SOFISA SA,

Fribourg

Consolidated Financial Statements for the

year ended December 31, 2022

and Report of the Statutory Auditor

Deloitte SA

Rue Saint

-Martin 7

1003 Lausanne

Switzerland

Tel: +41 (0)58 279 92 00

Fax: +41

(0)58 279 93 00

www.deloitte.c

Report of the Statutory Auditor

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 (the Company) and its

subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31

December 2022, the consolidated statement of comprehensive income, the consolidated statement

of changes in equity and the 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 31 December 2022 and of 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 (ISA) and

Swiss Standards on Auditing (SA-CH). 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, together with the requirements of the Swiss audit profession, as well as

those of the International Ethics Standards Board for Accountants’ International Code of Ethics for

Professional Accountants (including International Independence Standards) (IESBA Code), and we

have fulfilled our other ethical responsibilities in accordance with these requirements.

We 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.

Deloitte SA

Report of the statutory auditor

for the year ended

December 31, 2022

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

We performed a process walkthrough to gain an

in multifamily buildings

understanding of the controls in place related to

he group has various streams of revenue

the real estate revenue recognition process.

including revenue from sales of single-family

We obtained the listing of residential property

detached homes and individual residential units in

sales recorded for the financial year 2022. We

multi-f

amily buildings accounted for as a sale of

selected a sample of sales transactions for detail

goods under IFRS 15 (Revenue from Contracts

testing and used amounts. Furthermore, we

with Customers). There is a risk that these

tested to build an expectation for the remainder

revenues recorded do not meet all the revenue

of the population and assessed it against the

recognition criteria under IFRS 15 due to the

actual revenue recorded. The detailed testing

terms and conditions of the sale contract that

consisted of the following steps:

require management judgement to assess

whether all the criteria have been fulfilled. These

- We agreed details of the sale to the sale

revenue streams amount to CHF 7.95 million for

contract and reviewed the agreement for terms

the year ended December 31, 2022

and conditions that could affect the group's

(corresponding to CHF 13.41 million for the year

ability to recognise revenue.

ended December 31, 2021) for revenue from

- We agreed the revenue amount and the date

single-f

amily detached homes build on

that when the revenue was recorded to the

speculation and individual residential units in

closing statement prepared by the lawyer

multi-family buildings.

indicating the release of the sales proceeds to the

he revenue recognition methods according to

group and the transfer of the title to the buyer.

IFRS 15 require management judgments and are

- We agreed proceeds (deposit and final payment)

therefore assessed as a key audit matter. Refer to

to the evidence of receipt.

the accounting policy in note 4 and additionally

- Late cut-off was also tested through a review of

the revenue details in note 23.

the sales recorded subsequent to year end.

- We assessed the adequacy and completeness of

the revenue related disclosures according to IFRS

15.

Based on the procedures performed above, we

obtained sufficient audit evidence to address the

risk of incorrect application of IFRS 15.

Other Information

The Board of Directors is responsible for the other information. The other information comprises the

information included in the annual report, but does not include the consolidated financial statements

and our auditor’s reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we

do not express any form of assurance conclusion thereon.

Deloitte SA

Report of the statutory auditor

for the year ended

December 31, 2022

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

other information 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.

Board of Directors’ Responsibilities for the Consolidated Financial Statements

The Board of Directors is responsible for the preparation of the consolidated financial statements,

which 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 going 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.

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, ISA and SA-CH 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.

A further description of our responsibilities for the audit of the consolidated financial statements is

located on EXPERTsuisse’s website at: https://www.expertsuisse.ch/en/audit-report. This description

forms an integral part of our report.

Report on Other Legal and Regulatory Requirements

In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control

system exists, which has been designed for the preparation of the consolidated financial statements

according to the instructions of the Board of Directors.

We confirm the compliance of the consolidated financial statements of the Group as at December

31, 2022 with the relevant requirements set out in the ESEF Regulation that are applicable to

financial statements.

