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1 Annual Report 2012

2 Commercial investment properties Lausanne-Flon

3 KEY FIGURES Mobimo Group (consolidated) Net rental income CHF million Net income from revaluation CHF million Profit on sale of trading properties CHF million Operating result (EBIT) CHF million Profit CHF million Profit (attributable to the shareholders of Mobimo Holding AG) CHF million Return on equity % 8.5 % Profit (attributable to the shareholders of Mobimo Holding AG) not including revaluation CHF million Return on equity not including revaluation % 5.2 % Commercial investment properties CHF million 1, ,133.3 Residential investment properties CHF million Commercial development properties CHF million Residential development properties CHF million Total properties CHF million 2, ,171.2 Investment property vacancy rate 3.8 % 3.3 % Ø Discount rate for revaluation 4.63 % 4.76 % Ø Headcount (full-time basis) Ø Rate of interest on financial liabilities 3.0 % 3.0 % Ø Residual maturity of financial liabilities Years Equity ratio 48 % 47 % Net gearing 5 80 % 69 % Mobimo share No. of shares outstanding 6 6,200,169 6,168,351 Earnings per share CHF Earnings per share not including market-driven revaluation CHF Earnings per share not including revaluation CHF Distribution 7 CHF Nominal value per share CHF NAV per outstanding share after options and convertible bond 8 CHF Share price as at 31 December CHF Dividend yield (distribution yield) 4,1 % 4,3 % Payout ratio 9 73 % 58 % Share capital CHF million 180, Market capitalisation as at 31 December CHF million 1, ,283.4 Equity as at 31 December CHF million 1, , Most of the positive revaluation income of CHF 36.9 million derives from operating performance. The completion of properties under construction, the development of investment properties and successful new lettings made a contribution of CHF 20.5 million. The positive performance of the Swiss property market accounted for about a further CHF 16.4 million of the change in value ² Profit (attributable to the shareholders of Mobimo Holding AG) in relation to average equity (attributable to the shareholders of Mobimo Holding AG; equity at 1 January plus capital increase / reduction) for the period under review ³ Profit (attributable to the shareholders of Mobimo Holding AG) not including revaluation (and attributable deferred tax) in relation to average equity (attributable to the shareholders of Mobimo Holding AG; equity at 1 January plus capital increase / reduction) for the period under review ⁴ Changes in headcount, see also Note 26 ⁵ Net financial liabilities to equity ⁶ No. of shares in issue 6,208,913 less treasury shares 8,744 = no. of outstanding shares 6,200,196 ⁷ Distribution of paid-in capital for 2012 financial year of CHF 9 per share in accordance with proposal to Annual General Meeting of 9 April Some CHF 326 million was available for distribution of paid-in capital as at 31 December ⁸ Assuming all options granted and conversion rights are exercised ⁹ Payout ratio = distribution earnings per share ¹⁰ Profit figure includes a non-recurring, positive tax effect of CHF 5.5 million Annual Report

4 Development property Condominiums Zurich, Schilf Hinterbergstrasse 53 2

5 CONTENTS Key figures 1 About Mobimo 4 The company 6 Group structure and milestones 7 Board of Directors/Executive Board 8 Strategy/Portfolio 10 Share information 12 The 2012 financial year 14 Letter to Shareholders 16 Review Sustainability report 22 Financial report 36 Consolidated annual financial statements 38 Consolidated balance sheet 38 Consolidated income statement 40 Consolidated statement of comprehensive income 41 Consolidated statement of changes in equity 42 Consolidated cash flow statement 43 Notes to the consolidated annual financial statements 44 Segment reporting 52 Property details 94 Trading property details 94 Geographic breakdown of trading properties 95 Commercial property details 96 Residential property details 104 Details of investment properties under construction 106 Details of properties owned and used by Mobimo 106 Co-ownership details 106 Breakdown of residential and commercial investment properties and 108 commercial development properties by economic area Report of the statutory auditor on the consolidated financial 109 statements to the General Meeting of Mobimo Holding AG Report of the valuation expert 110 EPRA key performance metrics 114 Annual financial statements of Mobimo Holding AG 116 Balance sheet 116 Income statement 118 Notes to the annual financial statements 119 Proposed appropriation of profit 122 Report of the statutory auditor to the General Meeting of Mobimo Holding AG 123 Corporate governance 124 Corporate governance 126 Remuneration and profit-sharing 136 Contact addresses 140 Annual Report

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7 About MOBIMO Development property, Investments for Third Parties Rental apartments, commercial Dübendorf, Hochbord Sonnentalstrasse 10

8 T H E C O M P A N Y Mobimo a leading Swiss real estate company Mobimo Holding AG was established in Lucerne in 1999 and has been listed on the SIX Swiss Exchange since Today Mobimo is one of the leading real estate companies in Switzerland. Following the merger with LO Holding Lausanne-Ouchy SA at the end of 2009, it now ranks as one of the biggest market players in both German-speaking and French-speaking Switzerland. Acquisitions and investments are targeted mainly in the economic areas of Zurich and Lausanne / Geneva, together with those of Basel, Lucerne / Zug, Aarau and St. Gallen. A premium portfolio As at 31 December 2012, the real estate portfolio comprised 126 properties with a value of approximately CHF 2,355 million, which breaks down into CHF 1,558 million for investment properties and CHF 797 million for development properties. The portfolio mix is optimised on an ongoing basis, and the residential component is gradually being increased through the planning and construction of investment properties for the company s own property portfolio. The medium-term target is for office space, residential and other commercial usage to each account for around 30 % of the portfolio. 75 % Rental income Investment properties Growth + stable returns Core competencies 1. Buying and selling 2. Development 3. Portfolio management Solid financing Mobimo s business model sets it apart from its competitors. 25 % Appreciation in value / capital gains / service income Development properties Investments for Third Parties Secure earnings Around three-quarters of the property portfolio is invested in investment properties which are broadly diversified in terms of both location and use. The rentable area of 493,000 m2 provided potential rental income of some CHF 103 million p.a. as at 31 December This means that a high proportion of revenues is stable and predictable. The company s portfolio management team ensures close proximity to the market and allows the company to react swiftly to any changes in the market. Development properties with appreciation potential Mobimo is currently planning and realising investment properties (CHF 1,100 million) and condominium properties ( CHF 540 million) with a total investment volume of around CHF 1,650 million. Business model combines stable returns with growth With a solid financing base and equity of not less than 40 % of total assets, Mobimo plans, builds and maintains returnoriented investment properties and realises development properties offering attractive potential gains. Based on its three core competencies buying / selling, development and portfolio management Mobimo has successfully built up a premium investment portfolio comprising commercial, industrial and residential properties and generating broad-based rental income with steady returns. A well-stocked project pipeline provides a steady supply of new investment properties to be held in the portfolio or sold to third-party investors, along with attractive condominium apartments which, when sold, will generate capital gains. In addition to these developments, Mobimo also offers development services for third parties up to and including turn-key real estate investments for institutional and private investors. Area, site and project developments are turned into reality in a way which meets the needs of the market and is sustainable. Cooperation with partners takes a number of different forms, and is structured in line with requirements and depending on the stage reached. Attractive dividend yield Mobimo has consistently generated a high dividend. Since the initial public offering in 2005, CHF 9.00 has been paid out to Mobimo shareholders each year in the form of a withholding tax-exempt nominal value repayment or capital repayment. 6

9 GROUP STRUCTURE AND MILESTONES Group structure Mobimo Holding AG Share capital: CHF 180 million BoD: Urs Ledermann, Daniel Crausaz, Brian Fischer, Bernard Guillelmon, Wilhelm Hansen, Paul Rambert, Peter Schaub, Georges Theiler Executive Board: Dr. Christoph Caviezel, Manuel Itten, Peter Grossenbacher, Andreas Hämmerli, Thomas Stauber Statutory auditor: KPMG AG Mobimo Mobimo AG LO Holding JJM Participations SA Immobilien Invest Management AG Lausanne-Ouchy SA Holding AG Share capital: Share capital: Share capital: Share capital: Share capital: CHF 0.1 million CHF 72 million CHF 12 million CHF 6 million CHF 0.15 million Milestones 1997 On 15 October 1997, Dr. Alfred Meili, together with private banker Karl Reichmuth and other investors, founds Mobimo AG, with its headquarters in Lucerne. The company s share capital is CHF 36 million, on top of which there is another CHF 36 million in the form of shareholder loans Mobimo Holding AG, Lucerne, is founded on 27 December Its share capital is CHF 73 million Under a private placement in October 2000, Mobimo Holding AG s share capital is increased to CHF 181 million On 23 June 2005, Mobimo Holding AG is listed on the SIX Swiss Exchange following a successful IPO, involving an issue volume of CHF 112 million On 8 June 2006, Mobimo conducts a capital increase of CHF 143 million; at the end of June 2006, share capital amounts to CHF 225 million and shareholders equity to CHF 596 million A further capital increase of CHF 149 million takes place on 4 June As at 30 June 2007, Mobimo s shareholders equity stands at CHF 757 million The newly formed Board of Directors, headed by Chairman Urs Ledermann, and the Executive Board, headed by CEO Dr. Christoph Caviezel, review the company s strategy and direction Mobimo Holding AG s exchange offer for LO Holding Lausanne-Ouchy SA is successfully completed on 9 November 2009; the share capital is increased by CHF 27 million in order to carry out the conversion In June 2010, Mobimo Holding AG successfully completes a CHF 175 million convertible bond issue maturing on 30 June A further capital increase of approximately CHF 193 million is conducted on 6 December Mobimo Holding AG issues 1,028,350 new registered shares, which are traded on the SIX Swiss Exchange for the first time on 7 December Annual Report

10 BOARD OF DIRECTORS f.l.t.r. Urs Ledermann Chairman of the Board of Directors Member of the Real Estate Committee Member of the Remuneration Committee Georges Theiler Vice Chairman of the Board of Directors Chairman of the Real Estate Committee Chairman of the Remuneration Committee Peter Schaub Member of the Board of Directors Chairman of the Audit & Risk Committee Bernard Guillelmon Member of the Board of Directors Brian Fischer Member of the Board of Directors Member of the Real Estate Committee Daniel Crausaz Member of the Board of Directors Member of the Audit & Risk Committee Member of the Remuneration Committee Paul Rambert Member of the Board of Directors Member of the Real Estate Committee Wilhelm Hansen Member of the Board of Directors Member of the Audit & Risk Committee Member of the Remuneration Committee 8

11 EXECUTIVE BOARD Thomas Stauber Member of the Executive Board, Head of Investments for Third Parties Manuel Itten Member of the Executive Board, CFO Dr. Christoph Caviezel Chairman of the Executive Board, CEO Peter Grossenbacher Member of the Executive Board, Head of Portfolio Management Andreas Hämmerli Member of the Executive Board, Head of Development Modell: Investment and development property Zurich, Am Pfingstweidpark and Mobimo Tower Annual Report

12 StrategY Qualitative growth Mobimo strives to grow its real estate portfolio on a stepby-step basis. This growth takes place primarily through the construction of investment properties for the company s own portfolio as well as through the acquisition of individual properties or portfolios. Growth may also be achieved via company takeovers. The decision to grow is taken when the elements of price, location and future prospects come together in such a way as to create value for shareholders. Mobimo invests in promising locations in Switzerland. We see these primarily as the economic areas of Zurich and Lausanne / Geneva, together with those of Basel, Lucerne / Zug, Aarau and St. Gallen. Investments are only made in sustainably good locations. Good portfolio mix Over the medium term, the investment portfolio comprises approximately one-third residential usage, one-third office usage and one-third other commercial usage. Active portfolio management The real estate portfolio is optimised and adjusted on an ongoing basis. Value is rigorously maintained and increased by cultivating relationships with lessees, ensuring a high level of rental occupancy, optimising costs and implementing effective marketing strategies. Value through development Real estate development focuses on the following areas: the development and construction of new investment properties for our own portfolio the continued development and optimisation of proprietary real estate holdings the development, construction and sale of condominium properties development and investments for third parties Sustainability Quality of life is expressed, inter alia, in the design of living, residential and working space. In addition to economic aspects, Mobimo also incorporates environmental and socio-cultural factors in its activities. This results in added value for the users of Mobimo properties and for shareholders. Solid financing Mobimo can borrow on both a short- and long-term basis. Equity should amount to at least 40 % of total assets. Profitable investment The Mobimo share regularly generates high dividends. It is characterised by steady value growth and an attractive payout ratio. 10

13 portfolio Real estate portfolio as at 31 december 2012 Overall portfolio CHF 2,355 million 66 % 34 % Investment properties CHF 1,558 million Development properties CHF 797 million 50 % 16 % 14 % 5 % 15 % Commercial properties CHF 1,177 million 1 Residential properties CHF 381 million Commercial properties (investment) CHF 329 million 2 Residential properties (investment) CHF 122 million 3 Residential properties (trading) CHF 346 million 7 % 11 % portfolio mix as at 31 december % 32 % Office Residential Retail Industry Hotels / catering Other use 5 17 % 19 % breakdown of portfolio by economic area 6 8 % 8 % 4 % 52 % Zurich Lake Geneva North-western Switzerland Eastern Switzerland Central Switzerland 28 % 1 Including owner occupied properties ² Including commercial properties under construction (investment properties under construction) in Affoltern am Albis, Obstgartenstrasse; Horgen, Seestrasse 93 (Meilenwerk); Lausanne, Avenue d Ouchy 4 6 and Lausanne, Les Pépinières, as own-portfolio developments ³ Including residential properties under construction (investment properties under construction) in Affoltern am Albis, Obfelderstrasse; Regensdorf, Schulstrasse; Zurich, Turbinenstrasse City West Site C and Lausanne, Rue Voltaire, as own-portfolio developments ⁴ Breakdown of target rental income by type of use (overall portfolio without trading properties) ⁵ Other use mainly comprises car parks and ancillary uses ⁶ Breakdown of fair values / carrying amounts of properties by economic area (overall portfolio) Annual Report

14 SHARE AND CONVERTIBLE BOND INFORMATION I. Overview No. of shares No. of shares as at 31 December Share capital (in TCHF) 180, , , , ,230 No. of registered shares issued 6,208,913 6,170,098 5,131,170 5,053,552 4,355,323 Nominal value per registered share (in CHF) Of which treasury shares 8,744 1,747 1,071 4,373 10,000 No. of registered shares outstanding 6,200,169 6,168,351 5,130,099 5,049,179 4,345,323 Share data No. of shares as at 31 December Earnings per share Earnings per share not including revaluation NAV per share, after options and convertible bond Gross dividend Dividend yield (distribution yield) 4.1 % 4.3 % 4.5 % 5.1 % 6.4 % Payout ratio 2 73 % 58 % 69 % 64 % 87 % Share price Stock market price in CHF per share High Low Year-end price Average no. of shares traded per day 9,309 10,878 6,857 6,259 3,558 Market capitalisation at year-end (in CHF million) 1, , , Source: SIX Swiss Exchange The registered shares of Mobimo Holding AG are traded on the SIX Swiss Exchange in Zurich and are listed in accordance with the Standard for Real Estate Companies. Code: MOBN / Swiss security no.: / ISIN code: CH , Bloomberg: MOBN SW Equity / Reuters: MOBN.S The latest stock market data can be found at II. Share price performance 1 January 2007 to 31 December Mobimo Real Estate Index SPI Index As at 31 December 2012, Mobimo s share price of CHF was 12.7 % above the diluted NAV (net asset value) of CHF Taking into account the distribution from the capital contribution reserves of CHF 9.00 per share on 25 April 2012, Mobimo shares achieved a total performance of 9.6 % for the year as a whole. The liquidity of the Mobimo share and the trading volume fell slightly. An average of 9,309 (prior year: 10,878) shares were traded each day, generating daily revenues of around CHF 2.0 million (prior year: CHF 2.3 million). The Mobimo share generated total revenues of CHF 510 million (prior year: CHF 590 million) on the SIX Swiss Exchange in ¹ Distribution of paid-in capital for 2012 financial year of CHF 9.00 per share in accordance with proposal to General Meeting of 9 April 2013 ² Payout ratio: distribution earnings per share ³ Historical prices adjusted for share splits and distributions (source: Bloomberg)

15 III. Convertible bond Mobimo convertible bond 99 Jun 2010 Dec 2010 Jun 2011 Dec 2011 Jun 2012 Dec 2012 Source: Bloomberg In June 2010, Mobimo successfully completed a CHF 175 million convertible bond issue with a coupon of %, maturing in 2014, with a conversion price of CHF (original conversion price before the capital increase on 6 December 2011: CHF ). Published credit ratings for Mobimo: UBS: BBB stable; ZKB: BBB+. The convertible bond of Mobimo Holding AG is traded on the SIX Swiss Exchange in Zurich and is listed in accordance with the Standard for Bonds. Code: MOB10/Swiss security number: /ISIN code: CH , Bloomberg: MOBIMO Corp./Reuters: CH % IV. Shareholders Significant shareholders The following shareholders held more than 3 % of the share capital as at 31 December 2012: Zuger Pensionskasse, 3.38 % BlackRock, Inc % Free float as at 31 December 2012 (as per SIX Swiss Exchange definition): 100 % Shareholder structure 28 % 11 % 16 % 39 % Individuals Pension funds, insurers, banks Foundations Other companies Shares pending registration of transfer V. Communication Mobimo provides information on its business performance via annual and half-year reports prepared in English, German and French. Price-relevant facts are communicated via ad hoc notices. Information on our company, the Mobimo share, key dates and answers to commonly asked questions can be found on the website The information is updated on an ongoing basis. To protect the environment, print versions of Mobimo Holding AG s annual and half-year reports are only sent out by post upon request. A summary report on the 2012 financial year is to be sent to shareholders. VI. Contact addresses and calendar Mobimo Holding AG Dr. Christoph Caviezel, CEO Manuel Itten, CFO Tel ir@mobimo.ch Share register Tel info@sharecomm.ch General Meeting April 2013, KKL Lucerne Financial reporting 2013 interim results: 15 August 2013 Annual Report

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17 The 2012 Financial year Investment and development property Rental apartments and condominiums Zurich, Am Pfingstweidpark Turbinenstrasse 22 56

18 LETTER TO SHAREHOLDERS 2012: A GOOD YEAR DEAR SHAREHOLDERS Ladies and gentlemen 2012 was another good year for Mobimo Holding AG. Our company continues to deliver a a dynamic performance driven by a motivated and skilled team, an increasingly strong market position and steady demand for high-quality residential and commercial real estate. We have pressed ahead with a number of challenging building projects, some of which have already been completed, initiated attractive new projects and secured new sites for future developments. The quality of the investment portfolio has increased further, the residential component is on the up and occupancy rates are high. Our condominium units are in demand and our new Investments for Third Parties business area is performing well. The 2012 financial year can also be depicted in figures. The real estate portfolio grew to a total value of CHF 2,355 million as at the year-end reporting date (year-end 2011: CHF 2,171 million). The Group s operating profit (EBIT) reached CHF million, almost as high as the previous year s figure of CHF million, while net profit, excluding last year s non-recurring tax effect, increased by 2 % to CHF 76.3 million (2011: CHF 75.0 million after adjustment for the nonrecurring effect). Both net rental income from the planned growth of the investment portfolio and trading and revaluation gains contributed to this pleasing result. This will enable us to again propose a distribution of CHF 9 per share to the Annual General Meeting. Continued good market conditions in a challenging environment The Swiss real estate market remained robust in In the major economic centres especially, the stable economy, the persistent inflow of immigrants, the need for more living space and the growing number of small households are driving the continued demand for high-quality living space. Despite numerous calls to exercise restraint, demand for condominiums shows no sign of flagging. The low interest rates are making condominiums too attractive for many people when compared to apartment rentals. Sales of condominiums in the highest price ranges have slowed, however, while high rents are only achievable in the best locations. Market demand for centrally located office and commercial space is still intact. The transaction prices for purchasing investment properties often do not match our return expectations. Due to our own development activities this does not affect our growth, but in fact makes it easier to sell investments at good prices. Building is becoming increasingly expensive, though, but this has more to do with the obstacles of increasingly stringent regulation and building restrictions than with rising contractor and materials costs. Mobimo s locations and products mean it is still well positioned to succeed even in the face of increasing competition. Comprehensive construction activity progressing according to plan Mobimo s comprehensive and challenging building programme has progressed according to plan. Mid-2012 saw the completion of the Polygon office building for Rockwell Automation in Aarau. The resulting concentration of space will now allow for the realisation of the new AQA urban district on the former Torfeld Su d industrial site (page 22). The renovation of the office building on our Post Office site in Lausanne is at an advanced stage. The tenant, an up-and-coming bank, will also be able to move into its new head office during the first half of In Adliswil, 51 of the 57 apartments realised in the Wilacker development have been transferred to their new owners and occupied since the spring. Three apartment buildings in the same residential development have also been completed and transferred to an investor. The condominium apartments of the 16

19 Schilf project on the Zu richberg (page 3) have also been completed and in most cases are now occupied. The shells of the three residential buildings containing 250 rental and condominium apartments on the Am Pfingstweidpark site (page 14) at the foot of the Mobimo Tower in Zurich West are practically complete. Construction has started on the multifunction Pépinières building in Lausanne-Flon, which has already been fully let, and on the mixed development on the OVA site near the station in Affoltern am Albis, where a longterm rental agreement has been concluded with the future operator of the site s retirement centre for the elderly. Finally, construction of the new Im Pfand housing development in Regensdorf, with 141 apartments, began at the end of the year. However, due to objections since resolved the realisation of the planned Meilenwerk vintage car centre at the former Grob industrial building in Horgen has been delayed. Higher income from all areas Income from the sale of condominiums (trading properties) once again reached the high figure of CHF 21.7 million (prior year: CHF 22.3 million). Apartments were sold for a total of CHF 152 million. While demand in the mid-price segment continues to be as high as ever, the sale of the final highprice apartments in the Mobimo Tower is proving to be more complex than planned, despite sustained high interest. Consequently, we have sold the land we had set aside for the construction of luxury properties in Erlenbach and are now focusing primarily on developments in the mid-price segment. Rental income rose substantially again to CHF 92.8 million (2011: CHF 88.8 million) despite the reduction in the reference interest rate. This is due in part to the acquisition of new investment properties and also to the completion of the extensive portfolio adjustments in 2010 and 2011 in particular, which have substantially raised the quality of the investment portfolio and rental income. The vacancy rate remains low compared with the rest of the market at 3.8 %. In the office segment, the focus on newly built or sustainably renovated mid-price buildings in central locations is paying off. The progress made on the construction of existing projects, rental contract optimisations and the market-related reduction in the discount rate also contributed towards net income from revaluation of 36.9 million (2011: CHF 41.2 million. Pipeline filled with attractive new sites Mobimo is set to continue on its growth path. Properties intended for the company s own investment portfolio, with an investment volume of around CHF 440 million, are currently under construction or close to completion. There are also plans for more projects for the company s own portfolio with an investment volume of some CHF 670 million saw the addition of a characterful former commercial and office building on Badenerstrasse in Zurich Altstetten (page 36), which is being converted into an attractive residential property with more than 40 lofts and studios. In Lausanne, the realisation of a development of 81 rental apartments on Rue Voltaire (page 141), very close to the railway station, began at the turn of the year. Mobimo s development expertise is held in high regard by the market and provides us with access to interesting land and sites. Winning a competition to be a development partner for the towns of Biel and Nidau was a special honour for Mobimo. This project will see 130,000 square metres of the former Expo 2002 site on the shores of Lake Biel developed into a new and attractive suburb of the Bernese watchmaking metropolis under the name AGGLOlac. Annual Report

20 LETTER TO SHAREHOLDERS Shortly before the end of the year, Mobimo and Hochtief Development AG signed a development contract with Rheinmetall Air Defence, which is searching for a new production location, for its 53,000 m² site in Zurich Oerlikon. The company s withdrawal offers the city of Zurich a great opportunity to turn this area between the station and the residential district into a new urban zone. Situated close to one of Switzerland s busiest stations, the area is ripe for development to transform the old industrial site into a new and exciting mixed-use district focused on residential, service and commercial buildings. This and other development projects such as Mattenhof Lucerne Su d, Flon Lausanne and the Post Office in Lausanne will ensure that Mobimo has a stable and broad-based pipeline for years to come. The new Investments for Third Parties business area, active since 1 January 2012, is also performing well. The team is already working on its first project, a residential development of around 250 rental apartments in Du bendorf (page 4), and secured a further site in Olten at the beginning of Solid financing and a high equity ratio Mobimo s balance sheet is extremely solid and our business is highly predictable. The average residual maturity of our financial liabilities is 9.1 years and the average interest rate as at 31 December 2012 is a modest 2.83 %. As at the end of the year our equity amounted to CHF 1,201.0 million, corresponding to a solid equity ratio of 48 %. Positive share price performance The Mobimo share closed at CHF on 31 December 2012, around 5 % above its closing price as at the end of Including the withholding tax exempt (for individuals) dividend of CHF 9 per share that was paid out on 25 April 2012, this equates to a performance of 9.6 % for the year as a whole. Customer satisfaction is the top priority The satisfaction of our customers is our top priority. We have been able to consistently increase customer satisfaction in recent years by investing in the development of quality standards and in service and by forging close and intensive relationships with customers. Outlook for 2013 We are also optimistic for the coming financial year. From today s standpoint we expect continuity, which means the usual continuation of our company s dynamic performance. The main focus of our activities also remains unchanged: the realisation of our numerous construction projects, the expansion of development business for ourselves and third parties, condominium sales, space marketing and the targeted management and optimisation of our portfolio. Thank you for the trust you have placed in us. Urs Ledermann Chairman of the Board of Directors Christoph Caviezel CEO 18

