VALARTIS GROUP AG HALF-YEAR REPORT
2020
KEY FIGURES
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Total operating income | 5,035 | 4,441 | ||
Income from management services | 2,804 | 2,309 | ||
Income from investment property | 1,949 | 1,906 | ||
Share of results of associated companies | 148 | -157 | ||
Other income | 134 | 383 | ||
Administrative expense | -5,027 | -5,404 | ||
Personnel expense | -2,956 | -2,746 | ||
General expense | -2,071 | -2,658 | ||
Earnings before depreciation, valuation adjustments, provisions, interest and taxes | 8 | -963 | ||
Depreciation, valuation adjustments and provisions | -740 | 419 | ||
Earnings before interest and taxes (EBIT) | -732 | -544 | ||
Finance result, net (financial income, financial expense, market value adjustment) | -5,289 | 3,965 | ||
Net result from continued operations before taxes | -6,021 | 3,421 | ||
Income taxes | -12 | -86 | ||
Net result from continued operations | -6,033 | 3,335 | ||
Net result from discontinued operations | -43 | -49 | ||
Net result | -6,076 | 3,286 | ||
attributable to shareholders of Valartis Group AG | -4,286 | 2,172 | ||
attributable to non-controlling interests | -1,790 | 1,114 | ||
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Total assets | 156,164 | 168,570 | ||
Current assets | 56,491 | 60,319 | ||
Non-current assets | 97,775 | 106,310 | ||
Non-current assets classified as held for sale | 1,898 | 1,941 | ||
Total liabilities | 43,577 | 44,879 | ||
Current liabilities | 25,999 | 26,637 | ||
Non-current liabilities | 17,578 | 18,242 | ||
Total shareholdersʼ equity (including non-controlling interests) | 112,587 | 123,691 | ||
Equity capital quota, in per cent | 72.1 | 73.4 | ||
Staff (full-time equivalents, FTE) | 68.5 | 65.5 | ||
Closing price of VLRT share, in CHF | 8.90 | 10.20 | ||
Equity of Shareholders per share, in CHF | 25.37 | 27.52 | ||
CONTENTS
5 | Management Report |
7 | Valartis Group |
CONSOLIDATED FINANCIAL STATEMENTS
- Consolidated Income Statement
- Consolidated Statement of Comprehensive Income
- Consolidated Statement of Financial Position
14 | Consolidated Statement of Changes in Equity |
16 | Consolidated Cash Flow Statement |
NOTES
20 | Notes to the Consolidated Financial Statements |
22 | Notes to the Consolidated Income Statement |
25 | Notes to the Consolidated Statement of Financial Position |
34 | Additional Information |
36 | Events after the balance sheet date |
38 | Addresses and imprint |
Legal notice
This interim report is for information purposes only. Due to their nature, statements about future developments involve general and specific risks and uncertainties. In this context, it should be noted that forecasts, projections and results described or implied in forward-looking statements are not accurate.
Notes on the figures
The amounts shown in the figures are rounded. The total may therefore differ from the sum of the individual values.
This half-year report is also published in German, whereby the English version is binding. The half-year report 2020 is available online and in a pdf version (https://www.valartisgroup.ch/en/#geschaeftsberichte).
MANAGEMENT REPORT
BUSINESS PERFORMANCE AND
ECONOMIC SITUATION OF VALARTIS
Valartis Group reported a half-year net loss of CHF 6.1 million primarily attributable to adverse market conditions in the context of the COVID-19 pandemic. Lower crude oil prices leading to a lower ruble against Swiss Franc. Operating income increased by 13 per cent and operating expenses lower by 7 per cent despite an increase of activity and the number of employees. As of 30 June 2020, Valartis Group employed a total of 68.5 full-time equivalent employees in operations (31 Decem- ber 2019: 65.5 employees).
The ENR Group investment portfolio was impacted by lower valuations driven by ruble depreciation against the Swiss franc during the reporting period. Nevertheless, for the Investment property (Petrovsky Fort business centre) and despite the fact that the Russian government introduced legislation to protect certain tenants during the time where work from home restrictions applied requiring rental payment vacation or temporary discount to be granted, only a small number of tenants at the business centre were concerned by such measures. Nevertheless, few other tenants were not able to renew short term rental contracts due to adverse impact of the virus on their businesses. As such, the overall vacancies was 5 per cent higher than at 31 December 2019 and the impact on related income on investment property was contained. ENR Groupʼs planned investments in Kaluga Flower Holding LLC have been realised in due course and further area of greenhouses have been upgraded. The facility is now in operation with the first flowers grown and sold. Various flower growing programmes are in progress and harvests are planned for the autumn and year-end.
The investment side was adversely affected by Russian ruble depreciation against the Swiss franc. Compared with the 2019 financial year, this currency lost 14 per cent in value. This resulted in impairment losses on various long-term investment assets.
During the first half of 2020, EPH European Property Holdings Ltd. (EPH or formerly "Eastern Property Holdings Ltd.") continued to focus on strengthening its portfolio through the acquisition of premium assets in Western Europe. As part of the expansion, EPH successfully acquired a majority stake in a twenty thousand square meter hotel property in Berlin Friedrichshain, Germany, which is currently leased by Nhow Hotel (part of the NH hotel group). In addition, Valartis Group has supported the acquisition process of a sixteen thousand square meter hotel property in Dresden, Germany, currently fully occupied by Meliá Hotels International. In the same period, EPH acquired a prominent and centrally located office property of twenty-nine thousand square meters in Vienna, Austria. Through these major acquisitions during a turbulent market period, Valartis Group has
demonstrated its skills and resilience in accompanying real estate transactions.
The Valartis German Residential Health Care Fund which invests in German real estate properties for the silver generation has not faced any negative impact resulting from the COVID-19 pandemic. Thanks to the protective measures taken by all the operators, no COVID-19 case has been reported. Furthermore, the German government protects in particular nursing home operators against loss of revenues as well higher costs related to the COVID-19 measures. As a result, rental income remained stable and even increased slightly due to agreed upon indexation clauses .
FINANCING SITUATION
The financing situation of Valartis Group was impacted by the market conditions but it remains well capitalised. Group shareholdersʼ equity amounts to CHF 113 million as at 30 June 2020 (31 December 2019: CHF 124 million). This corresponds to an equity ratio, i.e. total equity in per cent of balance sheet total, of 72.1 per cent (31 December 2019: 73.4 per cent). Equity decreased comparing 30 June 2020 with 31 December 2019 due three main adverse effect: the net loss for the 1st semester 2020, the foreign exchange translation differences and the losses from financial assets whose fair value through adjustments are recognised through OCI.
During the half year 2020, cash flow statement is mainly influenced by additional investment into Kaluga Flower Holding LLC by way of various loans (CHF 2.9 million) financed by the divestment of short term investments CHF 7.4 million. The latter also reduced Group's market exposure during the period of high volatility. Net cash and cash equivalents increased compared to the previous period from CHF 7.5 million at the end of 2019 to CHF 9.2 million by mid-2020. Trading portfolio assets, held for short-term cash management purposes, amount to CHF 20.6 million (31 December 2019: CHF 27.7 million) after partial divestment as described above.
BUSINESS DEVELOPMENT
IN THE FIRST HALF OF 2020
Income statement
Valartis Group AG reported a net operating income of CHF 5.0 million in the first half-year 2020 compared to CHF 4.4 million for the first half of 2019. The EBITDA was break-even versus a loss of CHF 1.0 million for the first six months of previous year. The net loss for the first six months of 2020 amounts to CHF 6.1 million
VALARTIS GROUP HALF-YEARREPORT 2020| MANAGEMENT REPORT | 5
compared to the net profit for half-year 2019 of CHF 3.3 million. The net result for the first six months of 2020 was primarily effected by foreign exchange effect on the Investment property and investment portfolio. The turmoil on the global financial markets marked the first half of 2020 with the COVID-19 pandemic which has had a more negative impact on the global economy than anticipated, and the outlook for the recovery is to be more gradual than previously forecast with a high degree of uncertainty around the forecast.