For the Group it relates to:

- Consolidated 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.

Deloitte SA

Report of the statutory auditor

for the year ended

December 31, 2022

In our opinion, the consolidated financial statements of the Group as at December 31, 2022,

identified as sofisa-20

-12-31-e

n.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.

eloitte SA

nnik Jaton Hüni Julien Christophe Bosi

Licensed Audit Expert Licensed Audit Expert

Auditor in Charge

Lausanne, April 18, 2023

AJH/JBO/rex

Enclosures

- Consolidated financial statements (consolidated statement of financial position, consolidated statement of

comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and

notes)

SOFISA SA

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in CHF	Notes	31/12/2022	31/12/2021
ASSETS
Current assets
Cash and cash equivalents	7	8,713,463	90,625,884
Restricted cash	8	201,010	1,603,626
Securities	9/28	364,946,336	438,716,764
Trade and other receivables	10	10,565,200	1,236, 019
Current tax assets	11	4,430,452	1,093, 206
Retirement benefit asset	12	200,909	0
Inventories	13	143,890,363	117,267,497
Other current assets	14	1,813,599	879,917
Total current assets		534,7 61,332	6 51,422 ,913
Non-current assets
Property, plant and equipment, net	15	603,820	233,849
Investment in other companies	16	8,968,780	7,119, 936
Other non-current assets	14	798,779	965,044
Deferred tax assets	11	3,975,540	4,226, 719
Total non-current assets		14,34 6,919	12 ,545,54 8
Total assets		549,1 08,251	6 63,968 ,461

- 1 -

SOFISA SA

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in CHF	Notes	31/12/2022	31/12/2021
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables		5,719,532	5,810,966
Current tax liabilities	11	4, 281,387	9,263,712
Short term part of interest-bearing liabilities	18	54, 178,472	47,792,602
Other current liabilities	17	22, 734,625	21,577,274
Total current liabilities		86,91 4,016	84,44 4,554
Non-current liabilities
Retirement benefit obligation	12	0	446,243
Deferred tax liabilities	11	15,572, 290	26,137,583
Preferential shares	19	2,260,800	2,244,000
Long term part of interest-bearing liabilities	18	9,339,960	23,286,880
Other non-current liabilities	17	783,590	946,981
Total non-current liabilities		27,95 6,640	53,06 1,687
Total liabilities		114,8 70,656	137,5 06,241
Shareholders' equity
Share capital	19	3,960,000	3,960,000
Reserves	20	171,560, 000	171,560,000
Retained earnings	21	287,865, 361	380,162,617
Cumulative translation differences	22	(29, 147,766)	(29,220,397)
Total shareholders' equity		434,2 37,595	526,4 62,220
Total liabilities and shareholders' equity		549,1 08,251	663,9 68,461

- 2 -

SOFISA SA

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

for the year ended

in CHF		Notes	31/12/2022	31/12/2021
Continuing operations
Sales revenue		23	12,757,930	108,689,066
Investment income		24	0	78,809,949
Other income			109,589	930,835
Total operating income			12,86 7,519	18 8,429,8 50
Cost of sales			(9, 143,351)	(38,252,248)
Other operating costs			(9,437,622)	(7,773, 821)
Investment loss		24	(74,620,343)	0
Total operating costs			(93,201 ,316)	(46 ,026,06 9)
EBIT	(Earnings / (Loss) before interest and tax)		(80,333 ,797)	142,4 03,781
Other financial income		24	366, 769	6,060
Financial expenses		25	(7, 315,521)	(12,084,503)
EBT	(Earnings / (Loss) before tax)		(87,282 ,549)	130,3 25,338
Tax credit / (expense)		11	(1, 063,347)	(9,921,367)
Deferred tax credit / (expense)		11	10,696,667	(11,884, 297)
NET (LOSS) / PROFIT FOR THE YEAR			(77,649 ,229)	108,5 19,674
Other comprehensive income / (loss)
Items that may be subsequently reclassified to profit or loss
Foreign currency translation		22	72,631	13,252, 248
Items that may not be subsequently reclassified to profit or loss
Remeasurement losses/(gains) of post employ- ment benefit obligations		12	686, 178	774,893
Deferred tax (expense) / credit		11	(185,268)	(209,221)
Exchange translation differences of foreign
operations			697	(2,932)
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR			(77 ,074,99 1)	122,334,6 62