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22 Re v ie w 2012 GOOD RESULT AND SUCCESSFUL PERFORMANCE Good result with profit of CHF 76.3 million Mobimo once again achieved a good result at all levels in the 2012 financial year, generating a profit of CHF 76.3 million (2011: CHF 80.5 million) and thus consolidating the record result of the previous year. The prior-year result included a one-time positive effect of CHF 5.5 million under tax expense; adjusted for this effect the profit generated in 2012 was 2% higher than the prior-year figure. The profit before revaluations was CHF 48.6 million (2011: CHF 49.6 million). Again adjusted for the one-time tax effect in 2011, this equates to an increase of 10%. EBITDA of CHF million EBITDA of CHF million (2011: CHF million) and EBIT of CHF million (2011: CHF million) achieved in the year under review were both down slightly year-onyear. Before revaluations, however, EBITDA and EBIT both rose slightly to CHF 81.8 million (2011: CHF 81.2 million) and CHF 80.7 million (2011: CHF 79.9 million) respectively. Profit before tax was CHF 93.7 million (2011: CHF 92.4 million), up 1 % on the prior-year figure. EBT before revaluations was CHF 56.8 million (2011: CHF 51.2 million), an increase of 11% year-on-year. Solid earnings per share of CHF A capital increase was carried out successfully on 6 December 2011 through the issue of 1,028,350 new shares, generating CHF 193 million in new funds for the company. As a result of the increase, the number of shares issued rose by 20% as at the end of 2011 to 6,170,098. Mobimo generated earnings per share of CHF (2011: CHF 15.46) and diluted earnings per share of CHF (2011: CHF 14.00) on the higher number of shares in the 2012 financial year. Before revaluations, earnings per share were CHF 7.85 (2011: CHF 9.53) and diluted earnings per share CHF 7.64 (2011: CHF 8.90). The earnings per share generated will enable Mobimo to maintain its attractive dividend policy, and the company will once again propose a distribution of CHF 9 per share for the 2012 financial year to the forthcoming General Meeting. As at 31 December 2012 the net asset value (NAV) per share was CHF (year-end 2011: CHF ) and the diluted NAV per share was CHF (year-end 2011: CHF ). The closing share price of CHF on 31 December 2012 represents a premium of 13% over the diluted NAV. Solidly financed and an equity ratio of 48% Mobimo continues to have a very solid capital base with an equity ratio of 48% (2011: 47%) as at 31 December The average residual term of the company s financial liabilities fell slightly to 9.1 years (year-end 2011: 9.2 years) as at the end of the year. Its excellent liquidity meant there was only minimal need for refinancing in the 2012 financial year. The average interest rate of the financial liabilities was further reduced to 3.00% in the year under review, compared with 3.02% in the previous year. As at the reporting date of 31 December 2012 the average interest rate was even lower at 2.83%. Mobimo will continue to use the extremely attractive interest rate environment to tie in interest rates at a very low level over the long term Overall portfolio grows to more than CHF 2.35 billion The value of the overall portfolio grew by 8% in the 2012 financial year from CHF 2,171 million as at 31 December 2011 to CHF 2,355 million as at 31 December Net income from revaluation was CHF 36.9 million (2011: CHF 41.2 million), down 10% overall year-on-year. As at 31 December 2012 the average discount rate used for real estate valuations was slightly lower at 4.63% (year-end 2011: 4.76%). Increase in rental income to CHF 92.8 million and low vacancy rate of 3.8% Rental income was up 5% in 2012 to CHF 92.8 million (2011: CHF 88.8 million). Eight properties were sold in 2011 as part of the portfolio adjustment process. These portfolio adjustments reduced potential rental income by around CHF 6.7 million per year. The reduction was more than offset by the completion in 2011 and 2012 of properties under construction, with potential rental income totalling CHF 17.7 million per year, and their addition to the investment portfolio. The following properties developed by Mobimo were added to the investment portfolio during this period: Aarau, Polygon Industriestrasse Lausanne, Place de l Europe 6 Lausanne, Rue de Genève 7 Lausanne, Rue Beau-Séjour 8 Zurich, Manessestrasse 190/192 Zurich, Turbinenstrasse Hotel (Mobimo Tower) 20

23 As at 31 December 2012, the vacancy rate was still at the very low level of 3.8% (year-end 2011: 3.3%). Net rental income was CHF 79.8 million (2011: CHF 76.0 million) in 2012, an increase of 5% on the prior-year figure. The net yield on investment properties in the year under review was 4.8% (2011: 5.0%). Residential properties sold for CHF million Income from the sale of trading properties in the 2012 financial year was well above the prior-year figure at CHF million (2011: CHF million). Net income from the sale of trading properties was similar to the prior-year level at CHF 21.7 million. (2011: CHF 22.3 million). The successful result is primarily due to the transfer of ownership of residential properties from the following projects: Adliswil, Wilacker Erlenbach, Forch- / Glärnischstrasse Zurich, Hinterbergstrasse Zurich, Turbinenstrasse (Mobimo Tower) A total of 76 residential properties were transferred in 2012, comprising condominiums and also three properties with a total of 18 apartments that were sold in a single package as a residential complex. As at 31 December 2012, notarised sales agreements with a value of around CHF 149 million had been concluded for condominiums at the realisation stage, which will generate proceeds when ownership is transferred. Overall, work on all home ownership development projects proceeded as planned in the 2012 financial year. Project pipeline of around CHF 1.1 billion for the company s own portfolio Mobimo s growth is driven by the targeted development of residential and commercial properties for its own portfolio, the quality of which is being further optimised as new investment properties are constructed. The following properties for Mobimo s own portfolio were under construction or at the completion stage as at the end of 2012: Affoltern am Albis, Obstgartenstrasse retirement apartments Affoltern am Albis, Obfelderstrasse rental apartments Horgen, Seestrasse 93 Lausanne, Avenue d Ouchy 4 6 (administration) Lausanne, Les Pépinères Lausanne, Rue Voltaire 2-12 (Petit Mond-Riond) Regensdorf, Schulstrasse 95 / 101 / 107 / 115; Riedthofstrasse 55 / 63; Feldblumenstrasse 44 Zurich, Turbinenstrasse, City West (site C) The total investment volume for these projects is around CHF 440 million. The following projects for the company s own portfolio, involving a total investment volume of CHF 670 million, are also being planned: Aarau, Torfeld site 2 Aarau, Torfeld Aeschbachhalle Kriens, Mattenhof site Lausanne, Rue des Côtes-de-Montbenon Lausanne, Rue de Genève 19/21 Lausanne, Avenue d Ouchy 4 6 (development) Lausanne, Rue de la Vigie 3 Zurich, Albulastrasse/Hohlstrasse (Labitzke site) Zurich, Letzigraben The properties under construction and planned will create additional potential rental income of over CHF 61 million a year for the company s own portfolio. In addition to the projects at the planning or completion stage, Mobimo is development partner to the towns of Biel and Nidau in their AGGLOlac project and to the company Rheinmetall in the development of its site in Zurich Oerlikon. These developments offer further opportunities to supplement Mobimo s own portfolio with carefully selected, attractive investment properties. Inclusion of share in the Stoxx 600 After inclusion in the FTSE EPRA/NAREIT in the prior year, the Mobimo share was added to the Stoxx Europe 600 benchmark equity index, another important index, in the 2012 financial year. Manuel Itten, CFO Annual Report

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25 Sustainability report Park 5,000 m² Investment and development property Residential, office, commercial and leisure use Aarau, Torfeld Süd, AQA 50,000 m² site

26 Sustainability report CHRISTOPH CAVIEZEL, CEO A broad market segment with a long-term impact From a sustainability perspective, real estate is a broad market segment that also has a long-term impact. Decisions we take in the real estate sector today will have an impact on the environment, the socio-demographic development of communities and townscapes, people s quality of life and the business success of our real estate company for decades to come. This makes it all the more important to tackle the challenges in a conscious and targeted manner. Climate change, the limited availability of oil and gas and the planned withdrawal from nuclear energy are placing new demands on the construction and real estate industry. The majority of final energy consumption (around 46 %) is attributable to the 1.64 million buildings in Switzerland. Buildings generate about 35 % of all greenhouse gas emissions. New, more stringent political requirements are to be expected. The tighter rules for newbuilds and conversions and the overall efficiency of buildings thus form part of the debate on the energy strategy for 2050 (e.g. the introduction of compulsory energy inspections for building technology and operational optimisation). International and national building standards and certification systems (DGNB, LEED, the 2000 Watt society, Minergie, etc.) are being implemented; these measure the quality and value of real estate in relation to the three dimensions of sustainability economy, environment and society and rate them objectively and transparently for customers and shareholders. This standard-based measurement is having an increasing influence on the valuation methods and value of real estate (e.g. the attention now being paid to life cycle considerations), is having an impact on the markets (the prices achieved from purchasers and tenants) and is now an important political topic (introduction of a Swiss standard ). It should not be forgotten that real estate with added value represents a genuine option or alternative in the investment markets. Strategically and organisationally integrated At Mobimo we embrace sustainability as an opportunity. As a forward-looking real estate company we regard sustainability as an investment in the future and have therefore integrated it into our real estate strategy. We identify the expected opportunities and risks such as those mentioned above as quickly as possible and take them into account in our corporate decision-making processes. We regularly review our strategic objectives, measures taken and how quickly they are put into practice, and the implementation of sustainability within the company, with the highest decision-making body, the Real Estate Committee, which is composed of members of the Board of Directors. Sustainability is taken into account in current and future investment and portfolio decisions. The strategy sets out the targets for the portfolio in respect of investment and development. It also defines how we work with partners, our commitment to organisations, our communication process and the training and professional development of our employees. Goals and successes In terms of the environment, our most important objective is to increase the energy efficiency of buildings, use renewable energies and reduce greenhouse gas emissions. We have therefore collected these data from the entire portfolio for our sustainability report and indicated the change we hope to achieve between 2011 and We are systematically continuing our work with certification bodies and implementing their standards. Mobimo sets itself apart through the social responsibility demonstrated on its sites, with forward-looking concepts that bring together the worlds of living, leisure and work so effectively as to offer people our customers a particularly high quality of life. We are sticking to our economic objectives: as a leading real estate company, Mobimo takes care to strike a realistic and successful balance between generating profits and safeguarding the future of the company. Acting sustainably makes an important contribution to boosting the value of individual properties and the portfolio. We have been able to celebrate further successes in 2012 thanks to the dedication and commitment of all our employees. A year is a short time in real estate. We would therefore like to acknowledge and praise our employees increasing awareness of sustainability and in particular their impressive efforts to implement it. One indicator of this is the number of further increases in the already high satisfaction levels of our customers. Furthermore, Mobimo applied the guidelines of the European Public Real Estate Association (EPRA) for the first time in its Annual Report 2011, for which it was awarded a gold medal. Mobimo also received the prestigious award for the Most Improved Annual Report, which achieved GRI Level B (prior year: Level C). The commensurate certificate can be found on the last page of this sustainability report. 24

27 MOBIMO SUSTAINABILITY REPORT INTRODUCTION Sustainability is of central importance Sustainability is of central importance to the real estate sector. This includes setting objectives for all three dimensions of sustainability: environmental, sociocultural and economic. For Mobimo, sustainability means successfully striking a realistic balance between generating profits and safeguarding the future of the company. Mobimo wants its properties to create a basis for modern, healthy, responsible and environmentally friendly living and working. Given the limited availability of non-renewable forms of energy, demand for sustainable homes and office buildings is set to rise further in the years to come. Sustainability is an integral part of the real estate strategy Mobimo wants to seize this opportunity and integrate an environmental and market focus into its real estate strategy by developing living and working spaces that are fit for the future. This should ensure that growth is in line with the guiding principle, by means of future-oriented properties. Existing buildings are renovated sustainably wherever possible. Sustainable buildings should be identifiable by means of nationally or internationally recognised certificates such as Minergie, DGNB or LEED. The integration of sustainability issues is linked to investment that will create value over the medium to long term, as lower operating and maintenance costs make up for higher initial construction costs. The growing demand will cause sustainable Mobimo buildings to appreciate, thereby adding value for customers and shareholders. Gains in investment property values are achieved through active portfolio management, in other words: ongoinganalysis and rationalisation. The newly added properties largely meet the latest construction standards. Building renovations also help to constantly improve the quality of the portfolio. Sustainability is an integral part of day-to-day business Mobimo addresses sustainability at all levels. This means not only investing in projects, but also making a commitment to shareholders, customers and employees in the interests of society, both today and in the future. The key stakeholders include shareholders, customers and employees, but also partners from the construction industry and other organisations and associations of relevance to society. In order to report transparently on its sustainability activities, in 2012 Mobimo is for the second time publishing a sustainability report as part of its annual report. This has been prepared in accordance with the Global Reporting Initiative (GRI) Guidelines and fulfils GRI Level B. Mobimo wants to drive the issue of sustainability further forward in 2013 and make it a core element of projects and of the company s profile. The code of conduct developed during the year under review is another major step in this direction. The code defines how Mobimo aims to carry out its business activities. Mobimo s reputation as a responsible and progressive company depends on the daily decisions and actions of each individual. This is why employees are expected to demonstrate personal responsibility and integrity. Mobimo s employees obey the law and act honestly and fairly. In the case of development projects, Mobimo sets itself apart through its choice of locations, the architecture selected, the efficient use of resources, the certified energy efficiency of buildings and the avoidance of emissions. Customers are included in the construction and development process from the outset, thus becoming directly involved with the product and its quality. Annual Report

28 Sustainability report CUSTOMERS Customer satisfaction is the top priority Mobimo s customers include private and commercial tenants of investment properties, along with institutional investors, interested parties and private purchasers of development projects. Ensuring their complete satisfaction is Mobimo s top priority, and the company seeks to achieve this through investment in developing quality standards, in service and in building close, intensive customer relationships. Mobimo s customers receive intensive support throughout the process, from the time they express an interest right through to the signing of contracts, and also benefit from after-sales care following the handover of the property. This includes specific services that Mobimo develops for particular sites or projects and which are aimed at the community generally (e.g. Flon, Lausanne). These have been met with great interest. Maintaining personal relationships, with an emphasis on keeping the same contact person wherever possible, also demonstrates to customers that Mobimo is always a reliable partner and understands their needs. The manager is the contact person for both business and private customers. Tenants should also know their manager and caretaker and interact with them. This close contact allows Mobimo to ensure that customers and their satisfaction are always its top priority. To constantly improve satisfaction levels and cooperation with customers, surveys are conducted at clearly defined points in the customer process. When selling properties, these take place following official certification, following selection of the internal fixtures and fittings, three months after transfer of possession and three months after the two-year acceptance. Purchasers express a high degree of satisfaction with Mobimo, giving it an average score of more than 74 % over the entire process. Satisfaction levels for commercial and residential customers are also surveyed annually. This survey is also conducted by an independent external partner. Customer satisfaction was very pleasing once again in the year under review: 87 % of commercial customers and 84 % of residential customers would recommend Mobimo to a good friend. Personal, individual contact Mobimo takes complaints very seriously and constantly strives to improve. The procedure for dealing with any such complaints is clearly defined, as are the relevant responsibilities and deadlines. Short information channels, personal contact and fast responses to s and letters are top priorities. Mobimo endeavours to find the best possible solution for every customer. The Portfolio Management department receives hardly any complaints due to the adjustments made to the portfolio and the resulting improvements in the quality of the properties. Furthermore, the more accurate understanding of customer requirements thanks to regular surveys has led to a steady increase in the quality of the offering and services. Maintaining personal contact with customers is of central importance in this respect. Mobimo employees make regular on-site visits to commercial tenants (offices, commercial space, retail, hotels) in particular. The caretaker is another important contact person who informs the occupants of each building precisely when and how he can be contacted, when he is present and what work is carried out to what schedule. As a quality assurance measure, each caretaker enters into a service level agreement. This requires the caretaker and the manager to treat the property as if it were their own. The caretaker s tasks include introducing himself to the customers personally and getting to know them so that he can deal promptly with any problems such as damage or stains. All incidents must be recorded, and then checked and monitored with the help of a specifications manual. It is also very important for the Development department to assist customers as early as possible and look after them throughout the entire purchase decision process. In the case of newbuild projects, even the basics at the building site have to be clearly defined. This is the first tangible step for the customer towards the realisation of his or her project. New projects, regular contact, checks and events help manage customer expectations and enhance their satisfaction with the purchase. Here, too, regular customer surveys throughout the entire process make an important contribution. All customers can also give personal feedback at any time, either directly to their customer advisor or manager, by , letter or telephone, or at a specific customer meeting. 26

29 Quality of products and services Mobimo wins people over through its quality. Clearly defined quality management for development properties is implemented at building sites and in services, with a particular emphasis on health and safety aspects. This covers the entire process: site preparation, development and construction, moving in, use and operation, waste disposal. Sustainability plays an important role at all stages. All products and services are systematically examined with a view to the health and safety of users and customers as part of the quality management process. The measures implemented do not simply comply with the standard regulations but actually exceed them. All external requirements laid down by the federal government, cantons, SUVA, SIA, the police, fire service, etc. are of course complied with, in addition to more stringent internal regulations. Attention is paid to sustainability aspects such as public transport links, accessibility, outdoor spaces and so on. To test implementation of requirements Mobimo always builds a show home in order to gauge customer reactions and needs and identify areas for technical improvement. With investment properties, Mobimo systematically ensures compliance with requirements and standards promulgated by the federal government, the cantons and organisations such as SIA and SUVA. In the case of newly built investment properties that are added to the portfolio, Mobimo also defines its own standards and criteria for sustainable construction aimed at achieving steady improvements in sociocultural, technological, environmental and locationrelated quality aspects and process stages. Health considerations in respect of residential space are closely scrutinised and awarded the Gutes Innenraumklima (good indoor climate) quality seal, for example. Depending on the property, themes such as feng shui or electrobiology may also be employed. With regard to health, the most up-to-date findings in the sector are implemented in newer properties. All the labels used comply with the highest levels of quality assurance and standards. Particularly when dealing with commercial tenants, the quality of the offering plays a decisive role, especially as a cost factor. Surveys show that tenants of office, commercial, retail and hotel space particularly appreciate Mobimo properties for their space, central location and transport connections. An attractive price/performance ratio is another advantage. Portfolio Management is planning a package of measures to promote service quality. As described above, Mobimo is in regular one-to-one contact with tenants. The contact persons are known to tenants and are available to answer questions or provide assistance. Mobimo s 24-hour helpdesk provides such support round the clock. Tenants are provided with full written notification of renovation plans in good time. In the case of major works, on-site information events are held. Commercial customers are always informed of changes of tenants within the building. The Mobimo website acts as an information and marketing portal for customers and partners. Mobimo takes care to pass on clear information to its customers. To do so, it uses various communication channels (brochures, newspaper advertisements, its own website and other platforms) and one-to-one information sharing via discussions with estate agents, architects and other parties. It reports on the key financial figures and on materials and technologies subject to declaration requirements. There were no incidents or breaches of declaration requirements during the period under review. Great importance is also attached to customer data protection, which is supported through the use of the latest IT technologies and suitable employee training. Adding value for customers For Mobimo, it goes without saying that customers should receive transparent information about the offering. This includes financial and other key data regarding the rental apartment or property being purchased, along with details of its use. Brochures, websites, factsheets, advertisements and personal conversations and planning meetings are used to communicate the information. In the case of properties for rent or purchase, instructions regarding the use and maintenance of the technical installations are also provided. Fulfilling customer requirements in this targeted manner remains Mobimo s primary objective in The company can expect to see rising demand among customers for sustainability in real estate. The direct added value for customers, which Mobimo wants to increase even further through its activities, relates above all to future energy cost savings and higher energy efficiency, as well as generally lower maintenance and running costs, special materials, a high standard of living and good infrastructure and public transport connections, plus add-ons such as artwork on buildings. The processes used are constantly improved and adjusted in order to promote these objectives. Annual Report

30 Sustainability report SHAREHOLDERS Adding value for shareholders Shareholders benefit from Mobimo s transparent information policy, which allows them to gain a good idea of future developments and decisions. Annual and half-year reports, up-to-date price information and news stories on the website in English, German and French, information events, this GRI report and more all serve to keep shareholders informed. They earn profits thanks to a well-performing share, the company s growth and the appreciation in the value of the portfolio. Mobimo is independent of the influence of any single shareholder or group of shareholders (100 % of its shares are in free float). This ensures that all shareholders are treated equally. ENVIRONMENT Clear guidelines for optimising the portfolio Mobimo is one of the leading real estate companies for sustainable building. By developing living and working spaces that are fit for the future, it integrates environmental aspects into its real estate strategy. Where possible, investments are made in central locations with good public transport links. Particularly in light of climate change, issues such as resource-saving power generation, energy efficiency and the reduction of emissions and pollutants are key aspects of the sustainability strategy. In terms of Mobimo s business model, this means reviewing the investment portfolio according to business, sociocultural and environmental criteria. As part of the ongoing cycle of renovation, properties are renovated sustainably where possible. Wherever possible, properties that are added to the portfolio meet high quality and environmental standards fulfilling the Minergie standard as a minimum requirement, for example. The portfolio is therefore optimised on an ongoing basis and its value increased in line with sustainability criteria. User behaviour is a specific challenge that has not yet been adequately aligned with the new, sustainable breed of real estate. Mobimo s customers are therefore provided with information and documentation that includes suggestions for making optimum use of the properties. High demands on development properties Mobimo was one of the earliest investors in Minergie-certified real estate and has been realising such properties since Going forward, Mobimo s development activities will maintain the systematic focus on high-quality properties that as a minimum must all meet the requirements of the Minergie standard or equivalent labels. As far as energy is concerned, in addition to the building envelope and the use of energy-efficient household appliances, the reduction of technical installations overall plays a key role and is in line with customer wishes. Alongside purely energy-related considerations, attention is also paid to the type of materials used, reduced water consumption and how waste water and other waste materials are dealt with. Within Switzerland, Mobimo uses the facilities provided for this purpose by municipalities, cantons or the federal government. Other key aspects include high-quality and generous landscaping and optimum conditions for sustainable mobility. This includes favourable public transport links, availability of car sharing services, sufficiently convenient bicycle parking and charging stations for electric cars. Mobimo s approach with regard to development properties is to work with partners that also actively support sustainability aims and possess the corresponding certificates. Setting a good example Two examples of the sustainable real estate strategy with regard to the environment are the developments of Wilacker in Adliswil and Rötiboden in Wädenswil. These modern residential buildings in the canton of Zurich were built using sustainable building materials in line with KBOB (Coordination of the Federal Construction and Properties Services)/IPB guidelines. This not only reduced the environmental burden but also helped create a better indoor climate. Both properties have been built to the Minergie standard: heat is supplied through a brine/water heat pump and rainwater drains away through an on-site soakaway system. The two examples illustrate how systematically Mobimo implements its sustainability strategy when developing new properties. 28

31 Wilacker property, Adliswil (Mobimo development to be sold as condominiums) Rötiboden property, Wädenswil (Mobimo development to be sold as condominiums) Energy: Built to Minergie standard Energy: Built to Minergie standard Heat supplied through brine/water heat pumps that use ground water Heat supplied through brine/water heat pumps that use ground water Use of energy efficiency class A washing machines and driers Use of energy efficiency class A washing machines and driers Materials: Use of sustainable building materials in line with KBOB/IPB sustainable planning and building guidelines Materials: Use of sustainable building materials in line with KBOB/IPB sustainable planning and building guidelines. Water: Waste: Use of water-saving sanitation systems On-site soakaway unit. Waste management system in line with requirements of the town of Adliswil. Water: Other: Use of water-saving sanitation systems. Use of largely domestic plant types in gardens. Other: Use of domestic plant types and extension of existing woodland vegetation for integration into the development Restoration of two streams Annual Report

32 Sustainability report Energy consumption and CO2 emissions One of the key aims of the real estate strategy is to reduce the portfolio s energy consumption. Since Mobimo has only partial access to actual consumption figures for investment properties, energy consumption and CO2 emissions data for last year s Mobimo annual report were calculated using a modelling tool. Each individual investment property in the existing portfolio was assigned to a building category (e.g. office building, 1960s-80s residential building, commercial building) Each building category is itself defined by specific energy values that describe the average consumption of heat energy and electricity per square metre for each building category. These energy values correspond to the average values of the Swiss building stock for the category concerned. more than 70 % of newbuilds (built in 2009 or later) comply with Minergie requirements. The Minergie values were therefore applied for these properties. The overall energy consumption for heat and electricity was then calculated for each investment property based on the energy-consuming space and energy values per square metre. Energy-consuming space was estimated at an average 85 % of overall usable space. Finally, CO2 emissions were calculated based on energy consumption for heat and electricity. Specifically, the CO2 emissions from heating were calculated for each investment property in line with the energy sources used (e.g. gas, oil or district heating) based on the factors published by the Federal Office for the Environment (FOEN), while the calculation of CO2 emissions from electricity consumption was based on the average Swiss consumer mix. Since a year is a short time in the real estate sector and changes happen very slowly, the calculations will not be repeated until the next reporting year and the results as of 2011 shown. The analysis of all Mobimo investment properties showed that properties built in or before 2008 consume a total of more than 232 kwh per m2 and year. Of this, 165 kwh/m2 relates to heating and 67 kwh/m2 to electricity. The newbuild properties in the portfolio, however, require just 83 kwh per m2 and year. This equates to a reduction of over 65 % compared with older investment properties. With regard to heating requirements in particular, building standards such as Minergie have produced huge advances. Chart above: Electricity and heat consumption of the properties in the Mobimo portfolio as at Heat consumption comprises heating, hot water and process heat. The electricity used for heat generation (hot water, process heat) is also included under heat consumption. More than 70 % of newbuilds (2009 and later) comply with Minergie requirements. The Swiss average value was determined using energy statistics and is based on the structure of building types in Switzerland as at 2010 (type and quantity). The different data sources used give rise to uncertainties, which are taken into account on a blanket basis with an overall range of 25 %. The width of the bar gives a clear indication of this. As the Mobimo portfolio includes a disproportionately high number of energy-intensive investment properties for commercial use in comparison with the Swiss building stock, energy consumption per m2 in the portfolio is slightly higher than the Swiss average. ¹ Energy values are based on analyses in ten cities and regions (Germany, Austria, Switzerland) and have been calibrated to the Swiss building stock. See also, for example, Berger, T., Genske, D., Hu sler, L., Jödecke, T., Menn, A. and Ruff, A. (2011). Energy Optimisation in the Canton of Basel-Stadt. Office of Environment and Energy, Basel-Stadt. 171 pages. ² Energy-consuming space is the space in which energy (electricity, heating, fuel) is consumed and excludes unheated areas of a building such as staircases and cellars. ³ Without concrete consumption figures, energy consumption calculations are subject to uncertainty. In fact, the average values for the Swiss building stock that are used may differ significantly from actual energy consumption in individual cases. Across the entire investment portfolio, however, the overestimated and underestimated energy values balance each other out in line with the law of large numbers. With this in mind, the entire portfolio was analysed rather than a projection being produced based on part of the portfolio. This additional step means that the overall energy consumption calculated does represent a solid estimate of actual consumption. ⁴ To a certain extent, the differences are also attributable to the fact that newbuild projects increasingly involve residential properties, whereas a larger proportion of older investment properties are commercial or other types of properties. Even if we were to compare residential buildings exclusively, however, newbuilds would be over 50 % more energy-efficient than older investment properties 30