Income from Management Services increased from CHF 2.3 million to CHF 2.8 million compared to the previous half-year due to additional special advisory and transaction mandates in 2020. Income from management services comprises fees for the development and management of real estate projects, management fees for administration and accounting services as well as investment fees for investment funds distributed abroad. Income from investment property 2020 (CHF 1.9 million) is in line with the previous half-year (CHF 1.9 million).
The value of the Valartis Group stake in Norinvest Holding SA is slightly lower than in the previous period due to a valuation adjustment. Associated companies are accounted for using the equity method. Norinvest Holding SA published its financial figures after Valartis Group. Valartis Group estimated the 2019 share in the result of Norinvest Holding SA for the accounting of the associated participation taking into account publicly available information. Differences between the actual results and these estimates are corrected in the Valartis Groupʼs consolidated financial statements for the following year, i.e. 2020. On the other hand, the Valartis Group stake in Norinvest Holding SA increased from 27.1 per cent to 30.0 per cent due Norinvest buying back its own shares thus increasing the amount of treasury shares it holds.
Operating expenses fell by 7.0 per cent from CHF 5.4 million to CHF 5.0 million compared to the previous period due to further cost-cutting measures. Personnel expenses, the most important cost component, increase by 8 per cent at CHF 3.0 million compared to CHF 2.7 million in the previous period. At the end of June 2020, Valartis employed 68.5 full-time staff (3 people more than at year-end 2019). General expenses fell by 22 per cent from CHF 2.7 million to CHF 2.1 million. Nevertheless, expenses for travel and representation, consulting and auditing as well as other general expenses continue to be significant. Valuation adjustments, provisions and losses, CHF 0.4 million for the half-year 2020 (previous period: gain of CHF 0.7 million), is mainly due to the Russian ruble losing 14 per cent in value against the Swiss franc compared to 31 December 2019. This resulted in an impairment loss on a long-term investment asset.
Net finance result mid-2020 is significantly lower compared to the previous period: it amounts to a net loss of CHF 5.3 million as of 30 June 2020, compared to a net income of CHF 4.0 million as of 30 June 2019. This change, compared to June 2019, is mostly
due to the negative market development of the trading portfolio assets by CHF 1.5 million and currency development on loans and liabilities in foreign currencies which generated a loss of CHF
4.3 million. In the reporting period, there were no major shifts in the currency composition of the income statement compared with the end of 2019.
Balance sheet
Valartis reported equity of CHF 113 million as at 30 June 2020 in accordance with IFRS, lower than at 31 December 2019 (CHF 124 million). The balance sheet continues to be very liquid. Over the reporting period, total assets decreased by 7.4 per cent to CHF 156 million from CHF 169 million.
EXTRAORDINARY EVENTS
Significant events after the balance sheet date
There were no significant events after the balance sheet date. Events after the balance sheet date are also reported in the Valartis Groupʼs consolidated financial statements, Note 23.
Segment reporting
Valartis Group has only one single segment and reporting is in accordance with IFRS 8 for the single component of the company. See also the note on segment reporting in Note 21.
OUTLOOK
Expected development of Valartis Group
The focus for the front units Private Equity, Real Estate Project Management and Financial Services for 2020 continues to be the successful development of new profitable activities started in the last two years and on the further development of projects already underway, with a continued focus on results. Valartis Group continues to focus its market development and adapts its range of services to demand. The Group structure will be geared to new circumstances and project implementations, new requirements and an expanded range of services. The activities of 2020 continue to focus on building up and managing new participations and new projects in line within the strategic guidelines of Valartis Group.
6
VALARTIS GROUP
Valartis Groupʼs activities currently include financial services, real estate project management and equity investments. In financial services, Valartis Group concentrates on the comprehensive management of niche funds (investment satellites). As investment advisor, Valartis Group manages the Valartis German Residential Health Care Fund, which was launched exclusively for qualified investors. The fund focuses on the megatrend "Aging" and invests in nursing homes in Germany. Valartis Group assumes various administrative tasks for the fund. For these services, it is compensated with customary market fees. In addition, Valartis Group provides corporate finance advisory services for listed and unlisted medium-sized companies in Germany, Austria, Switzerland as well as in Eastern Europe. On the real estate side, Valartis Group combines the management of profitable commercial and residential properties with investments in promising development projects. In the case of participations, the focus is on equity participation as a shareholder.
Valartis Group currently has offices in Switzerland (Fribourg, Geneva, Zurich), Luxembourg, Russia (Moscow and St. Petersburg), Germany (Frankfurt am Main, Stuttgart, Hamburg) with 68.5 employees (full-time equivalents as of 30 June 2020; as of 31 December 2019: 65.5 employees). Valartis Group AG, headquartered in Fribourg, Canton Fribourg, Switzerland, is the holding company of the Group. The registered shares of Valartis Group AG are listed on the SIX Swiss Exchange (ISIN CH0367427686). The main shareholder is MCG Holding SA, Baar, Canton of Zug, Switzerland, which holds currently 45.33 per cent of the capital and voting rights as of 30 June 2020 according to its most recently published disclosure. Geographically, the Group has business activities in Switzerland, Europe and Russia.
Valartis Group - Operational Structure
Valartis Group AG
Fribourg
100% | 100% | 100% | ||||||||||
Valartis AG | Valartis | Valartis Advisory | ||||||||||
International Ltd | Services SA | |||||||||||
Fribourg | BVI | Geneva/Zurich | ||||||||||
100% | 30.0% | 63.2% | 100% | 100% | ||||||||
VLR Germany | Norinvest | ENR Russia | Valartis | VLR Russia | ||||||||
Frankfurt | Holding SA | Invest SA | International Ltd | Moscow Branch | ||||||||
am Main | Geneva | Geneva | Moscow Branch | |||||||||
Selected business activities in detail
Real estate projects
Valartis Group holds 63.2 per cent of the investment company ENR Russia Invest SA (ENR), which is listed on the SIX Swiss Exchange (ISIN CH0034476959) and is a member of the Swiss Association of Investment Companies. Since 1996, the company has been investing in private equity, listed shares, real estate and fixed-income instruments of Russian companies and companies of other states of the Commonwealth of Independent States and the Baltic States. Among others, ENR Russia Invest SA (www.enr.ch) owns a large office centre, Petrovsky Fort, in St. Petersburg, Russia (www.petrofort.ru/en/) and, through a wholly owned subsidiary, 50 per cent of interest in a 27.4 hectare greenhouse and engineering facility for flower growing in Kaluga Oblast in Russia (www.florentika.ru/).
EPH European Property Holdings Limited (EPH) is a stock corporation listed on the SIX Swiss Exchange. As a real estate investment and development company, EPH concentrates on commercial properties with trophy potential in Western Europe focusing on proven or upcoming locations in Germany's larger cities and Vienna. On 19 December 2012, Valartis Group sold its entire stake in EPH (around 40 per cent). Today Valartis Group is still responsible for certain asset, property and investment management and corporate functions of EPH (www.european- propertyholdings.com) under several management contracts.
Investment activities
The focus is on equity participation as a shareholder. Valartis Group pursues a bottom-up approach and is constantly looking for special investments for its own investment portfolio.
Elements of the traditional portfolio management process such as portfolio realisation (asset allocation, monitoring, review) and portfolio control (performance measurement, attribution) are used for the selection investment opportunities. The disciplined implementation of these steps contributes to achieving the goal of a stringent profitability orientation with an appropriate risk/return ratio.
One of the central challenges in putting together own investment portfolio is to resolve the conflict between optimising the expected return (value growth including interest and dividends less costs) within a certain period on the one hand and limiting the risk of loss on the other hand. Typically, the structure of an investment portfolio will show a certain consistency over time, which implies an anti-cyclical behaviour and therefore risk-mitigating and risk-bearing behaviour.