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SOFISA SA

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

			Cumulative
	Share	Retained	translation	Reserves	Total
in thousands of CHF	Capital	earnings	differences		Equity
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
Total comprehensive income / (loss)
for the year	-	109,0 83	13,25 2	-	122,3 35
Dividends	-	(6, 800)	-	-	(6, 800)
	-
Balance at 31 December 2021	3,960	380,16 3	(29,221)	171,5 60	526,4 62
Balance at 1 January 2022	3,960	380,163	(29, 221)	171,560	526,462
Net loss	-	(77, 649)	-	-	(77, 649)
Other comprehensive income / (loss)	-	501	73	-	574
Total comprehensive income / (loss)
for the year	-	(77,148)	73	-	(77,075)
Dividends	-	(15,150)	-	-	(15, 150)
				-	-
	-			-	-
Balance at 31 December 2022	3,960	287,86 5	(29,148)	171,5 60	434,2 37

- 4 -

SOFISA SA

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended

n thousands of CHF		Notes	31/12/2022	31/12/2021
Cash flow generated by (used in) operating activities
Net profit			(77, 649)	108,520
Adjustments for :
Non cash items in net profit and other adjustments
Depreciation and amortization			73	101
Tax (credit) / expense recognised in profit or loss		11	(9, 633)	21,806
Unrealised (gain) / loss on securities		24	80,988	(71, 354)
Other financial income		24	(367)	(6)
Interest expense recognised in profit or loss			2,002	1,669
Net (increase) / decrease in operating assets
Securities		9/28	(7, 217)	(11, 183)
Trade and other receivables		10	(7,927)	383
Inventories		13	(32, 866)	3,476
Other financial assets			0	3,136
Other assets		14	(968)	(14)
Net increase / (decrease) in operating liabilities
Trade and other payables			(91)	4, 700
Accrued expenses and deferred income		17	1, 157	6,833
Other liabilities		22	(446)	(673)
Income taxes received / (paid)		11	(9,000)	(3,007)
Net cash flow generated by / (used in) operating activities			(61,946)	64, 385
Cash flow generated by (used in)	investing activities
(Purchase) of property, plant and equipment, net		15	(443)	(245)
(Investments in) / proceeds from other companies		16	(1,849)	3,285
Interest received		24	367	6
Net cash flow generated by / (used in) investing activities			(1, 926)	3,045

- 5 -

SOFISA SA

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

		for the year ended
in thousands of CHF		31/12/2022	31/12/2021
Cash flow generated by (used in) financing activities
(Repayment) of short term borrowings	18	(13, 863)	(632)
(Repayment) of long term borrowings	18	(163)	(2,742)
Proceeds from long term borrowings	18	9, 340	5,467
Interest paid on preference shares		(78)	(72)
Borrowing costs	25	(1,907)	(1, 594)
Dividends paid		(15, 150)	(6, 800)
Net cash flow (used in)/generated by financing activities		(21, 822)	(6, 373)
Effects of exchange rate differences		3,781	10,907
Net (decrease)/increase in cash and cash equivalents		(81, 913)	71,964
Cash and cash equivalents at beginning of the year		90,626	18,661
Cash and cash equivalents at the end of the year		8,713	90,626

- 6 -

SOFISA SA

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 2021 consolidated financial

statements, except for the Group’s adoption of new IFRSs effective January 1, 2022.

In the current financial year several new standards and amendments were adopted effective

January 1, 2022 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, 2021.

