a recognised independent real estate expert (CBRE Geneva SA) as at 30 June 2019 using the discounted cash flow (DCF) method. CBRE (Geneva) SA has succeeded Wüest Partner AG, which held this function for six years and performed valuations until 31 December 2018. The valuation method applied for the half-year financial statements for 2019 is unchanged from the previous year.
1. Acquisitions and disposals of consolidated companies
Transactions in 1st half 2019
On 1 January 2019, Régie du Rhône SA acquired and integrated the property management portfolio of DHR Immobilier SA.
On 28 February 2019, 100% of the shares in Régie du Rhône Crans-Montana SA, Lens, were sold.
On 25 March 2019, half of the investment in La Foncière de la Dixence SA, Lens, was sold. The remaining 42% stake in the company is recognised as an investment in associates.
On 27 June 2019, 100% of the shares in Valotel SA, Lens, were sold. In 2018, another Group company issued a bank guarantee until 31 March 2021 of CHF 13.7 million for a Valotel SA construction project in St. Gallen. Following the sale of Valotel SA, this bank guarantee was not replaced by the buyer and remains as a contingent liability of the Group.
In the 1st half 2019, net assets acquired in an acquisition in 2018 had to be adjusted. The recognition of a newly identified liability of CHF 0.07 million reduced the net asset value of the acquired company and consequently led to an increase in goodwill off-set against retained earnings of CHF 0.04 million and a reduction in non-controlling interests of CHF 0.03 million.
Transactions in 1st half 2018
On 1 February 2018, Investis Properties SA acquired 100% of the shares in the real estate company Société d’investissements immobiliers SII SA, Geneva. The company was then merged with Investis Properties SA.
On 1 February 2018, 100% of the shares in Domus Flavia Investments AG, Geneva, were sold.
NON-CASH EFFECTS IN 1ST HALF 2018
Following the signing of the purchase price agreement for the acquisition of Société d’investissements immobiliers SII SA, Geneva, a deposit of CHF 10.8 million was paid in December 2017. As the transaction was completed only in February 2018, the corresponding cash outflow was reported as an increase in other receivables in net cash from operating activities (cash flow) in the Annual Financial Statements 2017.
Following the signing of the purchase price agreement for the sale of Domus Flavia Investment AG, Geneva, a deposit of CHF 1.5 million was received in December 2017. As the transaction was completed only in February 2018, the corresponding cash inflow was reported as an increase in other payables in net cash from operating activities (cash flow) in the Annual Financial Statements 2017.
GROUP INTERNAL MERGERS IN 1ST HALF 2018
As at 1 January 2018, the following Group companies were merged:
- –Casamar AG, Geneva, Jalu SA, Lens, Investis Patrimoine SA, Lens, Les Résidences Privées SA, Lens, Parallax SA, Geneva, Serge Spaggiari SA, Perly-Certoux, Transimo SA, Fribourg, and WEGRA Holding AG, Auenstein, were merged with Investis Properties SA, Lens.
- –Hauswartprofis Baar GmbH, Baar, Hauswartprofis Mägenwil AG, Mägenwil, Hauswartprofis ZH AG, Dübendorf, and Treos AG, Volketswil, were merged with hauswartprofis AG, Mägenwil.
- –Minas-Tirith SA, Wollerau, was merged with Investis Investments SA, Lens.
2. Segment reporting
Segment Information 1st half 2019
SEGMENT INFORMATION 1ST HALF 2018
3. Revenue from letting of properties
Duration of existing fixed leases of commercial properties
The duration of existing fixed leases of commercial properties was:
Most important tenants
The five most important tenants measured according to property income were (in alphabetical order):
- –As at 30.06.2019: Clamac SA, Duca SA, Globe Plan & Cie SA, Hospice Général, Permanent Mission of India to the UN in Geneva
- –As at 31.12.2018: Hospice Général, Permanent Mission of India to the UN in Geneva,
Valotel Management (Fribourg) Sàrl, Valotel Management (Rothrist) AG and Valotel
Management (Sion) SA
5. Financial result
In the 1st half 2019, the stake in Polytech Ventures Holding SA was reduced from 50% to 33%, resulting in income from disposal of associates of CHF 3.8 million.
Income from disposal of subsidiary consists of the gain on the sale of the property management company Régie du Rhône Crans-Montana SA. The gain on the sale of the real estate companies La Foncière de la Dixence SA (42% stake) and Valotel SA (100%) is included in income from disposal of properties.
In the 1st half 2019, other financial expenses include CHF 0.4 million (1st half 2018: CHF 0.4 million) for the issuance of bonds.
6. Income taxes
Due to the release of deferred tax liabilities, total income taxes resulted in an income in the 1st half 2019.
In the 1st half 2019, deferred taxes in the amount of CHF 61.4 million were reversed after the Canton of Geneva voted on 19 May 2019 that the corporate tax reform should be implemented at cantonal level at the beginning of 2020.
7. Earnings per share and net asset value
Earnings per share are calculated by dividing net profit attributable to Investis Holding SA shareholders by the weighted average number of shares entitled to dividends. For both periods under review, there were no dilutive effects.
