SOFISASA,

Fribourg



ConsolidatedFinancialStatementsfortheyear

endedDecember31,2021

andStatutoryAuditor’sReport



DeloitteSA

RueSaint‐Martin7,

1003Lausanne

Switzerland



Phone:+41(0)582799200

Fax:+41(0)582799300

www.deloitte.ch

StatutoryAuditor’sReport



TotheGeneralMeetingof

SOFISASA,Fribourg



ReportontheAuditoftheConsolidatedFinancialStatements



Opinion

WehaveauditedtheconsolidatedfinancialstatementsofSOFISASAanditssubsidiaries(theGroup),

whichcomprisetheconsolidatedstatementoffinancialpositionasatDecember31,2021

andthe

consolidatedstatementofcomprehensiveincome,consolidateds tatementofchangesinequityand

consolidatedstatementofcashflowsfortheyearthenended,andnotestotheconsolidatedfinancial

statements,includingasummaryofsignificantaccountingpolicies. 



Inouropiniontheaccompanyingconsolidatedfinancialstatementsgiveatrueand

fairviewofthe

consolidatedfinancialpositionoftheGroupasatDecember31,2021,anditsconsolidatedfinancial

performanceanditsconsolidatedcashflowsfortheyearthenendedinaccordancewithInternational

FinancialReportingStandards(IFRS)andcomplywithSwisslaw.



BasisforOpinion

Weconductedouraudit

inaccordancewithSwisslaw,InternationalStandardsonAuditing(ISAs)and

SwissAuditingStandards.Ourresponsibilitiesunderthoseprovisions andstandardsarefurther

describedintheAuditor’sResponsibilitiesfortheAuditoftheConsolidatedFinancialStatementssection

ofourreport.WeareindependentoftheGroupinaccordancewiththeprovisions

ofSwisslawandthe

requirementsoftheSwissauditprofession, aswellastheInternationalCodeofEthicsforProfessional

Accountants(includingInternationalIndependenceStandards)oftheInternationalEthicsStandards

BoardforAccountants(IESBACode)andwehavefulfilledourotherethicalresponsibilitiesinaccordance

withtheserequirements.



believethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisfor

ouropinion.



KeyAuditMatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinour

auditoftheconsolidatedfinancialstatementsofthecurrentperiod.These

matterswereaddressedin

thecontextofourauditoftheconsolidatedfinancialstatementsasawhole,andinformingouropinion

thereon,andwedonotprovideaseparateopiniononthesematters.



SOFISASA

StatutoryAuditor’sReportontheconsolidatedfinancialstatements

fortheyearended

December31,2021



Keyauditmatter

Howthescopeofourauditrespondedtothekey

auditmatter

Revenuefromlandsales,salesofsingle‐family

detachedhomesandindividualresidentialunits

inmultifamilybuildings

Thegrouphasvariousstreamsofrevenue

includingrevenuefromlandsale,salesofsingle‐

familydetachedhomesandindividualresidential

unitsinmulti‐familybuildingsaccountedforasa

saleofgoodsunder

IFRS15(Revenuefrom

ContractswithCustomers).Thereisariskthat

theserevenuesrecordeddonotmeetallthe

revenuerecognitioncriteriaunderIFRS15dueto

thetermsandconditionsofthesalecontractthat

requiremanagementjudgementtoassess

whetherallthecriteriahavebeenfulfilled.These

revenuestreamsamounttoCHF13.4millionfor

theyearendedDecember31,2021forrevenue

fromsingle‐familydetachedhomesbuildon

speculationandindividualresidentialunitsin

multi‐familybuildings,andtoCHF96.6millionfor

revenuefromlandsale.

Therevenuerecognitionmethodsrequire

managementestimatesand/orjudgments

and

arethereforeakeyauditmatter.Refertothe

accountingpolicyinnote4andadditionallythe

revenuedetailsinnote24.



Weperformedaprocesswalkthroughtogainan

understandingofthecontrolsinplacerelatedto

therealestaterevenuerecognitionprocess.

Weobtainedthelistingof

residentialproperty

salesrecordedduringtheperiod.Weselecteda

sampleofsalestransactionsfordetailtestingand

usedamountstestedtobuildanexpectationfor

theremainderofthepopulationandassessedit

againsttheactualrevenuerecorded.Thedetailed

testingconsistedofthefollowingsteps:

‐Weagreeddetails

ofthesaletothesale

contractandreviewedtheagreementforterms

andconditionsthatcouldaffectthegroup's

abilitytorecogniserevenue.

‐Weagreedtherevenueamountandthedate

thatrevenuewasrecordedtotheclosing

statementpreparedbythelawyerindicating 

releaseofthesalesproceeds

tothegroupand

transferoftitletothebuyer.

‐Weagreedproceeds(deposit andfinalpayment)

toevidenceofreceipt.

‐Latecut‐offwasalsotestedthroughareviewof

thesalesrecordedsubsequenttoyearend.



Basedontheproceduresperformedabove,we

obtainedsufficientauditevidence

toaddressthe

riskofincorrectapplicationofIFRS15.

SOFISASA

StatutoryAuditor’sReportontheconsolidatedfinancialstatements

fortheyearended

December31,2021



Keyauditmatter

Howthescopeofourauditrespondedtothekey

auditmatter

Valuationofthemarketablesecuritiesportfolio

andrelatedinvestmentincome/(loss)

Thegroupholdsamarketablesecuritiesportfolio

classifiedasfinancialassetsheldfortradingin

accordancewithIFRS9(FinancialInstruments).

Thesemarketablesecuritiesaremeasuredatfair

valuewithchangesinfairvaluesrecognisedin

theincomestatement(FVTPL).

The

valuationofthesemarketablesecuritiesand

relatedinvestmentincome/(loss)isbasedonfair

valuesderivedfromquotedpriceinactive

markets.Changesinfairvaluecanhavea

materialimpactonthefinancialstatementsof

thegroup.

AtDecember31,2021,themarketablesecurities

amounttoCHF438.7millionand

generatedanet

realisedlossofCHF1.3millionandanunrealised

gainofCHF71.3million.

Giventhesignificanceofthesebalancestothe

financialstatementsasawholethevaluationof

themarketablesecuritiesportfolioisakeyaudit

matter.Refertotheaccountingpolicyinnote4

and

additionallythesecuritiesdetailsinnote9as

wellastheinvestmentincomedetailsinnote25.



Weperformedaprocesswalkthroughtogainan

understandingoftheinternalcontrols relatedto

theinvestmentprocess.

Wevalidatedtheaccuracyofthefairvalueofthe

marketablesecuritiesatthebalance

sheetdate

andtherelatedunrealisedgains/(losses) with

confirmationsreceivedfromthebanks.In

addition,thefairvalueofthemarketabl e

securitieswasalsotested,onasamplebasis,by

tracingtoindependentmarketquotes.

Wealsoperformeddetailedtestingonasample

ofmarketablesecuritiesacquiredanddisposed

during

theyear,vouchingtorelatedsupporting

documentationandre‐performingthecalculation

ofrealisedgains/(losses).

Basedontheproceduresperformedabove,we

obtainedsufficientauditevidencetoaddressthe

riskofincorrectapplicationofIFRS9.



OtherInformationintheAnnualReport

TheBoardofDirectorsisresponsiblefortheotherinformationinthea nnualreport.Theother

informationcomprisesallinformationincludedintheannualreport,butdoesnotincludethe

consolidatedfinancialstatements,thestand‐alonefinancialstatementsoftheCompanyandour

auditor’s

reportsthereon.



Ouropinionontheconsolidatedfinancialstatementsdoesnotcovertheotherinformationinthe

annualreportandwedonotexpressanyformofassuranceconclusionthereon.



SOFISASA

StatutoryAuditor’sReportontheconsolidatedfinancialstatements

fortheyearended

December31,2021



Inconnectionwithourauditoftheconsolidatedfinancialstatements,ourresponsibilityistoreadthe

otherinformationintheannualreportand,indoingso,considerwhethertheotherinformationis

materiallyinconsistentwiththeconsolidatedfinancialstatementsorourknowledgeobtainedinthe

audit,orotherwiseappearsto

bemateriallymisstated.If,basedontheworkwehaveperformed,we

concludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthat

fact.Wehavenothingtoreportinthisregard.



ResponsibilityoftheBoardofDirectorsfortheConsolidatedFinancialStatements

TheBoard

ofDirectorsisresponsibleforthepreparationoftheconsolidatedfinancialstatementsthat

giveatrueandfairviewinaccordancewithIFRSandtheprovisionsofSwisslaw,andforsuchinternal

controlastheBoardofDirectorsdeterminesisnecessarytoenablethepreparationofconsolidated

financialstatements

thatarefreefrommaterialmisstatement,whetherduetofraudorerror.



Inpreparingtheconsolidatedfinancialstatements,theBoardofDirectorsisresponsibleforassessing

theGroup’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoing 

concernandusingthegoi ngconcernbasisofaccounting

unlesstheBoardofDirectorseitherintendsto

liquidatetheGrouportoceaseoperations,orhasnorealisticalternativebuttodoso.



TheBoardofDirectorsisresponsibleforpresentingandmarkinguptheconsolidatedfinancial

statementsincompliancewiththerequirementssetoutintheDelegatedRegulation

2019/815on

EuropeanSingleElectronicFormat(“theESEFRegulation”).



Auditor’sResponsibilitiesfortheAuditoftheConsolidatedFinancialStatements

Ourobjectivesaretoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatements

asawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissuean

auditor’s

reportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnota

guaranteethatanauditconductedinaccordancewithSwisslaw,ISAsandSwissAuditingStandardswill

alwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorand

are

consideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedto

influencetheeconomicdecisionsofuserstakenonthebasisoftheseconsolidatedfinancialstatements.



WehavealsobeenengagedbytheBoardofDirectorstoassesswhethertheconsolidatedfinancial

statementshavebeenpreparedin

allmaterialrespectswiththerequirementslaiddownintheESEF

Regulation.



AspartofanauditinaccordancewithSwisslaw,ISAsandSwissAuditingStandards,weexercise

professionaljudgmentandmaintainprofessionalskepticismthroughout theaudit.Wealso:

 Identifyandassesstherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,

whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,

andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.

Theriskofnotdetectingamaterialmisstatement resultingfromfraudishigherthanforone

resultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,

misrepresentations,ortheoverrideofinternalcontrol.

SOFISASA

StatutoryAuditor’sReportontheconsolidatedfinancialstatements

fortheyearended

December31,2021



 Obtainanunderstandingofinternalcontrolrelevanttotheaudit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Group’sinternalcontrol.

 Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccounting

estimatesandrelateddisclosuresmade.

 ConcludeontheappropriatenessoftheBoardofDirectors’useofthegoingconcernbasisof

accountingand,based ontheauditevidenceobtained,whetheramaterialuncertaintyexists

relatedtoeventsorconditionsthatmaycastsignificantdoubtontheGroup’sabilitytocontinue

asagoingconcern.Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodraw

attentioninourauditor’sreporttotherelateddisclosuresintheconsolidatedfinancial

statementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsare

basedontheauditevidenceobtaineduptothedateofourauditor’sreport.However,future

eventsorconditionsmaycausetheGrouptoceasetocontinueasagoingconcern.