VALARTIS GROUP HALF-YEARREPORT 2020| VALARTIS GROUP | 7
Current investments
Norinvest Holding SA, headquartered in Geneva, Switzerland, is a Swiss investment company founded in 1984. It is listed on the OTC platform of the Cantonal Bank of Berne and is the 100 per cent owner of Banque Cramer & Cie SA which specialises in private banking and asset management. Following the completed sale of its two Swiss subsidiaries Valartis Bank AG and Valartis Wealth Management SA to Banque Cramer & Cie SA in 2014, Valartis Group AG acquired a 25 per cent stake in Norinvest Holding SA (this stake changes slightly over time due to Norinvest increasing or decreasing its treasury share holdings).
Whitebox Services AG, through its wholly owned subsidiary Whitebox GmbH, founded in July 2014, has been one of the first online asset management companies on the German market, as of January 2016. Whitebox aims at a return on investment that is significantly better than that of conventional offers at the same risk level. Whitebox GmbH, Weil am Rhein, is a wholly owned subsidiary of Whitebox Services AG which is based in Switzerland. The owners of Whitebox Services AG are the founders, former management members of leading banks and industry experts. Valartis has acquired a smaller stake in Whitebox Services AG.
In 2018 and 2019, Valartis Group invested in three limited partnerships called Briese Schiffahrts GmbH & Co. KG MS, by way of a contribution as a limited partner a total of EUR 6.5 million or approximately CHF 7.2 million at the time of investments. Briese Schiffahrts GmbH & Co. KG MS operates a mid-size freight cargo and is in Leer, Germany.
Athris Holding AG, headquartered in Zug, Canton of Zug, Switzerland, is a Swiss investment company whose shares are traded on BX Bern eXchange which is a Swiss regulated stock exchange under the supervision of FINMA. Valartis Group holds this investment as a financial category Asset at fair value through OCI.
BOARD OF DIRECTORS
Gustav Stenbolt, Chairman, Philipp LeibundGut, Vice-Chairman, and Olivier Brunisholz, Member, were all re-elected to the Board of Directors of Valartis Group AG at the Annual General Meeting 2020:
Organisation Chart
Board of Directors
Gustav Stenbolt, Chairman 1
Philipp LeibundGut , Vice-Chairman1
Olivier Brunisholz 1
Compensation Committee | Business Development | ||||||
Philipp LeibundGut, Chairman | Gustav Stenbolt, Philipp LeibundGut | ||||||
Executive Management
Gustav Stenbolt, Delegate of the BoD
Front Organisation | Service Organisation | ||||
Real Estate Project & Asset | Group Accounting & Controlling | ||||
Management | IT & Logistics | ||||
Real Estate Funds & Property | Corporate Communications | ||||
Private Equity | |||||
Corporate Finance | |||||
1 Member of the Compensation Committee
8
VALARTIS GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
in CHF 1,000 | Note | 1.1.-30.06.2020 | 1.1. - 30.06.2019 | |||
Income from management services | 1 | 2,804 | 2,309 | |||
Income from investment property | 2 | 1,949 | 1,906 | |||
Share of results of associated companies | 3 | 148 | -157 | |||
Other income | 4 | 134 | 383 | |||
Total operating income | 5,035 | 4,441 | ||||
Personnel expenses | 5 | -2,956 | -2,746 | |||
General expenses | 6 | -2,071 | -2,658 | |||
Administrative expenses | -5,027 | -5,404 | ||||
Earnings before depreciation, valuation adjustments, provisions, | ||||||
interest and taxes | 8 | -963 | ||||
Depreciation/amortisation of property, plant | ||||||
and equipment and intangible assets | 7 | -330 | -282 | |||
Valuation adjustments, provisions and losses | 8 | -410 | 701 | |||
Earnings before interest and taxes (EBIT) | -732 | -544 | ||||
Financial income | 9 | 934 | 4,555 | |||
Financial expenses | 9 | -6,223 | -590 | |||
Net result from continued operations before taxes | -6,021 | 3,421 | ||||
Income taxes | 10 | -12 | -86 | |||
Net result from continued operations | -6,033 | 3,335 | ||||
Net result from discontinued operations, after taxes | 22 | -43 | -49 | |||
Net result | -6,076 | 3,286 | ||||
Net gain/(loss) attributable to shareholders of Valartis Group AG | -4,286 | 2,172 | ||||
Net gain/(loss) attributable to non-controlling interests | -1,790 | 1,114 | ||||
in CHF | ||||||
Earnings per share | ||||||
Undiluted earnings attributable to shareholders of Valartis Group AG | -1.12 | 0.50 | ||||
Diluted earnings attributable to shareholders of Valartis Group AG | -1.12 | 0.50 | ||||
Earnings per share - continued operations | ||||||
Undiluted earnings attributable to shareholders of Valartis Group AG | -1.11 | 0.51 | ||||
Diluted earnings attributable to shareholders of Valartis Group AG | -1.11 | 0.51 | ||||
Earnings per share - discontinued operations | ||||||
Undiluted earnings attributable to shareholders of Valartis Group AG | -0.01 | -0.01 | ||||
Diluted earnings attributable to shareholders of Valartis Group AG | -0.01 | -0.01 |
10
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
in CHF 1,000 | 1.1.-30.06.2020 | 1.1. - 30.06.2019 | ||
Net gain/(loss) in the income statement | -6,076 | 3,286 | ||
Other comprehensive income which will be reclassified to the income statement | ||||
Foreign exchange translation differences | -2,812 | 1,149 | ||
Other comprehensive income which will be reclassified to the income statement | -2,812 | 1,149 | ||
Other comprehensive income which will not be reclassified to the income statement | ||||
Change in fair value of financial assets at fair value through OCI | -2,289 | -373 | ||
Remeasurement of defined benefit pension plans | 73 | -269 | ||
Other comprehensive income which will not be reclassified to the income statement | -2,216 | -642 | ||
Total other comprehensive income, after tax | -5,028 | 507 | ||
Total comprehensive income | -11,104 | 3,793 | ||
Allocation of total comprehensive income | ||||
attributable to shareholders of Valartis Group AG | -8,254 | 2,136 | ||
attributable to non-controlling interests | -2,850 | 1,657 |
VALARTIS GROUP HALF-YEARREPORT 2020 | VALARTIS GROUP CONSOLIDATED FINANCIAL STATEMENTS | 11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
in CHF 1,000
Cash and cash equivalents
Trading portfolio assets
Other financial assets at fair value Due from third parties Accrued and deferred assets
Total current assets
Financial assets at fair value through OCI Property, plant and equipment Investment property
Goodwill
Associated companies
Non-current receivables
Deferred tax assets
Total non-current assets
Note | 30.06.2020 | 31.12.2019 | ||
9,234 | 7,472 | |||
11 | 20,649 | 27,657 | ||
1,631 | 1,633 | |||
12 | 22,894 | 21,373 | ||
2,083 | 2,184 | |||
56,491 | 60,319 | |||
13 | 26,674 | 28,963 | ||
1,471 | 1,788 | |||
14 | 35,773 | 41,147 | ||
1,843 | 2,134 | |||
27,556 | 27,537 | |||
15 | 4,458 | 4,718 | ||
- | 23 | |||
97,775 | 106,310 | |||
Total current and non-current assets | 154,266 | 166,629 | ||||
Non-current assets classified as held for sale | 22 | 1,898 | 1,941 | |||
Total assets | 156,164 | 168,570 | ||||
12
LIABILITIES
in CHF 1,000 | Note | 30.06.2020 | 31.12.2019 | |||
Liabilities | ||||||
Accounts payable | 594 | 609 | ||||
Current financial liabilities | 16 | 20,381 | 20,621 | |||
Current tax liabilities | 806 | 809 | ||||
Other current liabilities | 4,177 | 4,546 | ||||
Current provisions | 41 | 52 | ||||
Total current liabilities | 25,999 | 26,637 | ||||
Non-current financial liabilities | 17 | 15,614 | 16,190 | |||
Liabilities from defined benefit pension plans | 1,809 | 1,882 | ||||
Deferred tax liabilities | 28 | 22 | ||||
Non-current provisions | 127 | 148 | ||||
Total non-current liabilities | 17,578 | 18,242 | ||||
Total liabilities | 43,577 | 44,879 | ||||
Shareholdersʼ equity | ||||||
Share capital | 18 | 4,769 | 4,769 | |||