33 In the year under review, two new properties were added that meet the Minergie standard. In addition, energy-efficient renovation was undertaken at three properties. This portfolio optimisation is therefore in line with the strategy and will contribute to the continuous reduction in energy consumption over the next few years, even in the context of a growing overall portfolio. CO2 emissions can also be cut significantly through the targeted expansion of renewable forms of energy, for example, geothermal probes or connections to district heating networks to meet heating needs or the use of renewable energy sources for electricity. By 2016, energy consumption is expected to fall by 4 % compared with 2011 levels, while the portfolio as measured in terms of energy-consuming space is set to increase by 13 %. Energy efficiency, expressed in the form of energy consumption per square metre of energy-consuming space, will improve by more than 15 % over the same period, while CO2 emissions per square metre will fall by 19 %. The model assumes that 50 % of the heat energy for development properties comes from renewable sources, including district heating from waste incineration plants. It also assumes energy optimisation for 1 % of the portfolio annually. Although Mobimo recommends that its customers use certified green electricity for development properties, in the interests of producing a conservative model this has not been taken into account here. In reality, not all customers opt for green electricity. Chart above: Energy consumption and CO₂ emissions in relation to energy-consuming space over the next five years. EMPLOYEES Giving real estate a face Mobimo staff are not just employees they embody and exude their passion for real estate and for the company. This means that projects and properties take on a clear and positive face for customers. Mobimo s positioning includes the objective for staff to excel in all areas from correspondence to project realisation through their expertise and professionalism. Purposeful cross-departmental cooperation and communication, environmental awareness, rapid response times thanks to deadlines that are clearly defined and met and the fostering of new and visionary ideas are also part of Mobimo s mission. Since Mobimo staff see each other as customers, this applies both within the company and in dealings with external parties. Chart above: Expected overall energy consumption in heat and electricity for the Mobimo portfolio from 2011 to 2016 and portfolio growth over the same period. Please note: The calculations will be repeated in the next reporting year using up-to-date figures Annual Report

34 Sustainability report Professionalism as a market promise Mobimo recruits highly qualified staff and is committed to their ongoing training and development. This is the only way that the company can credibly promise professionalism as a key argument vis-à-vis its customers and the market and deliver on this promise day in, day out. It is therefore important that staff have a broad-based knowledge of the company, the market and the sector. Individual expertise is equally important. With its flat hierarchy, Mobimo enables its employees to benefit from a high degree of independence and individual responsibility. At the same time, however, the company demands corresponding expertise and close cooperation both within teams and with all other departments. This means that motivated staff have exciting career opportunities at Mobimo and the chance to work on attractive and challenging projects. Mobimo also employs apprentices to develop the next generation. Three commercial apprentices were employed at Mobimo in The training given is in line with statutory requirements and also follows Mobimo s own training plan. The apprentices work in various different departments, spending a few months in each. Ongoing and open dialogue Since Mobimo is not excessively large and the workforce is motivated, there is direct contact and a continuous transfer of expertise throughout the company. As a rapidly growing and dynamic organisation, Mobimo places great emphasis on carefully integrating new staff into the existing team and providing individual support to all employees. They are therefore involved in the company s development via regular discussions with line managers, team meetings and workshops. Ideas and suggestions can be taken on board at an early stage. Individual annual objectives are defined, discussed and evaluated with all employees in annual performance appraisals. These appraisals are also used to assess how satisfied employees are, to discuss their potential and to raise any concerns. Other topics discussed include specialist knowledge, quality of work, output, organisation, customer orientation, initiative, the ability to work under pressure and the level of identification with the company. The steps required to achieve objectives, such as further training and development, on-the-job learning or other support measures, are also decided in these appraisal meetings. A balanced and stable workforce Mobimo is in a phase of strong growth. As at the end of 2012 the company employed a total of 96 staff (prior year: 90), and there are also plans to further increase the workforce in 2013, primarily in the Development and Investments for Third Parties business areas. A little over half of Mobimo s staff work in the Development and Portfolio Management divisions. The company has offices in Ku snacht (79 employees) and Lausanne (17 employees). Apart from the apprentices and one other exception, all employees are on permanent contracts, and 71 % (prior year: 79 %) work on a full-time basis. The increase in the number of part-time staff in 2012 is due chiefly to the fact that Mobimo offers this option all the way up to middle management level. In terms of age, most employees (67, prior year: 55) are in the middle segment from 30 to 50. The distribution above and below this segment is balanced. The middle segment is also well represented at management level. In terms of the gender mix, Mobimo s workforce is well balanced on the whole. More appointments of female staff in the year under review mean that women now make up more than half of the workforce 54 % (previous year: 47.7 %) of employees are female. There are still significantly fewer women at senior management levels. The staff turnover rate is very much in line with the average at 10.4 % (previous year: 10 %). Excluding the reorganisation at the Lausanne office, which affected six members of staff (outsourcing of reception and building maintenance functions), the staff turnover rate would be at the low level of 4.17 %. This low rate is indicative of the very high level of employee satisfaction. Attractive employment conditions To support employee retention, Mobimo believes it is important to offer its staff an attractive and stimulating environment. The flat hierarchies mean that employees have a great deal of responsibility and independence. The company pays market-based salaries that are determined on the basis of various aspects such as education, experience, function and rank and take individual performance and success into account. Employees receive five weeks holiday, a 13th month salary and a bonus based on the performance of the business and of the employee. There is a good working environment and employee events are held on a regular basis. Employees are granted service anniversaries after 5, 10 and 15 years as a thank you for their loyalty to the company. All Mobimo employees are members of a defined contribution pension scheme. The majority of employees enjoy the mandatory pension coverage 32

35 required by law, while additional, non-statutory coverage is provided for middle managers, Executive Board members and a number of other employees. As at September 2012, the pension fund s coverage was as in % (prior year: %). With the exception of assistance with training costs, all work-related benefits are also available to temporary employees, although pension provision is only provided for contracts of more than three months and maternity leave lasts only until the end of the contractual period. Health and safety are a key priority The well-being and safety of its staff are very important to Mobimo. Adherence to all statutory provisions can be taken as read, and the company also implements recommendations from other organisations such as SUVA, the Swiss public law accident insurer. During the refurbishment of the first floor in the main Mobimo building, special attention was paid to quality considerations and the best possible balance between ventilation and heating with a view to providing a good office environment. Mobimo invests in high-quality office facilities, and staff are provided with generously proportioned workstations in light and pleasant rooms. With regard to the furnishings, care was taken to foresee and prevent accident risks as far as possible. An emergency course was offered and attended by around 50 % of staff. Employees with long-term illnesses receive support from line managers or the HR department in the form of case management. Absences due to illness or accident are continuously monitored with the aid of an SAP absence system, and statistical evaluations are produced. Days of absence are counted right from the first day, and accidents are immediately reported to the insurance company (Zurich Insurance). Mobimo employees are offered attractive insurance solutions. There is no deduction for daily sickness benefits, and the accident insurance includes hospital treatment in a private ward. Employee protection and work/life balance Flexible working hours and the option to work part-time are highly valued by staff, and take-up is high, with numerous fathers working at 80 % of full-time hours, for example. Job sharing, early retirement upon request or continuing to work after the official retirement age are other options that can be used to take account of employees individual situations. Employees are also well protected against bullying, sexual harassment and discrimination. The employee regulations set out a whistle-blowing framework and provide an external, independent contact person whom employees can approach if they are affected by any of these issues or suspect another person of misconduct. As in previous years, no such cases were reported in SOCIETY Commitment to society In today s society there is frequently a crossover between the worlds of work, home and leisure. Mobimo takes proper account of this, paying due attention to forward-looking and sustainable action and planning in its major projects. Such major projects may have a profound effect on townscapes, social interaction and the demographic structure, for example, via housing estates, multi-family homes and developments with several residential and commercial buildings. Real estate has a long lifespan, and subsequent generations should have the chance to benefit from it as well. Decisions taken in the initial phase of a project are therefore particularly important, as they will have an impact on the environment and society for decades to come. In putting together and managing its real estate portfolio, Mobimo takes care to combine environmental aspects such as emissions, waste and the consumption of resources with social aspects such as health and safety and with economic objectives. In a number of Mobimo projects, consideration of this long-term social and economic perspective is of the utmost importance from the outset. Examples include Flon in Lausanne, Zurich-West, AQA in Aarau, AggloLAC and Mattenhof in Kriens/Lucerne. Even before a project is launched, therefore, Mobimo liaises closely with public authorities, district associations, neighbours and other stakeholders. In addition to its business activities, Mobimo plays an active role in society and demonstrates its commitment by supporting cultural and other events to develop districts into social meeting places. In the Flon district of Lausanne, Mobimo employs event managers for this specific purpose. This enhances the location, districts and townscape, generating economic and social benefits for an entire region. Zurich-West is another area in which Mobimo has realised several projects. Previously an industrial wasteland blighted by polluted sites, it is now a hip, trendy and lively area in a centre for cultural and business activities. The development has undoubtedly added value for the entire city. Art Annual Report

36 Sustainability report on or around buildings or structures either internally or externally rounds off the visual effect and is part of Mobimo s requirements for properties (e.g. the No Problem sculpture at the Mobimo Tower, the WaterLightStone at Manessestrasse, Zurich, the lighting installation at Garage, Horgen, the Language plays time work at the Ova site development, Affoltern a/a). In all building projects, Mobimo tries to notify residents promptly of any potential noise and dust disturbance or prevent such issues from arising. The company regularly produces analyses to ascertain the impact of its activities and help it better address trends in the market and changing requirements for living space. With a view to constantly improving how it deals with such challenges, Mobimo endeavours to exchange views and ideas with other experts in discussion forums and is an active member of various associations and organisations such as the Swiss Real Estate Association (SVIT), the Association of Real Estate Investors and Managers (VIV), the Homeowners Association (HEV), the Public Private Partnership (PPP) Association and various other business organisations. Strong values for long-term success The enthusiasm that its staff show for real estate is what keeps Mobimo alive. To realise its objectives, the company focuses on its core competences and on actively implementing values such as fairness, transparency and workplace equality. These are established elements of the company s business ethics that are actively shaped through dialogue with employees and passed on to customers. Cooperation with regional suppliers, expertise and shared values To further promote forward-looking ideas, Mobimo takes care to ensure that the suppliers it works with also share its values. Projects are always realised in line with Swiss standards, and the suppliers and partners involved generally come from the corresponding geographical development areas, in other words: from the Zurich metropolitan area, from Central Switzerland or, in the Canton of Vaud, primarily from the Lausanne region % of all purchases thus come from regional or national suppliers. Expertise, quality and in particular adherence to Mobimo s requirements with regard to sustainability are also taken into account when selecting suppliers. For example, Mobimo s service contracts with sole contractors and their sub-contractors contain an explicit provision that Mobimo does not tolerate discrimination. Mobimo is drawing up a supplier strategy to ensure that suppliers implement sustainability aspects even more consistently. Sponsorship The focus of sponsorship is one of the company s main activities. Sponsorship reflects Mobimo s strategy and concentrates on three areas, focusing primarily on real estate and location promotion and, in specific cases, on social organisations. Mobimo s sponsorship activities are therefore targeted mainly at the regions and locations in which it operates and the issues affecting the company and its industry. To protect the corporate values and promote integrity, every employee signs an anti-corruption statement when they start working for Mobimo. There were no cases of corruption in 2012, nor were any lawsuits filed due to anti-competitive practices or the formation of cartels or monopolies. In addition, no fines or sanctions were imposed on Mobimo in the year under review for breaches of legal provisions. The new Code of Conduct comes into force in Publishing details Mobimo Management AG sustainability report GRI Level (Global Reporting Initiative) Dr. Brigitte Ruetsch, Ruetsch&Partner Consulting GmbH, Management sustainserv GmbH, GRI partner for sustainability 34

37 Mobimo s sustainability reporting is based on the Global Reporting Initiative (GRI) Guidelines. GRI is a global non-profit organisation founded in 1997 by CERES (now Investors and Environmentalists for Sustainable Prosperity) and the United Nations Environment Programme (UNEP). GRI aims to promote sustainability reporting and enhance the transparency and comparability of corporate and sustainability reporting worldwide by providing a reference framework and corresponding guidelines. The Application Levels A, B and C indicate the extent number of performance indicators met, management approach to which a company applies the G3 or G3.1 Guidelines in its sustainability reporting. Level A is the highest Application Level. The Mobimo Sustainability Report 2012 fulfils the requirements for Application Level B. This means that Mobimo meets more than 20 performance indicators relating to the economy, the environment, product responsibility, society, labour practices and human rights in full and also fulfils the requirements in respect of its management approach. Annual Report

38

39 Financial report Development property Condominiums Zurich-Altstetten, «Station 595» Badenerstrasse 595

40 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 1.1 CONSOLIDATED BALANCE SHEET All amounts in TCHF Note Assets Current assets Cash 2 97, ,059 Trade receivables 3 4,019 6,368 Income tax receivables Other receivables 4 22,581 12,113 Trading properties 5 346, ,008 Accrued income and prepaid expenses 6 3,881 4,753 Total current assets 475, ,301 Non-current assets Investment properties Commercial properties 7 1,367,228 1,317,333 Residential properties 7 380, ,261 Investment properties under construction 7 244, ,964 Property, plant and equipment Owner occupied properties 8 16,635 16,630 Other property, plant and equipment 8 1,420 1,039 Intangible assets 9 3,626 3,524 Investments in associates 10 22,787 20,087 Financial assets 11 1,950 2,153 Deferred tax assets 18 5,091 4,647 Total non-current assets 2,043,428 1,883,638 Total assets 2,518,994 2,477,939 38

41 All amounts in TCHF Note Equity and liabilities Liabilities Current liabilities Current financial liabilities 12 68,739 60,867 Trade payables 13 19,608 14,557 Current tax liabilities 37,863 33,675 Derivative financial instruments Other payables 14 1, Advance payments from buyers 15 29,022 25,430 Accrued expenses and deferred income 16 16,540 28,450 Total current liabilities 173, ,439 Non-current liabilities Non-current financial liabilities ,169 1,001,790 Employee benefit obligation ,691 Derivative financial instruments 12 26,825 25,052 Deferred tax liabilities , ,784 Total non-current liabilities 1,144,817 1,140,317 Total liabilities 1,318,014 1,303,756 Equity 19 Share capital 180, ,933 Treasury shares 1, Capital reserves 443, ,308 Retained earnings 575, ,316 Total equity attributable to the shareholders of Mobimo Holding AG 1,197,514 1,174,183 Attributable to minority interests 3,466 0 Total equity 1,200,980 1,174,183 Total equity and liabilities 2,518,994 2,477,939 Annual Report

42 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT¹ All amounts in TCHF Note Income from rental of properties 21 92,765 88,787 Income from sale of trading properties , ,029 Other income Revenue 245, ,724 Gains from revaluation of investment properties 53,934 54,330 Losses on revaluation of investment properties 17,045 13,136 Net income from revaluation 24 36,889 41,194 Profit on sale of investment properties ,484 Direct expenses for rented properties 21 12,937 12,753 Direct expenses from sale of trading properties , ,714 Direct operating expenses 143, ,467 Capitalised own account services 6,053 5,771 Personnel expenses 26 17,958 18,054 Operating expenses 27 5,945 5,542 Administrative expenses 28 2,563 2,683 Earnings before interest, tax, depreciation and amortisation (EBITDA) 118, ,426 Depreciation and amortisation 29 1,320 1,356 Earnings before interest and tax (EBIT) 117, ,070 Share of profit of associates 2,900 2,246 Financial income ,523 Financial expense 30 27,449 32,472 Financial result 23,723 28,704 Earnings before tax (EBT) 93,653 92,367 Tax expense 31 17,613 11,913 Profit 76,039 80,454 Of which attributable to the shareholders of Mobimo Holding AG 76,323 80,454 Of which attributable to minority interests EBITDA not including revaluation 81,807 81,232 Operating result (EBIT) not including revaluation 80,487 79,876 Earnings before tax (EBT) not including revaluation 56,764 51,173 Earnings per share in CHF Diluted earnings per share in CHF the income statement was restructured in the year under review and the prior year was adjusted for comparative purposes (see also Note to the consolidated annual financial statements Adjustment to structure of consolidated income statement). 40

43 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME All amounts in TCHF Profit 76,039 80,454 Cash flow hedges Loss on financial instruments for hedge accounting 1,333 12,888 Transfer to income statement Tax effects 397 3,010 AFS financial assets Transfer to income statement Other comprehensive income/loss 1,384 11,189 Total comprehensive income 74,656 69,265 of which attributable to the shareholders of Mobimo Holding AG 74,939 69,265 of which attributable to minority interests Annual Report

44 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 1.3 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY All amounts in TCHF Share capital Treasury shares Capital reserves Market value reserve Hedging reserve Other retained earnings Total retained earnings Equity attributable to the shareholders of Mobimo Holding AG Minority interests Total equity As at 1 January , , , , , ,340 Profit ,454 80,454 80,454 80,454 Cash flow hedges: Loss 1 12,888 12,888 12,888 12,888 Transfer to income statement Tax effects 3,010 3,010 3,010 3,010 AFS financial assets: Transfer to income statement Other comprehensive income/loss , ,189 11, ,189 Total comprehensive income ,214 80,454 69,265 69, ,265 Distribution of capital contribution reserves 46,204 46,204 46,204 Capital increase 30, , , ,859 Share-based payments: Board of Directors and management 1, ,295 2,295 Acquisition of property 3 13,477 13, Acquisition of treasury shares 15,434 15,434 15,434 Sale of treasury shares Purchase of minority interests As at 31 December 2011 / 1 January , , , , ,316 1,174, ,174,183 Profit ,323 76,323 76, ,039 Cash flow hedges: Loss 1 1,333 1,333 1,333 1,333 Transfer to income statement Tax effects Other comprehensive income/loss , ,384 1, ,384 Total comprehensive income ,384 76,323 74,939 74, ,656 Distribution of capital contribution reserves 55,813 55,813 55,813 Capital increase Conversion of convertible bond ,239 6,124 6,124 Share-based payments: Board of Directors and management 2, ,444 1,444 Acquisition of treasury shares 4,501 4,501 4,501 Sale of treasury shares Minority interests arising from acquisition 3,749 3,749 As at 31 December ,058 1, , , , ,709 1,197,514 3,466 1,200,980 1 The cash flow hedges are described in Note 12 Financial liabilities ² Sale of the investment in Olmero AG ³ The purchase of the property Place de la Gare, Avenue d Ouchy 4/6 in Lausanne is described in Note 19 Equity ⁴ Details on the conversions can be found in Note 19 Equity and Note 12 Financial liabilities 42

45 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 1.4 CONSOLIDATED CASH FLOW STATEMENT All amounts in TCHF Note Earnings before tax 93,653 92,367 Net gains from revaluation of investment properties 24 36,889 41,194 Share-based payments 35 1,444 2,295 Depreciation on property, plant and equipment 29 1,142 1,115 Amortisation of intangible assets Loss / profit on disposal of investment properties ,484 Loss on disposal / derecognition of property, plant and equipment Share of profit of associates 2,900 2,246 Financial result 30 26,624 30,949 Change Trade receivables 2, Trading properties 14,110 31,372 Other receivables and accrued income and prepaid expenses 7,338 4,416 Employee benefit obligation Trade payables 5, Advance payments from buyers 3, Other current liabilities and accrued expenses and deferred income 12,536 5,944 Income tax paid 8,409 6,297 Net cash from operating activities 51,259 53,373 Investments in financial assets Acquisition of investment properties 7 118, ,935 Acquisition of property, plant and equipment Acquisition of intangible assets ,358 Disposal of financial assets ,168 Disposal of property, plant and equipment Disposal of investment properties ,040 Dividends received Interest received Net cash used in investing activities 117,976 73,150 Proceeds from financial liabilities 152, ,888 Repayment of financial liabilities 149, ,100 Net cash from conversion of bond into registered shares Net cash from capital increases ,443 Share capital nominal value repayment 19 55,813 46,204 Acquisition of treasury shares 19 4,501 15,434 Disposal of treasury shares Interest paid 31,382 28,593 Net cash used in / from financing activities 87, ,063 Increase / decrease in cash 154, ,286 Cash at beginning of reporting period 252,059 92,773 Cash at end of reporting period 97, ,059 Annual Report

46 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 1.5 NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Business activities The Mobimo Group is a real estate company which operates exclusively in Switzerland. Its business activities consist of the long-term holding and management of commercial, industrial and residential properties, the construction and selling of owneroccupied residential properties and the development of commercial and residential properties. The parent company is Mobimo Holding AG, a public limited company under Swiss law, headquartered in Lucerne and listed on the SIX Swiss Exchange Group accounting policies General information The consolidated annual financial statements of Mobimo Holding AG are prepared in accordance with International Financial Reporting Standards (IFRS) and comply with legislation in Switzerland as well as with Article 17 of the Directive on Financial Reporting issued by the SIX Swiss Exchange. Consolidation takes place on the basis of the individual financial statements from the Group companies. These statements are audited and drawn up in accordance with standardised guidelines. The balance sheet date is 31 December. All amounts contained in the consolidated annual financial statements are shown in thousands of Swiss francs (TCHF), unless stated otherwise. The sums and totals of the individual positions may be larger or smaller than 100% due to rounding. The consolidated annual financial statements have been prepared at amortised cost, with the exception of investment properties, investment properties under construction, derivatives and financial assets available for sale, which are recognised at fair value. Adjustment to the structure of the consolidated income statement The consolidated income statement was restructured in the year under review; in particular, the income from rentals, the sale of trading properties as well as other income are combined to give a total sales revenue. The prior year figures were restated accordingly. The income from rentals and the sale of trading properties that was previously clearly set out in the income statement can now be found in the Notes to the consolidated annual financial statements. The individual items in the income statement have not changed in terms of quantity. Use of estimates and assumptions and the application of judgement In preparing the consolidated annual financial statements in accordance with IFRS, management is required to make estimates and assumptions and apply its judgement in its application of the accounting policies. This can influence reported income, expenses, assets, liabilities and contingent assets and liabilities at the time the statements are drawn up. The estimates and assumptions used are based on past experience as well as on other factors which appear plausible at that specific point in time. If actual results in the future differ from such estimates and assumptions, the initial estimates and assumptions will be adjusted in the applicable reporting period. The main estimates and assumptions used in the valuation of assets and liabilities are described below. Fair values of investment properties Mobimo holds investment properties with a carrying amount of CHF 1,992 million. The properties are measured at fair value, determined on the basis of the DCF method. This method is itself based on various estimates and assumptions, which are set out in the accounting policy applicable to the properties. A sensitivity analysis checked the impact of a reduction or increase in discount rates as part of the DCF valuation. A general reduction of 0.25% (average discount rate as at 31 December %) would increase the fair value of the investment properties as at 31 December 2012 by 5.6 % or CHF 111 million. A general increase in the discount rate by 0.25% would reduce the current fair value of the investment properties as at 31 December 2012 by 5.1% or CHF 101 million. Further findings from the sensitivity analysis can be found in the table below. Incidence sur les justes valeurs d une modification des taux d escompte Change in discount rate Change in fair value in % Change in fair value in CHF million % % % % % 43 Average discount rate as at 31 December % % % % % %

47 Estimates of construction costs of trading properties Mobimo has ongoing building projects (trading properties) amounting to CHF 346 million. Ongoing projects are valued on the basis of the financial forecasts for the individual projects. Valuation allowances are made for loss-making projects as soon as losses become visible. Budgeted overall costs and planned sales prices are determined on the basis of various factors and assumptions. These include past experience, project specifications for the properties, benchmark values for construction costs and other relevant factors such as the planned construction period. Financial forecasts are reviewed on an ongoing basis and adjusted where necessary. If actual building costs and sales proceeds differ from the planned figures or if unexpected developments during the construction period make an adjustment of the financial forecasts necessary, an adjustment in carrying amounts, i.e. an adjustment in valuation allowances for loss-making projects, may become necessary Income taxes Mobimo has deferred tax liabilities of CHF million. Deferred taxes are almost exclusively attributable to valuation differences in respect of investment properties and investment properties under construction. The taxation of gains from the disposal of properties is subject to a special property gains tax in various cantons. The tax rates applied depend on the length of time the property is held and can vary significantly. In the calculation of deferred taxes on investment properties, a residual holding period is estimated for each property. Should the actual holding period for a property deviate from the estimated holding period, the amount of tax applicable at the time the property is sold may vary considerably from the deferred tax estimated. Various property gains tax amounts due on property sales in the current and previous periods are not yet definitive as at the financial reporting date. If the definitive amounts involved are not the same as the initial calculations, this may have a material effect on the tax expense for future periods. Changes in accounting policies Mobimo has applied the following new or revised standards and interpretations for the first time in its consolidated annual financial statements for Standard / Interpretation: Amendments to IFRS 7 Disclosures: Derecognition of Financial Assets These changes had no impact on the consolidated annual financial statements for Amendments to IAS 12 Deferred Taxes: Recovery of Underlying Assets Under the amendment to IAS 12, deferred taxes on investment properties are to be determined on a sale basis. This is in keeping with the practice applied by Mobimo and thus had no effect on these 2012 consolidated annual financial statements. Annual Report

48 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS The following new and amended standards and interpretations were approved, but did not take effect until a later date and have not been applied in advance in these consolidated annual financial statements. The impact on Mobimo s consolidated annual financial statements has not yet been systematically analysed; this means that the information provided at the bottom of the table is merely an initial estimate from Group management. Standard/Interpretation Entry into force Planned application by Mobimo (financial year) IFRS 10 Consolidated Financial Statements: establishes * 1 January financial year principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities IFRS 11 Joint Arrangements: establishes principles for financial * 1 January financial year reporting by parties to a joint arrangement IFRS 12 Disclosure of Interests in Other Entities ** 1 January financial year IFRS 13 Fair Value Measurement *** 1 January financial year Amendments to IAS 1 Amendment to Presentation of Other Income ** 1 July financial year Amendments to IAS 19 Employee Benefits *** 1 January financial year IAS 28 (rev. 2011) Investments in Associates and Joint Ventures * 1 January financial year Amendments to IFRS 7 Disclosures: Offsetting Financial Assets and Financial * 1 January financial year Liabilities Amendments to IFRSs (May 2012) Annual Improvements to IFRSs Cycle * 1 January financial year Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities * 1 January financial year IFRS 9 Financial Instruments Classification and Measurement **** 1 January financial year IFRS 13 The new IFRS 13 Fair Value Measurement standard was published in May IFRS 13 does not change the rules about which items on the balance sheet must be valued at fair value, but it does contain new standard guidelines for determining the fair value of assets, liabilities and equity instruments, if their application is required or permitted by another standard. IFRS 13 also contains extended rules on disclosures in the notes. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e. an exit price). With non-financial assets, management must assume the highest and best use by a market participant, which may differ from its current use. For Mobimo, IFRS 13 will mainly be of significance in the valuation of investment properties. The impact of the new standard is currently being analysed. According to external valuer Wüest & Partner, the early application of IFRS 13 as of 31 December 2012 would result in an increase of around CHF 10 million in the value of the investment property portfolio. IAS 19 The key changes in the revised standard are as follows: Previously, Mobimo recognised actuarial gains and losses from periodic recalculations in profit or loss on a straight-line basis over the average remaining period of service if they exceeded 10% of the higher of assets and benefit obligations ( corridor method ). With the ending of the corridor method from 1 January 2013 onwards, actuarial gains and losses will be recognised immediately in equity, not through profit or loss, but under other income. As at 31 December 2012, these totalled CHF 3.6 million (1 January 2012: CHF 2.2 million). Greater volatility in employee pension obligations and consolidated equity can therefore be expected. In addition, the revised IAS 19 now provides for a net interest component. This is determined by multiplying the net pension obligation by the discount rate. As the net pension obligation covers both obligations and plan assets, this approach implies a netting of interest expense and expected income from plan assets. At the same time, this means that expected income from plan assets will be at the level of the discount rate. Previously, the return on plan assets was estimated in accordance with expected income based on the respective investment portfolio. If the new rule had been applied in the 2012 financial year, pension expense would have been CHF 0.2 million higher. * No impact or no significant impact expected on Mobimo s consolidated financial statements. ** Additional disclosures or changes in the presentation of Mobimo s consolidated financial statements are primarily expected. *** The impact on the consolidated financial statements is explained below. **** The impact on Mobimo s consolidated annual financial statements has not yet been determined to a sufficiently reliable degree. 46