 Evaluatetheoverallpresentation,structureandcontentoftheconsolidatedfinancialstatements,

includingthedisclosures,andwhethertheconsolidatedfinancials tatementsrepresentthe

underlyingtransactionsandeventsinamannerthatachievesfairpresentation.

 Obtainsufficientappropriateauditevidencer egarding thefinancialinformationoftheentitiesor

businessactivitieswithintheGrouptoexpressanopinionontheconsolidatedfinancial

statements.Weareresponsibleforthedirection,supervisionandperformanceoftheGroup

audit.Weremainsolelyresponsibleforourauditopinion.



WecommunicatewiththeBoardofDirectorsoritsrelevantcommitteeregarding,amongothermatters,

theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificant

deficienciesininternalcontrolthatweidentifyduringouraudit.



WealsoprovidetheBoardofDirectorsoritsrelevantcommitteewithastatementthatwehave

compliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththem

allrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,and

whereapplicable,relatedsafeguards.



FromthematterscommunicatedwiththeBoardofDirectorsoritsrelevantcommittee,wedetermine

thosemattersthatwereofmostsignificanceintheauditoftheconsolidatedfinancialstatementsofthe

currentperiodandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor’s

report,unlesslaworregulationprecludespublicdisclosureaboutthematteror when,inextremelyrare

circumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausethe

adverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterest

benefitsofsuchcommunication.





SOFISASA

StatutoryAuditor’sReportontheconsolidatedfinancialstatements

fortheyearended

December31,2021



ReportonOtherLegalandRegulatoryRequirements

Inaccordancewitharticle728aparagraph1item3COandthe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havecheckedthecomplianceoftheconsolidatedfinancialstatementsoftheGroupasatDecember

31,2021withtherelevantrequirementssetoutintheESEFRegulationthatareapplicabletofinancial

statements.

FortheGroupitrelatesto:

‐ FinancialstatementspreparedinavalidxHTMLformat; 

‐

TheXBRLmarkupoftheconsolidatedfinancialstatementsusingthecoretaxonomyandthe

commonrulesonmarkupsspecifiedintheESEFRegulation.



Inouropinion,theconsolidatedfinancialstatementsoftheGroupasatDecember31,2021,identified

assofisa‐2021‐12‐31‐en.zip,havebeenprepared,inallmaterial

respects,incompliancewiththe

requirementslaiddownintheESEFRegulation.



Werecommendthattheconsolidatedfinancialstatementssubmittedtoyoubeapproved.



DeloitteSA



AnnikJatonHüni GuillaumePicq

LicensedAuditExpert LicensedAuditExpert

AuditorinCharge



Lausanne,April21,2022

AJH/GPI/rex



Enclosures

- Consolidatedfinancialstatements(statementoffinancialposition,statementofcomprehensive

income,statementofchangesinequity,statementofcashflowsandnotes)

SOFISA SA

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in CHF Notes

31/12/2021 31/12/2020

ASSETS

Current assets

Cash and cash equivalents 7 90 625 884 18 661 319

Restricted cash 8 1 603 626 431 342

Securities 9/29 438 716 764 356 179 438

Trade and other receivables 10 1 236 019 2 791 025

Current tax assets 11 1 093 206 1 261 527

Inventories 13 117 267 497 116 139 956

Other financial assets 14 0 3 135 976

Other current assets 15 879 917 820 174

Total current assets 651 422 913 499 420 757

Non-current assets

Property, plant and equipment, net 16 233 849 89 694

Investment in other companies 17 7 119 936 10 405 022

Other non-current assets 15 965 044 1 010 782

Deferred tax assets 11 4 226 719 6 184 410

Total non-current assets 12 545 548 17 689 908

Total assets 663 968 461 517 110 665

- 1 -

SOFISA SA

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in CHF Notes

31/12/2021 31/12/2020

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Trade and other payables 5 810 966 1 110 906

Current tax liabilities 11 9 263 712 2 467 026

Short term part of interest-bearing liabilities 19 47 792 602 47 142 777

Other current liabilities 18 21 577 274 14 744 340

Total current liabilities 84 444 554 65 465 049

Non-current liabilities

Retirement benefit obligation 12 446 243 1 119 439

Deferred tax liabilities 11 26 137 583 16 261 705

Preferential shares 20 2 244 000 2 240 625

Long term part of interest-bearing liabilities 19 23 286 880 17 407 570

Other non-current liabilities 18 946 981 3 688 719

Total non-current liabilities 53 061 687 40 718 058

Total liabilities 137 506 241 106 183 107

Shareholders' equity

Share capital 20 3 960 000 3 960 000

Reserves 21 171 560 000 171 560 000

Retained earnings 22 380 162 617 277 880 203

Cumulative translation differences 23 -29 220 397 -42 472 645

Total shareholders' equity 526 462 220 410 927 558

Total liabilities and shareholders' equity 663 968 461 517 110 665

- 2 -

SOFISA SA

for the year ended

in CHF Notes

31/12/2021 31/12/2020

Continuing operations

Sales revenue 24 108 689 066 13 671 861

Investment income 25 78 809 949 21 744 708

Other income 930 835 675 112

Total operating income 188 429 850 36 091 681

Cost of sales -38 252 248 -10 608 148

Other operating costs -7 773 821 -6 585 339

Total operating costs -46 026 069 -17 193 487

EBIT (Earnings before interest and tax)

142 403 781 18 898 194

Other financial income 25 6 060 23 423

Financial expenses 26 -12 084 503 -1 862 049

EBT (Earnings before tax)

130 325 338 17 059 568

Tax credit / (expense) 11 -9 921 367 -1 644 523

Deferred tax credit / (expense) 11 -11 884 297 270 073

NET PROFIT FOR THE YEAR 108 519 674 15 685 118

Other comprehensive income / (loss)

Items that may be subsequently reclassified to profit or loss

23 13 252 248 -7 043 941

Items that may not be subsequently reclassified to profit or loss

ment benefit obligations 12 774 893 -56 475

11 -209 221 15 248

-2 932 0

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 122 337 594 8 599 950

operations

Foreign currency translation

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

Deferred tax (expense) / credit

Remeasurement losses/

ains

)

of post employ-

Exchange translation differences of foreign

- 3 -

SOFISA SA

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Cumulative

Share Retained translation Reserves

Total

in thousands of CHF

Capital earnin

s differences Equity

Balance at 1 January 2020

3 960 268 894

-35 429

171 560 408 985

Net profit - 15 685 - -

15 685

Other comprehensive income / (loss) -

101

-7 044 -

-6 943

- 15 786 -7 044 - 8 742

Dividends - -6 800 - -

-6 800

Balance at 31 December 2020

3 960 277 880 -42 473 171 560 410 927

Balance at 1 January 2021

3 960 277 880

-42 473

171 560 410 927

Net profit -

108 520

- -

108 520

Other comprehensive income / (loss) -

563

13 252 -

13 815

- 109 083 13 252 - 122 335

Dividends - -6 800 - - -6 800

Balance at 31 December 2021

3 960 380 163 -29 221 171 560 526 462

Total comprehensive income / (loss)

for the year

Total comprehensive income /

(

loss

)

for the year

- 4 -

SOFISA SA

CONSOLIDATED STATEMENT OF CASH FLOWS

in thousands of CHF

31/12/2021 31/12/2020

Cash flow

enerated by

(

used in

)

operatin

activities

Net profit 108 520 15 685

ustments for :

Non cash items in net profit and other ad

ustments

Depreciation and amortization 101 155

Tax (credit) / expense recognised in profit or loss 21 806 1 374

Unrealised (gain) on securities -71 354 -15 888

Other financial income -6 -23

Interest expense recognised in profit or loss 1 669 707

Net (increase) / decrease in operating assets

Securities -11 183 -3 874

Trade and other receivables 383 3 574

Inventories 3 476 -15 155

Other financial assets 3 136 1 345

Other assets -14 72

Net increase / (decrease) in operating liabilities

Trade and other payables 4 700 -8 130

Accrued expenses and deferred income 6 833 -2 579

Other liabilities -673 53

Income taxes received / (paid) -3 007 -484

Net cash flow generated by / (used in) operating activities 64 385 -23 166

Cash flow generated by (used in) investing activities

(Purchase) of property, plant and equipment, net -245 -23

Proceeds from other companies 3 285 3 012

Interest received 6 23

Net cash flow used in investing activities 3 045 3 012

for the year ended

- 5 -

SOFISA SA

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

in thousands of CHF

31/12/2021 31/12/2020

Cash flow generated by (used in) financing activities

(Repayment) of short term borrowings -632 0

Proceeds from short term borrowings 0 26 319

(Repayment) of long term borrowings -2 742 -82

Proceeds from long term borrowings 5 467 9 691

Interest paid on preference shares -72 -71

Transaction with a related party 0 0

Borrowing costs -1 594 -636

Dividends paid -6 800 -6 800

Net cash flow (used in)/generated by financing activities -6 373 28 422

Effects of exchange rate differences 10 907 -995

Net increase in cash and cash equivalents 71 964 7 273

Cash and cash equivalents at beginning of the year 18 661 11 388

Cash and cash equivalents at the end of the year 90 626 18 661

for the year ended

- 6 -

SOFISA SA

- 7 -

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1) SOFISA’S BUSINESS ACTIVITIES

Sofisa SA is a holding company incorporated in 1930 and organised under Swiss law. The

company owns interests in several wholly-owned or majority owned subsidiaries, established

in various countries. The Company, together with its subsidiaries, forms the Sofisa Group. The

Sofisa Group conducts activities in residential real estate development in Canada and USA

and further holds a diversified investment portfolio to provide finance for the Group.

Sofisa SA is a public limited company with its head office in Grand-Places 14, Fribourg,

Switzerland, where it is also registered. The share capital of the company is fixed at the sum

of six million one hundred sixty-five thousand Swiss francs (CHF 6,165,000); it is divided into

three thousand nine hundred sixty (3,960) ordinary shares, numbered 1 to 3,960, of CHF 1,000

each and three thousand (3,000) preference shares, numbered 3,961 to 6,960, of CHF 735

each. The shares numbered 2,395 to 2,904 have a preferred dividend right. The shares

numbered 3,961 to 6,960 have a preferred dividend right and privileged voting rights. The

shares numbered 3,961 to 6,960 in Sofisa SA are traded on the Luxembourg Stock Exchange

under securities no 013902662 (ISIN CH0013225898).

2) PRINCIPLES OF CONSOLIDATION AND FINANCIAL REPORTING

GENERAL PRINCIPLES: The consolidated financial statements for the Sofisa Group are based

on the financial statements of the individual companies within the Group as per

December 31, which have all been prepared in a consistent manner.