- 7 -

SOFISA SA

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

Standards and Interpretations were issued and effective in 2022:

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 to IFRS Amendment to IFRS 1 First time adoption of International

Standards 2018 2020 Financial Reporting Standards, IFRS 9 Financial Instru-

ments, IFRS 16 Leases and IAS 41 Agriculture

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 IAS 1 Classification of Liabilities as Current or Non-current

Amendments to IAS 1 Disclosure of Accounting Policies

IFRS 17 Initial application of IFRS 17 and IFRS 9 – comparative

information

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 Non-current Liabilities with Covenants

Amendments to IFRS 16 Lease liability in a Sale and Leaseback

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 amended 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.

- 8 -

SOFISA SA

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.

SIGNIFICANT ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS: 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

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

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

judgments to determine when the revenue recognition criteria are fulfilled in accordance

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

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.

- 9 -

SOFISA SA

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

2022

2021

2022

2021

1 USD

0.9252

0.9111

0.9550

0.9143

1 EUR

0.9875

1.0362

1.0048

1.0810

1 CAD

0.6829

0.7213

0.7338

0.7293

1 GBP

1.1129

1.2341

1.1791

1.2575

1 AUD

0.6275

0.6624

0.6627

0.6865

1 NZD

0.5852

0.6238

0.6062

0.6465

100 JPY

0.7012

0.7912

0.7295

0.8326

100 SEK

8.8797

10.0636

9.4593

10.6553

100 HKD

11.8543

11.6868

12.1951

11.7624

100 NOK

9.3922

10.3324

9.9530

10.6367

100 SGD

68.9849

67.5852

69.2342

68.0303

100 DKK

13.2785

13.9312

13.5064

14.5356

100 ILS

26.2215

29.2747

28.4075

28.3004

* 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. Profit and loss impacts are immaterial. 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 interest-bearing liabilities.

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

- 10 -

SOFISA SA

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, Financial instruments, 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.

IFRS 9 provides guidance on how to determine whether a business model is to manage assets

to collect contractual cash flows or to both collect contractual cash flows and to sell financial

assets. Other business models are all the ones that do not meet one of those two qualifying

criteria. If the portfolio manager actively buys and sells financial instruments to generate short-

term profits, the financial instruments in the portfolio are considered, by default, as held as

FVTPL.

The Group holds a marketable securities portfolio which is measured at FVTPL. 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.

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

held for sale. 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 recognised as part of the cost of the qualifying assets.

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

- 11 -

SOFISA SA

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.

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.

- 12 -

SOFISA SA

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.

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.

- 13 -

SOFISA SA

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

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 previous 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. 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 by 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.

- 14 -

SOFISA SA

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”.

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

2022

Property

Investment

Consolidated

development

Other

activity

CHF

Investment loss

(74,620,343)

Revenues from external

customers

12,757,930

Earnings /(Loss) before

interest and tax

(2,509,847)

(1,866,164)

(75,957,786)

(80,333,797)

Net financing costs

(6,948,752)

Income tax

9,633,320

Net profit (loss)

(77,649,229)

Reportable segment assets

175,125,484

2,642,679

371,340,088

549,108,251

Reportable segment

liabilities

67,711,277

2,423,352

44,736,027

114,870,656

- 15 -

SOFISA SA

Residential

2021

Property

Investment

Consolidated

development

Other

activity

CHF

Investment income

78,809,949

Revenues from external

customers

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

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

Switzerland (country of domicile).

2022

Consolidated

Canada

USA

Switzerland

CHF

Investment loss

- (74,620,343) (74,620,343)

Revenues from

external customers

11,704,737

1,053,193 - 12,757,930

Earnings / (Loss)

before interest and

tax

(5,289,709)

913,698 (75,957,786) (80,333,797)

Reportable

segment assets

166,985,532

10,782,631

371,340,088

549,108,251

Reportable

segment liabilities

69,895,006

239,623 44,736,027

114,870,656

2021

Consolidated

CHF

Canada

USA

Switzerland

Investment income

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

- 16 -

SOFISA SA

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, Canada development

British Pacific Properties Ltd 100 100 Residential real estate

Vancouver, Canada development

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

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

British Pacific Properties Parking Corp 100 100 Residential real estate

Vancouver, Canada development

- 17 -

SOFISA SA

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

CASH AND CASH EQUIVALENTS

2022

2021

CHF

Cash at banks and in hand

8,677,913

90,586,346

Short-term deposits

35,550

39,538

Total

8,713,463

90,625,884

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.