49 Scope of consolidation and consolidation methods The consolidated annual financial statements encompass all companies over which Mobimo Holding AG has either direct or indirect control. Control means the exertion of a significant influence on the financial and operating policies of an entity so as to obtain benefits from its activities. This is the case if the Group holds more than 50 % of voting rights in a company or if executive management is exercised either under a statute or agreement or on a de facto basis (see scope of consolidation in Note 40). Group companies acquired or divested during the course of a year are consolidated from the date on which control is acquired or deconsolidated from the date on which control ceases. For fully consolidated companies, assets, liabilities, expense and income are taken over on a 100 % basis using the full consolidation method. All intragroup transactions and relationships as well as interim profit on intragroup transactions and balances are eliminated. Unrealised losses on intragroup transactions are also eliminated, unless there is evidence of an impairment. Capital is consolidated at the time of acquisition using the purchase method. The purchase price of the acquired company is determined on the basis of the total market value of the acquired assets, the liabilities incurred or assumed and the equity instruments issued by the company. Transaction costs arising in connection with a company acquisition are recognised in profit or loss. Goodwill arising from a company acquisition is recognised as an asset. It corresponds to the excess of the sum of the purchase price, the contribution of the noncontrolling interests to the acquired company and the market value of the equity already owned over net assets, liabilities and contingent liabilities valued at market value. A particular option may be selected for each transaction when valuing the amount attributable to the non-controlling interests. They may be valued either at market value or as the proportion of the non-controlling interests in the market value of the net assets acquired. In the case of a negative difference, the remaining balance is immediately recognised in profit or loss following a further assessment of the market value of the net assets acquired. Goodwill is subject to an impairment test at least once a year, or sooner if there are indications of a decrease in value. Non-controlling interests are shown separately from the Group s equity. Changes in the interest that do not lead to loss of control are treated as transactions with equity owners. Any difference between the purchase price paid or the consideration received and the amount by which the noncontrolling interests are being adjusted is recognised directly in equity. Ownership interests of between 20% and 50% in companies which Mobimo exerts a significant influence over but does not control, as well as shares in joint ventures, are accounted for using the equity method and recognised separately in the balance sheet. The market value of the pro rata net assets is determined at the time of acquisition and recognised in the balance sheet together with any goodwill under Investments in associates. In subsequent reporting periods, this figure will be adjusted to reflect Mobimo s share of the additional capital and the profits generated, as well as any dividends. Ownership interests of below 20% are classified as financial assets available for sale and recognised in the balance sheet at fair value. Changes in fair value are recognised in equity, not as income. Foreign currency translation The foreign currency positions contained in the individual statements of consolidated companies are translated as follows: Foreign currency transactions are translated into Swiss francs and recognised at the exchange rate valid on the day of the transaction. Any monetary assets and liabilities denominated in foreign currency are translated in the balance sheet at the rate on the financial reporting date. Exchange rate differences arising from retranslations or revaluations of foreign currency positions on the financial reporting date are recognised through profit or loss. At at the end of 2012, Mobimo held no assets or liabilities in foreign currencies. All subsidiaries present their financial statements in Swiss francs, which means that consolidation produces no exchange differences. Cash Cash comprises cash in hand and call deposits with banks as well as fixed-term deposits with banks and short-term money market investments with a term of up to 90 days from the time of acquisition. These are recognised at nominal value. Receivables Receivables are measured at amortised cost, which generally equates to the nominal value less any necessary valuation allowances for non-collectible receivables. The valuation allowances are individual valuation allowances for specifically identified positions where there are objective indications that the outstanding amount will not be collected in full. Trading properties The trading properties category includes properties for conversion as well as new-builds where Mobimo performs the production of condominiums in order to subsequently sell them. Trading properties also includes properties that Mobimo has acquired as part of projects for the Investment for Third Parties business area and that it intends or has contractually agreed to sell to third-party investors in the future. Trading properties are valued at the lower of cost or market value. With loss-making properties, provisions are created immediately for the total loss expected. See also the explanations in the section entitled Use of estimates and assumptions and the application of judgement (Estimates of construction costs of trading properties). Annual Report

50 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Investment properties Commercial, residential and investment properties under construction These properties are classified as investment properties under IAS 40. They are properties which have been either acquired or built by the company and which will be held and managed over a substantial period of time. Land held for undetermined future use, investment properties under construction and properties which are being converted, renovated or developed are also classified as investment properties. These properties are initially valued at cost including directly attributable transaction costs. After initial recognition, they are valued at fair value. To this end, independent property experts Wüest & Partner conduct a valuation as at the financial reporting date. Fair values are determined using the DCF (discounted cash flow) method. The procedure for determining fair values using the DCF method is as follows: Fair values do not take account of any real estate sales tax, real property gains tax or value added tax, nor do they take account of any other costs or commissions due upon any property sale. With the exception of investment properties under construction, neither future investments to enhance value nor any related additional income arising from such investments are factored in. Rental income, operating and maintenance costs, refurbishment costs and the discount rate are based on the following assumptions: Rental income Rents are factored into valuations on the basis of current rents and contractually agreed conditions. With leases of limited duration, the period following expiry of the lease is accounted for using the potential collectible rental income, from the current perspective, over the long term. Potential rental income in line with the market is determined on the basis of the most recent leases concluded either for the property concerned or for comparable properties in the vicinity of the property concerned, as well as on the comprehensive real estate market research carried out by Wüest & Partner. Tenants options to extend a lease are taken into account when actual rents are less than the market rents determined. Rental properties that are currently vacant are incorporated into the valuation taking account of marketing periods customary for the market. Operating and maintenance costs Operating and maintenance costs are determined using figures from the past, the budgets approved by Mobimo and benchmarking values from Wüest & Partner. Refurbishment costs Refurbishment costs aimed at preserving the value of a property are determined using investment plans and construction cost analysis tools. Discount Rate Discounting is undertaken for each property in accordance with location and real estate criteria. These reflect both the location-relevant features of the macro and micro situation and the fundamental parameters of the current management situation. The discounting rates applied are subject to being measured and checked empirically using known change of ownership and transaction data. Investments and revaluation Replacement and additional investments are capitalised in properties carrying amounts if it is likely that Mobimo will derive economic benefits from them in the future. The change in fair values is recognised in profit or loss. Any deferred tax liabilities or assets are recognised in the income statement as tax expense or tax income. Investment properties are not depreciated. Property, plant and equipment Property, plant and equipment and owner-occupied properties are valued at cost less accumulated depreciation and any accumulated impairment losses. Components of an item of property, plant and equipment with different useful lives are recognised individually and depreciated separately. Subsequent investments are capitalised in the carrying amount of property, plant and equipment if it is likely that Mobimo will derive economic benefits from these in the future. Maintenance and renovation costs are charged to the income statement. Property, plant and equipment is depreciated using the straight-line method over the shorter of its estimated useful life or the term of the lease. Useful life is as follows: Buildings Interior fixtures and fittings Technical equipment Office furnishings Office equipment Telephone installations Vehicles Hardware 50 years 15 years 15 years 8 years 5 years 5 years 5 years 3 years Leasing Mobimo does not possess any leasing agreements classed as finance leases. Payments for operating leases are recognised in profit or loss over the term of the lease. Intangible assets Software and other intangible assets (e.g. purchase rights) are measured at cost less accumulated amortisation and any additional amortisation resulting from impairment. Software is amortised over a useful estimated life of three to five years. 48

51 Financial assets Financial assets comprise long-term loans to third parties and non-consolidated equity investments. Loans are recognised at amortised cost less any valuation allowance. Non-consolidated equity investments are classified as available for sale and measured at fair value; with the exception of impairments, changes in fair value are recognised in equity, not through profit or loss. If a fair value cannot be reliably defined, the non-consolidated equity investment is measured at cost. Impairment of non-financial non-current assets The intrinsic value of property, plant and equipment and intangible assets is assessed at least once a year. If there are indications of sustained decreases in value, an impairment test is carried out. Recoverable amounts are calculated annually for other intangible assets with an indefinite useful life and intangible assets not yet available for use, even if there are no indications of any decrease in value. Non-current assets held for sale Non-current assets and groups of assets including directly associated liabilities ( disposal groups ) are classified as held for sale and presented separately in the balance sheet as separate assets or liabilities if the carrying amount is to be recovered principally through a sale transaction rather than through continuing use. A prerequisite for this is that the sale is highly probable and the asset is available for immediate sale in its current condition. For a sale to be regarded as highly probable, certain criteria must be met; for example, the sale must be expected to take place within 12 months. Trade and other short-term payables Trade and other payables are measured at amortised cost, which generally corresponds to the nominal value of the payables. Financial liabilities Financial liabilities consist of outstanding convertible bonds and mortgage-secured bank loans. In the case of long-term financial liabilities, the residual maturity is agreed as being longer than twelve months. All other agreements are classified as short term, incl. amortisation payments that are due within twelve months after the reporting date. At initial recognition, financial liabilities are recognised at fair value less transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortised cost, with the difference between the amount to be repaid and the carrying amount being amortised over the term using the effective interest method. Outstanding convertible bonds are recognised in the balance sheet in accordance with IAS 32 and broken down into liabilities (part of financial liabilities) and equity. The equity component corresponds to the difference between the proceeds from the issue before issue costs and the fair value of the financial liabilities as at the issue date. The issue costs are split pro rata between the liability and equity components, and are therefore offset against the convertible bond. The equity component remains unchanged. The difference between the recognised financial liability and the redemption amount will be amortised in profit or loss over the term of the convertible bond using the effective interest method. Derivative financial instruments Mobimo uses derivative financial instruments (e.g. interest rate SWAPS and forward rate agreements) to hedge the interest rate risks of financial liabilities. Derivative financial instruments are measured at fair value at initial recognition and thereafter. Gains and losses from adjustments to fair values are treated as follows: The hedging of interest rate risk on financial liabilities is classified as a cash flow hedge under certain circumstances. The effective portion of the change in derivatives fair values is recognised directly in equity via a special reserve (hedging reserve). As soon as the hedged transaction (interest payments) takes place, cumulated unrealised gains and losses are transferred to the income statement and recognised in the financial result. Changes in fair values of all other derivatives are recognised in profit or loss in the financial result. Provisions Provisions are set aside if an event which has taken place has given rise to a present legal or constructive obligation, it is probable that there will an outflow of resources and a reliable measurement can take place. Annual Report

52 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Employee benefits Liabilities from defined benefit plans are determined annually for each plan, by setting the present value of the defined benefit obligation using the projected unit credit method. The discount rate used for the calculation is based on the interest rate of first-class industrial bonds with very similar terms to the liabilities. This method takes into account the market value of plan assets, unrealised actuarial profits and losses, and unrealised past service costs. Pension costs associated with work performed in the reporting period (current service cost) are recognised in profit or loss. Past service cost (the change in obligation for employee service in prior periods due to new or improved benefits) is recognised in employee benefit expense on a straight-line basis until the amended benefits become vested. Actuarial and investment gains and losses from periodic recalculations are recognised in profit or loss on a straight-line basis over the average remaining period of service provided they exceed 10% of the higher of plan assets and the benefit obligation. Equity The share capital is presented as equity since there is no repayment obligation and no dividend guarantee. Transaction costs incurred during a capital increase and attributable directly to the issuing of new shares are deducted from the amount of the capital increase less associated income tax. Dividends are presented as liabilities as soon as they are approved by the General Meeting and are thus due. Treasury shares The costs for the acquisition (purchase price and directly attributable transaction costs) of treasury shares are offset against equity. Shares which have been bought back are classified as treasury shares and deducted from equity as a negative item. Revenue recognition Revenues from the rental of investment properties include net rental revenues, i.e. target rental revenues less vacancy costs. In the case of rental agreements classed as operating leases, the rents are recognised on an accrual basis over the term of the lease. If the tenants are provided significant incentives (e.g. rent-free periods), the cost of such incentives is recognised over the lease term on a straight-line basis as an adjustment of the rental income. At present, Mobimo has no rental agreements classed as finance leases. In accordance with the provisions of IFRIC 15, sales proceeds from trading properties are recognised after construction is completed at the point when control and the significant risks and rewards of ownership are transferred. Gains from the disposal of investment properties correspond to the difference between net proceeds and the fair value recognised. The gain is recognised when the significant risks and rewards are transferred. Provisions are made for deficits arising from those calculations. Surpluses are only capitalised up to a specific amount that does not exceed the sum of unrealised past service costs, unrealised actuarial losses and gains from future contribution refunds or reductions. Interest on borrowing Interest on loans taken out to finance construction projects (trading properties and investment properties under construction) is capitalised over the construction period. All other borrowing interest is recognised as an expense in the income statement using the effective interest method. 50

53 Tax Income taxes include current and deferred income taxes. They are recognised in profit or loss, with the exception of income tax on transactions that are recognised in other income or directly in equity. In these cases, the income tax is similarly charged to other income or directly to equity. Current income taxes include the expected taxes payable on the relevant taxable result, calculated using the tax rates enacted or substantially enacted at the reporting date, capital gains taxes on property sales effected and any adjustments to tax liabilities or assets from previous years. Deferred taxes are recognised for temporary differences between the respective tax bases in the tax balance sheet and the consolidated balance sheet, in accordance with the balance sheet liability method. Measurement of deferred taxes takes account of the point in time when the asset/liability is expected to be realised/settled and the manner in which carrying amounts are expected to be recovered or settled. The tax rates used are those that are enacted or substantially enacted at the reporting date. Deferred tax assets can only be recognised to the extent that it is probable that future profits will be available, against which the temporary differences can be offset. Share-based payments Share-based payments are transactions whereby Mobimo receives goods or services in return for equity instruments such as shares or options. The Board of Directors and the Executive Board are currently subject to compensation rules under which compensation is paid partly in the form of shares. Both schemes are classified as share-based payments. The costs of share-based payments are recognised in profit or loss in personnel expenses, spread over the vesting period. The corresponding counter-posting takes place in equity. The vesting period is the period during which unlimited entitlement to the shares or options granted is earned. The valuation is based on the fair value of the equity instruments as at the grant date. The grant date is the date on which both parties agree to the plan for the share-based payment and reach a joint agreement on the terms and conditions of the plan. Earnings per share Earnings per share are calculated from the Group result attributable to the shareholders of Mobimo Holding AG, divided by the weighted average of the number of shares outstanding during the reporting period. Diluted earnings per share additionally take account of any shares arising from the exercise of option or conversion rights. Annual Report

54 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Segment reporting The management structure of the Mobimo Group and thus the internal reporting to the Group s key decision-maker is based on the individual divisions. The divisions themselves are structured according to the services and/or activities of the Group. Reportable segments pursuant to IFRS 8 are the two divisions Portfolio Management and Development. The business activities of these two divisions can be described as follows: Portfolio Management Portfolio Management focuses on the long-term holding and management of commercial and residential properties. This division also handles the buying and selling of investment properties. Development The Development division is responsible for purchasing land as well as for the construction and sale of residential property (newly constructed buildings and redeveloped buildings) as well as for residential and commercial properties. It also holds land, properties under construction and completed properties which will be transferred to the investment property portfolio. These investment properties are purchased with certain construction shortcomings or substantial vacancy rates. As soon as the vacancy rate of a development property falls below 10 % on a long-term basis, it is reclassified as an investment property on 1 January of the subsequent year (and is thus transferred to the Portfolio Management division). Investment properties with a long-term vacancy rate of over 10 % where vacancy is unlikely to be brought below 10 % on a long-term basis without significant refurbishment measures are transferred from investment properties to development properties. Also included are projects from the Investments for Third Parties business area, which is currently being set up. The Board of Directors, which has been identified as the key decision-maker, monitors the results of the individual divisions on the basis of EBIT. These figures are determined using the same accounting principles as in the consolidated annual financial statements prepared in accordance with IFRS. Income tax and interest are not included in the segment results and are recognised under Reconciliation. The costs of central functions such as Finance and IT, Marketing and Communication, Legal Services and Central Services, like the expenses for the Executive Board, are attributed to the segments on the basis of usage. The expenses in connection with the Board of Directors are not attributed to the segments and are reported under Reconciliation. The other income that was also not allocated to the divisions in the prior year, as well as depreciation and amortisation, will be reattributed to the divisions. The prior year has been adjusted for comparative purposes. Segment assets include trading properties, investment properties, owner-occupied properties and trade receivables. No other assets are attributed to the segments. Segment assets are measured in the same way as in the consolidated annual financial statements prepared in accordance with IFRS. There were no transactions between the individual segments. Accordingly, there was no need to eliminate intersegment transactions. Since Mobimo operates exclusively in Switzerland, revenues and non-current assets do not need to be broken down on a geographical basis. Mobimo did not enter into any transactions with clients amounting to more than 10 % of Group revenues. A further breakdown of income from properties by sub-segment (commercial, residential and trading properties) can be found in Note

55 Segment information 2012 All amounts in TCHF Portfolio Management Development Total segments Reconciliation Total Income from rental of properties 83,415 9,350 92,765 92,765 Net income from revaluation 26,169 10,720 36,889 36,889 Income from sale of trading properties 151, , ,954 Profit on disposal of investment properties Other income Total segment income 110, , , ,261 Segment result EBIT 91,985 26, ,804 1, ,376 Financial result 23,723 Earnings before tax (EBT) 93,653 Tax 17,613 Profit 76,039 Trading properties 346, , ,467 Investment properties 1,540, ,682 1,747,668 1,747,668 Owner occupied properties 16,635 16,635 16,635 Investment properties under construction 244, , ,250 Trade receivables 4,019 4,019 4,019 Total segment assets 1,561, ,399 2,359,039 2,359,039 Non-attributed assets 159, ,955 Total assets 2,518,994 Depreciation and amortisation ,320 1,320 Investments in non-current assets 10, , ,277 1, ,453 1 The reconciliation EBIT comprises compensation for the Board of Directors Annual Report

56 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Segment information 2011 All amounts in TCHF Portfolio Management Development Total segments Reconciliation Total Income from rental of properties 72,112 16,675 88,787 88,787 Net income from revaluation 27,849 13,345 41,194 41,194 Income from sale of trading properties 133, , ,029 Profit on disposal of investment properties 2, ,484 2,484 Other income Total segment income 102, , , ,401 Segment result EBIT 83,467 39, , ,070 Financial result 28,704 Earnings before tax (EBT) 92,367 Tax 11,913 Profit 80,454 Trading properties 319, , ,008 Investment properties 1,451, ,623 1,652,594 1,652,594 Owner occupied properties 16,630 16,630 16,630 Investment properties under construction 182, , ,964 Trade receivables 6, ,368 6,368 Total segment assets 1,474, ,665 2,177,564 2,177,564 Non-attributed assets 300, ,375 Total assets 2,477,939 Depreciation and amortisation ,356 1,356 Investments in non-current assets 10, , ,586 8, ,712 1 The reconciliation EBIT comprises compensation for the Board of Directors 54

57 1.5.4 Notes to the consolidated financial statements 1. Changes in the scope of consolidation On 23 and 24 August 2012, a total of 113 shares were purchased in Glarus-based Immobilien Invest Holding AG, which equates to around % of this company s share capital. Immobilien Invest Holding AG holds all of the shares in Petit Mont-Riond SA, Lausanne, which owns the property at Rue Voltaire 2 12 in Lausanne. As the purchased companies did not qualify as a business within the meaning of IFRS 3, the acquisition did not qualify as a business combination but represented a purchase of assets. The property at Badenerstrasse 595 in Zurich was likewise purchased in the year under review by acquiring the shares of Ruf Immoblien AG, Ennetbürgen. As the purchased company did not qualify as a business within the meaning of IFRS 3, the acquisition did not qualify as a business combination but represented a purchase of assets. Under a merger agreement dated 2 August 2012, Ruf Immobilien AG was merged with Mobimo AG. As part of restructuring efforts within the companies covered under the scope of consolidation, the companies FLON Events Sàrl, Lausanne and LO Gestion SA, Lausanne were merged to form LO Immeubles SA, Lausanne. There were no changes to the scope of consolidation in the prior year. The property at Albulastrasse / Hohlstrasse in Zurich was purchased by acquiring the shares of Büha-Verwaltungs AG. As the purchased company did not qualify as a business within the meaning of IFRS 3, the acquisition did not qualify as a business combination but represented a purchase of assets. Under a merger agreement dated 17 May 2011, Büha-Verwaltungs AG was merged with Mobimo AG. Under the terms of a restructuring, the assets of Mobimo Finance Ltd. were transferred to Mobimo Holding AG and LO Holding Lausanne-Ouchy SA and the company was subsequently liquidated. In addition, the investment in O4Real AG was transferred from Mobimo Holding AG to LO Holding Lausanne-Ouchy SA. Annual Report

58 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 2. Cash Cash is comprised exclusively of current account deposits. Of the CHF 97.6 million (prior year: CHF million) in cash, the entire amount is freely available. The average rate of interest applicable to cash amounted to 0.05 % (prior year: 0.11 %). 3. Trade receivables Outstanding purchase prices real estate due from third parties Outstanding purchase prices real estate due from related parties 0 70 Outstanding rents and ancillary costs due from third parties 4,951 6,965 Outstanding rents and ancillary costs due from third parties Less doubtful debt allowance for outstanding rent and ancillary costs 1, Total trade receivables 4,019 6,368 Outstanding rents and ancillary costs includes CHF 1.4 million (prior year: CHF 1.8 million) in receivables from rent and CHF 3.6 million (prior year: CHF 5.2 million) from ancillary costs; the remaining amount is attributable to other receivables from property accounts. The age structure of receivables that are not impaired is as follows: Not past due 3,862 5,663 Up to 30 days Up to 90 days Over 90 days Total 4,019 6,368 Doubtful debt allowances for outstanding rent and ancillary costs developed as follows in the year under review: Specific valuation allowances As at 1 January Change in valuation allowances As at 31 December 1, There were no general valuation allowances as at the reporting date. In the year under review, specific allowances amounting to TCHF 142 (prior year: reversal of TCHF 2) were made. Based on past experience, Mobimo does not expect any additional defaulting. 56

59 4. Other receivables Tax receivables (withholding tax and VAT) 1, Other receivables from third parties 17,396 10,744 Receivables WIR Advance payments for land purchases 3, Receivables from related parties 1 0 Total other receivables 22,581 12,113 Other receivables from third parties include CHF 12.9 million (prior year: CHF 10.6 million) in public sector guarantees. As at the reporting date, no receivables were overdue and no valuation allowances were necessary. 5. Trading properties Land 81,529 57,405 Properties under construction 155, ,027 Completed real estate and development properties 108, ,576 Total trading properties 346, ,008 In accordance with the provisions of IFRIC 15, revenues and thus gains from the sale of trading properties are not recognised until the property has been completed and title has been transferred to the buyer. Trading properties are measured at cost. In the year under review, land was acquired in Dübendorf, Sonnentalstrasse 10, and sold in Erlenbach, Forchstrasse/Glärnischstrasse and Müllheim, Grüenegg. Properties that have recently been classified as under construction include the project at Regensdorf, im Pfand, which is being transferred from investment properties, and the project at Zurich, im Brächli, which was changed from a conversion property to a completed property in the prior year. The Adliswil, Wilacker I, Adliswil, Wilacker II and Zurich, Hinterbergstrasse 53 projects were completed during the course of the year. A total of 68 apartments were completed for sale within the scope of these three projects. Of these 68 apartments, 61 had been sold as at 31 December Furthermore, the Adliswil Wilacker III project, comprising three apartment buildings, has been completed and transferred to an investor. Of the last few apartments that had not been sold in previous years (Horgen, Stockerstrasse 54 and Wädenswil, Rötiboden), as well as those at Zürich, Turbinenstrasse (Mobimo Tower), nine were sold in the year under review. In addition, two apartments were sold in Egerkingen. The properties at Zurich, Badenerstrasse 595 and St. Erhard, Längmatt were purchased as development properties to be sold at a later date. On the trading properties, valuation allowances for properties which have not yet been sold amount to CHF 0.65 million (prior year: CHF 0.01 million). The carrying amount for these units appraised at the estimated net selling price is CHF 2.3 million. 6. Accrued income and prepaid expenses Accruals resulting from property accounts relating to third parties 3,320 3,928 Accruals resulting from property accounts relating to associates Other items Other items relating to related parties 25 0 Total accrued income and prepaid expenses 3,881 4,753 Annual Report

60 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 7. Investment properties Investment properties developed as follows: 2012 Commercial properties Residential properties Investment properties under construction 2012 total Market value as at 1 January 1,317, , ,964 1,835,558 Acquisition costs As at 1 January 1,168, , ,007 1,638,076 Increases from purchases ,142 23,579 Increases from investments 18,968 3,824 83, ,698 Disposals Transfers to trading properties 0 9, ,835 Transfers from / to property, plant and equipment Transfers between segments 21,117 34,128 55,244 0 Cumulative acquisition costs as at 31 December 1,208, , ,812 1,757,601 Revaluation Total as at 1 January 148,425 46,100 2, ,482 Gains on valuations 23,984 13,665 16,285 53,934 Losses on valuations 16, ,045 Disposals Transfers between segments 2,793 3,398 6,191 0 Cumulative revaluation as at 31 December 158,715 63,163 12, ,317 Market value as at 31 December 1,367, , ,250 1,991,918 Fire insurance value 1,294, , ,106 1,773,996 58