The consolidated financial statements are prepared in accordance with International

Financial Reporting Standards (IFRS) as issued by the International Accounting Standards

Board (IASB) and are also prepared in accordance with IFRS adopted by the European Union.

The consolidated financial statements have been prepared on the basis of original values at

acquisition, non-monetary assets being valued, in principle, at acquisition or cost or at market

values, if lower. Securities and certain financial assets are measured at fair value. Certain

portfolio holdings consist of shares in funds principally invested in instruments ranging from

equities to currencies and commodities, all traded on a securities exchange.

Details concerning valuation are given in the accounting policies indicated below.

3) ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

The accounting policies are the same as those applied in the 2020 consolidated financial

statements, except for the Group’s adoption of new IFRSs effective January 1, 2021.

In the current financial year several new amendments were adopted effective January 1,

2021 but had no material impact on the Group consolidated financial statements.

Otherwise, the same accounting policies, presentation and methods of computation are

followed in these consolidated financial statements as were applied in the preparation of the

consolidated financial statements for the year ended December 31, 2020.

SOFISA SA

- 8 -

Standards not affecting the reported results nor the financial position

At the date of authorisation of these consolidated financial statements, the following

Standards and Interpretations which have not been applied in these financial statements

were issued but not yet effective:

Amendments to IFRS 3 Reference to Conceptual Framework

Amendments to IAS 16 Property, Plant and Equipment – Proceeds before

intended use

Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract

Annual Improvement Amendments to IFRS 1 First-time Adoption of

to IFRS Standards 2018-2021 Cycle International Financial Reporting Standards, IFRS 9

Financial Instruments, IFRS 16 Leases, and IAS 41

Agriculture.

Amendments to IAS 1 Classification of Liabilities as Current or Non-current

IFRS 17 Insurance Contracts

Amendments to IAS 8 Definition of Accounting Estimates

Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising

from a single transaction

Amendments to IAS 1 Disclosure of Accounting Policies

and IFRS Practice Statement 2

The directors do not expect that the adoption of the standards listed above will have a

material impact on the consolidated financial statements of the Group in future periods.

However these new standards could lead to a few additional disclosures.

4) SIGNIFICANT ACCOUNTING POLICIES

SCOPE OF THE CONSOLIDATED STATEMENTS: The consolidated financial statements for Sofisa

Group cover Sofisa SA and all the entities controlled by the Company. Subsidiaries are those

companies controlled directly or indirectly by the parent through a majority of votes or by

other means. Control is achieved when the parent has the power over the investee; is

exposed, or has right, to variable return from its involvement with the investee; and has the

ability to use its power to affect its return.

METHOD OF CONSOLIDATION: The consolidated financial statements represent the

aggregation of the annual accounts of the individual Group companies, which are prepared

using uniform accounting principles.

The financial statements of the parent and its subsidiaries are prepared as of the same end

of the reporting period. Assets and liabilities, and income and expenses of a subsidiary are

included in the consolidated financial statements from the date that control is acquired until

the date on which the parent ceased to control the subsidiary. All intra-group transactions,

balances, income and expenses are eliminated on consolidation.

INVESTMENTS IN OTHER COMPANIES: Investment in company not accounted for as subsidiary,

associates or jointly controlled entities (normally below 20% shareholding levels) are stated at

cost less any provision for impairment. The fair value of these investments cannot be reliably

measured.

GOING CONCERN: The Board of directors has, at the time of approving the financial

statements, a reasonable expectation that the Group has adequate resources to continue

in operational existence for the foreseeable future. Thus they continue to adopt the going

concern basis of accounting in preparing the financial statements.

SOFISA SA

- 9 -

SIGNIFICANT ACCOUNTING ESTIMATES: In preparing the consolidated financial statements,

management is required to make estimates and assumptions that affect reported income,

expenses, assets, liabilities and disclosure of contingent assets and liabilities. The estimates and

associated assumptions are based on historical experience and other factors that are

considered to be relevant. Actual results may differ from those estimates.

Significant estimates used in the preparation of these consolidated financial statements and

judgements made by management in the application of IFRSs that have significant effect on

the financial statements are discussed below.

Revenues from sales of completed single-family detached home on a specific parcel or a

completed residential units in multi-family buildings: Revenues from such transactions are

recognised at a point in time. This revenue recognition method requires management

estimates and judgments to determine when the revenue recognition criteria are fulfilled in

accordance with the requirements of IFRS 15, Revenue from Contracts with Customers.

Valuation of the marketable securities portfolio and related investment income / (loss): The

Group holds a marketable securities portfolio classified as held for trading in accordance with

IFRS 9, Financial instruments. These marketable securities are designated at fair value through

profit or loss and recorded at fair value in the statement of financial position under

“Securities”. Changes in the fair value of these financial instruments are recorded in the

statement of profit or loss in the captions “investment income” or “Investment loss” as

appropriate.

The valuation of these marketable securities and related investment income / (loss) is based

on fair value derived from quoted price in active markets. Changes in fair value can have a

material impact on the financial statements of the Group.

Securities represent investments in equity markets mainly invested in instruments ranging from

equities to currencies and commodities all traded on a securities exchange. For those

financial instruments traded in the active markets, the determination of the fair values is based

on quoted market prices or dealer price quotations. The value measurement does not result

from a valuation made by the management of the company.

FUNCTIONAL CURRENCY AND CONVERSION OF FOREIGN CURRENCIES: The Group’s

consolidated financial statements are prepared in Swiss francs (CHF) and, if not otherwise

indicated, are rounded up or down to the nearest CHF 1,000.

For certain companies within the Group, transactions that are carried out in a foreign

currency are converted using a fixed exchange rate. At closure, monetary assets and

liabilities in foreign currencies are converted into the functional currency of the company

using year-end rates. The resulting exchange differences are recorded in profit or loss. Non-

monetary items that are measured in terms of historical cost in a foreign currency are not

retranslated.

In the Group’s consolidated financial statements, the assets and liabilities from the statements

of financial positions of foreign subsidiaries prepared in a foreign currency have been

translated into Swiss franc using year-end rates. The statements of profits or losses and other

comprehensive income and cash flows have been translated using the average exchange

rates for the year.

Exchange differences arising on the net assets of foreign subsidiaries as a result of changes in

exchange rates compared to the previous year and translation differences arising from the

calculation of the Group’s results using average annual exchange rates and year-end rates

are recognised directly in other comprehensive income and reported separately as

cumulative translation differences. Cumulative translation differences will be recognised in

the profit or loss when a subsidiary is sold or liquidated.

SOFISA SA

- 10 -

The principal exchange rates against the Swiss franc in relation to the consolidated financial

statements are as follows:

Statement of Statement of profit or loss and

Financial position* other comprehensive income **

Exchange rates 2021 2020 2021 2020

1 USD 0.9111 0.8839 0.9143 0.9381

1 EUR 1.0362 1.0816 1.0810 1.0705

1 CAD 0.7213 0.6938 0.7293 0.7000

1 GBP 1.2341 1.2083 1.2575 1.2039

1 AUD 0.6624 0.6821 0.6865 0.6476

1 NZD 0.6238 0.6364 0.6465 0.6100

100 JPY 0.7912 0.8561 0.8326 0.8789

100 SEK 10.0636 10.7632 10.6553 10.2161

100 HKD 11.6868 11.4000 11.7624 12.0948

100 NOK 10.3324 10.3240 10.6367 9.9951

100 SGD 67.5852 66.8820 68.0303 68.0212

100 DKK 13.9312 14.5302 14.5356 14.3608

100 ILS 29.2747 27.5301 28.3004 27.2246

* Year-end rates ** Average rates for the year

FINANCIAL ASSETS AND LIABILITIES: The financial assets and liabilities are classified into the

following specified categories:

Financial assets are classified as fair value through profit or loss if they are acquired with a

view to realising a profit from short-term fluctuations in the price and measured at fair value.

The resulting realised and unrealised changes in value are recognised in profit or loss and are

included in the financial result for the relevant reporting period. Included in this category of

financial assets are the securities which include marketable, easily realisable securities and

time deposits with an original maturity of 3 to 12 months.

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They reach the objective of collecting

contractual cash flows over their life. This type of financial instrument, including in particular

trade receivables, loans and other receivables, is measured in the statement of financial

position at amortised cost using the effective interest rate method less any impairment.

Interest income is recognised by applying the effective interest rate method, except for short-

term receivables when the recognition of interest would be immaterial.

Trade receivables are carried at amortised cost less allowances for loss. They generally do not

contain a significant financing component. The allowance loss measurement is then

determined by applying a simplified approach equalling the lifetime expected credit losses.

Under this approach the tracking of changes in credit risk is not required but instead the base

lifetime expected credit loss at all times is applied. An allowance for loss is made for

potentially impaired receivables during the year in which they are identified based on a

periodic review of all outstanding amounts. Losses are recorded within cost of sales in the

profit or loss. Trade receivables are deemed as impaired when there is an indication of

significant financial difficulties of the debtor (delinquency in or default on payments occurs,

probability of bankruptcy or need for financial reorganisation).

Financial liabilities are classified as other financial liabilities.

SOFISA SA

- 11 -

Other financial liabilities, including borrowings and long term debts, are initially measured at

fair value, net of transaction costs. Other financial liabilities are subsequently measured at

amortised cost using the effective interest rate method, with interest expense recognised on

an effective yield basis. The effective interest rate method is a method of calculating the

amortised cost of a financial liability and allocating interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments

through the expected life of the financial liability, or, where appropriate, a shorter period.

CASH AND CASH EQUIVALENTS: In addition to cash on hand and cash at bank, cash and cash

equivalents may also include fixed-term deposits with an original maturity of up to three

months.

RESTRICTED CASH: Cash is considered to be restricted when it is subject to contingent rights of

a third party.

SECURITIES: On the statement of financial position, securities under current assets comprise

marketable, easily realisable securities and time deposits with an original maturity of 3 to 12

months.

IFRS 9 requires that the classification of an investment portfolio as either “fair value through

profit or loss (FVTPL)” or as “fair value through other comprehensive income (FVTOCI)”

depends on the entity’s intention and past practice. If the portfolio manager actively buys

and sells financial instruments to generate short-term profits, the financial instruments in the

portfolio are considered as held for trading. Management assesses that the investment

portfolio is considered as held for trading and therefore is classified and accounted for at fair

value through profit or loss.

INVENTORIES: Inventories consist of land and residential property under development and

held for sale. Inventory is recorded at the lower of cost and estimated net realisable value.

Cost includes the cost of land, carrying costs (principally property taxes) and development

costs (including construction). Net realisable value is the estimated selling price in the ordinary

course of business, less the estimated costs of completion and selling expenses.

PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are carried at cost less

accumulated depreciation and impairment. Depreciation is provided on a straight-line basis

over the estimated useful lives of the assets as follows:

Furniture and fixtures 10 years

Computer equipment 3 years

Computer software 3 years

Leasehold improvements over term of lease

Portable buildings 3 years

The depreciation method, residual values and useful lives of all property, plant and

equipment are reviewed and adjusted, if appropriate, at least at each financial year end,

with the effect of any changes in estimate accounted for prospectively.