Treasury shares | 19 | -12,106 | -12,106 | |||
Reserves | 99,160 | 103,446 | ||||
Cumulated income from financial assets at fair value through OCI | 9,759 | 12,048 | ||||
Foreign exchange translation differences | -4,669 | -2,917 | ||||
Remeasurement of defined benefit pension plans | 404 | 331 | ||||
Shareholdersʼ equity of the shareholders of Valartis Group AG | 97,317 | 105,571 | ||||
Non-controlling interests | 15,270 | 18,120 | ||||
Total shareholdersʼ equity (including non-controlling interests) | 112,587 | 123,691 | ||||
Total liabilities and shareholdersʼ equity | 156,164 | 168,570 | ||||
VALARTIS GROUP HALF-YEARREPORT 2020 | VALARTIS GROUP CONSOLIDATED FINANCIAL STATEMENTS | 13
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2019
in CHF 1,000
Opening balance at 1 January 2019
Gains/(losses) from financial assets at fair value through OCI Foreign exchange translation differences Remeasurement of defined benefit pension plans
Other comprehensive income
Net result
Comprehensive income
Dividend payments
Change in treasury shares
Share-based compensation
Transaction with non-controlling interests
Ownership-related changes
Total shareholdersʼ equity at 30 June 2019
2020
in CHF 1,000
Opening balance at 1 January 2020
Gains/(losses) from financial assets at fair value through OCI Foreign exchange translation differences Remeasurement of defined benefit pension plans
Other comprehensive income
Net result
Comprehensive income
Dividend payments
Change in treasury shares
Share-based compensation
Transaction with non-controlling interests
Ownership-related changes
Total shareholdersʼ equity at 30 June 2020
Share capital | Treasury shares Capital reserves | Retained |
earnings |
5,000 | -9,277 | -5,804 | 111,555 | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | 2,172 | |||
- | - | - | 2,172 | |||
- | - | - | -432 | |||
- | -4,274 | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | -4,274 | - | -432 | |||
5,000 | -13,551 | -5,804 | 113,295 | |||
4,769 | -12,106 | -5,804 | 109,250 | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | -4,286 | |||
- | - | - | -4,286 | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
- | - | - | - | |||
4,769 | -12,106 | -5,804 | 104,964 | |||
14
Net unrealised | Foreign | Remeasurement | Total equity | Non-controlling | Foreign exchange | Total | Total | ||||||
gains/losses on financial | exchange | defined benefit | shareholders | interests | effect on | non-controlling | shareholdersʼ | ||||||
assets at fair value | translation | pension plans | of Valartis | non-controlling | interests | equity | |||||||
through OCI | difference | Group AG | interests | ||||||||||
9,675 | -3,697 | 920 | 108,372 | 17,615 | -1,993 | 15,622 | 123,994 | ||||||
-373 | - | - | -373 | - | - | -373 | |||||||
- | 606 | - | 606 | - | 543 | 543 | 1,149 | ||||||
- | - | -269 | -269 | - | - | - | -269 | ||||||
-373 | 606 | -269 | -36 | - | 543 | 543 | 507 | ||||||
- | - | - | 2,172 | 1,114 | - | 1,114 | 3,286 | ||||||
-373 | 606 | -269 | 2,136 | 1,114 | 543 | 1,657 | 3,793 | ||||||
- | - | - | -432 | - | - | - | -432 | ||||||
- | - | - | -4,274 | - | - | - | -4,274 | ||||||
- | - | - | - | - | - | - | - | ||||||
- | - | - | - | - | - | - | - | ||||||
- | - | - | -4,706 | - | - | - | -4,706 | ||||||
9,302 | -3,091 | 651 | 105,802 | 18,729 | -1,450 | 17,279 | 123,081 | ||||||
12,048 | -2,917 | 331 | 105,571 | 19,589 | -1,469 | 18,120 | 123,691 | ||||||
-2,289 | - | - | -2,289 | - | - | -2,289 | |||||||
- | -1,752 | - | -1,752 | - | -1,060 | -1,060 | -2,812 | ||||||
- | - | 73 | 73 | - | - | - | 73 | ||||||
-2,289 | -1,752 | 73 | -3,968 | - | -1,060 | -1,060 | -5,028 | ||||||
- | - | - | -4,286 | -1,790 | - | -1,790 | -6,076 | ||||||
-2,289 | -1,752 | 73 | -8,254 | -1,790 | -1,060 | -2,850 | -11,104 | ||||||
- | - | - | - | - | - | - | - | ||||||
- | - | - | - | - | - | - | - | ||||||
- | - | - | - | - | - | - | - | ||||||
- | - | - | - | - | - | - | - | ||||||
- | - | - | - | - | - | - | - | ||||||
9,759 | -4,669 | 404 | 97,317 | 17,799 | -2,529 | 15,270 | 112,587 | ||||||
VALARTIS GROUP HALF-YEARREPORT 2020 | VALARTIS GROUP CONSOLIDATED FINANCIAL STATEMENTS | 15
CONSOLIDATED CASH FLOW STATEMENT
in CHF 1,000 | 30.06.2020 | 30.06.2019 | ||
Net result after taxes from continued operations | -6,033 | 3,335 | ||
Net result after taxes from discontinued operations | -43 | -49 | ||
Net result | -6,076 | 3,286 | ||
Depreciation of property, plant and equipment | 330 | 282 | ||
Share of results of associated companies | -148 | 157 | ||
Change in valuation adjustments and provisions | 410 | -701 | ||
Finance result, net | 5,289 | -3,965 | ||
Change in taxes | 12 | 86 | ||
Other non-cash income and expenses | -2,033 | 2,527 | ||
Operating cash flow before changes in the working capital and taxes | -2,216 | 1,672 | ||
Due from third parties | -1,981 | -453 | ||
Accrued and deferred assets | 78 | -110 | ||
Accounts payables | -2 | -384 | ||
Other current liabilities | -399 | -1,837 | ||
Taxes paid | 22 | -159 | ||
Cash flow from/(used in) operating activities | -4,498 | -1,271 | ||
Trading portfolio assets (including derivative financial instruments) | 7,421 | 6,876 | ||
(Increase)/decrease other financial assets at fair value | - | 1 | ||
Non-current receivables | 109 | 254 | ||
Interest and dividends received | 795 | 815 | ||
Purchase of property, plant and equipment, investment property and intangible assets | -180 | -186 | ||
Sale of property, plant and equipment, investment property and intangible assets | 22 | - | ||
Acquisition of associated companies | - | -5,604 | ||
Cash flow from/(used in) investment activities | 8,167 | 2,156 |
16
in CHF 1,000 | 30.06.2020 | 30.06.2019 | ||
Proceeds from/(repayments of) current financial liabilities | -28 | -245 | ||
Proceeds from/(repayments of) non-current financial liabilities | -125 | 59 | ||
Interest paid | -440 | -363 | ||
Dividends paid to shareholders of the Company | - | -432 | ||
Change in treasury shares | - | -4,272 | ||
Change in non-controlling interests | -1,314 | 859 | ||
Foreign exchange effect on banking loan for the investment property | - | 2,284 | ||
Cash flow used in financing activities | -1,907 | -2,110 | ||
Increase/(decrease) in cash and cash equivalents | 1,762 | -1,225 | ||
Position at 1 January | 7,472 | 6,051 | ||
Position at 30 June | 9,234 | 4,826 | ||
Cash | 2 | 2 | ||
Due from banks at sight/callable | 9,232 | 4,824 | ||
Total cash and cash equivalents | 9,234 | 4,826 | ||
VALARTIS GROUP HALF-YEARREPORT 2020 | VALARTIS GROUP CONSOLIDATED FINANCIAL STATEMENTS | 17
NOTES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DESCRIPTION OF BUSINESS
Valartis Group's activities include financial services, real estate project management and equity investments. In financial services, Valartis Group concentrates on the comprehensive management of niche funds (investment satellites). In addition, Valartis Group provides corporate finance advisory services for listed and unlisted medium-sized companies. On the real estate side, Valartis Group combines the management of profitable commercial and residential properties with investments in promising development projects. In the case of participations, the focus is on equity participations as a shareholder. Valartis Group currently has offices in Switzerland (Fribourg, Geneva, Zurich), Luxembourg, Frankfurt am Main, Hamburg, Stuttgart, St. Petersburg and Moscow with 68.5 employees (full-time equivalents as of 30 June 2020). Valartis Group AG, headquartered in Fribourg, Canton Fribourg, Switzerland, is the parent company of the Group and its registered shares are listed on the SIX Swiss Exchange. Geographically, the Group operates in Switzerland, Europe and Russia.