61 2011 Commercial properties Residential properties Investment properties under construction 2011 total Market value as at 1 January 1,234, , ,946 1,708,668 Acquisition costs As at 1 January 1,104, , ,387 1,540,856 Increases from purchases 34, ,500 43,742 Increases from investments 12,334 2, , ,729 Disposals 74, ,032 Transfers from intangible assets ,691 10,691 Transfers from / to property, plant and equipment 3, , Transfers between segments 89, , ,618 0 Cumulative acquisition costs as at 31 December 1,168, , ,007 1,638,076 Revaluation Total as at 1 January 130,618 18,634 18, ,811 Gains on valuations 28,397 6,877 19,056 54,330 Losses on valuations 9,369 1,447 2,320 13,136 Disposals 11, ,524 Transfers between segments 10,300 22,035 32,335 0 Cumulative revaluation as at 31 December 148,425 46,100 2, ,482 Market value as at 31 December 1,317, , ,964 1,835,558 Fire insurance value 1,284, , ,953 1,767,542 Annual Report

62 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS The following new plots or investment properties were acquired for CHF 23.5 million in the year under review: Affoltern a. A., Obstgartenstrasse (Site II - care home) St. Gallen, Wassergasse 42 / 44 (purchase of condominiums) Lausanne, Rue Voltaire 2 12 Investment properties under construction Commercial property Investment properties under construction Two parts of the buildings in the properties at Dübendorf, Sonnentalstrasse 5 and Dübendorf, Zürichstrasse 98 were recognised as disposals. The following properties are shown under Transfers: from Aarau, Polygon Industriestrasse Investment properties under construction Commercial properties Regensdorf, Schul- / Riedthof- / Feldblumenstrasse Residential properties Investment properties under construction / trading properties Lausanne, Rue des Côtes-de-Montbenon 16 (building parts) Commercial properties Owner occupied properties Zurich, Manessestrasse 190 Investment properties under construction Residential properties All costs directly attributable to the acquisition of a property (purchase price, notary s costs and change in ownership costs, buying commissions, subsequent investments with future economic benefits, etc.) are capitalised as acquisition costs. to Residential properties under construction at Affoltern am Albis, Obfelderstrasse; Lausanne, Rue Voltaire 2 12; Zurich, Turbinenstrasse site C; Regensdorf, Schulstrasse / Riedthofstrasse / Feldblumenstrasse, and commercial properties under construction at Affoltern am Albis, Obstgartenstrasse; Horgen, Seestrasse 93 (Meilenwerk); Lausanne, Avenue d Ouchy 4 / 6 (Administration) and Lausanne, les Pépinières are accounted for under investment properties under construction. Accounting for investment properties is based on annual estimates of market values as at 31 December, which are carried out by an independent property expert. The market value appraisal as at 31 December 2012 was carried out by Wüest & Partner AG using the DCF method. For the DCF valuations as at 31 December 2012, the discount rates applied averaged 4.63 % (prior year: 4.76 %), within a range from 3.9 % to 8.0 % (prior year: 4.1 % to 8.0 %). 60

63 8. Property, plant and equipment 2012 Owner occupied properties Other P, P & E 2012 total Acquisition values As at 1 January 19,593 2,185 21,778 Increases Disposals Transfers to commercial property Cumulative acquisition values as at 31 December 20,381 2,887 23,268 Depreciation As at 1 January 2,963 1,146 4,110 Increases ,142 Disposals Cumulative depreciation as at 31 December 3,746 1,466 5,212 Net carrying amount as at 31 December 16,635 1,420 18,056 Fire insurance value 14,159 1,825 15,984 Owner occupied properties include the property at Küsnacht, Seestrasse 59, and part of the property at Lausanne, Rue de Genève 7, which are used by Mobimo Management AG as its administrative centre. Also included is a room for cultural activities in the property at Lausanne, Rue des Côtes-de-Montbenon 16. Other property, plant and equipment comprises movables, vehicles and computer hardware. Property, plant and equipment does not include any items under financial leasing arrangements. Annual Report

64 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 2011 Owner occupied properties Other P, P & E 2011 total Cost As at 1 January 18,939 1,844 20,783 Additions Disposals Transfers to commercial property 3, ,545 Transfers from investment properties under construction 4, ,155 Cumulative acquisition values as at 31 December 19,593 2,185 21,778 Depreciation As at 1 January 2, ,498 Additions ,115 Disposals Transfers to commercial property Cumulative depreciation as at 31 December 2,963 1,146 4,109 Net carrying amount as at 31 December 16,630 1,039 17,668 Fire insurance value 13,753 1,039 14, Intangible assets 2012 Purchase options / construction projects Software 2012 total Cost As at 1 January 3, ,731 Additions Disposals As at 31 December 3, ,010 Amortisation As at 1 January Additions Disposals Cumulative amortisation as at 31 December Net carrying amount as at 31 December 3, ,626 Purchase options / construction projects consists primarily of a notarised purchase option for a plot in Merlischachen (SZ). 62

65 Purchase options / construction projects Software total Cost As at 1 January 10, ,668 Additions 3, ,358 Disposals Transfers to investment properties under construction 10, ,691 As at 31 December 3, ,731 Amortisation As at 1 January Additions Disposals Cumulative amortisation as at 31 December Net carrying amount as at 31 December 3, , Investments in associates and joint ventures Investment in Flonplex SA, Lausanne (40 % stake) 6,625 5,332 Investment in Parking du Centre SA, Lausanne (50 % stake) 16,162 14,755 Total 22,787 20,087 Flonplex SA is a cinema operator whose majority shareholder is Pathé Schweiz AG. Parking du Centre SA is a joint venture with Vinci Park SA and is a car park operator. Summary financial information for the 2012 financial year (basis: 100%): Flonplex SA Flonplex SA PC SA PC SA Assets 29,341 27,118 58,600 57,258 Liabilities 12,779 13,789 26,276 27,748 Revenues 12,501 12,517 6,186 6,188 Profit 3,733 2,591 2,815 2,419 Annual Report

66 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 11. Financial assets Financial assets can be broken down as follows: Financial assets Loans to third parties Non-consolidated equity investments (available for sale) 1,870 1,871 Total 1,950 2,153 The non-consolidated equity investments primarily comprise the investment in Parking St-François SA. Financial assets changed as follows: Acquisition values As at 1 January 2,218 3,017 Additions 0 34 Disposals Cumulative acquisition values as at 31 December 1,950 2,218 Valuation allowances As at 1 January Disposals 65 0 Cumulative valuation allowances as at 31 December 0 65 Net carrying amount as at 31 December 1,950 2,153 A loan of CHF 0.2 million was repaid by Parking Port d Ouchy SA in the year under review. Disposals for 2011 include the repayment of a loan of CHF 0.8 million by Parking du Centre SA. As at the reporting date, there were no overdue items. Non-impaired loans were granted exclusively to borrowers with good creditworthiness. Based on past experience, Mobimo does not expect any defaulting on these loans. 64

67 12. Financial liabilities Fixed-rate mortgage amortisation due within 12 months 4,551 4,697 Mortgages due for extension or repayment within 12 months 1 64,188 56,170 Total current financial liabilities 68,739 60,867 Mortgages 828, ,790 Convertible bond 165, ,000 Total non-current financial liabilities 994,169 1,001,790 Total financial liabilities 1,062,908 1,062,657 1 including building loans for properties under construction As at the reporting date, amounts due were as follows: n / a 60, ,739 58, , , ,918 32, ,961 9, ,094 73, ,867 25, ,211 71, , , ,471 50, ,476 53, to , ,923 Total financial liabilities 1,062,908 1,062,657 Annual Report

68 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Maturity profile The average residual term of overall financial liabilities was maintained at the same level and amounted to 9.1 years as at 31 December 2012 (prior year: 9.2 years). Interest rate periods are as follows (composition until next interest rate adjustment): Up to one year 68,739 60,867 Up to 2 years 215,016 58,513 Up to 3 years 32, ,574 Up to 4 years 15,961 32,287 Up to 5 years 74,094 9,348 Over 5 years 656, ,069 Total financial liabilities 1,062,908 1,062,657 Certain mortgage interest rates used to be hedged in advance by means of forward rate agreements. Such forward rate agreements generally qualify as derivatives embedded in credit agreements and have to be measured at fair value in accordance with IAS 39. Some of these forward rate agreements were classified as cash flow hedges pursuant to IAS 39, and fair value adjustments relating to the effective portion of the hedge recognised directly in equity via a separate item (hedging reserve). When the hedged interest cash flows occur, cumulative unrealised gains or losses are transferred to the income statement. This applies until An amount of TCHF 448 (prior year: TCHF 336) was reposted to the income statement in the year under review. As at 31 December 2012 and 2011 no new forward rate agreements of this kind were used for cash flow hedges, or the term of the hedged financial liabilities had already started. Mobimo has also concluded separate interest rate hedges (swaps) for mortgages amounting to CHF million (prior year: million). Of these, CHF million (prior year: CHF 130.0) are classified as cash flow hedges. Consequently, fair value adjustments were recognised under other comprehensive income in equity, and not through the income statement. The fair value of these instruments amounts to CHF 14.2 million (prior year: CHF 12.9 million). There are also a further CHF 79.3 million (prior year: CHF million) of interest rate hedges not classified as cash flow hedges. Fair value adjustments were thus recognised through the income statement. The fair value of interest rate swaps not held for hedge accounting with a negative replacement value amounts to CHF 12.6 million (prior year: CHF 12.5 million). As at 31 December 2012 the fair value of all derivatives thus stood at a net amount of CHF 26.8 million (prior year: CHF 25.4 million). ¹ Non-current financial liabilities include, in addition to mortgage liabilities, the convertible bond with a carrying amount of CHF million (nominal value CHF million) maturing on 30 June

69 In addition to mortgage liabilities, non-current financial liabilities also include a convertible bond that was issued on 30 June 2010 with the following features: Volume: CHF 175 million Interest rate: % p.a., payable annually on 30 June, with the first payment on 30 June 2011 Term: 4 years (30 June June 2014) Conversion price: CHF , original conversion price before the capital increase of 6 December 2011 was CHF Listing: SIX Swiss Exchange Swiss security no.: Each convertible bond has a nominal value of CHF 5,000 and can be converted up to seven trading days before the end of the term into registered shares at the conversion price of CHF The conversion price was adjusted following the capital increase of 6 December 2011 and the resulting dilution; the original conversion price was CHF per registered share. A maximum of 841,386 registered shares may be issued at this conversion price under the convertible bond (831,866 registered shares before the capital increase). The company has created conditional capital for the creation of the registered shares. The prospective exercise of conversion rights would dilute earnings per share. The convertible bond can be redeemed early at any time if more than 85 % of the original bond volume is converted and / or redeemed or, from 21 July 2013, if the closing price of Mobimo Holding AG registered shares on the SIX Swiss Exchange (SIX) is 130 % or more of the conversion price over a period of 20 consecutive trading days. As at the reporting date, the convertible bond was recognised as follows: Convertible bond before issuance costs 170, ,910 Pro-rated issuance costs 3,732 3,732 Amortisation of difference between liability component / redemption amount 4,724 2,821 Conversion of bond into registered shares 6,183 0 Convertible bond (liability component) 165, ,999 Equity component before issuance costs 4,090 4,090./. Pro-rated issuance costs /. Reclassification of deferred taxes on the difference between the carrying amount and taxable value upon issue Equity component upon issue 3,391 3,391 Increase in equity through conversion 6,183 0 Conversion fees and settlement of fractional amounts 71 0 Reversal for deferred tax upon conversion 13 0 Equity component conversions 6,125 0 Provisions for deferred tax upon issue Cumulative reversal for deferred tax in income statement Reversal for deferred tax conversion against equity 13 0 Deferred tax liability Annual Report

70 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS In 2012, bonds with a nominal value of CHF 6.3 million 3.63 % of the issue volume were converted. In addition to the nominal interest expense of CHF 3.5 million (prior year: CHF 3.7 million), the income statement also includes an amortisation expense of CHF 1.9 million (prior year: CHF 1.9 million), which corresponds to an effective rate of interest of 3.34 %. Of overall financial liabilities, CHF million bear interest at fixed rates (prior year: CHF 1,062.7 million) and CHF 63.5 million (prior year: CHF 0 million) at variable rates as at 31 December (taking interest rate swaps into account). In addition to variable rate mortgages and rollover mortgages, loans with a total maturity of less than one year (fixed advances) count as variable; property financing for construction projects is included under building loans. This does not include property financing for properties which were not yet classified as investment properties under construction at the time the financing was concluded and were reclassified as investment properties under construction during the term of the existing financing. Average rates of interest for the period, taking interest rate swaps into account, were as follows: 2012 in % 2011 in % Financial liabilities excluding building loans: fixed rate of interest 3, variable rate of interest 0.77 Building loans: fixed rate of interest 1.95 variable rate of interest 0, Total average rate of interest 3, Trade payables Trade payables include payables from property accounts for advance rent payments, payables for operating costs and payables for construction costs. 14. Other payables In the year under review, other payables amounting to CHF 1.4 million (prior year: CHF 0.2 million) comprise CHF 1.1 million in deferred purchase price payments for the already completed acquisition of Immobilien Invest Holding AG (property at Lausanne, Rue Voltaire 2-12). The remainder relates primarily to payables in connection with social insurance and value added tax. 15. Advance payments from buyers Advance payments from buyers of CHF 29.0 million (prior year: CHF 25.4 million) represent reserve payments from purchasers of trading properties prior to transfer of ownership. 16. Accrued expenses and deferred income Accruals for construction work 6,357 13,672 Accruals from property accounts 1,689 4,369 Accruals for services for related parties Other items 7,689 9,633 Total accrued expenses and deferred income 16,540 28,450 68

71 17. Employee benefit obligations Mobimo is affiliated with group administration plans ( Sammelstiftungen ) for the purposes of mandatory and non-mandatory employee benefit insurance in accordance with the Swiss Federal Law on Occupational Retirement, Survivors and Disability Pension Plans (BVG). Mandatory employee benefit insurance and the savings process involved in non-mandatory employee benefit insurance qualify as defined benefit plans under IAS 19. With regard to non-mandatory occupational benefit insurance, the risks of death and disability are fully reinsured. Risk insurance for non-mandatory occupational benefit insurance qualifies as a defined contribution plan under IAS 19. Employer contributions are charged to the income statement. Plan assets and employee benefit obligations changed as follows in the year under review: Change in benefit obligations Present value of benefit obligations at the beginning of the period 23,254 21,422 Employer's current service cost Interest expenses Employee contributions Amounts paid 1, Actuarial (gains) losses 1,944 1,026 Past service cost Present value of benefit obligations at the end of the period 25,303 23,254 Change in plan assets Plan assets at market values at the beginning of the period 19,335 16,685 Expected return on plan assets Employer contributions 824 1,408 Employee contributions Amounts paid 1, Actuarial gains (losses) Plan assets at market values at the end of the period 20,704 19,335 The amounts recognised in the balance sheet for the defined benefit plan are made up as follows: Net liabilities for all plans Present value of benefit obligations 25,303 23,254 21,422 17,024 9,981 Market value of plan assets 20,704 19,335 16,685 13,765 7,936 Net liability 4,600 3,919 4,737 3,259 2,045 Unrecognised actuarial gains (losses) 3,643 2,228 2, Net benefit obligations recognised in balance sheet 957 1,691 2,310 2,309 1,107 Annual Report

72 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS The expense recognised for these plans in the income statement is made up as follows: Net benefit expense recognised Current service cost Interest expense Expected return on plan assets Recognition of actuarial (gains) losses 0 30 Recognition of past service cost Net benefit expense The item Recognition of past service cost is due to the reduction in the conversion rate. Expected employer contributions for the 2013 financial year amount to TCHF 829. The net obligation recognised in the balance sheet changed as follows: Change in net benefit obligation As at 1 January 1,691 2,310 Company's net benefit expense Employer contributions 824 1,408 As at 31 December 957 1,691 Experience gains and losses Actual return on assets 1, Actual return on assets in % 5.8 % 1.0 % 2.0 % 2.0 % 7.7 % Difference between expected and actual return on assets Difference between expected and actual return on assets in % 2.6 % 4.4 % 1.2 % 1.9 % 12.0 % Experience loss (gain) on benefit obligations , Experience loss (gain) on benefit obligations in % 0.7 % 3.5 % 5.0 % 1.8 % 3.4 % Plan assets can be broken down into the following categories: Asset classes Plan assets 2012 in % Expected return 2012 in % Plan assets 2011 in % Expected return 2011 in % Shares 30 % 5.70 % 27 % 5.90 % Bonds and notes 45 % 1.60 % 45 % 1.75 % Real estate 16 % 4.00 % 16 % 3.75 % Alternative investments 5 % 4.00 % 9 % 3.75 % Other 4 % 0.25 % 3 % 0.25 % Total 100 % 3.30 % 100 % 3.30 % As at 31 December 2012, the plan assets did not include treasury shares or real estate in the company s own use. 70

73 The following assumptions were applied to the expense reported in the income statement: Discount rate 2.0 % 2.7 % Expected return on plan assets 3.3 % 3.4 % Expected future salary increases 1.3 % 1.3 % Expected future pension benefit increases 0.1 % 0.5 % Expected long-term interest rate on pension assets 2.0 % 2.0 % 18. Deferred tax Deferred tax liabilities and assets are allocated to the following balance sheet items: Assets Liabilities Assets Liabilities Investment properties 120, ,438 Employee benefit obligation Other items 5,404 3,338 5,037 2,341 Deferred taxes on temporary differences 5, ,840 5, ,778 Tax benefit of offsettable loss carryforwards Total deferred taxes 6, ,840 5, ,778 Offset of deferred tax assets and liabilities Deferred tax assets / liabilities 5, ,867 4, ,784 The company holds and manages properties and is also involved in trading activities. In some cantons, gains from the sale of properties are subject to separate taxation in the form of a property gains tax applicable to the portion of the gain in excess of the depreciation recapture. The tax rates applied vary depending on how long the property has been held. Property gains tax rates contain speculation premiums and / or deductions for length of ownership, which is why the tax amount due declines as the period of ownership increases. Deferred taxes are calculated on the basis of cantonal regulations and, in the case of properties, individually for each property. The expected residual period of ownership is estimated for each property. Deferred tax assets for loss carryforwards are recognised to the extent that it is probable that future taxable profits will be available against which the loss carryforwards can be utilised. The assets of CHF 0.5 million recognised in the year under review (prior year: CHF 0.3 million) relate to offsettable loss carryforwards in direct federal, cantonal and communal taxes of CHF 2.0 million (prior year: CHF 1.2 million). There were no unrecognised loss carryforwards (CHF 0 compared with CHF 0.9 million in the prior year). No deferred taxes were recognised for undistributed profits of subsidiaries, since no taxes are expected if a distribution were to take place. Of the net change in deferred tax liabilities of CHF 10.6 million (prior year: CHF 5.6 million), CHF 9.2 million (prior year: CHF 5.7 million) was recognised in the income statement and CHF 0.1 million (prior year: CHF 0.1 million) on financial instruments was recognised directly in other comprehensive income. Deferred taxes of a net amount of CHF 1.5 million were taken over with the acquisitions of Ruf Immobilien AG and Petit Mont-Riond SA. Annual Report

74 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 19. Equity The Annual General Meeting of 18 April 2012 approved a distribution from capital contribution reserves of CHF 9 per share for the 2011 financial year, which was paid on 25 April The nominal value of Mobimo shares remains at CHF 29. Changes in the equity holding can be summarised as follows: No. of shares Shares issued Treasury shares Shares outstanding As at 1 January ,131,170 1,071 5,130,099 Issue of shares from conditional capital for options exercised 10,578 10,578 Acquisition of treasury shares 71,736 71,736 Share-based payments for the acquisition of properties 62,785 62,785 Share-based payments to Board of Directors and management 8,331 8,331 Sale of treasury shares Issue of shares from authorised capital for capital increase 1,028,350 1,028,350 Acquisition of treasury shares from capital increase As at 31 December ,170,098 1,747 6,168,351 Issue of shares from conditional capital for options exercised 8,315 8,315 Issue of shares from conversion of convertible bond 30,500 30,500 Share-based payments to Board of Directors and management 9,486 9,486 Acquisition of treasury shares 20,591 20,591 Sale of treasury shares 4,108 4,108 As at 31 December ,208,913 8,744 6,200,169 As at 31 December 2012, share capital amounted to CHF million (prior year: CHF million) and was composed of 6,208,913 registered shares (prior year: 6,170,098) with a nominal value of CHF 29 per share. 8,744 treasury shares (prior year: 1,747) were held as at that date. 8,315 option rights (prior year: 10,578) were exercised in 2012, leading to a CHF 0.2 million increase (CHF 0.3 million) in share capital. In addition, the conversion of 1,269 bonds from the outstanding convertible bond resulted in the issue of 30,500 new shares and an increase in the share capital of CHF 0.9 million. The nominal value of the converted bonds of CHF 5.5 million in excess of the nominal value of the new shares was credited to capital reserves after deduction of amounts due for rounding out and issue costs of CHF 0.3 million (see Note 12 Financial liabilities). The purchase of the property at Place de la Gare, Avenue d Ouchy 4 / 6 in Lausanne in 2010 as part of the takeover of O4Real AG was completed in The purchase price of a maximum of CHF 18.3 million was payable entirely in shares and was paid incrementally in line with rents received. The maximum purchase price was fully recognised at the time of acquisition as an increase in the capital reserves. The final transfer of shares took place in In total, 67,585 shares were transferred to the sellers, with 62,785 of these being transferred in The acquisition costs of the treasury shares bought back on the market after being transferred to the sellers amounted to a total of CHF 14.3 million (2011: CHF 13.4 million; 2010: CHF 0.9 million) and were charged to capital reserves as at the time of the transfer. Also in 2011, Mobimo issued 1,028,350 new registered shares from existing authorised capital. The capital increase safeguarded shareholders subscription rights. Each existing shareholder was granted one subscription right per registered share held. Five subscription rights entitled the holder to purchase one new Mobimo registered share at the price of CHF 192 per share. By the end of the subscription period on 5 December, 99.8% of the subscription rights had been exercised. The remaining 1,959 shares were placed at the price of CHF 206 each. Share capital thus increased by a nominal CHF 29.8 million. The amount of CHF million in excess of the nominal value was credited to capital reserves. The costs of the capital increase, which amounted to CHF 5.3 million, were charged to capital reserves and the consequent tax effect of CHF 0.4 million was credited to capital reserves. This resulted in an overall increase of CHF million. 72

75 There is also conditional share capital of a maximum of CHF 34.3 million for the issue of up to 1,182,891 fully paid-up registered shares with a nominal value of CHF 29, of which up to CHF 0.3 million is designated for the exercise of option rights granted to members of the Board of Directors, employees of Group companies and related parties. Shareholders subscription rights are excluded; up to CHF 0.9 million is designated for the exercise of subscription rights created after 5 May 2010 under an employee share option programme. Shareholders subscription rights are excluded; up to CHF 33.1 million is designated for the exercise of conversion and / or option rights connected to convertible bonds, bonds with warrants, similar bonds or other financial market instruments of the company or granted by Group companies. Shareholders subscription rights are excluded. Finally, authorised share capital is available allowing the Board of Directors to increase the share capital of the company by a maximum of CHF 33.1 million within two years at most (up to April 2013) via the issue of a maximum of 1,141,150 registered shares, to be fully paid up, with a nominal value of CHF 29 per share. The authorised capital of CHF 33.1 million and the conditional capital are linked together insofar as upon using the authorised capital, the equivalent amount of conditional capital will no longer be available to the Board of Directors. The same applies in the reverse scenario; if the conditional capital is used, the equivalent amount of the authorised capital will no longer be available. The amount of the authorised capital of 33.1 million available to the Board of Directors for increasing the share capital as at 31 December 2012 is thus reduced by the outstanding portion of the convertible bond of CHF 23.5 million (conditional capital). The Board of Directors will propose to the upcoming General Meeting of 9 April 2013 a distribution of CHF 55.9 million in the form of a distribution of paid-in capital of CHF 9 per share. Annual Report

76 1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Capital structure Total TCHF Number of registered shares Nominal value per share (CHF) Capital as at 31 December 2012 Share capital 180,058 6,208, Authorised capital (until 6 April 2013) max. 33,093 1,141, Conditional capital max. 34,304 1,182, Changes in capital Share capital as at ,411 2,600, Share capital as at ,346 3,466, Share capital as at ,232 4,343, Share capital as at ,230 4,345, Share capital as at ,035 5,053, Share capital as at ,804 5,131, Share capital as at ,933 6,170, Share capital as at ,058 6,208, Authorised capital as at , , Authorised capital as at , , Authorised capital as at , , Authorised capital as at , , Authorised capital as at , , Authorised capital as at ,800 1,200, Authorised capital as at ,978 1,171, Authorised capital as at ,093 1,141, Conditional capital as at , , Conditional capital as at , , Conditional capital as at , , Conditional capital as at , , Conditional capital as at , , Conditional capital as at ,558 1,260, Conditional capital as at ,252 1,250, Conditional capital as at ,304 1,182,

77 20. Earnings per share Undiluted earnings per share are calculated on the basis of Group profit and the average number of outstanding shares. Diluted earnings per share are calculated using Group profit and the average number of outstanding shares (not including treasury shares), taking into account the effects from all potential shares, options and conversions Calculation of earnings per share Number of outstanding shares as at 1 January 6,168,351 5,130,099 Effect of capital increase (average) 25,716 79,013 Effect of change in holdings of treasury shares 2,283 6,486 Average number of outstanding shares 6,191,784 5,202,626 Effect of outstanding options: average number of potential shares 11,548 22,402 average number of shares which would be issued at average market value 1,542 3,095 Average number of potential shares from convertible bond 819, ,544 Effective number of shares as basis for calculation of diluted earnings per share 7,021,251 6,054,477 Profit in TCHF (attributable to the shareholders of Mobimo Holding AG) 76,323 80,454 Net income from revaluation in TCHF (attributable to the shareholders of Mobimo Holding AG) 36,921 41,194 Attributable deferred tax in TCHF 9,230 10,299 Profit not including revaluation (and attributable deferred tax) in TCHF 48,631 49,558 Effect of coupon payment on convertible bond in TCHF 5,440 4,701 Attributable income tax in TCHF Profit after eliminations from convertible bond in TCHF 81,339 84,788 Profit not including revaluation or effects from convertible bond in TCHF 53,647 53,893 Earnings per share in CHF Diluted earnings per share in CHF Earnings per share not including revaluation (and attributable deferred tax) in CHF Diluted earnings per share not including revaluation (and attributable deferred tax) in CHF Calculation of net asset value (NAV) per share Number of outstanding shares as at 31 December 6,200,169 6,168,351 Number of outstanding options 9,295 17,610 Number of potential shares from convertible bond 810, ,386 Number of shares as basis for calculation of diluted NAV 7,020,344 7,027,347 Equity as at 31 December in TCHF 1,197,514 1,174,183 Liability component convertible bond 165, ,999 Deferred taxes on convertible bond Option exercise (outstanding options x nominal value) in TCHF Shareholders' equity after conversion and option exercise in TCHF 1,363,733 1,345,083 NAV per share in CHF NAV per share, diluted, in CHF Annual Report