IMPAIRMENT OF TANGIBLE ASSETS: At each end of the reporting period, the Group reviews the

carrying amounts of its tangible assets to determine whether there is any indication that those

assets have suffered an impairment loss. If any such indication exists, the recoverable amount

of the asset is estimated in order to determine the extent of the impairment loss (if any). When

it is not possible to estimate the recoverable amount of an individual asset, the Group

estimates the recoverable amount of the cash-generating unit to which the asset belongs.

When a reasonable and consistent basis of allocation can be identified, corporate assets are

also allocated to individual cash-generating units, or otherwise they are allocated to the

smallest group of cash-generating units for which a reasonable and consistent allocation

basis can be identified.

SOFISA SA

- 12 -

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing

value in use, the estimated future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and

the risks specific to the asset for which the estimates of future cash flows have not been

adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than

its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to

its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-

generating unit) is increased to the revised estimate of its recoverable amount, but so that

the increased carrying amount does not exceed the carrying amount that would have been

determined had no impairment loss been recognised for the asset (or cash-generating unit)

in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

DIVIDENDS: Dividends received are recognised to profit in the fiscal year in which they were

approved by the Shareholder Meeting.

TAXATION: Tax expense represents the sum of the current tax and deferred tax.

Current tax: The tax currently payable is based on taxable profit for the year. Taxable profit

differs from profit as reported in the consolidated statement of profit or loss and other

comprehensive income because it excludes items of income or expense that are taxable or

deductible in other years and it further excludes items that are never taxable or deductible.

The Group’s liability for current tax is calculated using tax rates that have been enacted or

substantively enacted by the end of the reporting period.

Deferred tax: Deferred tax is recognised on temporary differences between the carrying

amounts of assets and liabilities in the consolidated financial statements, and the

corresponding tax base used in the computation of taxable profit, and is accounted for using

the full liability method. Deferred tax liabilities are generally recognised for all taxable

temporary differences, and deferred tax assets are generally recognised for all deductible

temporary differences to the extent that it is probable that taxable profits will be available

against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period

and reduced to the extent that it is no longer probable that sufficient taxable profits will be

available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply

in the period in which the liability is settled or the asset realised, based on tax rates (and tax

laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that

would follow from the manner in which the Group expects, at the end of the reporting period,

to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year: Current and deferred tax are recognised as an

expense or income in profit or loss, except when they relate to items credited or debited

directly to equity, in which case the tax is also recognised directly in equity.

BORROWING COSTS: Borrowing costs directly attributable to the acquisition, construction or

of qualifying assets, which are assets that necessarily take a substantial period of time to get

ready for their intended use or sale, are added to the cost of those assets, until such time as

the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are

incurred.

SOFISA SA

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RETIREMENT BENEFIT COSTS: Wages, salaries, social security contributions, annual leave and

paid sick leave, bonuses and non-monetary benefits are expensed in the year in which the

associated services are rendered by the Group’s employees.

Pension obligations: A defined benefit plan is a pension plan that defines an amount of

pension benefit that an employee will receive on retirement, principally dependent on an

employee’s years of service and remuneration at retirement. Plans are usually funded by

payments from the Group and employees. The liability recognised in the statement of

financial position is the aggregate of the present value of the defined benefits obligation less

the fair value of plan assets. Where a plan is unfunded, only a liability representing the present

value of the defined benefits obligation is recognised in the statement of financial position.

The present value of the defined benefits obligation is calculated by independent actuaries

using the projected unit credit method. This method reflects the discounted expected future

payment required to settle the obligation resulting from employee service in the current and

prior periods. The future cash outflows incorporate actuarial assumptions primarily regarding

the projected rates of remuneration growth, and long-term indexation rates. Discount rates,

used to determine the present value of the defined benefit obligation, are based on the

market yields of high-quality corporate bonds in the country concerned. Actuarial gains and

losses arising from experience adjustments and changes in actuarial assumptions are

charged or credited to equity in other comprehensive income in the period in which they

arise. Past-service costs are recognised immediately in the income statement. Net interest

expense is calculated by applying the discount rate at the beginning of the period to the net

defined benefit liability or asset. Pension assets and liabilities in different defined benefit

schemes are not offset unless the Group has a legally enforceable right to use the surplus in

one plan to settle obligations in the other plan.

SALES REVENUE

Revenue recognition

The Group accounts for a contract when the Group and the homebuyer have approved the

contract in accordance with customary business practices and are committed to their

obligations, the rights of the parties and payment terms are identified, and collection of the

consideration is probable.

Typically, the Group contracts with a homebuyer to provide a completed single-family

detached home on a specific land parcel or a completed residential unit in a multi-family

building for a fixed-price, the transaction price, as specified in the contract. This may involve

the Group integrating a number of tasks and components into a single project.

Consequently, the entire contract is accounted for as a single performance obligation.

For sales of single-family detached homes, individual residential units in multi-family buildings,

or in rare instances parcel(s) of land, the Group satisfies its performance obligation when the

homebuyer takes physical possession at the time the sale is closed. That is also the point in

time the Group has the right to payment beyond the initial purchase deposits received from

the homebuyer. Therefore, the Group recognises all revenue at the closing date. Funds

received in advance of the closing date in the form of purchase deposits are recorded as a

liability on the consolidated balance sheet and captioned as deferred revenue until the

closing date.

For the construction of custom built single-family detached homes on land not owned by the

Group and the completion of miscellaneous onsite and offsite development associated with

a large parcel of land sold in the current year, the Group satisfied the performance obligation

over time and receives payment during the course of the contract on specified dates or as

certain milestones are met. Therefore, the Group recognises revenue over time as the

performance obligation is satisfied. The revenue for the construction and remaining

development is recognised based on the extent of progress toward completion of the

SOFISA SA

- 14 -

performance obligation. The Group uses the cost-to-cost measure of progress as it best

reflects the costs that were incurred on the contract. Under the cost-to-cost measure, the

extent of progress is determined by the ratio of costs incurred to date to the total estimated

costs at completion of the single performance obligation. Costs of residential property sold

include land, materials, labour, subcontractors, other direct costs, and an allocation of

certain indirect costs. Revenues, including estimated profits, are recorded proportionately as

costs are incurred.

In connection with the sale of a large parcel of land in the current year, the Group is required

to provide ongoing advisory services to the purchaser to assist the purchaser with obtaining

certain development permits on the purchased land. The services are to be provided over

an 18-month term ending June 30, 2023 at which time the Group will be paid a lump-sum

amount currently held in trust. As the contracted revenue to be earned for providing these

services is not contingent on the purchaser successfully obtaining the development permits,

the Group will satisfy the performance obligation over time as the services are provided and

will record the revenue on a straight-line basis over the 18-month term.

The Group’s contracts specify the price for the performance obligation. In the case of

contracts for custom built single-family detached homes, the homebuyer may request

changes to the specifications and requirements of the home. Because of the integrated

nature of the goods and services associated with providing a completed home to a

homebuyer, such modifications are for items that are not distinct from the existing contract

and are accounted for as if they were part of the existing contract. The effect of such

contract modifications on the transaction price and the measure of progress of the

performance obligation is recognised as a cumulative adjustment to revenue as an increase

or decrease in revenue.

Deferred revenue also includes the excess of amounts billed to homebuyers over the revenue

earned on uncompleted contracts. Such amounts are classified as a liability.

Deferred revenue is reported on a contract-by-contract basis.

Amounts billed for work performed but not yet paid for the homebuyer are included in the

trade and other receivables as an asset.

When it is probable that total contract costs will exceed total contract revenue, the expected

loss is recognised as an expense immediately.

DIVIDEND AND INTEREST INCOME: Dividend income from securities is recognised when the

holder’s rights to receive payment has been established. Dividends are recognised as

“investment income” in the consolidated statement of profit or loss and other comprehensive

income in the financial statements.

Interest is recognised using the effective interest rate method. Interest revenue is recognised

in the consolidated statement of profit or loss and other comprehensive income as “Other

financial income”.

SOFISA SA

- 15 -

5) OPERATING SEGMENTS

The operating segments are identified on the basis of internal reporting about components

of the Group that are regularly reviewed by the operating decision maker in order to allocate

resources to the segments and to assess their performance.

Residential property development: rezoning and obtaining development permits, designing

and constructing homes, both single and multi-family on existing land located in Canada and

USA, for our own account, and sometimes acting as general contractor for third party clients.

Other: Providing corporate services to the other segments in Canada (residential property

development), including corporate financing, management and administration, payroll,

office premises.

Investment activity/Corporate: direct administration of the operating subsidiaries as well as

management of a global equity portfolio in adherence to the MSCI All Country World (net

dividend invested) in Swiss francs. This activity is conducted by the parent company and its

subsidiary Sofisa Finance SA, both companies based in Switzerland.

Residential 2021

Property Investment Consolidated

development Other activity CHF

Investment income - - 78,809,949 78,809,949

Revenues from external

customers

108,689,066 - - 108,689,066

Earnings /(Loss) before

interest and tax 64,874,553 (210,418) 77,739,645 142,403,781

Net financing costs - - - (12,078,443)

Income tax - - - (21,805,664)

Net profit - - - 108,519,674

Reportable segment assets 207,539,737 799,939 455,628,786 663,968,461

Reportable segment

liabilities 75,874,892 8,248,226 53,383,123 137,506,241

Residential 2020

Property Investment Consolidated

development Other activity CHF

Investment income

-- 21,744,708 21,744,708

Revenues from external

customers

13,671,861

Earnings /(Loss) before

interest and tax

821,554

(2,781,030)

20,857,669

18,898,194

Net financing costs

-- - (1,838,626)

Income tax

-- - (1,374,450)

Net profit

-- - 15,685,118

Reportable segment assets

146,348,868 6,709,065 364,052,732 517,110,665

Reportable segment

liabilities

49,984,080

4,591,259

51,607,768

106,183,107

SOFISA SA

- 16 -

The Group operates in three geographical areas – British Columbia, in Canada, USA and

Switzerland (country of domicile).

