Ina Invest Holding Ltd (the Company) is a Swiss company domiciled at Thurgauerstrasse 101A, Glattpark (Opfikon), Switzerland. The Company’s consolidated interim financial statements cover the Company and its subsidiaries (referred to collectively as “the Group” or “Ina Invest”). The individual companies are to be considered group companies.

The Group’s business activities comprise developing and building of real estate and construction projects of all kinds, planning and completion of new buildings and conversions of real estate held by Ina Invest, as well as holding, managing, renting, and brokering of real estate.

The consolidated interim financial statements were prepared in accordance with Swiss GAAP FER 31 “Complementary recommendations for listed companies” and provide a true and fair view of the Group’s assets, financial situation and earnings. It shall be read in conjunction with the consolidated annual financial statements as of 31 December 2021, as it represents an update of this and compared to an annual financial statement, allows for abbreviations in presentation and disclosures. The accounting principles applied in these interim financial statements correspond to those applied in the consolidated annual financial statements as of 31 December 2021. The consolidated interim financial statements comply with the provisions of Swiss law. The Group discloses the additional information required for real estate companies by the Swiss stock exchange (SIX Swiss Exchange) (Article 17 of the Directive on Financial Reporting of SIX Swiss Exchange).

The consolidated interim financial statements have been prepared under the assumption of going concern for the Group’s business. Valuations in the consolidated interim financial statements are based on historical acquisition or production costs, unless a standard prescribes another valuation basis for an item in the financial statements, or another value was used based on an accounting policy choice. This is the case for the investment properties presented in note 2.2, which were measured at fair value.

The consolidated interim financial statements are presented in Swiss francs (CHF), the Company’s functional currency. Unless otherwise stated, all financial information is presented in Swiss francs, rounded to the nearest thousand.

The consolidated interim financial statements are based on the stand-alone financial statements prepared in accordance with consistent principles as at 30 June 2022 by all group companies in which the Company directly or indirectly held more than 50% of voting rights or which it controls in another way.

In addition to the Company, the subsidiaries included in the scope of consolidation are:

All companies in the scope of consolidation operate in the real estate sector.

Implenia Ltd holds 42.5% of the remaining voting rights and shares in Ina Invest Ltd (31 December 2021: 42.5%). The minority interests in Ina Invest Development Ltd are distributed among various third-party investors, of whom none can exercise any significant influence.

Subsidiaries are included in the consolidated financial statements from the date on which control is assumed and excluded from the date on which control is relinquished. These dates do not necessarily coincide with the acquisition or disposal date. Capital consolidation is performed according to the purchase method. This involves the group companies’ equity being offset against the carrying amount of the parent company’s investment at the time when it is purchased or, if appropriate, at the date of incorporation. Assets and liabilities of the group company are measured at fair value as at this date in accordance with principles that are consistent throughout the Group. The difference between the acquisition cost and the remeasured net assets is reported as goodwill or negative goodwill (“badwill”), which is offset against equity. Transaction costs are recognised as part of the acquisition cost.

Using the full consolidation method, the assets and liabilities of the consolidated companies were recognised in full in the consolidated interim financial statements. Intragroup assets and liabilities are eliminated, as are intragroup income and expenses.

 

As of 21 January 2022, 100% of the shares in CERES Group Holding Ltd were acquired by the indirectly controlled group company Ina Invest Development AG. The core of the CERES Group Holding Ltd real estate portfolio is the Buss site at Pratteln railway station with the development project “Bredella”. With a surface area of 82,600 m² and a viable floor space of 172,500 m², the site is to be transformed into a lively central district with 70% residential space (more than 1,000 apartments) and 30% commercial space in the next 20 years.

Prior to the acquisition, Ina Invest Development Ltd performed a capital increase, in which external investors were involved in addition to Ina Invest Ltd. Part of the purchase price was settled with shares of the Company. For this purpose, an authorized capital increase was performed. For further information please refer to note 3.2.

The acquired net assets of CERES Group Holding Ltd and its subsidiaries Buss Immobilien und Services Ltd and Bredella Ltd (hereinafter referred to as “CERES Group”), measured at fair value, comprise of:

1.4 Seasonality

The current reporting period was not influenced by seasonality. The income for the period consists mainly of the result from the change in fair value of the investment properties, income from the rental of investment properties and income from the sale of promotional properties, which are not subject to any significant seasonal fluctuations. The financial income for the reporting period includes a positive one-off effect from the unwinding of interest rate swaps. For further information please refer to note 3.4.