ACCOUNTING PRINCIPLES
The consolidated financial statements of Valartis Group AG comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). This interim report complies with the requirements of IAS 34 Interim Financial Reporting. As it does not contain all the information and disclosures required in the annual report, this interim report should be read in conjunction with the audited consolidated financial statements of the Annual Report 2019.
The consolidated financial statements are presented in Swiss francs (CHF). The following exchange rates apply for the translation of major currencies:
30.06.2020 | 1.1. - 30.6.2020 | 30.06.2019 | 1.1. - 30.6.2019 | |||||
Balance sheet | Annual | Balance sheet | Annual | |||||
date rate | average rate | date rate | average rate | |||||
EUR | 1.0679 | 1.0645 | 1.1093 | 1.1272 | ||||
USD | 0.9518 | 0.9638 | 0.9740 | 0.9971 | ||||
RUB | ||||||||
(100) | 1.3470 | 1.3718 | 1.5440 | 1.5383 | ||||
The half-year report is based on the individual financial statements of the Group companies prepared in accordance with uniform principles. The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Groupʼs annual consolidated financial statements for the year ended 31 December 2019, with the
exception of the below amendments which have been applied as of 1 January 2020. All these amendments had no material impact on the Group's financial statements. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not effective, yet.
AMENDMENTS TO ACCOUNTING POLICIES
Definition of a Business (amendments to IFRS 3)
The amendments clarify whether a transaction should be accounted for as a business combination or as an asset acquisition.
Definition of Material (amendments to IAS 1 and IAS 8)
The amendments clarify the definition of "Material": Materiality depends on the nature or magnitude of information, or both. An entity assesses whether information, either individually or in combination with other information, is material in the context of its financial statements taken as a whole.
Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. Information is obscured if it is communicated in a way that would have a similar effect for primary users of financial statements to omitting or misstating that information.
Other new standards and interpretations
The following new and revised standards and interpretations had no material impact on the financial statements of Valartis Group at the time of their first application or were of no significance to it:
- IFRS 9/IFRS 7/IAS 39 - Interest Rate Benchmark Reform.
Other change
In the past, the net gain or loss on trading portfolio assets as part of respectively financial income or expenses included the foreign exchange effect as of the balance sheet date. In order, to increase the level of details in the Note 9 - Financial result, as of the 30 June 2020, the net foreign exchange loss was reported on a separate line from the net loss on trading portfolio assets. The comparative information of the previous period for the Note 9 - Financial result has been adjusted. There were no changes for the income statement, statement of comprehensive income, statement of financial position, statement of change in equity and the cash flow statement. The change had no effect on the result, the earning per share, the total and individual shareholderʼs equity components of the previous reporting period.
20
CHANGES IN THE SCOPE OF CONSOLIDATION
Changes in the current period of review
There were no changes in the scope of consolidation for the first half of 2020.
Changes in the prior period of review
There were no changes in the scope of consolidation for the prior period of review.
DISCONTINUED OPERATIONS
The share in the associated company Darsi Investment Ltd. is shown in the Consolidated Financial statements as discontinued operations (same as 31 December 2019).
ESTIMATES, ASSUMPTIONS AND EXERCISE OF DISCRETION BY MANAGEMENT
There have been no material changes in managementʼs esti- mates, assumptions and judgements for the half-year financial statements as of 30 June 2020 compared with the period ended on 31 December 2019.
APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
The 2020 half-year report was approved by the Board of Directors of Valartis Group AG on 20 August 2020.
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 21
NOTES TO THE CONSOLIDATED INCOME STATEMENT
1. INCOME FROM MANAGEMENT SERVICES
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Revenue from management services | 2,804 | 2,309 | ||
Revenue from management services | 2,804 | 2,309 |
Income from management services comprises fees for the development and management of real estate projects, management
fees for administration and accounting services as well as investment fees for investment funds distributed abroad.
2. INCOME FROM INVESTMENT PROPERTY
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Rental income | 1,949 | 1,906 | ||
Total income from investment property | 1,949 | 1,906 | ||
The rental income from investment property refers to the | ||||
Petrovsky Fort investment property. For more detail please refer | ||||
to Note 14. | ||||
3. SHARE OF RESULTS OF ASSOCIATED COMPANIES | ||||
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Share in net profit | 384 | 56 | ||
Impairment | -236 | -213 | ||
Total | 148 | -157 | ||
4. OTHER INCOME | ||||
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Other income | 297 | 470 | ||
Other expenses | -163 | -87 | ||
Total other income | 134 | 383 |
22
5. PERSONNEL EXPENSES
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Salaries and bonuses | -2,086 | -2,012 | ||
Social security benefits | -336 | -309 | ||
Contributions to occupational pension plans | -145 | -140 | ||
Other personnel expenses | -389 | -285 | ||
Total | -2,956 | -2,746 |
6. GENERAL EXPENSES
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Occupancy expense 1) | -116 | -198 | ||
IT and information expenses | -141 | -148 | ||
Consultancy, audit, corporate communication and representation expense | -897 | -1,120 | ||
Land lease expenses of investment property | - | -100 | ||
Operating expenses of investment property | -519 | -645 | ||
Investment property tax and non-recoverable VAT | -194 | -175 | ||
Other general expenses | -204 | -272 | ||
Total | -2,071 | -2,658 | ||
1) Lease contracts with a term of less than 12 months |
7. DEPRECIATION AND AMORTISATION OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 |
Depreciation office leases 1) | -307 | -261 | ||
Depreciation of property, plant and equipment | -23 | 21 | ||
Total | -330 | -282 | ||
1) Related to right-of-use of office leases |
8. VALUATION ADJUSTMENTS, PROVISIONS AND LOSSES
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Impairments | -439 | - | ||
Impairment reversals | 29 | 701 | ||
Total | -410 | 701 |
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 23
9. FINANCIAL RESULT
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.20191) | ||
Interest and dividend income from trading portfolios | 609 | 1,038 | ||
Other interest income third parties | 325 | 5 | ||
Total interest income | 934 | 1,043 | ||
Net gain on trading portfolio assets 1) | - | 1,494 | ||
Net foreign exchange gain 1) | - | 2,018 | ||
Total financial income | 934 | 4,555 | ||
Interest expenses for loans | -22 | -293 | ||
Interest expenses on leasing liabilities | -102 | -12 | ||
Interest expenses for financial liabilities due to banks | -316 | -285 | ||
Total interest expenses | -440 | -590 | ||
Net loss on trading portfolio assets 1) | -1,520 | - | ||
Net foreign exchange loss 1) | -4,263 | - | ||
Total financial expenses | -6,223 | -590 | ||
Total financial result, net | -5,289 | 3,965 |
- Previous period figures have been restated, see page 20 - Amendments to accounting policies, Other change.