2021

Canada

USA Switzerland

Consolidated

CHF

Investment income - - 78,809,949 78,809,949

Revenues from

external customers 103,042,868 5,646,198 - 108,689,066

Earnings / (Loss)

before interest and

tax 59,408,367 5,255,769 77,739,645 142,403,781

Reportable

segment assets 198,806,660 9,533,015 455,628,786 663,968,461

Reportable

segment liabilities 84,032,008 91,110 53,383,123 137,506,241

2020

Canada

USA Switzerland

Consolidated

CHF

Investment income - - 21,744,708 21,744,708

Revenues from

external customers 11,516,246 2,155,615 - 13,671,861

Earnings / (Loss)

before interest and

tax (3,823,771) 1,864,296 20,857,669 18,898,194

Reportable

segment assets 138,830,457 14,227,476 364,052,732 517,110,665

Reportable

segment liabilities 54,329,325 246,014 51,607,768 106,183,107

6) SUBSIDIARIES

Details of the Group’s significant subsidiaries at year-end are as follows:

Name of the subsidiary Ownership Voting

Place of incorporation interest held rights Principal activity

% %

Sofisa Canada Ltd 100 100 Residential real estate

Vancouver, Canadadevelopment

British Pacific Properties Ltd 100 100 Residential real estate

Vancouver, Canadadevelopment

British Pacific Enterprises Ltd 100 100 Residential real estate

Vancouver, Canada development

British Pacific Holdings Ltd 100 100 Investment holding

Vancouver, Canada

Rodgers Creek G.P. Ltd 100 100 Residential real estate

Vancouver, Canada development

SOFISA SA

- 17 -

The British Pacific Properties Ltd Partnership 100 100 Residential real estate

Vancouver, Canada development

The Peak British Properties GP Ltd 100 100 Residential real estate

Vancouver, Canada development

The Courtenay British Properties GP Ltd 100 100 Residential real estate

Vancouver, Canada development

The Uplands One G.P. Ltd 100 100 Residential real estate

Vancouver, Canada development

The Uplands Two G.P. Ltd 100 100 Residential real estate

Vancouver, Canada development

The Uplands Three G.P. Ltd 100 100 Residential real estate

Vancouver, Canada development

The Uplands Four G.P. Ltd 100 100 Residential real estate

Vancouver, Canada development

Rodgers Creek Ltd Partnership 100 100 Residential real estate

Vancouver, Canada development

The Peak British Properties Ltd Partnership 100 100 Residential real estate

Vancouver, Canada development

The Courtenay British Properties Ltd Partnership 100 100 Residential real estate

Vancouver, Canada development

The Uplands One Limited Partnership 100 100 Residential real estate

Vancouver, Canada development

The Uplands Two Limited Partnership 100 100 Residential real estate

Vancouver, Canada development

The Uplands Three Limited Partnership 100 100 Residential real estate

Vancouver, Canada development

The Uplands Four Limited Partnership 100 100 Residential real estate

Vancouver, Canada development

British Pacific Homes Limited 100 100 Residential real estate

Vancouver, Canada development

The British Pacific Trust 100 100 Residential real estate

Vancouver, Canada development

SOFISA USA Inc. 100 100 Residential and

Delaware, USA commercial real estate

development

Sofisa Malaysia (L) Ltd 100 100 Investment company to

Labuan, Malaysia provide finance to group

companies

Sofisa Properties SDN BHD 100 100 Investment holding

Labuan, Malaysia

Sofisa Finance SA 100 100 Finance for the Group and

Fribourg, Switzerland portfolio investment

SOFISA SA

- 18 -

7) CASH AND CASH EQUIVALENTS 2021 2020

CHF CHF

Cash at banks and in hand 90,586,346 18,657,524

Short-term deposits 39,538 3,795

Total90,625,884 18,611,319

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term

deposits are made for varying periods of between one day and three months, depending on

the immediate cash requirements of the Group, and earn interest at the respective short-term

deposit rates.

8) RESTRICTED CASH

As at December 31, 2021, the Group’s CHF 1,603,626 restricted cash balance (2020 – CHF

431,342) was related to holdbacks paid by customers for houses under construction. Restricted

cash for all periods is presented separately on the statement of financial position.

9) SECURITIES 2021 2020

CHF CHF

Financial assets carried at fair value

through profit and loss

Non derivative financial assets (FVTPL) 438,716,764 356,179,438

otal438,716,764 356,179,438

Securities are pledged as collateral bank credit facility (see note 19).

10) TRADE AND OTHER RECEIVABLES 2021 2020

CHF CHF

Trade receivables 169,883 2,636,361

Amounts due from customers under construction

contracts in progress 489,116 -

Amounts due from customers under completed

contracts 159,801 -

Harmonized Sales Tax (HST) 398,582 102,883

Other receivables 18,637 51,781

Total1,236,019 2,791,025

No provision for doubtful trade accounts receivable was deemed necessary.

SOFISA SA

- 19 -

11) CURRENT TAX ASSETS

a) CURRENT TAX ASSETS AND LIABILITIES

Current tax assets 2021 2020

CHF CHF

VAT receivable 12,306 3,785

Withholding tax receivable 184,338 185,358

Tax refund receivable 896,562 1,072,384

Total 1,093,206 1,261,527

Current tax liabilities 2021 2020

CHF CHF

Current tax payable and other taxes 8,879,577 941,349

Previous year tax payable 384,135 201,810

Withholding tax payable 0 1,323,867

Total 9,263,712 2,467,026

2021

DEFERRED TAX ASSETS/(LIABILITIES)

Opening

balance

Charged to

income

Charged

to OCI

Exchange

differences

Closing

balance b)

CHF CHF CHF CHF CHF

Temporary differences

Securities (13,794,501) (9,963,725) - - (23,758,226)

Furniture and equipment 411,630 (14,468) - 16,476 413,459

Accruals and deferred income 848,159 1,527,102 - 16,868 2,392,127

Unrealised

exchange gain (2,467,204) 87,847 - - (2,379,357)

Retirement benefit

obligations 302,248 15,649 (209,221) 11,808 120,485

Losses carry forward 3,771,737 (3,558,211) 188,531 402,057

Warranties provision 18,733 - - 743 19,475

Temporary differences (10,909,198) (11,905,986) (209,221) 234,426 (22,789,980)

Tax losses 831,903 21,689 - 25,524 879,116

Income tax benefit / (expense)

recognised in profit or loss (10,077,295) (11,884,297) (209,221) 259,950 (21,910,864)

SOFISA SA

- 20 -

2020

DEFERRED TAX ASSETS / (LIABILITIES)

Opening

balance

Charged to

income

Charged

to OCI

Exchange

differences

Closing

balance

CHF CHF CHF CHF CHF

Temporary differences

Securities (11,445,681) (2,348,820) - - (13,794,501)

Furniture and equipment 249,929 181,042 - (19,341) 411,630

Accruals and deferred income 1,282,215 (346,124) - (87,931) 848,159

Unrealised

exchange gain (2,467,492) 588 - - (2,467,204)

Retirement benefit

obligations 287,974 19,637 15,248 (20,611) 302,248

Losses carry forward 1,755,949 2,159,534 - (143,746) 3,771,737

Warranties provision 20,164 - - (1,431) 18,733

Temporary differences (10,317,242) (334,143) 15,248 (273,061) (10,909,198)

Tax losses 287,700 604,216 - (60,013) 831,903

Income tax benefit / (expense)

recognised in profit or loss (10,029,542) 270,073 15,248 (333,074) (10,077,295)

Deferred tax balances are presented in the statement of financial position as follows:

2021 2020

CHF CHF

Deferred tax assets 4,226,719 6,184,410

Deferred tax liabilities (26,137,583) (16,261,705)

Net balance (21,910,864) (10,077,295)

c) Tax recognised in profit or loss 2021 2020

CHF CHF

Tax expense comprises:

Current tax (expense) (9,921,367) (1,644,523)

Deferred tax income/(expense) relating to the

origination and reversal of temporary

differences (11,905,986) (334,143)

Recognition of deferred tax assets on losses

carried forward 21,689 604,216

Total tax expense (21,805,664) (1,374,450)

SOFISA SA

- 21 -

The total charge for the year can be reconciled to the accounting profit / (loss) as follows:

2021 2020

CHF CHF

Profit from continuing operations 130,325,338 17,059,568

Income tax expense calculated at 13.87%

(2020: 13.87%) (18,072,678) (2,365,711)

Effect of non-deductible and not taxable items (684,910) 2,502,546

Effect of expenses that are not deductible in

determining taxable profit (776,455) (651,316)

Other items (6,253) 22,053

Effect of different tax rates of subsidiaries

operating in other jurisdictions (2,265,368) (882,022)

Total tax expense (21,805,664) (1,374,450)

12) RETIREMENT BENEFIT OBLIGATION

The Group operates a funded defined benefit plan for four qualifying employees of one of its

subsidiaries in Canada. Under the plan, the employees are entitled to retirement benefits

based upon pensionable salary and length of service on attainment of a retirement age of

65 or, subject to actuarial reduction of benefit, as early as age 55. No other post-retirement

benefits are provided to these employees, except for the supplementary pension plan as

disclosed below.

The Group also operates unfunded non-contributory defined benefit pension plans for three

beneficiaries, which provides pension benefits that are based on the difference between the

annual pensions which they would be eligible to receive under the subsidiary’s registered

pension plan (the “Plan”) if the maximum pensions payable were not limited by the Income

Tax Act and Regulations, and the maximum pensions which they are eligible to receive under

the terms of the Plan.

The Group’s two defined benefit pension plans, as described above, are valued as at

December 31 each year for the purpose of the Group’s accounting in accordance with

standard IAS19. In addition, the funded plan was last valued as at December 31, 2018 for the

purpose of determining the Group’s contribution to the plan.

Salaried plan

The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at December 31,

2021 2020

Discount rate(s) 3.00 2.55

Expected rate(s) of salary

increase 2.75 2.75

Inflation 2.00 2.00

Mortality CPM2014 Priv

Table – Fully generational

Improvement Scale CPM-B

CPM2014 Priv

Table –Fully generational

Improvement Scale CPM-B

SOFISA SA

- 22 -

Amounts recognised in profit or loss in respect of these defined benefit plans are as follows:

2021 2020

CHF

Current service cost 168,135 163,737

Net interest cost 13,993 17,137

dministrative expenses 7,213 6,938

Defined benefit cost recognised in profit or loss 189,341 187,812

Remeasurements – recognised in OCI (733,778) (129,810)

otal defined benefit cost recognised in profit or loss

and OCI (544,437) 58,002

The cost for the year is included in the other operating costs in the statement of profit or loss

and other comprehensive income.

Present value of defined benefit obligation is as follows:

2021 2020

CHF

Present value of funded defined benefit obligation (5,104,351) (4,985,647)

Fair value of plan assets 5,152,967 4,419,853

Present value of defined benefit (obligation) 48,616 (565,794)

Movements in the present value in the defined benefit obligation in the current period were

as follows:

2021 2020

CHF

Opening defined benefit obligation 4,985,647 4,868,463

Current service cost 168,135 163,737

Interest cost 130,267 140,078

Employees' contributions 19,475 21,369

Benefits paid (147,506) (147,086)

Remeasurements (Actuarial loss (gain)):

a. changes in demographic assumptions - -

b. changes in financial assumptions (391,233) 471,853

c. experience adjustments 141,952 (187,256)

Exchange difference 197,614 (345,511)

Closing defined benefit obligation 5,104,351 4,985,647

SOFISA SA

- 23 -

Movements in the present value of the plan assets in the current period were as follows:

2021 2020

CHF

Opening fair value of plan assets 4,426,798 4,232,190

Interest income 116,274 122,941

Return on plan assets (excluding amount

included in net interest income) 484,497 414,407

Employer contributions 92,921 90,270

Employees' contributions 19,475 21,369

Other operating costs paid from plan assets (7,213) (6,938)

Benefits paid (147,506) (147,086)

Exchange difference 175,464 (300,355)

Closing fair value of plan assets 5,160,710 4,426,798

The major categories of plan assets are as follows:

2021 2020

Equity instruments 63 62

Debt instruments 37 38

Total 100

100

The actual return on plan assets was CHF 600,771 (2020: (CHF 537,348).