Weighted average number of shares
Earnings per share
Net asset value per share
Net asset value per share excluding deferred taxes with regard to properties
8. Properties held for sale
In the 1st half 2019, the consolidated Group company La Foncière de la Dixence SA was deconsolidated, together with the project “Hérémence”. Moreover, several apartments of “Route de Vermala 43/45” in Crans-Montana, “Route de Crans 89” in Lens and “Gstaadstrasse 6/8” in Saanen were sold. The increases relate to the acquisition of “Avenue Neuve 22” in Ardon and to ongoing construction activities at the properties “Gstaadstrasse 6/8” in Saanen, “Route de la Forêt Derrière” in Hérémence, “Chemin des Chantres 8” in St.-Sulpice and “Route de Crans 89” in Lens. The properties “Vermala 43/45” in Crans-Montana and “Route de Crans 87” in Lens were reclassified from residential properties (non-current assets, valued at fair value) and subsequently valued at the lower of this value (including construction costs after reclassification) or fair value.
In the 1st half 2018, the two properties “Rue de Zurich 35” in Geneva and “Rue du Vieux-Chêne 20/22” in Chêne-Bougeries were acquired in connection with the takeover of Société d’investissements immobiliers SII SA. The increases relate to ongoing construction activities at the properties “Gstaadstrasse 6/8” in Saanen, “Route de la Forêt Derrière” in Hérémence and “Chemin des Chantres 8” in St.-Sulpice. The property “Rue du Vieux-Chêne 20/22” and one apartment in the jointly (50%) held property “Rue du Prado 19” in Lens were sold. The property “Chemin des Chantres 8” was reclassified from investment properties under construction (non-current assets, valued at fair value) and subsequently valued at the lower of this value (including construction costs after reclassification) or fair value.
9. Investment properties
Increases consisted of value-enhancing renovations, purchases of buildings and investments.
In the 1st half 2019, the four residential properties “Chemin de la Rochette 4” in Montpreveyres, “Avenue de Bussy 22/24” in Moudon, “Chemin de Valentines 25” in Bex, “Rue Juste Olivier 13” in Nyon, one part of the commercial property “Grand Place 12/14” in Lens and the undeveloped plot of land “Route de Vermala” in Crans-Montana were sold. Moreover, the consolidated Group company “Valotel SA” was disposed of, together with three commercial properties “Grand-Places 14” in Fribourg, “Avenue du Grand-Champsec 21” in Sion, “Helblingstrasse 9” in Rothrist and two properties under construction “Heiligkreuzstrasse” in St. Gallen and “Allée de la petite Prairie” in Nyon. The residential properties “Route de Vermala 43/45” in Crans-Montana and “Route de Crans 87” in Lens were reclassified as properties held for sale.
In the 1st half 2018, the residential property “Route de Pliany 16/18” in Crans-Montana and the commercial property “Chemin Lambien” in Sion were sold. Additionally, the consolidated Group company “Domus Flavia Investments AG” was disposed of, together with the commercial property “Rue Peillonnex 39” in Chêne-Bourg.
The valuation of investment properties as at 30 June 2019 was carried out by CBRE (Geneva) SA in accordance with national and international standards and guidelines (valuations were performed by Wüest Partner AG until 31.12.2018).
10. Financial liabilities
Fixed advances, mortgages and bonds due for repayment within the next twelve months are reported under current financial liabilities. Current fixed advances are unsecured and are due within 30 days.
In the 1st half 2019, a CHF 140 million bond maturing on 15 February 2021 was issued on 14 February 2019. The coupon is 0.773%. The proceeds were used to refinance the CHF 140 million bond that expired on 14 February 2019.
In the 1st half 2018, a CHF 100 million bond maturing on 12 June 2020, with a coupon of 0.35%, was issued on 12 June 2018.
As at the balance sheet date, the following bonds are outstanding:
As at 30 June 2019, properties in the amount of CHF 7.4 million (31.12.2018: CHF 233.7 million) were pledged to secure mortgages. Credit lines totalled CHF 114 million (31.12.2018: CHF 205 million), of which CHF 58 million was unused as at 30 June 2019 (31.12.2018: CHF 171 million).
As at the balance sheet date, amounts falling due are as follows:
Interest maturity periods are as follows (composition until next interest rate adjustment):
The weighted average interest rate for interest-bearing financial debt amounted to 0.6% (1st half 2018: 0.5%).
11. Events after the balance sheet date
On 8 August 2019, 100% of the shares in Régie du Rhône SA, Lancy were sold. In 2018, this subsidiary generated revenue of CHF 20 million with 155 employees. At the same time Investis acquired a portfolio of six residential properties in Geneva for CHF 62 million. These have an annualised full occupancy property rent of CHF 2.89 million.
The Board of Directors approved the consolidated financial statements for publication on 27 August 2019.
No other events occurred between 30 June 2019 and the date of approval of the consolidated financial statements that would require adjustments to the carrying amounts of the Group’s assets and liabilities as at 30 June 2019 or disclosure in this section.