 

Promotional properties include projects involving condominium apartments intended for sale at a later date.

The change in the carrying amount of the projects under development was in particular affected by the transfer of the project Lokstadt Rocket in Winterthur to the balance sheet item investment properties. For further information please refer to note 2.2. The decrease in the carrying amount of the projects under construction is mainly attributable to the sale of 8 condominiums apartments of the project Ernst-Jung-Gasse 18 (Lokstadt Tender) in Winterthur.

The plots of land on which the projects are being built are completely owned by Ina Invest at the beginning of a project. Ina Invest develops the plots of land until it receives a building permit for them and then makes them ready to be built on. Construction begins as soon as most of the condominium apartments have been reserved. A general contractor executes the constructions. The two projects, Ernst-Jung-Gasse 18 (Lokstadt Tender) in Winterthur and Auf der Höhe 12-18 (Am Schwinbach) in Arlesheim, have Implenia Group acting as general contractor. In terms of risks and rewards, a distinction is made between sold and unsold projects under construction as well as completed projects in sale:

• Projects under construction: During the construction phase, Ina Invest, as the owner of the plots of land, bears the material risks and rewards from the development and implementation until the units are sold to an end customer. Accordingly, acquisition cost for the plot of land and part of the development costs attributable to the unsold units are recognised in promotional properties. When units are sold, Ina Invest transfers the relevant portion of the fully developed land to the buyer, who concludes or has already concluded an agreement with a general contractor to build the unit. Ina Invest no longer bears any risks or rewards for these units after their sale, which is why the acquisition cost for the plot of land and development cost for this unit is de-recognised at the time of the transaction and no further development costs are recognised.

• Projects in sale: For units not sold, the cost of work performed by the general contractor is transferred to Ina Invest after construction is completed. Ina Invest is obliged to accept the work provided during the construction phase. Ina Invest sells units not yet sold by the end of the construction as turnkey units to the end customers. Ina Invest bears the material risks and rewards concerning the condominium apartments between the end of construction until the sale, therefore acting as seller of the portion of the plot of land and the respective development cost share.

The following table presents the change in the number of the projects’ condominium apartments included in the promotional properties.

 

¹ In the reporting period, it was decided to develop the project Lokstadt Rocket in Winterthur entirely as an investment property. Therefore, acquisition costs were reclassified to the balance sheet item investment properties. For further information please refer to note 2.2.

Investment properties comprise plots of land and properties that are expected to be held and managed over a longer period of time. This item includes properties under development, properties under construction and portfolio properties held for rent.

 

The additions through changes in the consolidation scope result from the acquisition of CERES Group. For further information please refer to note 1.3.

The contractual agreements with Implenia Group as a partner for the development of investment properties include a performance-based development fee for the services rendered. This contractual arrangement applies to all investment properties in the portfolio as at the balance sheet date. The performance-based development fee corresponds to 20% of the project result between the market values and the investment acquisition costs before settlement of the performance-based development fee. For Ina Invest, this contractual mechanism can lead to an increase or also a reduction of the development costs recognised on the basis of other contractual elements. Generally, the performance-based development fee is settled after completion of the development project. Thereafter, the development partner Implenia Group has no further share of a potential increase or reduction in the value of the investment property. The performance-based development fee recognised as at the balance sheet date resulted in non-current receivables from and non-current liabilities to the developer. Without the contractually agreed performance-based development fee, the gains from change in fair value would amount to CHF 20,093 thousand (30 June 2021: CHF 8,379 thousand) and the losses from change in fair value to CHF 6,738 thousand (30 June 2021: CHF 3,655 thousand). The net result from change in fair value would be CHF 2,671 thousand higher than presented in the income statement as at the balance sheet date (30 June 2021: CHF 961 thousand higher).

In the reporting period, the additions of CHF 80,212 thousand and the payment of liabilities for development services assumed as part of the acquisition of the CERES Group resulted in a cash outflow of CHF 86,581 thousand for investments in investment properties.