Supplemental plan

The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at December 31,

2021 2020

Discount rate(s) 3.00 2.55

Expected rate(s) of salary increase N/A N/A

Amounts recognised in profit or loss in respect of these defined benefit plans are as follows:

Remeasurements - recognised in OCI 2021 2020

CHF

Interest cost 14,210 12,142

Defined benefit cost recognised in profit or loss 14,210 12,142

Remeasurements - recognised in OCI (41,114) 186,285

Total defined benefit cost recognised in profit or loss

and OCI (26,904) 198,427

SOFISA SA

- 24 -

The cost for the year is included in other operating costs in the statement of profit or loss.

Present value of unfunded defined benefit obligation is as follows:

2021 2020

CHF

Present value of unfunded defined benefit

obligation 502,602 560,590

The amount included in the statement of financial position arising from the Group’s obligation

in respect of its defined benefit plans is as follows:

2021 2020

CHF

Unfunded defined benefit obligation 502,602 560,590

Movements in the present value of the defined benefit obligation in the current period were

as follows:

2021 2020

CHF

Opening defined benefit obligation 560,590 437,699

Interest cost 14,210 12,142

Benefits paid (53,304) (44,473)

Remeasurements (Actuarial loss (gain)):

a. changes in demographic assumptions

- -

b. changes in financial assumptions

(19,331) 16,443

c. experience adjustments

(21,783) 169,842

Exchange difference 22,220 (31,063)

Closing defined benefit obligation 502,602 560,590

The assets and liabilities recognised in the balance sheet and gains or losses recognised in

other comprehensive income at December 31 are as follows:

2021 Salaried plan Supplemental

plan

TOTAL

CHF

Present value of defined benefit (obligation) 48,616 (502,602) (453,986)

Other comprehensive income (loss / (gain)) (737,779) (41,114) 774,893

- changes in demographic assumptions - - -

- changes in financial assumptions (391,233) (19,331) 410,564

- experience adjustments 141,952 (21,783) 120,169

- return on plan assets (excluding amount

included in net interest income) (484,497) - (484,497)

SOFISA SA

- 25 -

2020 Salaried plan Supplemental

plan

TOTAL

CHF

Present value of defined benefit (obligation) (565,794) (560,590) (1,126,384)

Other comprehensive income (loss / (gain)) (129,810) 186,285 56,475

- changes in demographic assumptions - - -

- changes in financial assumptions 471,853 16,443 488,296

- experience adjustments (187,256) 169,842 (17,414)

- return on plan assets (excluding amount

included in net interest income) (414,407) - (414,407)

The plans in Canada expose the Group to actuarial risks such as: investment risk, interest rate

risk, longevity risk and salary risk.

Investment risk The present value of the defined benefit plan liability is calculated using a

discount rate. If the return on plan asset is below this rate, it will create a

plan deficit.

Interest risk A decrease in the interest rate will increase the plan liability. However, this

will be partially offset by an increase in the return on the plan’s investments.

Longevity risk The present value of the defined benefit plan liability is calculated by

reference to the best estimate of the mortality of plan participants both

during and after their employment. An increase in the life expectancy of

the plan participants will increase the plan’s liability.

Salary risk The present value of the defined benefit plan liability is calculated by

reference to the future salaries of plan participants. As such, an increase in

the salary of plan participants will increase the plan’s liability.

Significant actuarial assumptions for the determination of the defined obligation are discount

rate, inflation/pension increase rate, expected salary increase and mortality. The sensitivity

analyses below have been determined based on reasonably possible changes of the respective

assumptions occurring at the end of the reporting period, while holding all other assumptions

constant.

Assumption Salaried plan Supplemental plan

Discount rate If the discount rate is 0.5 points

higher (lower), the defined benefit

obligation would decrease by CHF

388,276 (increase by CHF 437,396).

If the discount rate is 0.5 points

higher (lower), the defined benefit

obligation would decrease by CHF

19,836 (increase by CHF 21,495).

Inflation /

pension

increase rate

If the expected inflation/pension

increase rate is 0.5 points higher

(lower), the defined benefit

obligation would increase by CHF

376,230 (decrease by CHF 341,175).

If the expected inflation/pension

increase rate is 0.5 points higher

(lower), the defined benefit

obligation would increase by CHF

20,557 (decrease by CHF 19,187).

Salary increase

rate

If the expected salary growth rate is

0.5 points higher (lower), the defined

benefit obligation would increase by

CHF 42,557 (decrease by CHF

39,744).

N/A

Mortality If the life expectancy increases

(decreases) by one year for both

men and women, the defined

benefit obligation would increase by

CHF 221,223 (decrease by CHF

220,357).

If the life expectancy increases

(decreases) by one year for both

men and women, the defined

benefit obligation would increase

by CHF 38,590 (decrease by CHF

35,704).

SOFISA SA

- 26 -

13) INVENTORIES

Residential property under development 2021 2020

CHF CHF

Balance beginning of year 116,139,956 108,699,558

Add (deduct):

Development costs 35,999,233 25,219,496

Carrying costs (1,606,001) 436,748

Cost of sales (37,907,657) (10,494,903)

Net foreign currency exchange differences 4,641,965 (7,720,943)

Total 117,267,497 116,139,956

In accordance with IFRS the “land held for future development” is carried at the lower of cost

and estimated realisable value. The group engaged a third party valuation expert who

assessed the fair value of the “land held for future development” at CAD 1,085 million (CHF

783 million) as at December 31, 2021 (2020: CAD 1,089 million / CHF 756 million).

14) OTHER FINANCIAL ASSETS 2021 2020

CHF CHF

Current assets

Loan receivable - 3,135,976

The loan receivable was non-interest bearing. The amount was lent to a development partner

for an indefinite period, governed by a development agreement. It was secured by a

mortgage at 0% on certain residential lands of the borrower in West Vancouver. The loan was

repaid in the first quarter 2021.

15) OTHER ASSETS 2021 2020

CHF CHF

Current assets

Prepaid expenses 106,659 83,682

Prepaid real estate commissions 773,258 736,492

Total

879,917 820,174

Non-current assets

Lease assets 965,044 1,010,782

Total

965,044 1,010,782

SOFISA SA

- 27 -

16) PROPERTY, PLANT AND EQUIPMENT

Leasehold

improvements

Computer,

equipment

Fixtures,

fittings,

office

equipment Buildings

2021

Total

Cost

CHF

At January 1, 2021 139,082 478,392 191,038 1,937,773 2,746,285

Additions (Disposals) - 41,139 - 199,281 240,419

Net foreign currency

exchange differences 5,513 18,962 7,572 76,807 108,854

At December 31, 2021 144,595 538,493 198,610 2,213,861 3,095,558

Accumulated depreciation

At January 1, 2021 132,571 449,939 180,025 1,894,056 2,656,591

Depreciation charge for

the year 6,659 35,092 3,148 56,028 100,927

Net foreign currency

exchange differences 5,182 17,449 7,101 74,460 104,192

At December 31, 2021 144,411 502,480 190,275 2,024,543 2,861,709

Carrying amount

At January 1, 2021 6,511 28,453 11,013 43,717 89,694

At December 31, 2021 183 36,013 8,335 189,317 233,849

Leasehold

improvements

Computer,

equipment

Fixtures,

fittings,

office

equipment Buildings

2020

Total

Cost

CHF

At January 1, 2020 149,707 488,528 204,162 2,073,671 2,916,068

Additions (Disposals) - 24,535 1,365 11,269 37,170

Net foreign currency

exchange differences (10,625) (34670) (14,490) (147,167) (206,952)

At December 31, 2020 139,082 478,392 191,038 1,937,773 2,746,285

Accumulated depreciation

At January 1, 2020 135,531 442,140 189,810 1,926,612 2,694,093

Depreciation charge for

the year 6,718 39,528 3,718 105,106 155,070

Net foreign currency

exchange differences (9,679) (31,729) (13,504) (137,662) (192,572)

At December 31, 2020 132,571 449,939 180,025 1,894,056 2,656,591

Carrying amount

At January 1, 2020 14,176 46,388 14,351 147,059 221,974

At December 31, 2020 6,511 28,453 11,013 43,717 89,694

SOFISA SA

- 28 -

17) INVESTMENT IN OTHER COMPANIES

In 2021, three development sites in the USA acquired over the years 2016-2018 were sold. In

total, the net gain on sale was USD 5.8 million representing an average net return per annum

of 13.1%. Five new development sites were then acquired in the States of Georgia and Texas,

USA, at a cost of USD 6,862,003 (CHF 6,251,971).

In 2020, two development sites acquired over the years 2015-2017 were sold, with a net gain

on sale of USD 2.0 million representing an average net return per annum of 18.5%. A new

development site was acquired at a cost of USD 615,156 (CHF 543,736).

18) OTHER LIABILITIES 2021 2020

CHF CHF

Current liabilities

Accrued expenses 10,172,961 4,171,442

Deferred revenue

11,314,120 10,490,366

Lease liability 90,193 82,532

Total 21,577,274 14,744,340

Non-current liabilities

Other liabilities 72,130 69,380

Construction financing facility - 2,691,089

Lease liability 874,851 928,250

Total 946,981 3,688,719

19)

NTEREST BEARING LIABILITIES

2021 2020

CHF CHF

Bank overdraft

25,182,726 32,339,077

Short term part of the loans

22,609,876

14,803,700

Long term part of the loans

23,286,880

17,407,570

Total fixed-term loans

71,079,482

64,550,347

The Group has a CAD 60,000,000 credit line with a Swiss bank of which three fixed-term loans

of USD 6,000,000, CAD 15,000,000, and CHF 7,000,000 are drawn at December 31, 2021. The

loan in USD is payable on April 7, 2023, the loan in CHF is due on May 5, 2023 and the loan in

CAD is payable on December 28, 2023. This credit line is secured by the securities.

The fair value of these fixed-term loans is estimated to CHF 24,092,922 as at December 31,

2021 (2020: CHF 33,617,036).

SOFISA SA

- 29 -

The Group benefits from another CAD 75,000,000 (2020: CAD 75,000,000) credit facility with a

Canadian chartered bank, secured by an assignment of certain land holdings, from which

letters of credit totalling CAD 23,375,607 (2020: CAD 24,740,652) were issued. The bank

overdraft from this facility amounted to CAD 34,912,971 or CHF 25,182,726 as at December

31, 2021 (2020: CHF 32,339,077).