78 1 Income from rental of properties 21. Income from rental of properties Rental income can be broken down among the individual divisions as follows: Commercial properties 73,152 71,154 Residential properties 19,027 15,775 Income from rental of investment properties 92,179 86,929 Trading properties ,858 Total income from rental of properties 92,765 88,787 Commercial properties 9,978 9,743 Losses on receivables commercial properties Residential properties 2,568 2,444 Losses on receivables residential properties Investment property expense 12,841 12,603 Rented trading properties Losses on receivables trading properties 24 0 Net income from revaluation 12,937 12,753 Net rental income 79,828 76,034 Rental income contains net rental income, i.e. the rents received. The year-on-year increase in 2012 is mainly attributable to the first-time letting of properties completed during the course of the previous year and in the current year. Direct expenses contains all costs relating to maintenance and administration (including building superintendent remuneration) which cannot be passed on to tenants. 22. Profit on disposals of trading properties Proceeds from sale of trading properties 151, ,029 Total income from sale of trading properties 151, ,029 Pro-rata construction costs of trading properties sold 129, ,398 Changes in valuation allowances Total expenses from sale of trading properties 130, ,714 Profit on sale of trading properties 21,740 22,315 Further details of the trading properties sold can be found in Note 5. 1 Rental income from development properties 76

79 23. Other income Other income Total other income Other income includes income from the management of third-party property in Lausanne and income from the preparation of property heating and ancillary cost statements. 24. Net income from revaluation Positive fair value adjustments 53,934 54,330 Negative fair value adjustments 17,045 13,136 Net gains from revaluation 36,889 41,194 Of the CHF 36.9 million in net income from revaluation, CHF 15.7 million relates to the completion of properties under construction for the company s own portfolio in Profit on disposals of investment properties Sales proceeds investment properties ,631 Carrying amount ,556 Sales costs Profit on disposal of investment properties 124 2,484 There were some land cessions in the period under review (see Note 7). Annual Report

80 1 Income from rental of properties 26. Personnel expense Salaries 11,734 10,831 Profit-sharing (management / employees) 2,122 3,034 Social security contributions 1,148 1,095 Defined contribution plans Defined benefit plans Compensation for Board of Directors 1,428 1,496 External training and education costs Other personnel expenses 1, Total personnel expenses 17,958 18,054 Headcount as at 31 December (full-time basis) 85,2 84,1 Average headcount (full-time basis) 82,9 78,9 The lower personnel expense for defined benefit plans compared to the previous year is due to the lower cost of employee benefit plans calculated under IAS 19 (see Note 17). 78

81 27. Operating expense Room costs Costs for investigations in connection with the acquisition of properties, sales documentation Capital taxes Other operating expenses 4,925 4,885 Total operating expenses 5,945 5,542 Other operating expenses includes a loss of TCHF 27 (prior year: TCHF 20) on the disposal of property, plant and equipment. 28. Administrative expense Consulting expense 1,945 1,852 Consulting expense in respect of related parties Other administrative expenses Total administrative expenses 2,563 2, Depreciation and amortisation Depreciation on other property, plant and equipment Depreciation on owner occupied properties Amortisation of intangible assets Total depreciation and amortisation 1,320 1,356 Depreciation on other property, plant and equipment consists of ordinary depreciation for vehicles, furniture and hardware. Depreciation on owner-occupied properties comprises ordinary depreciation for the property at Seestrasse 59 in Küsnacht, as well as for the owner-occupied parts of the properties at Rue de Genève 7 and Rue des Côtes-de-Montbenon 16 in Lausanne. Annual Report

82 1 Income from rental of properties 30. Financial result Financial income Interest on bank and other deposits Interest on loans and debt instruments Interest on loans to associates 0 17 Total interest income Dividend income from equity investments Income from financial instruments (derivatives) 0 0 Gains from sale of financial assets Other income 5 0 Total financial income 825 1,523 Financial expense Interest expense 27,029 28,093 Cost of financial instruments (derivatives) 135 4,248 Other financial charges Total financial expense 27,449 32,472 Total financial result 26,624 30,949 In the 2012 financial year, a total of CHF 4.6 million (prior year: CHF 2.2 million) in borrowing costs was capitalised under trading properties and investment properties under construction. The average rate of interest on the capitalised interest amounted to 3.00 % (prior year: 1.91 %). 31. Tax expense Tax expense can be broken down as follows: Total current tax expense 8,443 6,193 Deferred tax Change in deferred tax 9,366 7,985 Capitalisation of deferred tax on tax loss carryforwards Changes in tax rate on deferred tax items recognised 0 1,981 Total deferred tax expense 9,170 5,720 Total income tax expense 17,613 11,913 Current tax expense contains an amount of CHF 1.4 million (prior year: CHF -5.4 million) for income tax from prior periods. Enacted tax rates were used in the calculation of current income tax. Other comprehensive income (equity) includes current tax income of CHF 0.3 million (prior year: CHF 2.9 million) from recognising the losses on financial instruments classified as cash flow hedges (swaps). In the prior year, the positive tax effect of CHF 0.4 million in current tax resulting from reporting the costs of the capital increase in equity was also recognised directly in equity. Details on deferred tax and deferred tax recognised directly in other comprehensive income can be found in Note

83 Tax expense can be analysed as follows: Group profit before tax 93,653 92,367 Applicable tax rate 25 % 25 % Tax expense at applicable tax rate 23,413 23,092 Non-deductible expenses 281 1,527 Creation / reversal for prior-year current tax 1,417 5,412 Non-recognition of tax loss carryforwards Utilisation of previously unrecognised tax losses Capitalisation of deferred tax assets 0 3,667 Expense / income which is taxed at a lower / higher tax rate 5,553 2,637 Impact of changes in tax rate on deferred tax items recognised 1,258 1,981 Other effects Total taxes 17,613 11,913 The applicable tax rate in the year under review was a mixed rate. It takes account of the fact that gains subject to cantonal and local authority tax are currently taxed at an average rate of 22 % (including direct federal tax), while property gains subject to property gains tax are taxed at rates of up to 35 %. The low tax rate in the 2011 financial year was mainly attributable to the implementation of the Swiss Federal Supreme Court judgement of 4 April 2011, which ended the longstanding legal dispute between Mobimo AG ( Mobimo ) and the City of Zurich. The dispute concerned the possibility of deducting expenses and loss carryforwards in connection with the assessment of property gains tax. As a result of the Supreme Court s ruling in Mobimo s favour, the company was able to release tax provisions of CHF 5.5 million. There are still a number of unresolved issues currently being clarified with the local tax authorities relating to how the Supreme Court judgement is to be effectively implemented. 34. Pledged assets/assets not freely disposable The carrying amount of pledged assets is as follows: Trade receivables Other receivables 4,337 0 Trading properties 104,567 57,568 Investment properties and investment properties under construction 1,867,613 1,773,408 Owner occupied properties 16,635 16,630 Carrying amount of pledged assets 1,993,244 1,847,909 With the exception of other receivables, this is the carrying amount of those assets which are pledged either in full or in part for the purpose of securing bank mortgage loans. These assets were effectively mortgaged in an amount of CHF million (prior year: CHF million) (see Note 12). Annual Report

84 1 Income from rental of properties 33. Operating leases Mobimo as tenant and lessee Obligations from non-cancellable rental and leasing agreements are as follows: Rental and leasing obligations up to 1 year Total future rental and leasing obligations The obligations relate to third-party leases for premises and car park facilities and to rented photocopying equipment. The rental and leasing expenses charged to the income statement amounted to TCHF 70 (prior year: TCHF 83). Mobimo as landlord The future rental income set out below will be generated from non-cancellable rental agreements for investment properties: 2012 Commercial properties Residential properties Total Rental income within 1 year 67,342 1,930 69,272 Rental income within 2 to 5 years 198,293 3, ,625 Rental income in over 5 years 130,902 2, ,865 Total future rental income from non-cancellable rental agreements 396,537 8, , Commercial properties Residential properties Total Rental income within 1 year 61,664 3,749 65,413 Rental income within 2 to 5 years 173,403 2, ,555 Rental income in over 5 years 197, ,338 Total future rental income from non-cancellable rental agreements 432,695 6, ,306 Rental agreements for commercial properties generally contain an index clause stating that rents may be increased on the basis of the consumer price index. Rent increases for residential properties are generally linked to the mortgage interest rate (reference interest rate), among others. As at 31 December 2012, 79.6 % (CHF 74.8 million) of rental income came from rental agreements with index clauses. The vast majority of these agreements contain a 100 % adjustment in line with the index. 82

85 The five biggest tenants generate the following shares of rental income: Name of tenant 2012 share in % 2011 share in % Swisscom Group SV (Schweiz) AG Coop MIGROS Cooperative Association Rockwell Automation AG Shares of the five biggest tenants (as at 31 December 2012) 6.5 % 6.1 % 3.8 % 3.3 % 3.3 % Swisscom Group SV (Schweiz) AG Coop MIGROS Cooperative Association Rockwell Automation AG Total other (incl. vacant) 76.9 % Further details of rental income can be found in Note 21. Length of existing fixed rental agreements (as at 31 December 2012) until to to to to to to to to to beyond % 2% 4% 6% 8% 10 % 12% 14 % 16% 18 % 20% 22% 24% Annual Report

86 1 Income from rental of properties 34. Financial risk management 34.1 General information Through its activities, Mobimo is exposed to various financial risks: credit risk, liquidity risk and market risk. Of the various market risks, interest rate risk is particularly significant. Risk management is assured by Internal Controlling. Internal Controlling operates in accordance with the principles of Mobimo s risk management concept, which are monitored by the Audit and Risk Committee. Risk management focuses on the identification, description, management, monitoring and control of credit, interest rate and liquidity risks. The Group uses derivative financial instruments to hedge certain risks. The risk management principles and the processes applied are subject to regular review in order to take account of changes in market conditions and in the activities of the Group. The aim is to use existing training and management guidelines and processes to maintain a disciplined and constructive control environment in which all employees can fulfil their function and exercise their duties. Risk management is part of the processes of the integrated management system. The following paragraphs provide an overview of the exposure to each of the individual risks together with information on the objectives, policies and processes for measuring, monitoring and hedging risks and on capital management within the Group. Further information on financial risks can be found elsewhere in the Notes (see Note 9 to the annual financial statements of Mobimo Holding AG, Risk assessment) Credit risk Credit risk is the risk that Mobimo could suffer financial losses if clients or counterparties to a financial instrument fail to fulfil their contractual obligations. Credit risk arises primarily in connection with trade receivables and cash. In order to minimise credit risk in connection with cash, short-term bank deposits are held with first-rate institutions. Trade receivables are receivables from property sales and from rental agreements. Property sales are exposed to only limited credit risk, since these sales are based on a publicly certified purchase agreement which is regularly secured via an irrevocable promise to pay. With rental agreements, credit risk is reduced via creditworthiness checks and by monitoring the age structure of amounts outstanding. Deposits or bank guarantees of three to six times the monthly rent are also demanded. The maximum credit risk exposure corresponds to the carrying amounts of the individual financial assets. There are no guarantees or similar obligations which could lead to an increase in risk in excess of the carrying amounts. As at the reporting date, the maximum credit risk exposure was as follows: Carrying amounts 2012 Carrying amounts 2011 Cash (bank deposits) 97, ,059 Trade receivables 4,019 6,368 Other receivables 1 4, Accrued income and prepaid expenses 2 2,768 3,278 Financial assets (loans) Total 109, , Liquidity risk Liquidity risk is the risk that Mobimo will not be able to meet its financial obligations when they become due. Investment properties are generally financed via medium- to long-term loans, and condominium development properties via short-term loans. Liquidity is managed via a liquidity planning tool, in combination with a mortgage database. 1 Not including tax receivables, receivables in relation to social insurance and advance payments 2 Not including costs paid in advance 84

87 The table below sets out the contractual maturities (including interest) in relation to Mobimo s financial liabilities. Future variable rates of interest have been estimated using the yield curve as at the reporting date. Carrying Contractual 1 month Over 2012 amount cash flows or less months months 1 5 years 5 years Non-derivative financial liabilities Trade payables 1 10,383 10,383 10,383 Other payables 2 1,179 1,179 1,179 Accrued expenses and deferred income 3 14,181 14,181 14,181 Financial liabilities 1,062,908 1,262, ,124 24, , ,736 Derivative financial liabilities Interest rate swaps 26,825 27, ,534 15,760 6,866 Total 1,115,476 1,315, ,737 28, , ,602 Carrying Contractual 1 month Over 2011 amount cash flows or less months months 1 5 years 5 years Non-derivative financial liabilities Trade payables 1 6,456 6,456 6,456 Other payables Accrued expenses and deferred income 3 23,325 23,325 23,325 Financial liabilities 1,062,657 1,268,555 63, ,185 70, , ,149 Derivative financial liabilities Interest rate swaps 25,358 37, ,088 4,526 15,740 15,275 Total 1,117,950 1,335,550 63, ,208 74, , ,424 1 Not including rents and ancillary costs paid in advance 2 Not including tax payables and payables in relation to social insurance 3 Not including deferred income and unused annual leave Annual Report

88 1 Income from rental of properties 34.4 Market risks Market risk is the risk that changes in market prices such as exchange rates, interest rates and the fair value of financial instruments could have an impact on the profit from and fair value of financial instruments held by Mobimo. Market risks are managed in order to monitor and control such risks and to ensure that they do not develop beyond a specific extent. Currency risk The Group is only active in Switzerland and all business is transacted in Swiss francs. Interest rate risk The Group s cash is used to reduce variable-rate mortgages or is invested on a short-term basis. The majority of interest on financial liabilities relates to loans for the financing of investment properties and development properties (trading properties). With investment properties, interest rate risk is generally addressed via the conclusion of long-term fixed-rate mortgage agreements. Where necessary, derivative financial instruments are also used to hedge interest rates. As at the reporting date, construction financing in the amount of CHF 63.5 million had been taken out on investment properties (prior year: CHF 0) in the form of fixed advances with a term of three months and exposed to heightened interest rate risk. Based on its market assessment, Mobimo has set itself the goal of maintaining the average residual term to maturity of financial liabilities over the long term via mortgages with long terms and derivative financial instruments. Further information on the interest rate profile of financial liabilities, forward rate agreements and interest rate swaps can be found in Note 12. Interest rate risk can be broken down into interest-related cash flow risk, i.e. the risk that future interest payments will change as a result of fluctuations in market interest rates, and interest-related fair value risk, i.e. the risk that the fair value of a financial instrument will change as a result of fluctuations in market interest rates. 86

89 Fair value sensitivity analysis for fixed-rate financial instruments Mobimo has no fixed-rate financial assets or liabilities which are classified at fair value in the income statement. Fixed-rate financial instruments are measured at amortised cost. With these positions, therefore, a change in market interest rates would have no impact on the profit for the year. Mobimo may hold forward rate agreements and interest rate swaps measured at fair value. Changes in fair value for interest rate swaps not held for hedge accounting purposes are recognised in the financial result and therefore have no direct impact on the profit for the year. Changes in fair value for forward rate agreements used for hedge accounting purposes are recognised directly in equity. An increase of 100 basis points in the interest rate would have increased the Group result by CHF 5.3 million (prior year: CHF 6.2 million) as a result of changes in fair value for swaps not held for hedge accounting purposes. Changes in fair value for swaps held for hedge accounting purposes would have increased other income (equity) by CHF 24.7 million (prior year: CHF 24.5 million). An equivalent reduction in the interest rate would have reduced the Group result and other income by a similar amount. This analysis is based on the assumption that all other variables remain unchanged. Cash flow sensitivity analysis for variable-rate financial instruments Mobimo s variable-rate financial liabilities are exposed to interest-related cash flow risk. An increase of 100 basis points in the interest rate would have lowered the Group result by CHF 0.6 million (prior year: CHF 0 million). An equivalent reduction in the interest rate would have reduced the Group result by the same amount. This analysis is based on the assumption that all other variables remain unchanged. Annual Report

90 1 Income from rental of properties Fair values The carrying amounts in the annual financial statements for cash, trade receivables, other current receivables and current liabilities approximate to fair value given the short terms involved. For interest rate swaps and forward rate agreements, fair value is the present value of the forward contract. For fixed-rate financial liabilities, fair value corresponds to the time value of the future cash flows to be discounted as at the reporting date using the market interest rate. As at the reporting date, for fixed-rate mortgages this figure was CHF million (prior year: CHF 87.4 million) higher than the carrying amount. The reason for this is that, as at 31 December 2012, market interest rates were considerably lower than the level hedged. The fair values of fixed-rate mortgages are based on early repayment penalties calculated by the lending banks as at the respective date. For the listed convertible bond, fair value, which corresponds to the closing price on the stock exchange, is CHF 11.5 million (prior year: CHF 9.0 million) higher than the carrying amount. Interest rates used in determining fair value Rates of interest for discounting future cash flows are based on money and capital market rates as at the time of measurement plus an adequate interest spread. For 2012, the discount rates used were between 0.57 % and 2.00 % (prior year: between 0.57 % and 2.00 %). Fair value hierarchy The table below analyses financial instruments carried at fair value, by measurement method, as at 31 December The different levels have been defined as follows: Level 1: quoted prices in active markets Level 2: inputs other than quoted prices in active markets that are observable either directly (i.e. prices) or indirectly (i.e. derived from prices) Level 3: inputs that are not based on observable market data Level 1 Level 2 Level 3 Derivative financial instruments (net) 0 26, Level 1 Level 2 Level 3 Derivative financial instruments (net) 0 25,358 0 Mobimo does not hold any financial instruments carried at fair value which are classified as Level 1. The fair value of the financial instruments classified as Level 3 changed as follows in 2012: As at 1 January 0 3,205 Sale of the investment in Olmero AG 0 1,367 Decrease through change to measurement at cost 0 1,838 As at 31 December 0 0 The item Decrease through change to measurement at cost shown in the prior year related to the investment in Parking Saint-François S.A, for which a corresponding fair value was calculated and recognised as part of the purchase price allocation (PPA) for the acquisition of the LO Group. Insufficient information was available to produce a regular and reliable calculation of the current fair value, however. 88

91 34.5 Categories of financial instruments The table below shows the carrying amounts of all financial instruments by category: Carrying amount 2012 Carrying amount 2011 Loans and receivables Cash 97, ,059 Trade receivables 4,019 6,368 Other receivables 1 4, Accrued income and prepaid expenses 2 2,768 3,278 Financial assets (loans) Total loans and receivables 109, ,436 Financial assets available for sale Financial assets (equity investments) 1,870 1,871 Financial liabilities measured at amortised cost Trade payables 3 10,383 6,456 Other payables 4 1, Accrued expenses and deferred income 5 14,181 23,325 Financial liabilities 1,062,908 1,062,657 Total liabilities measured at amortised cost 1,088,651 1,092,592 Financial liabilities held for trading purposes Derivative financial instruments 12,605 12,471 Financial liabilities held for hedging purposes Derivative financial instruments 14,220 12, Capital management The Board of Directors seeks to ensure a solid capital base. With regard to its capital structure, Mobimo aims to achieve long-term net gearing (ratio of net debt to shareholders equity) of a maximum of 150 %. In addition, equity should not drop below 40 % of total assets, in accordance with investment guidelines. Mobimo also consistently distributes a high dividend. Over the past five years the dividend yield (capital contribution or nominal value repayment) has amounted to an average of about 4.9 % (prior year: 5.1 %). As at the end of 2012, the return on equity was 6.7 % (prior year: 8.5 %) (profit in relation to average equity). The shares are characterised by a high level of stability in value, calculability and good profitability. 1 Not including tax receivables, receivables in relation to social insurance and advance payments 2 Not including costs paid in advance 3 Not including rents and ancillary costs paid in advance 4 Not including tax payables and payables due to social insurance 5 Not including deferred income and unused annual leave Annual Report

92 1 Income from rental of properties 35. Share-based payments The regulations governing the profit-sharing plan for the Executive Board in force since 1 January 2010 have been amended due to the expansion of the Executive Board. The amended regulations came into effect on 1 January 2012 and are now valid up to and including the 2015 financial year (Corporate Governance, Section 5 Remuneration and profit-sharing). The 7 % share of consolidated profit for the year that exceeds a hurdle of 5 % of return on equity will continue to be allocated to the Executive Board as variable remuneration. At least 50 % of the variable performance-related remuneration element must be drawn in the form of shares. The high water mark principle still stipulates that if figures drop below the 5 % hurdle, profit-sharing only becomes possible again when the difference is made up. The annual share of profits for the individual members of the Executive Board is limited to a maximum of 150 % of fixed gross annual salary. All the shares issued under profit-sharing arrangements are subject to a vesting period, generally of five years. For the 2012 financial year, a total of 4,528 shares (prior year: 7,392) were allocated to the Executive Board as a share of profits. The cost of the approved share allocation was recognised as TCHF 991 (prior year: TCHF 1,538), measured at the share price on 31 December 2012 of CHF per share (prior year: CHF 208). Sharebased remuneration for the Executive Board was based on the assumption that a ratio of 55 % applies (prior year: 60 %). In accordance with the regulations that came into effect in the 2009 financial year, the Board of Directors receives fixed remuneration structured on a modular basis. The modules used reflect members individual activities on the Board of Directors, thus ensuring that remuneration is in line with the level of responsibility involved and the time required. Each member of the Board of Directors may receive the compensation in cash or partly or fully in shares in accordance with the allocation resolution. In total, remuneration of CHF 1.1 million was paid in cash (prior year: CHF 1.0 million) and CHF 0.4 million in the form of shares (1,742 shares) (prior year: CHF 0.4 million, 1,708 shares) in Until 31 December 2009 (31 December 2008 in the case of the Board of Directors), the Executive Board and employees were subject to profit-sharing regulations which stated that should a hurdle of 5 % return on equity be exceeded, options (with dilution protection) would be granted on shares in an amount of 20 % of annual unrealised gains (valuation gains on properties less deferred taxes). The high water mark principle stipulated that if figures dropped below the 5 % hurdle, profit-sharing would only become possible again when the difference was made up. From 1 January 2006, the number of options was determined on the basis of the fair value of the option using the Black Scholes model. The option plan was in force from 1 July 2000 and the regulations governing the plan were updated following the introduction of new profit-sharing regulations for employees effective 1 January 2005 and 1 January In addition, the Board of Directors and the Executive Board were granted special one-time options in 2001 for the successful establishment of the Mobimo Group. The strike price for all options corresponds to the nominal value at the time of exercise. There was no nominal value reduction in the 2012 financial year, so the strike price remains unchanged at CHF 29. All options issued are subject to individual vesting periods of at least three years from the issue date (21 November 2001 for the establishment of the Group and profit-sharing 2000, 28 August 2002 for profit-sharing 2001). The first possible date for exercising options was 21 November The regulations, effective from 1 January 2006, governing the granting of options from the 2006 financial year onwards specify an exercise period of between the third and tenth year. In line with the allocation regulations applicable at the time, the Executive Board received a share of profits in the form of options for the last time in The Board of Directors was allocated a share of profits in the form of options for the last time in connection with the 2008 financial year. 90

93 The options issued can be broken down as follows: Grant date For the successful establishment of the Group ,000 13,000 From profit-sharing ,900 55,900 From profit-sharing ,725 18,725 Special allocation Executive Board ,293 2,293 From profit-sharing ,592 8,592 From profit-sharing ,322 8,322 From profit-sharing ,494 6,494 From profit-sharing ,825 1,825 From profit-sharing ,403 2,403 Total options issued 117, ,554 Options exercised 108,259 99,944 Expired options 0 0 Total options outstanding 31 December 9,295 17,610 Exercisable options Capital commitments As at 31 December 2012, capital commitments for future construction investments in investment properties amounted to CHF 65.7 million. These commitments relate to the agreements concluded with general contractors for the investment properties under construction at Zurich City West site C, Lausanne La Poste, Lausanne Les Pépinières and Affoltern am Albis, Obstgartenstrasse/Obfelderstrasse. There is also a future commitment of CHF 17.3 million arising from the notarised agreement for the purchase of an investment property. 37. Contingencies There are no contingent liabilities. 38. Significant shareholders As at the reporting date, the following shareholders hold more than 3 % of the shares and options in Mobimo Holding AG: 31 December Pensionskasse des Kantons Zug 3.38 % 3.40 % BlackRock, Inc % Annual Report

94 1 Income from rental of properties 39. Related parties Related parties include shareholders who could exert a significant influence over Mobimo, the Board of Directors and management, associates, companies controlled by members of the Board of Directors of the Mobimo Group and the Mobimo pension plan. Among the companies controlled by members of the Board of Directors are Ledermann Immobilien AG, the law firm weber schaub & partner ag and Immopoly Sàrl owned by Paul Rambert. Paul Rambert s son is a managing partner in the company Oloom Sàrl, which provides interior design services. The Board of Directors and the Executive Board received the following remuneration in the year under review (in TCHF): Members of the Board of Directors/Executive Board 5,812 6,173 broken down as follows salaries 3,910 3,733 social security contributions share-based payments 1,371 1,892 The regulations governing the remuneration system for the Board of Directors were amended in 2009 and the existing option plan discontinued (see Note 35). As of the 2010 financial year, the option plan for the Executive Board was also replaced by the new profit-sharing regulations for the Executive Board (see Note 35). EB profit-sharing/bod remuneration 2010 EB profit-sharing/bod remuneration 2011 EB profit-sharing/bod remuneration ,651 shares 9,100 shares 6,270 shares Further details of the Executive Board profit-sharing regulations can be found in Note 35. Further relationships with related parties are as follows: The income statement includes expenses of TCHF 389 (prior year: TCHF 488) for tax consulting by the tax and legal consulting firm weber schaub & partner ag. TCHF 80 (prior year: TCHF 27) was paid for advisory services provided by Immopoly Sàrl and TCHF 11 (prior year: TCHF 176) for design advisory services provided by Oloom Sàrl. The apartment in the Mobimo Tower purchased by Dr. C. Caviezel in 2011 was used by Mobimo as a show apartment until June 2012 and rental income of TCHF 47 was paid for it in the year under review. In addition, the donation of TCHF 40 paid in the previous year to the committee supporting Georges Theiler s campaign for election to the Council of States was repaid. The information on transparency pursuant to the Swiss Code of Obligations can be found in the notes to the annual financial statements of Mobimo Holding AG. 92