10. INCOME TAXES
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||
Current income taxes | 14 | -68 | ||
Change in deferred taxes | -26 | -18 | ||
Total income taxes | -12 | -86 | ||
Income tax as disclosed in the consolidated income statement | -12 | -86 | ||
Effective income taxes | -12 | -86 | ||
24
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
11. TRADING PORTFOLIO ASSETS
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Debt instruments | 13,323 | 20,063 | ||
Equity instruments | 5,130 | 5,347 | ||
Investment fund units | 2,196 | 2,247 | ||
Total trading portfolio assets | 20,649 | 27,657 |
12. DUE FROM THIRD PARTIES
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Due from third parties and associated companies | 32,110 | 30,526 | ||
Total due from third parties and associated companies gross | 32,110 | 30,526 | ||
Valuation adjustments for default risk | -9,216 | -9,153 | ||
Total due from third parties and associated companies net | 22,894 | 21,373 | ||
13. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Equity instruments | 26,674 | 28,963 | ||
Total financial assets at fair value through OCI | 26,674 | 28,963 |
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 25
14 INVESTMENT PROPERTY
in CHF 1,000 | Investment property | Investment property | Investment property | Total | ||||
building | financial leasing | under construction | ||||||
Carrying amount at 31 December 2018 | 31,604 | 1,577 | 438 | 33,619 | ||||
Investments | 414 | - | 49 | 463 | ||||
Disposals | -37 | - | - | -37 | ||||
Fair value adjustments | 3,729 | -5 | - | 3,724 | ||||
Foreign exchange translation differences | 3,220 | 158 | - | 3,378 | ||||
Carrying amount at 31 December 2019 | 38,930 | 1,730 | 487 | 41,147 | ||||
Carrying amount at 31 December 2019 | 38,930 | 1,730 | 487 | 41,147 | ||||
Investments | 178 | - | - | 178 | ||||
Disposals | - | - | -20 | -20 | ||||
Fair value adjustments | - | - | - | - | ||||
Foreign exchange translation differences | -5,297 | -235 | - | -5,532 | ||||
Carrying amount at 30 June 2020 | 33,811 | 1,495 | 467 | 35,773 | ||||
Valuation
Valartis Group, through its group company ENR Russia Invest SA (Group), holds the business centre Petrovsky Fort in St. Petersburg, Russia (real estate). The fair value of this investment property is determined by independent real estate valuation experts using recognised valuation techniques on an annual basis. For the 2020 half-year financial statements, the fair value of the real estate investment property was verified by a discounted cash flow calculation. As of 30 June 2020, the verification did not result in any change in the fair value of the property in RUB.
Based on the input parameters of the valuation method used, the measurement of fair value is categorised under level 3 instruments.
Investment property under construction
The investment property under construction is a parking garage project in Geneva, Switzerland.
26
15 NON-CURRENT RECEIVABLES
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Tax receivables | 3 | 1 | ||
Other receivables | 4,455 | 4,717 | ||
whereof escrow accounts | 3,472 | 3,658 | ||
Total non-current receivables | 4,458 | 4,718 | ||
The residual purchase price of approximately CHF 0.1 million (31 December 2019: CHF 0.2 million) owed by the buyer of Valartis Bank AG Switzerland and of approximately CHF 3.4 million (31 December 2019: CHF 3.5 million) from the sale of the investment in EPH European Property Holdings Ltd. are reported as escrow accounts.
The claim of CHF 0.1 million will be fully settled until October 2020. The receivable from the buyers of EPH European Property Holdings Ltd. relates to a third party. The development of this position has not affected Valartis Group since 2015.
16 CURRENT FINANCIAL LIABILITIES
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Due to banks | 8,462 | 8,498 | ||
Other current liabilities | 11,919 | 12,123 | ||
Current financial liabilities | 20,381 | 20,621 |
Liabilities to banks include the principal repayment portion (CHF 0.4 million) of a loan of CHF 12.9 million (31 December 2019: CHF 13.3 million) from UniCreditbank to finance the Petrovsky Fort investment property. The remaining CHF 12.5 million are disclosed under Non-current financial liabilities (31 December 2019: CHF 12.9 million).
The loan from UniCreditbank has been financed in EUR until 31 December 2023 with an interest rate of 4 per cent plus 3-month EUR Libor per year. In addition, an amortisation of the principle by EUR 0.1 million will be done on a quarterly basis.
17. NON-CURRENT FINANCIAL LIABILITIES
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||
Leasing liabilities | 2,710 | 3,298 | ||
Non-current financial liabilities | 12,904 | 12,892 | ||
Total non-current financial liabilities | 15,614 | 16,190 | ||
Non-current financial liabilities include the partial principal repayment due in more than one year (CHF 12.5 million) of a loan of CHF 12.9 million (31 December 2019: CHF 13.3 million)
from UniCredit Bank to finance the Petrovsky Fort investment property.
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 27
18. SHARE CAPITAL
in CHF | 30.06.2020 | 31.12.2019 | ||
Share capital, fully paid-in | 4,769,295 | 4,769,295 | ||
Number of registered shares | 4,769,295 | 4,769,295 | ||
Nominal value per share | 1 | 1 | ||
Equity per share (attributable to shareholders of Valartis Group AG, | ||||
before appropriation of profit) | 25.4 | 27.5 | ||
19. TREASURY SHARES
Number of shares | |
Position at 31 December 2018 | 638,003 |
Purchases | |
of which for the purpose of cancellation (at an average price of CHF 10.24 each) | 525,580 |
of which for other purposes | - |
Sales | - |
Cancellation | -230,705 |
Position at 31 December 2019 | 932,878 |
Purchases | |
of which for the purpose of cancellation | - |
of which for other purposes | - |
Sales | - |
Cancellation | - |
Position at 30 June 2020 | 932,878 |
of which for the purpose of cancellation | 470,000 |
of which for other purposes | 462,878 |
Historical cost value at 31 December 2019 in CHF | 12,107,971 |
of which held for the purpose of cancellation | 4,807,701 |
of which held for other purposes | 7,300,270 |
Historical average rate at 31 December 2019 in CHF | |
of which held for the purpose of cancellation | 10.23 |
of which held for other purposes | 15.77 |
Historical cost value at 30 June 2020 in CHF | 12,107,971 |
of which held for the purpose of cancellation | 4,807,701 |
of which held for other purposes | 7,300,270 |
Historical average rate at 30 June 2020 in CHF | |
of which held for the purpose of cancellation | 10.23 |
of which held for other purposes | 15.77 |
28
Share buyback programme 2019
At its meeting on 14 May 2019, the Annual General Meeting approved the repurchase of treasury shares up to a maximum of 470,000 shares. Based on this authorisation, the Board of Directors of Valartis Group AG decided to buy back the maximum in two stages.
As part of the share buyback offer submitted by the Board of Directors of Valartis Group AG on 28 May 2019 for a maximum of 359,000 registered shares at a fixed price of CHF 10.30 per registered share for the purpose of capital reduction (stage 1), Valartis was tendered a total of 432,966 registered shares during the offer period from 11 June 2019 to 25 June 2019. After the number of registered shares tendered exceeded the volume of the buyback offer, the registered shares were repurchased from the tendering shareholders on a pro rata basis, i.e. the tender was reduced on a pro rata basis to a maximum of 359,000 registered shares.
As part of the share buyback offer submitted by the Board of Directors of Valartis Group AG on 21 October 2019 for a maximum of 111,000 registered shares at a fixed price of CHF
10.00 per registered share for the purpose of capital reduction (stage 2), Valartis was tendered a total of 239,436 registered
shares during the offer period from 28 October 2019 to 8 November 2019. After the number of registered shares tendered exceeded the volume of the buyback offer, the registered shares were repurchased from the tendering shareholders on a pro rata basis, i.e. the tender was reduced on a pro rata basis to a maximum of 111,000 registered shares.