Valuation methods

Property valuations are carried out by Wüest Partner Ltd, Zurich, an external, independent, and qualified valuation expert. The properties are valued in accordance with the discounted cash flow method (DCF method), whereby the fair value of a property is determined by the sum of the entire estimated future net income discounted to the present value. The net income (EBITDA) for each property is discounted individually taking into account property-specific risks and rewards, as well as market conditions and risks. For properties under development or under construction, the value of the project is determined in three steps:

• Valuation of the property at the time of its completion, taking into account the current occupancy rate, market and cost estimates as at the cut-off date;

• Determination of the market value as at balance sheet date, in light of the forecasted future investments;

• Estimation of the risk, taking into account the separate cash flow of a cost item.

The discounting rates, market rents and vacancy rates have been identified as material non-observable input factors. The values used are summarised below.

Non-observable input factors used as at 30 June 2022

Non-observable input factors used as at 31 December 2021

Beyond that, uncertainties regarding future investments remain.

Additions/transfers in the reporting period

The following additions from acquisitions, changes in use as well as transfers between categories took place during the reporting period:

Encumbered investment properties

As at 30 June 2022, 8 collaterals for mortgage notes on investment property used for project financing were issued (31 December 2021: 5 collaterals).

The recognised fair value of these properties amounts to CHF 680,614 thousand as at 30 June 2022 (31 December 2021: CHF 196,190 thousand). For further information refer to note 3.1.

 

The two real estate portfolios, for which the Board of Directors and the Executive Board are provided separate reports for the purposes of corporate management, are regarded as segments of the Group.

Ina Invest Ltd

This segment comprises of the real estate portfolio of the group company Ina Invest Ltd, including promotional and investment properties in the areas of Zürich/Winterthur, central, north-western, and western Switzerland.

Ina Invest Development Ltd

This segment comprises of the real estate portfolio and service business of CERES Group, which was acquired by the group company Ina Invest Development Ltd in the current reporting period. The real estate portfolio essentially consists of the Buss site at Pratteln train station with the “Bredella” development project. For further information on the acquisition of CERES Group refer to note 1.3.

Various

The segment includes income and expenses that cannot be allocated to any segment. This segment essentially relates to the activities of the group management.

Until the acquisition of CERES Group, the Group’s real estate portfolio was managed as a single segment by the Board of Directors and the Executive Board. In accordance with Swiss GAAP FER 31, the Group thus had a single segment until the acquisition of CERES Group on 21 January 2022. For this reason, no segment information is disclosed for comparative period.

Maturity of long-term rental agreements

This maturity schedule shows the terms of commercial rental agreements (e.g. for hotels, commercial and industrial uses). Rental income from residential properties is not included as these agreements may be terminated on a short-term notice.

Loss of rent from vacancies

Rental losses due to vacancies in portfolio properties amounted to CHF 820 thousand during the reporting period (30 June 2021: CHF 74 thousand), which corresponds to a vacancy rate (comparing vacancies to target rental income) of 12.7% (30 June 2021: 5.0%).

 

 

Share capital

The share capital of the parent company Ina Invest Holding Ltd as of 30 June 2022 amounts to CHF 292,596 (31 December 2021: 265,997) and consists of 9,753,216 registered shares with a nominal value of CHF 0.03 each (31 December 2021: 8,866,560 registered shares with a nominal value of CHF 0.03). A capital increase from authorized capital was carried out on 19 January 2022, in course of which 886,656 shares with a nominal value of CHF 0.03 each were issued.

Shareholders are entitled to receive declared dividends and one vote per share at the Group’s general meeting.

Capital reserves and minority interests in equity

The capital reserves correspond to the difference between the cash and non-cash shareholders’ contributions, measured in accordance with Swiss GAAP FER and the nominal values of the shares received associated with the respective contribution steps. Furthermore, in accordance with Swiss GAAP FER, share-based payments, capital increase costs and the effects of transactions with treasury shares are recognised in the capital reserves. Due to different measurement principles, the capital reserves presented in the consolidated balance sheet are not identical to the capital reserves presented in the Company’s individual financial statements.

The effect of the capital increase of 19 January 2022 on the Company’s equity is presented below:

The capital contributions did not fully match the new shareholding ratios, which resulted in a re-allocation.

3.3 Net Asset Value (NAV) / earnings per share

 

Earnings per share are calculated as follows:

In the current reporting period, the Company’s share capital has been increased. For information on the capital increase, please refer to note 3.2.

3.4 Financial result

The Board of Directors approved the consolidated interim financial statements on 16 August 2022.

Ina Invest is not aware of any events after the balance sheet date that have a material impact on the consolidated interim financial statements.