On April 20, 2020, the Company entered into a non-revolving credit facility with Canadian

chartered bank in the amount of CHF 33,540,450 (CAD46,500,000) for purposes of developing

the Courtenay, a multi-unit residential development. This agreement matures December 31,

2022, where all outstanding indebtedness must be repaid in full. Interest on the outstanding

balance is calculated at the bank prime rate plus 1.10 per annum. The loan is secured by the

Courtenay land and improvements and a joint and several corporate guarantee to a

maximum of CHF 11,068,349 (CAD 15,345,000). Subsequent to year end the credit facility was

repaid in full.

On October 7, 2021 the Group secured a non-revolving Mezzanine loan with a third party in

the amount of CAD 8,000,000 for the purposes of developing the Hawksley, a multi-unit

residential development. The loan is secured by the Hawksley land in Rodgers Creek Area 6.

Repayment of the loan and accrued interest is due upon the closing of the sale of each unit,

or the third party can demand repayment if the Group fails to complete the project. As at

December 31, 2021, CHF 94,528 of interest has been accrued on this loan.

20) SHARE CAPITAL 2021 2020

CHF CHF

3’960 fully paid ordinary shares 3,960,000 3,960,000

Number

Fully paid ordinary shares of shares capital

Balance at January 1, 2020 and 2021 3,960 3,960,000

Balance at December 31, 2020 and 2021 3,960 3,960,000

Fully paid ordinary shares, which have a par value of CHF 1,000, carry one vote per share and

carry a right to dividends.

Sofisa SA issued 3,000 preference shares of a par value of CHF 735 each. The holder of such

preference shares is entitled to the following:

 Cumulative floating preferential dividend declared annually based on the 10-year Swiss

Government Bond plus 3.75% p.a.

 If one year the preferential dividend cannot be declared, such dividend will be

recoverable by priority out of the profits realised the next years.

 Unpaid dividends will be increased by an amount equal to the above interest plus 1%.

Under IAS 32, as the holder of the preference shares is entitled to an annual preferential

dividend and can redeem the shares at certain dates, the preference shares do not meet

the definition of equity and should be presented as liabilities in the statement of financial

position. Consequently, the dividends related to this class of shares are considered as an

interest expense as a charge of the business year.

SOFISA SA

- 30 -

21) RESERVES 2021 2020

CHF CHF

General 1,560,000 1,560,000

Special 170,000,000 170,000,000

Balance at the year end 171,560,000 171,560,000

The special reserve was created after being approved by decision of the General Meeting

of Shareholders on May 12, 1993.

There were no movements in the reserves in 2021.

22) RETAINED EARNINGS 2021 2020

CHF CHF

Balance at beginning of year 277,880,203 268,893,970

Net profit for the year

108,519,674 15,685,118

Other comprehensive income 562,740 101,115

Payment of dividends (6,800,000) (6,800,000)

Balance at the end of year 380,162,617 277,880,203

On June 8, 2021, a dividend of CHF 2,000 per share was paid to holders of fully paid ordinary

shares.

In addition, dividends of CHF 71,250 (2020: CHF 71,100) have been paid on shares numbered

3.961 to 6,960 classified as liabilities.

Subsequent to the end of the year, but before issuance of these financial statements,

following extraordinary dividends were distributed:

On March 29, 2022, based on retained earnings as at December 31, 2020, a preferred and

extraordinary dividend of CHF 13,896.47 per share was paid to the holders of shares numbered

2,345 to 2,394, following the approval by shareholders at the Extraordinary General Meeting

on March 22, 2022. This preferred and extraordinary dividend amounts of CHF 694,823.50.

On March 29, 2022, based on retained earnings as at December 31, 2020, an extraordinary

dividend of CHF 2,000 per share was paid to the holders of shares numbered 1 to 2,394 and

2,905 to 3,960, following the approval by shareholders at the Extraordinary General Meeting

on March 22, 2022. This extraordinary dividend amounts of CHF 6,900,000.

In respect of the current year, the Board of the Directors proposes that no dividend be paid

on June 28, 2022 to eligible holders of shares numbered 1 to 2,394 and 2,905 to 3,960 and a

total of CHF 78,000 be paid to holders of shares numbered 3,961 to 6,960. This decision is

subject to approval by shareholders at the Annual General Meeting.

SOFISA SA

- 31 -

23) CUMULATIVE TRANSLATION DIFFERENCES 2021 2020

CHF CHF

Balance at beginning of year (42,472,645)

(35,428,704)

Arising on translation of foreign operations 13,252,248 (7,043,941)

Balance at the end of year (29,220,397) (42,472,645)

Exchange differences relating to the translation from the functional currencies of the Group’s

foreign subsidiaries into CHF are recognised in the cumulative translation differences.

24) SALES REVENUE 2021 2020

CHF CHF

From a land sale 94,644,178 -

From single-family detached homes build on

speculation and individual residential units in multi-family

buildings

13,408,287

13,548,163

From custom built single-family detached homes 636,601 123,698

Total 108,689,066

13,671,861

25) INVESTMENT INCOME AND OTHER FINANCIAL INCOME 2021 2020

CHF CHF

Net income (loss) from securities

Dividend and interest income 6,493,638 7,448,763

Realised gain on securities 2,559,121 3,967,149

Realised loss on securities (1,294,103) (5,309,508)

Fees on portfolio management (302,605) (249,230)

Increase in value of securities 71,353,898 15,887,534

Total investment income 78,809,949 21,744,708

Other financial income

Interest received 6,060 23,423

Total other financial income 6,060 23,423

Total investment income and other

financial income 78,816,009 21,768,131

SOFISA SA

- 32 -

Investment revenue earned on financial assets, analysed by category of asset, is as follows:

Fair value through profit or loss (FVTPL) 78,809,949 21,744,708

Loans and receivables (including cash) 6,060 23,423

Total investment income and other

financial income 78,816,009 21,768,131

26) FINANCIAL EXPENSES 2021 2020

CHF CHF

Bank charges (352,730) (179,382)

Interest on long term debt (1,487,063) (1,314,811)

Dividends on preferential registered shares (74,625) (71,175)

Exchange difference (10,170,085) (296,681)

Total (12,084,503) (1,862,049)

27) OTHER RELATED PARTY TRANSACTIONS

During the year the Group paid short-term benefits totalling CAD 225,583 CHF 162,713 (2020:

CHF 217,000) recorded in other operating costs to key subsidiary operating management. Key

subsidiary operating management is defined as directors and officers.

28) COMMITMENTS AND CONTINGENT LIABILITIES

On January 1, 2017, the Group entered into a development agreement with a third party land

owner whereby the parties agreed to jointly develop, construct and sell to third party

purchasers, homes to be constructed on the third party land owner’s property. The Group will

be responsible to fund all construction costs, currently estimated to be CHF 1,766,216. As part

of the agreement the Group has agreed to provide funding to the third party land owner of

CHF 4,327,800 all of which has been repaid as of December 31, 2021 (2020: CHF 1,026,824).

At December 31, 2021, the Group has outstanding letters of credit aggregating approximately

CHF 16,860,825 (2020: CHF 17,165,064) in connection with real estate development projects.

In fiscal years 2016 and 2017, the Group received Notices of Reassessment from the Canada

Revenue Agency (“CRA”) totaling CAD 1,860,189 (CHF 1,341,754) in additional income taxes

and interest and transfer pricing penalties totaling CAD 718,929 (CHF 518,563) in respect of the

Group’s December 31, 2012 and 2013 taxation years.

While management and the Group’s legal counsel believe the reassessments are without merit

and the Group is more likely than not to be successful in its defense, under the reassessments,

CRA is asserting that the interest rate on certain debt with an affiliate should be substantially

SOFISA SA

- 33 -

lower, resulting in a reduction of tax deductible interest expense and a corresponding increase

in taxable income.

Subsequent to filing Notices of Objection for both reassessments, the Group filed a Notice of

Appeal to the Tax Court of Canada appealing to the 2012 and 2013 reassessments on July 4,

2019. On November 29, 2019, the Attorney General of Canada on behalf of the CRA filed a

Reply to the Notice of Appeal. To date, the Tax Court of Canada has not released any decision

on the Notice of Appeal.

In fiscal 2020, the Group was notified by CRA that the Company’s fiscal 2017 through 2019

taxation years would once again be subject to an audit by CRA. Other than requesting certain

information from the Group, CRA has not communicated the status of its audit or whether any

additional amounts will be assessed.

As management believes the Group will ultimately be successful in its defense of the 2012 and

2013 reassessments and will not be reassessed for any additional taxes resulting from the fiscal

2017 through 2019 audits, no amounts have been accrued in the December 31, 2021

consolidated financial statements for the impact of the reassessments nor any similar

adjustments that would likely be proposed for open taxation years should CRA ultimately be

successful.

While management and legal counsel believe the reassessments are without merit, during the

year the Group offered to settle the matter with CRA on a without prejudice basis for

approximately CAD 930,000 in order to avoid future litigation costs and not as an admission of

guilt. CRA has not accepted or rejected the settlement offer and this amount has not been

accrued in the Group’s December 31, 2021 consolidated financial statements.

Should the CRA be successful in its claim and apply their position to open taxation years

beyond 2012 and 2013, the Group has estimated the potential income tax exposure for the

remaining open taxation years to be approximately CAD 9.8 million excluding any interest or

penalties.

29) FINANCIAL RISK MANAGEMENT

The Sofisa Group has specific guidelines on managing financial assets and liabilities. In order

to optimise financial resources, the management of liquidity not required for operational

purposes is largely centralised as long-term Group financing.

Capital risk management: The Group manages its capital to ensure that it will be able to

continue as a going concern while maximising the return to shareholders through the

optimisation of the debt and equity balance. The Group overall strategy remains unchanged

from previous year.

The capital structure of the Group consists of debt, which includes the preference shares,

cash and cash equivalents and securities and equity attributable to the shareholders,

comprising issued capital, reserves and retained earnings as disclosed in Notes 20, 21 and 22.

Significant accounting policies: Details of the significant accounting policies and methods

adopted, including the criteria for recognition, the basis of measurement and the basis on

which income and expenses are recognised, in respect of each class of financial asset,

financial liability and equity instrument are disclosed above.