The Annual General Meeting on 19 May 2020 has approved a capital reduction by cancellation of the registered shares repurchased under the share buyback programme 2019 and the amendment to the Articles of Association (capital reduction) with regard to the actual number of repurchased shares. The capital reduction will be registered with the Commercial Register of the Canton of Fribourg, Switzerland, the registered office of the Company, in September 2020.
Share buyback programme 2020-2023
At its meeting on 19 May 2020, the Annual General Meeting authorised the repurchase of treasury shares up to a maximum of 340,000 shares until April 2023. As of 30 June 2020, the Board of Directors of Valartis Group AG has not yet decided to begin the buyback programme.
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 29
20. FAIR VALUE OF FINANCIAL INSTRUMENTS
Determination of Fair value
The following table shows the carrying amounts and fair values of financial assets and liabilities:
Fair value of financial instruments
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||||||||||
Book value | Fair value | Variation | Book value | Fair value | Variation | |||||||
Assets | ||||||||||||
Cash and cash equivalents | 9,234 | 9,234 | - | 7,472 | 7,472 | - | ||||||
Due from third parties | 22,894 | 22,894 | - | 21,373 | 21,373 | - | ||||||
Accrued and deferred assets | 2,083 | 2,083 | - | 2,184 | 2,184 | - | ||||||
Non-current receivables | 4,458 | 4,458 | - | 4,718 | 4,718 | - | ||||||
Financial assets at amortised costs | 38,669 | 38,669 | - | 35,747 | 35,747 | - | ||||||
Trading portfolio assets | 20,649 | 20,649 | - | 27,657 | 27,657 | - | ||||||
Derivative financial instruments | - | - | - | - | - | - | ||||||
Other financial assets at fair value | 1,631 | 1,631 | - | 1,633 | 1,633 | - | ||||||
Financial assets at fair value through OCI | 26,674 | 26,674 | - | 28,963 | 28,963 | - | ||||||
Financial assets at fair value | 48,954 | 48,954 | - | 58,253 | 58,253 | - | ||||||
Liabilities | ||||||||||||
Trade payables | 594 | 594 | - | 609 | 609 | - | ||||||
Current financial liabilities | 20,381 | 20,381 | - | 20,621 | 20,621 | - | ||||||
Current income taxes | 806 | 806 | - | 809 | 809 | - | ||||||
Other current liabilities | 4,177 | 4,177 | - | 4,546 | 4,546 | - | ||||||
Non-current financial liabilities | 15,614 | 15,614 | - | 16,190 | 16,190 | - | ||||||
Financial liabilities at amortised costs | 41,572 | 41,572 | - | 42,775 | 42,775 | - | ||||||
Derivative financial instruments | - | - | - | - | - | - | ||||||
Financial liabilities at fair value | - | - | - | - | - | - | ||||||
Level 1 instruments
Level 1 instruments are those financial instruments whose fair value is based on quoted prices in active markets. This category comprises almost all equity and debt instruments held by the Group. Investment funds for which a binding net asset value is published at least daily, exchange-traded derivatives and precious metals are also categorised as level 1 instruments. Closing prices are used for the valuation of debt instruments in the trading book. In the case of equity instruments, listed investment funds and exchange-traded derivatives, the closing or settlement prices of the relevant exchanges are used. In the case of unlisted investment funds, the published net asset values are used. In the case of currencies and precious metals, generally accepted prices are applied. No valuation adjustments were made in the case of level 1 instruments.
Level 2 instruments
Level 2 instruments are financial instruments whose fair value is based on quoted prices in markets that are not active. The same categorisation is used where the fair value is determined using a valuation method where significant inputs are observable, either directly or indirectly. If no active market exists, the fair value is determined on the basis of generally accepted valuation methods. If all of the significant inputs are directly observable in the market, the instrument is deemed to be a level 2 instrument.
The valuation models take into account the published net asset values. The credit risk is only taken into account when market participants would take it into account when determining prices.
30
Level 3 instruments
If at least one significant input cannot be observed directly or indirectly in the market, the instrument is classified as a level 3 instrument. These essentially comprise equity instruments and/ or investment funds for which a binding net asset value is not published at least quarterly. The fair value of these positions is based on the estimates of external experts or on audited financial statements. Where possible, the underlying assumptions are supported by observable market quotes.
The Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period.
The following table shows the assets and financial liabilities measured at fair value, classified according to a fair value hierarchy of three levels:
2020 | Quoted market prices | Valuation method | Valuation method | 30.06.2020 | ||||
in CHF 1,000 | (level 1) | based on | not based on | |||||
market data | market data | |||||||
(level 2) | (level 3) | |||||||
Assets | ||||||||
Trading portfolio assets | 15,084 | - | 5,565 | 20,649 | ||||
Other financial assets at fair value | - | - | 1,631 | 1,631 | ||||
Financial assets at fair value through OCI | - | 26,674 | - | 26,674 | ||||
Investment property | - | - | 35,773 | 35,773 | ||||
Assets at fair value | 15,084 | 26,674 | 42,969 | 84,727 | ||||
Liabilities | ||||||||
Total financial liabilities at fair value | - | - | - | - | ||||
2019 | Quoted market prices | Valuation method | Valuation method | 31.12.2019 | ||||
in CHF 1,000 | (level 1) | based on | not based on | |||||
market data | market data | |||||||
(level 2) | (level 3) | |||||||
Assets | ||||||||
Trading portfolio assets | 21,983 | - | 5,674 | 27,657 | ||||
Derivative financial instruments | - | - | - | - | ||||
Other financial assets at fair value | - | - | 1,633 | 1,633 | ||||
Financial assets at fair value through OCI | - | 28,963 | - | 28,963 | ||||
Investment property | - | - | 41,147 | 41,147 | ||||
Assets at fair value | 21,983 | 28,963 | 48,454 | 99,400 | ||||
Liabilities | ||||||||
Derivative financial instruments | - | - | - | - | ||||
Total financial liabilities at fair value | - | - | - | - | ||||
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 31
Movements of level 3 positions
2020 | 1.1.2020 | Recognised | ||
in CHF 1,000 | in the | |||
income | ||||
statement | ||||
Trading portfolio assets | 5,674 | -109 | ||
Financial assets at fair value through OCI | - | - | ||
Other financial assets at fair value | 1,633 | -2 | ||
Investment property | 41,147 | - | ||
Total assets at fair value (level 3) | 48,454 | -111 | ||
Derivative financial instruments | - | - | ||
Total financial liabilities at fair value | ||||
(level 3) | - | - | ||
2019 | 1.1.2019 | Recognised | ||
in CHF 1,000 | in the | |||
income | ||||
statement | ||||
Trading portfolio assets | 4,637 | -224 | ||
Financial assets at fair value through OCI | - | - | ||
Other financial assets at fair value | 1,635 | -2 | ||
Investment property | 33,619 | 3,724 | ||
Total assets at fair value (level 3) | 39,891 | 3,498 | ||
Derivative financial instruments | - | - | ||
Total financial liabilities at fair value | ||||
(level 3) | - | - | ||
Explanation of unobservable input parameters
The valuation of trading positions and financial assets at fair value through OCI classified as level 3 is based on the annual financial statements of the corresponding securities and individual transactions observable on the market.