95 40. Group companies The scope of consolidation comprises the following companies: Share capital in TCHF Ownership interest in % Consolidation method Company Domicile Mobimo Holding AG Lucerne 180,058 F Mobimo AG Küsnacht 72, F Mobimo Management AG Küsnacht F JJM Participations SA Lausanne 6, F LO Holding Lausanne-Ouchy SA Lausanne 12, F LO Immeubles SA Lausanne 2, F Parking du Centre SA Lausanne 6, E Flonplex SA Lausanne 2, E Parking Saint-François SA Lausanne 1,150 26,52 1 not cons. O4Real AG Lausanne 1, F Immobilien Invest Holding AG Glarus F Petit Mont-Riond SA Lausanne F F = fully consolidated E = equity valuation not cons. = not consolidated In the year under review, Mobimo Holding AG purchased % of the shares of Immobilien Invest Holding AG, Glarus, which holds 100 % of the shares of Petit Mont-Riond SA, Lausanne. As part of a restructuring within the companies covered under the scope of consolidation, the companies FLON Events Sàrl, Lausanne, and LO Gestion SA, Lausanne, were merged in the year under review into LO Immeubles SA, Lausanne. 41. Events after the reporting date The Board of Directors approved the consolidated financial statements for publication on 11 February These statements are also subject to approval by the General Meeting of Mobimo Holding AG on 9 April At the end of the year, Mobimo and Hochtief Development Schweiz AG signed an agreement with Rheinmetall relating to their joint development of the latter s current location in Zurich-Oerlikon. Rheinmetall has medium-term plans to move from its current location, which measures some 53,000m2. Following the move the site, which is superbly located between the station and a residential area in Zurich-Oerlikon, will offer a major opportunity for an attractive, mixed-use urban development with a residential focus, thereby further enhancing Mobimo s basis for new and attractive projects. On 1 February 2013 Mobimo purchased a property in Uetikon am See for CHF 8.4 million that it intends to develop as condominiums. The Investments for Third Parties business area also signed an agreement to purchase the shares of a real estate company with a property in Olten. The purchase agreement is expected to be completed in the next two months. No other events occurred between 31 December 2012 and the date of approval of the consolidated annual financial statements which would require adjustments to the carrying amounts of the Group s assets and liabilities as at 31 December 2012 or would require disclosure in this section. 1 The share of voting rights is 5 % Annual Report

96 2 PROPERTY DETAILS 2.1 TRADING PROPERTY DETAILS Location Address Site Register of Built Acquired area in m 2 polluted sites Building land Dübendorf Sonnentalstrasse ,292 no May 2012 Herrliberg Rigiweg 5,082 no Nov 2008 Lucerne Büttenenhalde 7,115 no Dec 2011 Meilen Feldgüetliweg 143 / 145 2,660 no Aug 2011 Weggis Hertensteinstrasse 105 3,043 no May ,192 Properties under construction Horgen Stockerstrasse (Wisental II) 7,047 no Nov 2005 Regensdorf Im Pfand 2 5,082 no Jun 2007 Zurich Im Brächli 5 / 7 / 9 2,144 no Aug 2009 Zurich Turbinenstrasse Site A 5,144 no May 2011 Zurich Turbinenstrasse Site B 5,965 no May ,382 Completed properties Aarau Buchserstrasse no 1907 Mar 2011 Adliswil Wilacker I 7,231 no Dec 2007 Adliswil Wilacker II 10,935 no Dec 2007 Egerkingen Einschlagstrasse 8,729 no Mar 2011 Horgen Stockerstrasse ,633 no Nov 2005 St. Erhard Längmatt 4,447 no 1979 Oct 2012 St. Moritz Via Maistra no 1930 Jul 2010 Zurich Badenerstrasse ,389 no 1954 May 2012 Zurich Hinterbergstrasse 53 1,465 no Jul 2010 Zurich Turbinenstrasse trading property (Mobimo 1,936 no May 2008 Tower) 45,563 1 Status: certified purchase agreement ² Development properties ³ Sale as project 94

97 Description Sales volumes Project status Realisation Carrying amount Sales status in TCHF in TCHF n /a open in planning n /a 36,345 1 / 1 8 condominiums open in planning 2012 / ,720 0 / 8 24 condominiums 29,421 in planning 2013 / ,937 0 / condominiums 30,000 in planning 2012 / ,248 0 / 14 open open in planning open 10,279 0 / 1 59,421 81, condominiums 51,861 construction project 2011 / , / condominiums 33,956 construction project 2013 / ,010 0 / condominiums 26,865 construction project 2011 / ,046 0 / condominiums 60,720 construction project 2011 / , / condominiums 76,343 construction project 2011 / , / , ,987 residential property open in planning open 470 open 33 condominiums 34,569 for sale 2010 / , / condominiums 27,709 for sale 2010 / , / 24 4 condominiums open for sale open 2,257 2 / 4 47 condominiums 60,192 for sale 2008 / / 47 open open for sale open 9,364 0 / 1 open open in planning 2013 / ,734 open 41 condominiums 49,520 in planning 2013 / ,794 0 / condominiums 25,515 for sale 2011 / , / condominiums 172,526 for sale 2008 / , / , ,952 GEOGRAPHIC BREAKDOWN OF TRADING PROPERTIES As at 31 December 2012, 20 trading properties were recognised in the balance sheet, of which 18 were new-build projects (prior year: 19) 2 were development projects (prior year: 4) Most residential development properties are located in the Canton of Zurich, primarily the city of Zurich itself and the Lake Zurich region. Percentage breakdown of carrying amounts in CHF Canton of Zurich Canton of Lucerne Canton of Graubünden Canton of Solothurn Canton of Aargau 0,7 % 4,5 % 0,1 % 7,4 % 87,3 Annual Report

98 2 PROPERTY DETAILS 2.2 COMMERCIAL PROPERTY DETAILS Location Address Acquired Built Year renovated Aarau Bahnhofstrasse 102 (Mediapark) Mar Aarau Polygon Industriestrasse Jun Aesch Pfeffingerring 201 May Baden-Dättwil Im Langacker 20 / 20a / 22 Jun Brugg Bahnhofstrasse 11 Jun Bülach Bahnhofstrasse 39 Sep Dierikon Pilatusstrasse 2 May Dübendorf Sonnentalstrasse 5 Mar / Dec Dübendorf Zürichstrasse 98 Jan Herisau Obstmarkt 1 Jul Horgen Seestrasse 80 Nov / 2008 Horgen Seestrasse 82 Nov / 2011 Kreuzlingen Hauptstrasse 37 Sep Kreuzlingen Lengwilerstrasse 2 Apr Kreuzlingen Leubernstrasse 3 Nov / Kreuzlingen Romanshornerstrasse Nov 2006 n/a Kriens Sternmatt 6 Feb Lausanne Flonplex Jun 2007 n/a Lausanne Parking du Centre Nov 2009 n/a Lausanne Place de la Gare 4 Nov Lausanne Place de la Navigation 4 6 Nov Lausanne Place de l'europe 6 Nov Lausanne Place de l'europe 7 Nov Lausanne Place de l'europe 8 Nov Lausanne Place de l'europe 9 Nov Lausanne Rue de Genève 2 / 4 / 5 / 6 / 8 Nov Lausanne Rue de Genève 7 Nov / 2011 Lausanne Rue de Genève 17 Nov Lausanne Rue de Genève 23 Nov Lausanne Rue de la Vigie 3 Nov Lausanne Rue de la Vigie 5 Nov Lausanne Rue des Côtes-de-Montbenon 6 Nov Lausanne Rue des Côtes-de-Montbenon 8 Nov Lausanne Rue des Côtes-de-Montbenon 16 Nov Lausanne Rue des Côtes-de-Montbenon 24 / 26 Nov 2009 n/a Lausanne Rue des Côtes-de-Montbenon 28 / 30 Nov 2009 n/a Lausanne Rue du Port-Franc 9 Nov Lausanne Rue du Port-Franc 11 (Miroiterie) Nov Lausanne Rue du Port-Franc 17 (Les Colonnades) Nov Lausanne Rue du Port-Franc 20; Rue de Genève 33 Nov Lausanne Rue du Port-Franc 22; Rue de la Vigie 1 Nov Lausanne Voie du Chariot 3 Nov Lausanne Voie du Chariot 4 / 6 Nov Lausanne Voie du Chariot 5 / 7 Nov Lucerne Alpenstrasse 9 Jun / Target gross yield as at reporting date 31 December 2012 as % of market value ² Vacancy rate as % of target rental income 96

99 Fair value in TCHF Acquisition costs in TCHF Gross yield in % 1 Target rental revenues in TCHF Vacancy rate as at in % 2 Vacant area as at in % 27, , , , , , , , , , , , , , , , , , , , , , , , , n/a 37, , , n/a 7, n/a 26, , , , , , , , , , , , , , , , , , , , , n/a 2, n/a 5, , , , , , , , , , , , , Annual Report

100 2 PROPERTY DETAILS 2.2 COMMERCIAL PROPERTY DETAILS Location Address Acquired Built Year renovated Neuhausen Victor-von-Bruns-Strasse 19 Mar Renens Chemin de la Rueyre 116 / 118 Mar St. Gallen Schochengasse 6 Feb St. Gallen St. Leonhardstrasse 22 Dec / 2006 St. Gallen Wassergasse 42 / 44 Feb St. Gallen Wassergasse 50 / 52 Feb Winterthur Industriestrasse 26 Oct Zurich Bahnhofplatz 4 Jul / 2005 Zurich Friedaustrasse 17 Oct Zurich Hardturmstrasse 3 / 5 (Mobimo Tower) Nov / 2008 Zurich Letzigraben Sep / 1975 Zurich Rautistrasse 12 Nov Zurich Schifflände 6; Kruggasse 1 May Zurich Stauffacherstrasse 41 Jun Zurich Thurgauerstrasse 23; Siewerdtstrasse 25 Mar / 1968 / Zurich Turbinenstrasse Mobimo Tower Hotel May Zurich Witikonerstrasse 311 / 311b Sep Commercial investment properties Aarau Site 1 Torfeld Süd Jun 2001 / Aug / 1984 Aarau Site 2 Torfeld Süd Oct / 1916 / 1929 / 1943 / 1954 Aarau Site 3 Torfeld Süd Jun 2001 / Oct / 1916 / 1929 / 1943 / 1954 / 1974 Aarau Site 4 Torfeld Süd Jun 2001 / Oct 2006 / Feb / 1916 / 1929 / 1943 / 1954 / / 1973 Kriens Mattenhof (building land) Mar 2005 n/a Lausanne Avenue d Ouchy 4 6 May Lausanne Rue de Genève 19 Nov Lausanne Rue de Genève 21 Nov Lausanne Rue des Côtes-de-Montbenon 1 / 3 Nov Lausanne Rue des Côtes-de-Montbenon 5 Nov Lausanne Rue des Côtes-de-Montbenon 11 / 24 Nov Lausanne Rue des Côtes-de-Montbenon 12 Nov Lausanne Rue des Côtes-de-Montbenon 14 Nov Regensdorf Althardstrasse 10 Dec Regensdorf Althardstrasse 30 Dec Zurich Albulastrasse / Hohlstrasse Apr / Commercial development properties Total commercial properties ¹ Target gross yield as at reporting date 31 December 2012 as % of market value ² Vacancy rate as % of target rental income 98

101 Fair value in TCHF Acquisition costs in TCHF Gross yield in % 1 Target rental revenues in TCHF Vacancy rate as at in % 2 Vacant area as at in % 13, , , , , , , , , , , , , , , , , , , , , , , ,160,546 1,000, , , , , , , , , n/a n/a 65, , , , , , , , , , , , , , ,367,228 1,208, , Annual Report

102 2 PROPERTY DETAILS 2.2 COMMERCIAL PROPERTY DETAILS Location Address Ownership Site area in m 2 Register of polluted sites Aarau Bahnhofstrasse 102 (Mediapark) sole ownership 5,675 no Aarau Polygon Industriestrasse sole ownership 3,840 yes (Code D) 3 Aesch Pfeffingerring 201 sole ownership 16,034 no details Baden-Dättwil Im Langacker 20 / 20a / 22 sole ownership 8,792 no Brugg Bahnhofstrasse 11 condo (773/ 1000) 2,726 no Bülach Bahnhofstrasse 39 sole ownership 563 no Dierikon Pilatusstrasse 2 sole ownership 4,397 no Dübendorf Sonnentalstrasse 5 condo (929/ 1000) 4,368 yes (code D) 3 Dübendorf Zürichstrasse 98 sole ownership 9,809 yes (petrol station) Herisau Obstmarkt 1 sole ownership 1,602 no Horgen Seestrasse 80 sole ownership 3,393 no Horgen Seestrasse 82 sole ownership 0 no Kreuzlingen Hauptstrasse 37 sole ownership 1,448 no Kreuzlingen Lengwilerstrasse 2 sole ownership 7,027 no Kreuzlingen Leubernstrasse 3 sole ownership 25,530 no Kreuzlingen Romanshornerstrasse sole ownership 2,180 no Kriens Sternmatt 6 sole ownership 28,757 no Lausanne Flonplex sole ownership 1,953 yes 8 Lausanne Parking du Centre sole ownership 5,065 yes 8 Lausanne Place de la Gare 4 sole ownership 630 no Lausanne Place de la Navigation 4 6 sole ownership 567 yes 4 Lausanne Place de l'europe 6 sole ownership 369 yes 4 Lausanne Place de l'europe 7 sole ownership 391 yes 4 Lausanne Place de l'europe 8 sole ownership 1,035 yes 4 Lausanne Place de l'europe 9 sole ownership 975 yes 4 Lausanne Rue de Genève 2 / 4 / 5 / 6 / 8 sole ownership 2,260 yes 4 Lausanne Rue de Genève 7 sole ownership 3,343 yes 4 Lausanne Rue de Genève 17 sole ownership 2,312 yes 4 Lausanne Rue de Genève 23 sole ownership 2,524 yes 6 Lausanne Rue de la Vigie 3 sole ownership 972 yes 7 Lausanne Rue de la Vigie 5 sole ownership 852 yes 7 Lausanne Rue des Côtes-de-Montbenon 6 sole ownership 510 yes 4 Lausanne Rue des Côtes-de-Montbenon 8 sole ownership 587 yes 4 Lausanne Rue des Côtes-de-Montbenon 16 sole ownership 850 yes 4 Lausanne Rue des Côtes-de-Montbenon 24 / 26 sole ownership 867 yes 8 Lausanne Rue des Côtes-de-Montbenon 28 / 30 sole ownership 1,068 yes 7 Lausanne Rue du Port Franc 9 sole ownership 2,733 yes 6 Lausanne Rue du Port-Franc 11 (Miroiterie) sole ownership 612 yes 5 Lausanne Rue du Port-Franc 17 (Les Colonnades) sole ownership 776 yes 5 Lausanne Rue du Port-Franc 20; Rue de Genève 33 sole ownership 2,000 yes 5 Lausanne Rue du Port-Franc 22; Rue de la Vigie 1 sole ownership 1,999 yes 5 Lausanne Voie du Chariot 3 sole ownership 500 yes 5 Lausanne Voie du Chariot 4 / 6 sole ownership 2,614 yes 5 Lausanne Voie du Chariot 5 / 7 sole ownership 1,042 yes 5 Lucerne Alpenstrasse 9 sole ownership 569 no ³ Code D: clarification necessary in the context of building projects ⁴ Site pollution unlikely the property must be maintained in accordance with the design plan ( Gestaltungsplan ) and has been subject to comprehensive renovation in recent years ⁵ Site pollution eliminated - property rebuilt in recent years 100

103 Property description 9 Total rentable area in m 2 Office space in % Sales space in % Commercial space in % Residential space in % Other in % com 13, com 4, com 14, com 9, com 4, com com 4, com 8, com 10, com 6, com 2, car park com 2, com 1, com 17, building right n/a com 27, building right 1, building right 6, com 4, com hotel 2, com hotel com 1, com 1, com 3, com 4, com 5, com share investment 6, prop. com 2, com 3, com 3, com 2, com 2, com building right building right 1, com 1, com 2, com 2, com 9, com 4, com 2, com 5, com 5, res + com 1, ⁶ Site pollution suspected but no measures expected - properties must be maintained in accordance with the design plan ( Gestaltungsplan ) ⁷ Site pollution suspected, measures required in new-build plans ⁸ Building-right plot on which new-build projects have been completed in recent years ⁹ Com = commercial; Res = residential Annual Report

104 2 PROPERTY DETAILS 2.2 COMMERCIAL PROPERTY DETAILS Location Ownership Site area in m 2 Register of polluted sites Neuhausen Victor-von-Bruns-Strasse 19 sole ownership 1,596 no Renens Chemin de la Rueyre 116 / 118 sole ownership 4,503 no St. Gallen Schochengasse 6 sole ownership 1,316 no St. Gallen St. Leonhardstrasse 22 sole ownership 219 no St. Gallen Wassergasse 42 / 44 condo (867/ 1000) 1,714 no St. Gallen Wassergasse 50 / 52 sole ownership 1,373 no Winterthur Industriestrasse 26 sole ownership 3,635 yes (code D) 3 Zurich Bahnhofplatz 4 sole ownership 189 yes Zurich Friedaustrasse 17 sole ownership 869 no Zurich Hardturmstrasse 3 / 5 (Mobimo Tower) sole ownership 2,151 yes Zurich Letzigraben sole ownership 5,003 yes Zurich Rautistrasse 12 sole ownership 1,894 yes (petrol station) Zurich Schifflände 6; Kruggasse 1 sole ownership 120 no Zurich Stauffacherstrasse 41 sole ownership 1,405 no Zurich Thurgauerstrasse 23; Siewerdtstrasse 25 sole ownership 2,657 no Zurich Turbinenstrasse Mobimo Tower Hotel sole ownership 5,808 no Zurich Witikonerstrasse 311 / 311b sole ownership 1,846 no 62 Commercial investment properties 202,414 Aarau Site 1 Torfeld Süd sole ownership 3,774 yes (insignificant) Aarau Site 2 Torfeld Süd sole ownership 12,692 yes (insignificant) Aarau Site 3 Torfeld Süd sole ownership 14,249 yes (insignificant) Aarau Site 4 Torfeld Süd sole ownership 13,032 yes (insignificant) Kriens Mattenhof (building land) sole ownership 3,666 yes (insignificant) Lausanne Avenue d Ouchy 4 6 sole ownership 12,609 no Lausanne Rue de Genève 19 sole ownership 2,733 yes 7 Lausanne Rue de Genève 21 sole ownership 2,524 yes 6 Lausanne Rue des Côtes-de-Montbenon 1 / 3 sole ownership 1,101 yes 6 Lausanne Rue des Côtes-de-Montbenon 5 sole ownership 734 yes 7 Lausanne Rue des Côtes-de-Montbenon 11 / 24 sole ownership 696 yes 7 Lausanne Rue des Côtes-de-Montbenon 12 sole ownership 499 yes 7 Lausanne Rue des Côtes-de-Montbenon 14 sole ownership 647 yes 7 Regensdorf Althardstrasse 10 sole ownership 7,714 no Regensdorf Althardstrasse 30 sole ownership 9,355 no Zurich Albulastrasse / Hohlstrasse sole ownership 8,663 yes 16 Commercial development properties 94,688 Total commercial properties 297,102 3 Code D: clarification necessary in the context of building projects 6 Site pollution suspected but no measures expected properties must be maintained in accordance with the design plan ( Gestaltungsplan") 7 Site pollution suspected, measures required in new-build plans 9 Com = commercial; Res = residential 102

105 Property description 9 Total rentable area in m 2 Office space in % Sales space in % Commercial space in % Residential space in % Other in % com 2, com 4, com 4, com 1, com 3, com 3, com 11, com com 2, com 8, com 6, com 6, com com 6, com 3, com hotel 22, res + com 2, , com 4, com 4, com 21, com 9, land com 25, com 3, com 3, com com com com com com 13, com 12, com 7, , , Annual Report

106 2 PROPERTY DETAILS 2.3 RESIDENTIAL PROPERTY DETAILS Location Address Acquired Built Year renovated Bergdietikon Baltenschwilerstrasse 3 / 5 / 7 / 9 / 11 / 13 / 15 / 17 Oct / / 2007 Binz Zürichstrasse 244 / 246 Nov / 2001 Horgen Seestrasse Nov Horgen Seestrasse Nov Lausanne Avenue d Ouchy 72 / 74 Nov Lausanne Avenue d'ouchy 70 Nov Lausanne Avenue d'ouchy 76 Nov Lausanne Place de la Navigation 2 Nov Lausanne Rue Beau-Séjour 8 Nov Lausanne Rue des Fontenailles 1 Nov / Münchwilen Buchenacker 22 / 24 / 26 / 28; Unterer Buchenacker 7 Jun / 1995 Opfikon-Glattbrugg Farmanstrasse 47 / 49 Dec Rheinfelden Rütteliweg 8; Spitalhalde 40 Sep St. Gallen Teufenerstrasse 15 Dec Wängi Brühlwiesenstrasse 11a / 11b / 15a / 15b / 19a / 19b Jun / 1988 Zurich Katzenbachstrasse Oct 2004 / Feb Zurich Katzenbachstrasse 239 Mar Zurich Klingenstrasse 34; Konradstrasse 68 Nov Zurich Manessestrasse 190 / 192; Staffelstrasse 1 / 3 / 5 Dec Zurich Wettingerwies 7; Zeltweg Apr Residential investment properties Location Address Ownership Site area in m 2 Register of polluted sites Bergdietikon Baltenschwilerstrasse 3 / 5 / 7 / 9 / 11 / 13 / 15 / 17 sole ownership 11,131 no Binz Zürichstrasse 244 / 246 sole ownership 4,025 no Horgen Seestrasse sole ownership 6,047 no Horgen Seestrasse sole ownership 5,307 no Lausanne Avenue d Ouchy 72 / 74 easement 0 yes 4 Lausanne Avenue d'ouchy 70 sole ownership 478 yes 4 Lausanne Avenue d'ouchy 76 sole ownership 738 yes 4 Lausanne Place de la Navigation 2 sole ownership 254 yes 4 Lausanne Rue Beau-Séjour 8 sole ownership 3,827 yes 5 Lausanne Rue des Fontenailles 1 sole ownership 716 no Münchwilen Buchenacker 22 / 24 / 26 / 28; Unterer Buchenacker 7 sole ownership 5,741 no Opfikon-Glattbrugg Farmanstrasse 47 / 49 sole ownership 3,840 no Rheinfelden Rütteliweg 8; Spitalhalde 40 sole ownership 14,817 no St. Gallen Teufenerstrasse 15 sole ownership 658 no Wängi Brühlwiesenstrasse 11a / 11b / 15a / 15b / 19a / 19b sole ownership 7,412 no Zurich Katzenbachstrasse sole ownership 6,137 no Zurich Katzenbachstrasse 239 sole ownership 1,987 no Zurich Klingenstrasse 34; Konradstrasse 68 sole ownership 361 no Zurich Manessestrasse 190 / 192; Staffelstrasse 1 / 3 / 5 sole ownership 2,345 no Zurich Wettingerwies 7; Zeltweg sole ownership 610 no 20 Residential investment properties 76,431 ¹ Target gross yield as at reporting date 31 December 2012 as % of market value ² Vacancy rate as % of target rental income ⁴ Site pollution unlikely the property must be maintained in accordance with the design plan ("Gestaltungsplan") and has been subject to comprehensive renovation in recent years ⁵ Site pollution eliminated property rebuilt in recent years 104

107 Fair value in TCHF Acquisition costs in TCHF Gross yield in % 1 Target rental revenues in TCHF Vacancy rate as at in % 2 Vacant area as at in % 20, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Property description 9 Total rentable 1 1 ½- room 2 2 ½- room 3 3 ½- room 4 4 ½- room 5 or more room Total apartments Other forms of use in % area in m 2 apartments apartments apartments apartments apartments 3 res 5, res 2, res 4, res 4, res res + com 1, res + com 2, res + com 1, res 10, res res 4, res 3, res 5, res + com 1, res 4, res 7, res 1, res + com 1, res 6, res + com 1, , ⁹ Com = commercial; Res = residential Annual Report

108 2 PROPERTY DETAILS 2.4 DETAILS OF INVESTMENT PROPERTIES UNDER CONSTRUCTION Location Address Ownership Acquired Built Affoltern am Albis Obfelderstrasse Mietwohnungen sole ownership Aug Affoltern am Albis Obstgartenstrasse Seniorenheim sole ownership Aug Horgen Seestrasse 93 Meilenwerk sole ownership Nov / 2013 Lausanne Avenue d Ouchy 4 6 (Administration) sole ownership May / 2012 Lausanne Rue Voltaire 2 12 sole ownership Oct 2012 Lausanne Vallée du Flon Les Pépinières sole ownership Nov Regensdorf Schulstrasse 95 / 101 / 107 / 115; Riedthofstrasse 55 / 63; sole ownership Jun / 1969 Feldblumenstrasse 44 Zurich Turbinenstrasse CityWest, Baufeld C sole ownership Dec Immeubles en cours de réalisation All of the above investment properties are in the construction phase. Completion of the properties in Zurich, Turbinenstrasse City West Site C, Lausanne, Avenue d Ouchy 4 6, Affoltern am Albis, Obfelderstrasse and Lausanne, Les Pépinières is scheduled for Construction of the properties in Horgen, Seestrasse 93 Meilenwerk, Affoltern am Albis, Obstgartenstrasse, and Lausanne, Rue Voltaire, is scheduled to end at the end of 2014; in Regensdorf, Schulstrasse 95, for OWNER-OCCUPIED PROPERTY DETAILS Location Address Ownership Acquired Built Lausanne Rue de Genève 7 sole ownership Nov Lausanne Rue des Côtes-de-Montbenon 16 sole ownership Nov Küsnacht Seestrasse 59 sole ownership Sep Properties 2.6 CO-OWNERSHIP DETAILS Location Address Ownership Acquired Built Lausanne Flonplex co-ownership 40 % Nov Lausanne Parking du Centre co-ownership 50 % Nov Lausanne Parking Saint-François co-ownership 26.5 % Nov 2009 n /a 3 Properties ³ Code D: clarification necessary in the context of building projects ⁴ Site pollution unlikely the property must be maintained in accordance with the design plan ("Gestaltungsplan") and has been subject to comprehensive renovation in recent years ⁵ Site pollution eliminated property rebuilt in recent years 106