SOFISA SA

- 34 -

Categories of financial instruments:

2021

Loans At fair value

Financial Total Fair

and through profit

liabilities carrying value

receivables

or loss at

amortised

cost

amount

CHF CHF CHF CHF CHF

Financial assets

Cash and cash equivalents 90,625,884 - - 90,625,884 90,625,884

Restricted cash 1,603,626 - - 1,603,626 1,603,626

Securities - 438,716,764 - 438,716,764 438,716,764

Trade and other receivables 1,233,893 - - 1,233,893 1,233,893

Total financial assets 93,463,403 438,716,764 - 532,180,167 532,180,167

Financial liabilities

Trade and other payables - - 5,810,966 5,810,966 5,810,966

Short term part of interest-

bearing debt - - 47,792,602

47,792,602

48,495,141

Long term part of interest-

bearing debt - - 23,286,880

23,286,880

24,092,922

Other liabilities - - 21,577,274

21,577,274 21,577,274

Preference shares - - 2,244,000

2,244,000 2,244,000

Total financial liabilities - - 100,711,722

100,711,722 102,220,303

2020

Loans At fair value Financial Total Fair

and through profit

liabilities carrying value

receivables

or loss

amortised

cost

amount

CHF CHF CHF CHF CHF

Financial assets

Cash and cash equivalents

18,661,319 - - 18,661,319 18,661,319

Restricted cash 431,342 - - 431,342 431,342

Securities - 356,179,438 - 356,179,438 356,179,438

Trade and other receivable

2,791,025 - - 2,791,025 2,791,025

Other financial asset 3,135,976 - - 3,135,976 3,135,976

Total financial assets 25,019,662 356,179,438 - 381,199,100 389,199,100

SOFISA SA

- 35 -

Financial liabilities

Trade and other payables - - 1,110,906 1,110,906 1,110,906

Short term part of interest-

bearing debt - - 47,142,777

47,142,777

47,296,234

Long term part of interest-

bearing debt - - 17,407,570

17,407,570

18,659,879

Other liabilities - - 14,744,340

14,744,340 14,744,340

Preference shares - - 2,240,625

2,240,625 2,240,625

Total financial liabilities - - 82,646,218 82,646,218 84,051,984

Financial risk management objectives: The Group finance management function provides

services to the business, co-ordinates access to domestic and international financial markets,

monitors and manages the financial risks relating to the operations of the Group through

internal risk reports which analyse exposures by degree and magnitude of risks. These risks

include market risk, credit risk, liquidity risk and other market risk.

The Group delegates other investment decisions to external Portfolio Managers. The mandates

are entrusted in accordance with the Swiss Law, within a clearly defined framework and

investments guidelines. In selecting individual investments, Portfolio Managers must adhere to

the principle of risk diversification and comply with the percentage limits, the investment

universe or the composition of the agreed benchmark MSCI All Country World (net dividend

invested) in CHF.

Market risk management: Market risks are potential losses that the Group could incur through

changes in the variable conditions. The variables may be the equity price risk, exchange rates

and interest rates. Changes in the fair values of financial assets, financial liabilities caused by

such variable factors may affect the Group’s financial position and results.

Sensitivity analysis with respect to price risk

The Group is exposed to price risks arising from portfolio investments. The sensitivity analyses

below have been determined based on the exposure to price risks at the reporting date.

If prices had been 10% higher/lower, net profit for the year ended December 31, 2021 would

have been affected as the portfolio investment are classified as at fair value through profit and

loss. The profit would increase/decrease by CHF 43.94 million (CHF 35.65 million in 2020).

Exchange rate risk management: The Group is exposed to exchange rate risk, mainly in relation

to the USD, CAD, EUR, GBP, JPY and CNY that affect the Group’s assets and earnings in Swiss

francs. The foreign exchange risks are not hedged.

Considering the weight of the different foreign currencies in which our assets are invested, the

impact of the exchange rate effect on our investment values may be estimated to about

1.30 % in 2021 (-5.88 % in 2020).

SOFISA SA

- 36 -

Sensitivity analysis with respect to foreign currencies

The sensitivity analysis covers only monetary items in the statements of financial position that,

relative to the functional currency of the Group, are settled in foreign currencies. The sensitivity

analysis excludes net investment in Group companies. The largest monetary items in the

statements of financial position of the Group companies relate to the currency pairs CHF/USD,

CHF/EUR, CHF/JPY, CHF/GBP and CHF /CNY.

If the CHF had been 10% stronger (weaker) against the USD at December 31, 2021, the Group’s

net income would have been CHF 26.59 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 20.11

million lower (higher).

If the CHF had been 10% stronger (weaker) against the EUR at December 31, 2021, the Group’s

net income would have been CHF 3.93 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 3.29

million lower (higher).

If the CHF had been 10% stronger (weaker) against the JPY at December 31, 2021, the Group’s

net income would have been CHF 2.44 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 2.41

million lower (higher).

If the CHF had been 10% stronger (weaker) against the GBP at December 31, 2021, the Group’s

net income would have been CHF 1.60 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 1.36

million lower (higher).

If the CHF had been 10% stronger (weaker) against the CNY at December 31, 2021, the Group’s

net income would have been CHF 1.60 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 1.94

million lower (higher).

Credit risk management: Credit risks arise when a customer or a third party fails to meet its

contractual obligations and causes the Group a financial loss. In the real estate development,

the Group is exposed to credit risk on its account receivables. The exposure to this risk is

generally concentrated to a limited number of debtors, and is also concentrated

geographically in British Columbia, Canada and is subject to the related economic conditions

in that region. Credit risk in this sector arises generally from sales of residential property and is

mitigated by the underlying lien or charge on the property. The Group does not have any

significant credit risk exposure. Maximum exposure to credit risk is limited to the carrying value

of account receivables and securities.

Liquidity risk management: The aim of liquidity risk management is to provide sufficient cash to

meet the Group’s financial liabilities on time while maintaining the flexibility to take advantage

of market opportunities and optimum investment conditions. The Group’s credit standing

enables it to borrow cash for financing at an advantageous rate.

At December 31, 2021, the Group had the following undrawn committed borrowing facilities

available:

2021 2020

CHF CHF

Expiring less than 1 year 12,053,949 2,530,858

SOFISA SA

- 37 -

The following tables detail the Group’s remaining contractual maturity for its non-derivative

financial liabilities. The tables have been drawn up based on the undiscounted cash flows of

financial liabilities based on the earliest date on which the Group can be required to pay. The

table includes both interest and principal cash flows.

2021

Weighted

average Less More

effective than than

interest rate 1 year 1 - 5 years 5 years Total

% CHF CHF CHF CHF

Non-interest bearing

Trade and other

payables - 5,810,966 - - 5,810,966

Other liabilities - 10,091,609 72,130 - 10,163,739

Preference shares - - 2,244,000 - 2,244,000

Interest bearing

Bank overdraft 3.45% 25,191,414 25,191,414

Bank short term debt 3.55% 22,676,956 - - 22,676,956

Bank long term debt 1.40% 76,532 5,486,939 - 5,563,471

Bank long term debt 3.60% 389,502 11,209,002 - 11,598,504

Bank long term debt 1% 70,000 7,023,973 - 7,093,973

64,306,979 26,036,043 - 90,343,022

2020

Weighted

average Less More

effective than than

interest rate 1 year 1 - 5 years 5 years Total

% CHF CHF CHF CHF

Non-interest bearing

Trade and other

payables - 1,110,906 - - 1,110,906

Other liabilities - 4,081,239 2,760,469 - 6,841,708

Preference shares - - 2,240,625 - 2,240,625

Interest bearing

Bank overdraft 3.45% 32,355,085 32,355,085

Bank short term debt 1.55% 5,385,603 - - 5,385,603

Bank short term debt 1% 9,595,000 9,595,000

Bank long term debt 3.60% 374,562 11,156,304 - 11,530,956

Bank long term debt 1% 70,000 7,140,000 - 7,210,000

52,972,485 23,297,398 - 76,269,883

SOFISA SA

- 38 -

Reconciliation of liabilities arising from financing activities

The table below details changes in the Group liabilities arising from financing activities,

including both cash and non-cash changes. Liabilities arising from financing activities are

those for which cash flows were, or future cash flows will be, classified in the Group

consolidated financial statement of cash flows as cash flows from financing activities.

Non-cash changes

Foreign

Other

January 1 Cash flows exchange Transfer changes

December



2021 movements

2021



Short term part of

interest bearing

liabilities

47,142,777

(17,938,168)

1,445,017

17,142,976

47,792,602

Long term part of

interest bearing

liabilities

17,407,570

19,812,122

412,410

(14,345,222)

23,286,880

Other liabilities

2,760,469

109,416

(2,797,755)

72,130

Preference

2,240,625

(71,250)

74,625

2,244,000

69,551,441

1,802,703

1,966,843

74,625

73,394,612

     

Non-cash changes

Foreign

Other

January 1 Cash flows exchange Transfer changes

December



2020 movements

2020



Short term part of

interest bearing

liabilities

12,289,855

33,319,466

(966,543)

2,500,000

47,142,777

Long term part of

interest bearing

liabilities

20,702,000

(794,430)

(2,500,000)

17,407,570

Other liabilities

74,680

2,691,089

(5,300)

2,760,469

Preference

2,240,550

(71,100)

--

71,175

2,240,625

35,307,085

35,939,455

(1,766,273)

71,175

69,551,441

     

Other changes include the transactions directly recognised in the statement of income.

SOFISA SA

- 39 -

Fair value of financial instruments:

All portfolio investments are concentrated in the global equity mandate tracking MSCI World

AC index. These securities investments are the only financial instruments measured at fair

value subsequent to their initial recognition.

Securities investments (2021: CHF 438,716,764 2020: CHF 356,179,438) qualify as Level 1 fair

value measurement category. Level 1 fair value measurements are those derived from the

quoted price in active markets.

The Group’s policy for determining when transfers between levels of the fair value hierarchy

are deemed to have occurred are based on changes in the level of inputs to valuation

techniques used to measure fair value. There was no transfer between levels of fair value

hierarchy in the current year.

30) RISK ASSESSMENT

The Board of Directors has performed a risk assessment on December 20, 2021.

31) DISCLOSURE OF BOARD COMPENSATION UNDER SECTION 663b bis OF SWISS CODE OF

OBLIGATIONS

2021 2020

Remuneration (net) (258,704) (256,504)

Contribution for old age and survivor

insurance and unemployment insurance

(27,263)

(27,256)

Total indemnity (285,967) (283,670)

32) DISCLOSURE OF BOARD SHAREHOLDINGS UNDER SECTION 663c OF SWISS CODE OF

OBLIGATIONS

The ownership interests in SOFISA SA held by members of the Board of Directors are disclosed

below.

Number of shares Voting rights

2021 2020 20212020

The Most Hon. Constantine Edmund

Walter Phipps Marquis of Normanby 551 551 7.92% 7.92%

Member of the Board of Directors

SOFISA SA

- 40 -

33) APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Board of Directors and authorised for issue on

April 8, 2022.

34) ESEF REPORTING

The official version of the Annual Report of Sofisa SA, which includes the consolidated

financial statements is the European Single Electronic Format (ESEF) version available with the

Officially Appointed Mechanism (OAM) tool.

35) SUBSEQUENT EVENTS

Since the end of the year, there have been no events which would significantly affect the

Group result as reported in the consolidated financial statements for the year 2021. We have

assessed the impact of the conflict between Russia and Ukraine which escalated end of

February 2022 by an invasion of Russian military forces into Ukraine. The Company has only a

minor and insignificant investment in Russia through its equity investment fund Emerging

Markets Global.