Net income | Transfer | Purchase | Sales | 30.06.2020 | ||||
recognised | from/(to) | |||||||
in OCI | level 1 and | |||||||
level 2 | ||||||||
- | - | 5,565 | ||||||
- | - | - | - | - | ||||
- | - | - | - | 1,631 | ||||
-5,532 | - | 178 | -20 | 35,773 | ||||
-5,532 | - | 178 | -20 | 42,969 | ||||
- | - | - | - | - | ||||
- | - | - | - | - | ||||
Net income | Transfer | Purchase | Sales | 31.12.2019 | ||||
recognised | from/(to) | |||||||
in OCI | level 1 and | |||||||
level 2 | ||||||||
- | - | 1,266 | -5 | 5,674 | ||||
- | - | - | - | - | ||||
- | - | - | - | 1,633 | ||||
3,378 | - | 463 | -37 | 41,147 | ||||
3,378 | - | 1,729 | -42 | 48,454 | ||||
- | - | - | - | - | ||||
- | - | - | - | - | ||||
"Other financial assets at fair value" includes the stake in Whitebox Services AG, acquired in 2017. Whitebox offers one of the first online financial services provider in Germany (BAFIN- regulated). Furthermore, it includes the existing contingent purchase price payment from the sale of EPH European Property Holdings Ltd. (EPH) of CHF 0.4 million (31 December 2019: CHF 0.4 million) in level 3.
32
The amount of this remaining purchase price receivable depends on the completion and sale of an EPH real estate project. The valuation of the remaining purchase price receivable is based on an estimate of the property project by an external independent expert and a supplementary management assessment.
An increase or decrease of 1 per cent in the base value used would result in an increase (or decrease) of the remaining purchase price receivable of CHF 3,000.
Significant, unobservable inputs in the evaluation of the investment property Petrovsky Fort | 30.06.2020 | 31.12.2019 | ||
Fair value of Petrovsky Fort (investment property) | ||||
in RUB | 2,510,058,000 | 2,497,000,000 | ||
in CHF | 33,811,000 | 38,930,000 | ||
Capitalisation rate for income capitalisation | 10.75% | 10.75% | ||
Discount rate for discounted cash flow | 14.25% | 14.25% | ||
Estimated Rental Value (ERV) per square metre in RUB | 11,500 | 11,500 | ||
Investment property
For the half-year report, the value of the investment property was verified using a discounted cash flow calculation, while an independent expert assesses the value once a year as of 31 December. For the discounted cash flow calculation, the future
cashflows were estimated, including rental income observing variable components, assumptions on vacancy rates, value maintenance costs and assumptions for the discount rate and a possible sales value.
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 33
ADDITIONAL INFORMATION
21. BUSINESS SEGMENTS
In the current organisational structure, there is only one management level in the sense of a leading decision-maker (the Delegate of the Board of Directors). Valartis Group has only a single segment and, in accordance with IFRS 8, reporting is done only for one component of the Group.
The Groupʼs external segment reporting is based on internal reporting.
Valartis Group prepares a monthly management report containing the consolidated financial information for Executive Management
and quarterly for the Board of Directors. The same principles apply to the valuation as to the consolidated financial statements. Management reviews the consolidated financial information and uses it in its management decisions to implement the overall strategy.
Information on geographical areas by the domicile of the reporting unit is shown below. This geographic information does not reflect the Groupʼs management structure:
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||||||||||
Domestic | Non-domestic | Total | Domestic | Non-domestic | Total | |||||||
Operating income | 741 | 4,294 | 5,035 | 902 | 3,539 | 4,441 | ||||||
Total assets | 53,610 | 102,554 | 156,164 | 57,916 | 110,432 | 168,348 | ||||||
22. SALE OF SUBSIDIARIES AND DISCONTINUED OPERATIONS
Divestments in the first half of 2020
There were no divestment transactions in the first half of 2020.
Divestments in the first half of 2019
There were no divestment transactions in the first half of 2019.
34
Results from discontinued operations
In the first half 2020, as in the first half 2019, the only effect from discontinued operations was related to the foreign exchange effect of the non-current asset held for sale:
in CHF 1,000 | 1.1. - 30.06.2020 | 1.1. - 30.06.2019 | ||||||
Income statement | ||||||||
of discontinued operations | Darsi Group | Total | Darsi Group | Total | ||||
Operating income | - | - | - | - | ||||
Administrative expense | - | - | - | - | ||||
Gross income | - | - | - | - | ||||
Valuation adjustments, provisions and losses | ||||||||
Impairment loss recognised on the revaluation | ||||||||
to fair value less costs to disposal | - | - | - | - | ||||
- | - | - | - | |||||
(Loss) from reclassification of cumulated foreign | ||||||||
currency translation differences formerly booked | ||||||||
in equity | -43 | -43 | -49 | -49 | ||||
Net profit/(loss) from discontinued operations | ||||||||
before tax | -43 | -43 | -49 | -49 | ||||
Income taxes | - | - | - | - | ||||
Net profit/(loss) from discontinued operations | -43 | -43 | -49 | -49 | ||||
whereof (loss) from reclassification of | ||||||||
cumulated foreign currency translation | ||||||||
differences formerly booked in equity | -43 | -43 | -49 | -49 | ||||
whereof result of discontinued operations | ||||||||
before reclassification of cumulated foreign | ||||||||
currency differences | - | - | - | - | ||||
Other comprehensive income of discontinued | ||||||||
operations | - | - | - | - | ||||
Foreign exchange translation difference | - | - | ||||||
Total recognised in other | ||||||||
comprehensive income | - | - | - | - | ||||
Cash flow from discontinued operations | - | - | ||||||
From operating activities | - | - | - | - | ||||
From investment activities | - | - | - | - | ||||
From financing activities | - | - | - | - | ||||
Net cash flow | - | - | - | - | ||||
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 35
Results from discontinued operations
in CHF 1,000 | 30.06.2020 | 31.12.2019 | ||||||
Balance Sheet | Darsi Group | Darsi Group | ||||||
Associated companies | 1,898 | 1,898 | 1,941 | 1,941 | ||||
Total non-current assets classified as held for sale | 1,898 | 1,898 | 1,941 | 1,941 | ||||
Liabilities directly associated with the | ||||||||
non-current assets classified as held for sale | ||||||||
Total liabilities directly associated with the | ||||||||
non-current assets classified as held for sale | - | - | - | - | ||||
Net assets/(liabilities) | 1,898 | 1,898 | 1,941 | 1,941 | ||||
23. EVENTS AFTER THE BALANCE SHEET DATE
None.
36
VALARTIS GROUP HALF-YEAR REPORT 2020 | NOTES | 37
ADDRESSES AND IMPRINT
Group Office, Switzerland Valartis Group AG
rue de Romont 29/31 CH-1700 Fribourg FR Phone +41 58 501 62 20 Fax +41 58 501 62 22
Office Geneva, Switzerland Valartis Advisory Services SA rue du Rhône 118 CH-1204Geneva
Phone +41 22 716 10 00 Fax +41 22 716 10 01
Office Zurich, Switzerland
Valartis Advisory Services SA
St. Annagasse 18
CH-8001 Zurich
Phone +41 44 503 54 00
Fax +41 44 503 54 49
Investor & Media Relations
Valartis Group AG Corporate Communications rue de Romont 29/31 CH-1700 Fribourg FR Phone +41 44 503 54 10 corporate.communications@valartis.ch
Valartis Market Information
Stock exchange listing: SIX Swiss Exchange
Security symbol: VLRT
Reuters: VLRT.S
Bloomberg: VLRT SW
ISIN: CH0367427686 www.valartisgroup.ch
www.valartisgroup.ch
Asset Management Luxembourg MCT Luxembourg Management S.à.r.l. 23, rue des Jardiniers
L-1835 Luxembourg Phone +352 26 20 25 94 Fax +352 26 20 25 84
Asset Management Russia
Valartis International Ltd.
Petrovka Street 5
RU-107031 Moscow
Phone +7495 730 35 25
Fax +7495 730 35 26
Asset Management Germany VLR Germany GmbH Bethmannstrasse 8 DE-60311Frankfurt am Main Phone +49 69 50602 6846
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Valartis Group AG published this content on 27 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 August 2020 07:16:03 UTC