109 Fair value in TCHF Site area in m 2 Register of polluted sites Description of property 9 Total rentable area in m 2 11,270 5,305 no res 4,366 21,180 3,537 no res 8,701 34,700 10,542 yes com 19,099 46,370 12,609 yes 7 com 8,139 19,020 4,743 no res 7,734 20,000 2,602 yes com 7,339 13,470 16,658 no 2 res 8,967 78,240 7,431 no res 10, ,250 63,427 74,484 Year renovated Carrying amount in TCHF Site area in m 2 Register of polluted sites Description of property 9 Total rentable area in m ,902 3,343 yes 4 com-share own-use yes 4 com-share own-use ,096 2,125 no com 2,050 16,635 6,318 2,918 Fair value in TCHF Site area in m 2 Register of polluted sites Description of property 9 Total rentable area in m 2 9,665 0 yes 5 multiplex cinema 5,256 28,250 0 yes 5 car park 0 2,531 0 yes 7 car park 0 40,446 ⁷ Site pollution suspected, measures required in new-build plans ⁹ Com = commercial; Res = residential Annual Report

110 2 PROPERTY DETAILS 2.7 BREAKDOWN OF RESIDENTIAL AND COMMERCIAL INVESTMENT PROPERTIES AND COMMERCIAL DEVELOPMENT PROPERTIES BY ECONOMIC AREA As at 31 December 2012, 106 investment properties were recognised in the balance sheet; of which 78 were commercial properties (prior year: 77) 20 were residential properties (prior year: 20) 8 were investment properties under construction (prior year: 8) 10 % 10 % 4 % 43 % Zurich Lake Geneva North-west Switzerland Eastern Switzerland Central Switzerland 33% Charts: Breakdown of residential and commercial investment properties, commercial development properties and investment properties under construction by economic area 62 commercial investment properties 20 residential investment properties 13.3 % 8.9 % 6.0 % 38.6 % Zurich Lake Geneva Eastern Switzerland North-west Switzerland Central Switzerland 27.7% 7.5 % 4.7 % 60.0 % Zurich Lake Geneva Eastern Switzerland North-west Switzerland 33.2 % 16 commercial development properties 8 investment properties under construction 30.0% 1.5 % 35.7% Zurich Lake Geneva North-west Switzerland Central Switzerland 35.0 % Zurich Lake Geneva North-west Switzerland 65.0 % 32.7% 108

111 Report of the Statutory Auditor on the Consolidated Financial Statements to the General Meeting of Shareholders of Mobimo Holding AG, Lucerne As statutory auditor, we have audited the consolidated financial statements of Mobimo Holding AG, which comprise the statement of balance sheet, income statement, statement of comprehensive income, statement of changes in equity, cash flow statement and notes (pages 38 to 108), for the year ended 31 December Board of Directors Responsibility The board of directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), Article 17 of the Directive on Financial Reporting (Directive Financial Reporting, DFR) of SIX Swiss Exchange and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2012 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Article 17 of the Directive on Financial Reporting (Directive Financial Reporting, DFR) of SIX Swiss Exchange as well as the Swiss law. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the board of directors. We recommend that the consolidated financial statements submitted to you be approved. KPMG AG Reto Benz Licensed Audit Expert Auditor in Charge Root / Lucerne, 11. February 2013 Reto Kaufmann Licensed Audit Expert Annual Report

112 2 PROPERTY DETAILS Report of the valuation expert Valuation of the properties of Mobimo Holding AG Mandate In accordance with your mandate, we have undertaken a valuation of those properties held for investment purposes by your company. The valuation was undertaken as per 31st December 2012 for accounting purposes. On this date, the total portfolio of either investment properties or properties under construction as investment properties totalled 106 units¹. The valuations result in the following summary table for the relevant portfolio of valued properties: Projected rental Segment Units Fair value per (CHF) Share of total income (CHF) Gross yield Investment units commercial properties 62 1,160,546, % 68,597, % Development units commercial properties ,681, % 13,884, % Investment units residential properties ,440, % 20,010, % All properties in inventory 98 1,747,667, % 102,491, % Properties under construction 8 244,250, % All properties 106 1,991,917, % The investment properties and the properties under construction have been valued as per 31st December 2012 using the discounted cash flow method. The properties are known to Wüest & Partner due to previous valuations, inspections carried out and documents and information made available to us. For the purposes of the update valuations Wüest & Partner was provided with current a tenant rent roll as per the date of valuation as well as the investment costs undertaken in the defined fiscal year. It is on this basis and as an independent valuation expert that we undertook the valuation of the individual properties. 1 The portfolio of investment properties includes, in addition to existing properties, a further eight properties under construction. These are assessed in line with the rules and guidelines of IAS / IFRS as «Investment Properties under Construction (IPUC)». Not included in the above summary table are the three self-used operational properties (Seestrasse 59, Küsnacht; Rue de Genéve 7, Lausanne; Cotes de Montbenon 16, Lausanne) as well as the properties of the affiliated companies (50 %-share of Parking du Centre SA [PCSA], Lausanne; 40 %-share of Flonplex SA, Lausanne; 26.5 %-share of Parking St. François SA, Lausanne). 110

113 Basis for the Valuations The market values determined by us, with the valuation date of 31st December 2012, have been completed in line with the definition of fair value as described in the International Financial Reporting Standards (IFRS) in accordance with IAS 40 Investment Properties. The reported fair value does not take into account any capital gains tax, property gains tax or value-added tax as well as any other costs or commissions associated with a possible sale of the properties. In addition, no owner liabilities regarding taxes (with the exception of regular property taxes) and financing costs are included. The determination of fair value for investment properties has been undertaken in line with Paragraph 51 of IAS 40, thereby excluding future value-enhancing investments such as conversions, extensions, etc., as well as the associated increases in additional income. A standard marketing period has been included in the valuation for those rental units vacant on the date of valuation. The valuation of properties under construction is undertaken in accordance with the expanded definition of income properties in IAS 40 (expansion per 1st January 2009). Under this definition those properties, which are scheduled for later use as investment properties and which are under construction on the date of valuation, fall under the scope of IAS 40 and as such are to be accounted for at market value. Discounting is undertaken for each property in accordance with location and real estate criteria. These reflect both the relevant spatial characteristics of the macro and micro location as well as the most important aspects of the current economic circumstances of the property. Independence and Confidentiality We confirm that the valuations of the Mobimo Holding AG properties have been completed in accordance with our business policies, without interference by third parties and in solely in accordance with the above-mentioned mandate. Wüest & Partner AG Zurich, 11. February 2013 Patrik Schmid dipl. Arch. ETH / SIA, Partner Marcel Schmitt lic. oec. publ., Manager Annual Report

114 2 PROPERTY DETAILS Additional information on DCF valuation Value growth The development of real estate value is influenced by various fundamental factors, whereby a distinction should be made between property-specific factors (e.g. property management) and exogenous factors arising from the real estate and financial market environments: Changes in the property management situation on both the revenue and cost side result in a direct adjustment in the declared market value. Of particular significance are the impact of new leases and the expiry of existing tenancies, changes in the vacancy situation as well as changes in operating and maintenance costs. Extraordinary investment programmes carried out in the reporting year have a direct impact on property values due to the absence of these funds in the cash flow summary. Value-enhancing investments can be passed on to tenants and thereby lead to higher rental income. Developments in the relevant local real estate market have an impact on the calculation of potential rental income. Changes in the capital or transaction markets have an influence on discount rates. Age-related deterioration of a property is also a major factor affecting its value. All other factors remaining constant, aging alone leads to an approximate 1 %¹ depreciation in building value within the space of a single year. Estimation of rental income Valuations are based on actual rental income as stated in the property management company s rental schedule as at the valuation date. The declared rental income is taken into account in the valuation after the incorporation of any terms and conditions agreed in rental agreements. Future rental income is estimated on the basis of the individual rental properties, with an individual revenue cash flow modelled for each property, taking existing rental agreements into account. For rental agreements of limited duration, the potential rental income attainable over the long term, from the current perspective, is adopted in the valuation on expiry of the contractual rental period. Potential rental income that is in line with the market is determined on the basis of the most recent rental agreements concluded either for the property concerned or for comparable properties in the vicinity of the property concerned, as well as on the comprehensive real estate market research carried out by Wüest & Partner. The plausibility of potential rental income from retail space is verified using calculations of customary market turnover figures. For existing rental agreements based on mixed usage, potential rental income is based on the separate individual forms of usage. Genuine tenants options to extend a lease are taken into account when actual rents are less than the market rents determined. Non-genuine options where provisions are in place for rents to be adjusted in line with market rents prevailing at a specific time are incorporated into the valuations as fixed-term rental agreements, as described above. For rental agreements of unlimited duration, as is common with residential use, adjustments in line with the potential rental income calculated take account of general conditions under rental law and the specific tenant turnover of the property in question. Operating and maintenance costs The operating and maintenance costs incorporated into valuations are based on the property accounts from prior years and on the budgets approved by the various bodies responsible at Mobimo Holding AG. The data are subject to a plausibility check based on existing contractual agreements from the property management side and compared with benchmarks from Wüest & Partner s database pool. Projected outlays for operation and ongoing maintenance are modelled on the basis of these analyses. Long-term maintenance costs Short-, medium- and long-term maintenance costs are of central importance in the DCF valuation. These valuations essentially reflect the investment plans provided by Mobimo Holding AG. The plausibility of these data is checked using specific cost benchmarks. In order to determine the long-term maintenance costs, Wüest & Partner uses a life-cycle method for the long-term value preservation of the existing structural fabric. In this analysis, the long-term investment required to preserve the value of the property is calculated, taking into account the age of the characteristic building components along with production costs and the building s current structural condition. ¹ Actual accrued depreciation depends in particular on the type of construction and on the age and location of the property in question 112

115 Discount rate The relevant discount rates determined reflect the risk assessment profile for each property. In determining these rates, Wüest & Partner takes both property-specific and location- and market-specific factors into account. The discount rates selected are regularly subject to empirical measurement and verification using known change of ownership and transaction data. The market-based, risk-adjusted discount rate is structured around individual factors within the framework of a premium model. The basis is a riskfree interest rate (in this case a long-term government bond), and premiums are then determined and added to this basis for general real estate risk (such as the property becoming illiquid, market risks) and for specific property risks (relating to the specific characteristics of the property and the location). Inflation Inflation is implicitly incorporated into valuations via changes in cash flows. In calculating rental income, each rental position takes into account the contractually agreed inflation adjustment or indexation rate (e.g. 80 % adjustment in line with changes in the consumer price index). Full inflation is generally factored into operating and maintenance costs. The discount rate selected is expressed in real terms. Annual Report

116 3 EPRA KEY PERFORMANCE METRICS Mobimo EPRA key performance metrics The Mobimo Group reports its key performance metrics in accordance with the Best Practices Recommendations of the EPRA Reporting and Accounting Committee. The European Public Real Estate Association is an association of leading European property companies and is a partner of the FTSE EPRA / NAREIT index family, which added the Mobimo Holding AG share as one of its components on 20 June The figures published elsewhere by Mobimo on NAV, net initial yield and vacancy rates may deviate from the EPRA figures set out below, as Mobimo does not, for example, include the market value of trading properties, which are accounted for at cost, and bases its calculations on effective rents. However, when calculating earnings per share Mobimo does take account of gains on the sale of trading and investment properties. A EPRA Earnings & EPRA Earnings Per Share Earnings as per IFRS income statement 76,323 80,454 (i) Changes in value of investment properties, development properties held for investment and other interests 36,889 41,194 (ii) Profits or losses on disposal of investment properties, development properties held for investment and other interests 66 3,459 (iii) Profits or losses on the sales of trading properties including impairment charges in respect of trading properties 9,696 22,316 (iv) Tax on profits or losses on disposals 2,886 7,317 (v) Negative goodwill /goodwill impairment n / a n / a (vi) Changes in fair value of financial instruments and associated close-out costs 135 4,248 (vii) Acquisition costs on share deals and non-controlling joint venture interests n / a n / a (viii) Deferred tax in respect of EPRA adjustments 9,189 10,687 (ix) Adjustments to positions (i) to (viii) in respect of joint ventures (x) Minority interests in respect of the above 32 n / a EPRA Earnings 41,367 34,904 Average number of shares outstanding 6,191,784 5,202,626 EPRA Earnings Per Share B EPRA Net Asset Value NAV as per consolidated financial statements 1,197,514 1,174,183 Effect of exercise of options, convertibles and other equity instruments 166, ,900 Diluted NAV after the exercise of options, convertibles and other equity instruments 1,363,733 1,345,083 (i.a) Revaluation of investment properties (if IAS 40 cost model is used) n / a n / a (i.b) Revaluation of investment property under construction (IPUC) (if IAS 40 cost model is used) n / a n / a (i.c) Revaluation of other non-current investments (owner-occupied properties) 9,560 8,847 (ii) Revaluation of tenant leases held as finance leases n / a n / a (iii) Revaluation of trading properties 37,069 47,495 (iv) Fair value of financial instruments 26,825 25,358 (v.a) Deferred tax 117, ,137 (v.b) Goodwill as a result of deferred tax n / a n / a Adjustments to (i) to (v) in respect of joint ventures 3,690 n / a EPRA NAV 1,558,651 1,533,921 Diluted no. of shares outstanding 7,020,344 7,027,347 EPRA NAV per share

117 C Triple Net Asset Value (NNNAV) EPRA NAV 1,558,651 1,533,921 (i) Fair value of derivative financial instruments 26,825 25,358 (ii) Fair value of financial liabilities 122,350 96,385 (iii) Deferred tax 117, ,137 EPRA NNNAV 1,291,702 1,305,041 Diluted No. of shares outstanding 7,020,344 7,027,347 EPRA NNNAV per share D EPRA Net Initial Yield Investment properties wholly owned 1,991,918 1,835,558 Investment properties share of joint ventures / funds 37,915 20,087 Trading property 346, ,008 Less developments 593, ,159 Completed property portfolio 1,782,396 1,669,494 Allowance for estimated purchasers costs 0 0 Gross up completed property portfolio valuation 1,782,396 1,669,494 Annualised cash passing rental income 97,233 92,810 Direct cost of investment properties 11,220 12,771 Annualised net rents 86,014 80,039 Add: additional notional rent expiration of rent free periods or other lease incentives 0 0 Topped-up net annualised rent 86,014 80,039 EPRA net initial yield 4.8 % 4.8 % EPRA "topped-up" net initial yield 4.8 % 4.8 % E EPRA Vacancy Rate Estimated rental income potential from vacant space 3,388 2,768 Estimated rental income from overall portfolio 88,607 84,980 EPRA vacancy rate 3.8 % 3.3 % Annual Report

118 4 ANNUAL FINANCIAL STATEMENTS OF MOBIMO HOLDING AG 4.1 BALANCE SHEET AS AT 31 DECEMBER All amounts in TCHF Assets Current assets Cash 12, ,612 Trade receivables Group 10,398 2,153 Other receivables Group Other receivables third parties 1, Accrued income and prepaid expenses Group 13,892 12,560 Accrued income and prepaid expenses third parties Treasury shares 1, Total current assets 40, ,291 Non-current assets Financial assets Participations 310, ,115 Loan Group 567, ,132 Total non-current assets 878, ,247 Total assets 918, ,

119 All amounts in TCHF Equity and liabilities Liabilities Current liabilities Payables Group 1,519 1,764 Payables related parties Payables third parties 2, Accrued expenses and deferred income third parties 2,266 2,263 Total current liabilities 7,011 5,138 Non-current liabilities Convertible bond 168, ,000 Total non-current liabilities 168, ,000 Total liabilities 175, ,138 Equity Share capital 180, ,933 Statutory reserves General reserves 42,144 37,268 Capital contribution reserve 325, ,083 Reserve for treasury shares 1, Retained earnings Balance brought forward 149, ,042 Profit for the year 43,349 21,711 Total equity 743, ,400 Total equity and liabilities 918, ,538 Annual Report

120 24 PROPERTY ANNUAL FINANCIAL DETAILS STATEMENTS OF MOBIMO HOLDING AG 4.2 INCOME STATEMENT All amounts in TCHF Income from cost charges Group 1,951 2,134 Income from participations Group 31,546 21,255 Financial income Group 17,648 10,590 Financial income third parties 85 1,017 Total income 51,229 34,996 Personnel expenses 1,620 2,293 Administrative expenses related parties 3 93 Administrative expenses third parties 1,407 6,954 Interest expense for convertible bond 3,537 3,719 Other financial expense third parties Tax expense 1, Total expenses 7,880 13,285 Profit for the year 43,349 21,

121 4.3 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 1. Equity The Annual General Meeting that was held on 18 April 2012 approved a distribution from capital contribution reserves for the 2011 financial year of CHF 9.00 per share, which was paid on 25 April. The nominal value of Mobimo shares remains at CHF 29. The share capital rose by CHF 0.2 million (prior year: CHF 0.3 million) due to the exercise of options, while general reserves increased by CHF 1.5 million (prior year: CHF 2.0 million). The share capital also rose by CHF 0.9 million (prior year: CHF 0 million) due to the issue of shares created through the exercise of conversion rights in connection with the convertible bond, while capital contribution reserves increased by CHF 5.5 million (prior year: CHF 0 million) due to the premium relating to the exercise of conversion rights in connection with the convertible bond. As at 31 December 2012, share capital amounted to CHF million, composed of 6,208,913 registered shares with a nominal value of CHF 29 each. All outstanding shares are entitled to dividends and confer the right to one vote per share at the company s general meetings. 2. Participations Name Registered office Purpose Share capital in TCHF Equity interest in % Mobimo AG Küsnacht Real estate company 72, Mobimo Management AG Küsnacht Real estate company LO Holding Lausanne-Ouchy SA 1 Lausanne Real estate group 12, JJM Participations SA Lausanne Holding company 6, Immobilien Invest Holding AG 1 Glarus Real estate group In August 2012, Mobimo Holding AG purchased 75.33% of the shares of Immobilien Invest Holding AG, Glarus. 3. Conditional capital Conditional share capital of a maximum of CHF 34.3 million is available for up to 1,182,891 fully paid-up registered shares with a nominal value of CHF 29 each (with shareholders pre-emptive rights excluded), of which a) up to CHF 0.3 million is designated for the exercise of option rights granted to members of the Board of Directors, employees of Group companies and related parties. b) up to CHF 0.9 million is designated for the exercise of subscription rights created after 5 May 2010 under an employee share option programme. c) up to CHF 33.1 million is designated for the exercise of conversion and/or option rights relating to convertible bonds, bonds with warrants, similar bonds or other financial market instruments of the company or granted by Group companies. 8,315 option rights were exercised in Authorised capital As at 31 December 2012, authorised share capital was available, allowing the Board of Directors to increase the share capital of the company by a maximum of CHF 33.1 million by 6 April 2013 via the issue of up to 1,141,150 registered shares, to be fully paid up, with a nominal value of CHF 29 per share. At CHF 33.1 million, conditional and authorised capital are linked together insofar that upon using this authorised capital, conditional capital will no longer be available in the same amount to the Board of Directors. The same applies in the reverse scenario; if this conditional capital is used, the same amount of the authorised capital is no longer available. The amount of the authorised capital share of CHF 33.1 million, the amount by which the Board of Directors is authorised to increase share capital by as at 31 December 2012, is thus reduced by the units of the convertible bond still outstanding totalling CHF 23.5 million (conditional capital). 5. Treasury shares As at 31 December 2012, the company held 8,744 treasury shares. Over the course of the financial year, the initial holding as at 1 January of 1,747 shares was increased through the purchase of a total of 20,591 shares at an average price of CHF ,108 shares were sold in the course of the year at a price of CHF ,486 shares were granted to the Board of Directors and management as part of their remuneration arrangements. 1 Subholding; see Note 40 to the consolidated financial statements for an overview of all Group companies % of this holding is held directly, and 35.7% via JJM Participations SA Annual Report

122 4 ANNUAL FINANCIAL STATEMENTS OF MOBIMO HOLDING AG 6. Significant shareholders As at the reporting date, the following shareholders hold more than 3% of the shares and options in Mobimo Holding AG: 31 December Pensionskasse des Kantons Zug 3.38 % 3.40 % BlackRock, Inc % 7. Additional information In the year under review, the members of the Board of Directors, related parties and the Executive Board received remuneration as set out below (disclosure in accordance with Article 663bis of the Swiss Code of Obligations). Profit-sharing Name, function Fees, salary Shares in cash in shares Social security contributions Payments for additional services Total 2012 Total 2011 BoD 1, ,428 1,476 Urs Ledermann, Chairman BoD Brian Fischer, BoD Wilhelm Hansen, BoD Peter Schaub, BoD Paul Schnetzer, BoD 4 n / a n / a n / a n / a n / a n / a n / a 48 Georges Theiler, BoD Daniel Crausaz, BoD Bernard Guillelmon, BoD Paul Rambert, BoD Executive Board 6 2, ,039 4,235 Christoph Caviezel, CEO ,395 1,654 Amounts equal the expense recognised in the consolidated annual financial statements of the reporting year (accrual accounting), with the exception of sharebased remuneration, which is disclosed at taxable value. Share-based remuneration for the Executive Board was based on the assumption that a ratio of 55% as stipulated in the remuneration regulations applies. ¹ The fee is billed via Ledermann Immobilien AG and also covers administrative services rendered ² Changed from being a member of the Audit & Risk Committee to a member of the Real Estate Committee in August 2012 ³ Each individual remuneration payment includes a reimbursement for expenses amounting to TCHF 8 ⁴ Up to April 2011 ⁵ Chairman of the Real Estate Committee from April 2011 ⁶ Executive Board expanded to include the Head of Investments for Third Parties from November

123 As at 31 December 2012, the shareholdings of the members of the Board of Directors and the Executive Board were as set out below (disclosure in accordance with Article 663c of the Swiss Code of Obligations). No. of shares No. Of Name, function issued approved options Total 2012 Total 2011 BoD 56, ,299 57,845 52,569 Urs Ledermann, Chairman BoD 34, ,739 31,060 Brian Fischer, BoD 1, ,541 1,071 Wilhelm Hansen, BoD 3, ,267 2,652 Peter Schaub, BoD Georges Theiler, BoD 4, ,350 5,350 Daniel Crausaz, BoD 1, ,795 1,283 Bernard Guillelmon, BoD 5, ,711 5,711 Paul Rambert, BoD 4, ,521 4,521 Executive Board 1 17,690 4,528 1,783 24,001 23,601 Christoph Caviezel, CEO 6,941 1,617 1,065 9,623 12,002 Manuel Itten, CFO 4, ,454 4,176 Peter Grossenbacher, Head of Portfolio Management 4, ,446 5,019 Andreas Hämmerli, Head of Development 1, ,831 2,404 Thomas Stauber, Head of Third-Party Investments Convertible bond A CHF 175 million convertible bond maturing on 30 June 2014 was issued on 30 June The coupon is 2.125%. For further information, see Note 12 to the Consolidated Financial Statements. 9. Risk assessment The Board of Directors addresses its risk management responsibilities via the Audit & Risk Committee (AC). The main duty of this Committee is to support the Board of Directors by means of preparatory work, audits and clarification. The four areas in which the Audit & Risk Committee is active are: Budgeting, preparation of financial statements, external audit and external appraisal Risk management and internal control system (ICs), including compliance with legislation, directives and internal guidelines (compliance) Financing Taxes In the period under review, the Audit & Risk Committee worked with management to prepare a risk inventory which sets out the fundamental risks involved by risk category. For each risk, the risk owner, impact and measures implemented are analysed and then evaluated on the basis of likelihood, financial impact and damage to reputation and image. Where necessary, further measures are defined for the ongoing management of the assessed risks. 10. Joint and several guarantees and undertakings Mobimo Holding AG forms a VAT group together with Mobimo AG, Mobimo Management AG, O4Real AG, JJM Participations SA, LO Holding Lausanne-Ouchy SA and LO Immeubles SA. It is jointly and severally liable for the liabilities arising therefrom. As part of an external financing arrangement with a bank, Mobimo Holding AG provided a joint and several guarantee of CHF 20 million for a Group company. As part of another external financing arrangement, Mobimo Holding AG gave an undertaking in a letter of comfort to ensure that Mobimo AG maintains minimum equity of CHF 100 million. Moreover, Mobimo Holding AG provides joint and several guarantees to Group companies in certain construction projects for payments to contractors arising from service contracts. In addition, Mobimo Holding AG agreed to provide funds for Mobimo AG to submit bids for properties. ¹ Executive Board expanded to include the Head of Investments for Third Parties from November 2011 Annual Report

124 4 ANNUAL FINANCIAL STATEMENTS OF MOBIMO HOLDING AG 4.4 PROPOSED APPROPRIATION OF PROFIT in TCHF Balance brought forward 149, ,042 Profit for the year 43,349 21,711 Reversal of capital contribution reserves 55,851 55,813 Total available to the General Meeting 248, ,566 The Board of Directors proposes the following appropriation of profit to the General Meeting: Payment of a dividend in the form of a distribution of paid-in capital of 55,851 55,813 Brought forward to new account 193, ,753 Total appropriation of profit proposed 248, ,566 Total distribution 55,851 55,813./. Less share from capital contribution reserves 55,851 55,813 The Board of Directors will propose to the General Meeting to pay a dividend of CHF 9 per share from capital contribution reserves. The final figure for the reversal/distribution of capital contribution reserves depends on the number of options exercised and the consequent number of shares with dividend entitlement issued by the date of the dividend payment. If not all exercisable options are exercised by this date, the reversal or distribution from capital contribution reserves will be correspondingly lower. If convertible bonds are converted to shares before the date of the dividend payment, this may increase the number of shares eligible for a dividend and therefore the amount of the dividend payment too. This has not been taken into account in the proposed profit distribution. The 8,744 treasury shares held on the reporting date are not eligible for the dividend payment. The number of shares eligible for a dividend on the date of the dividend payment may vary due to buybacks of further treasury shares. 122

125 4.5 REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF Mobimo Holding AG As statutory auditor, we have audited the financial statements of Mobimo Holding AG, which comprise the balance sheet, income statement and notes (pages 116 to 122), for the year ended 31 December Board of Directors Responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended 31 December 2012 comply with Swiss law and the company s articles of incorporation. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (Article 728 Code Obligations (CO) and Article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with Article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company s articles of incorporation. We recommend that the financial statements submitted to you be approved. KPMG AG Reto Benz Licensed Audit Expert Auditor in Charge Reto Kaufmann Licensed Audit Expert Root / Lucerne, 11. February 2013 Annual Report

126 Corporate Governance

127 CORPORATE GOVERNANCE Development property Condominiums Zurich, Collina Im Brächli 5/7/9