The decrease in cash is due to the cash used in operating activities, the repayment of short

borrowing and the dividend payment.

8) RESTRICTED CASH

As at December 31, 2022, the Group’s CHF 201,010 restricted cash balance (2021 – CHF

1,603,626) was related to holdbacks paid by customers for homes under construction.

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

SECURITIES

2022

2021

CHF

Financial assets carried at fair value

through profit and loss

Non derivative financial assets (FVTPL)

364,946,336

438,716,764

Total

364,946,336

438,716,764

Securities are pledged as collateral bank credit facility (see note 18).

- 18 -

SOFISA SA

10)

TRADE AND OTHER RECEIVABLES

2022

2021

CHF

Trade receivables

137,669

169,883

Amounts due from customers under construction

contracts in progress

3,972,361

489,116

Amounts due from customers under completed

contracts

5,969,415

159,801

Harmonized Sales Tax (HST)

469,449

398,582

Other receivables

16,306

18,637

Total

10,565,200

1,236,019

No provision for doubtful trade accounts receivable was deemed necessary.

11)

CURRENT TAX ASSETS

CURRENT TAX ASSETS AND LIABILITIES

Current tax assets

2022

2021

CHF

VAT receivable

12,306

Withholding tax receivable

226,745

184,338

Tax refund receivable

4,203,707

896,562

Total

4,430,452

1,093,206

Current tax liabilities

2022

2021

CHF

Current tax payable and other taxes

782,623

8,879,577

Previous year tax payable

854,581

384,135

Withholding tax payable

2,644,183

Total

4,281,387

9,263,712

- 19 -

SOFISA SA

2022

Opening

Charged to

Charged

Exchange

Closing

DEFERRED TAX ASSETS/(LIABILITIES)

balance

income

to OCI

differences

balance

CHF CHF

CHF

Temporary differences

Securities

(23,758,226) 10,627,754

- -

(13,130,472)

Furniture and equipment

413,459 (25,734)

- (20,226)

367,498

Accruals and deferred income

2,392,127 538,216 -

(164,683)

2,765,661

Unrealised

exchange gain

(2,379,357) (62,461)

- -

(2,441,818)

Retirement benefit

obligations

120,485 18,214

(185,268) (7,678)

(54,246)

Losses carry forward

402,057

354,871

(46,020)

710,908

Warranties provision

19,475 -

- (1,037)

18,438

Temporary differences

(22,789,980)

11,450,860

(185,268)

(239,643)

(11,764,032)

Tax losses

879,116 (754,193)

- 42,359

167,282

Income tax benefit / (expense)

recognised in profit or loss

(21,910,864)

10,696,667

(185,268)

(197,284)

(11,596,750)

2021

Opening

Charged to

Charged

Exchange

Closing

DEFERRED TAX ASSETS / (LIABILITIES)

balance

income

to OCI

differences

balance

CHF CHF

CHF

Temporary differences

Securities

(13,794,501) (9,963,725)

- -

(23,758,226)

Furniture and equipment 411,630

(14,648)

- 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)

- 20 -

SOFISA SA

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

2022

2021

CHF

Deferred tax assets

3,975,540

4,226,719

Deferred tax liabilities

(15,572,290)

(26,137,583)

Net balance

(11,596,750)

(21,910,864)

Tax recognised in profit or loss

2022

2021

CHF

Tax expense comprises:

Current tax (expense)

(1,063,347)

(9,921,367)

Deferred tax income/(expense) relating to the

origination and reversal of temporary

differences

11,450,860

(11,905,986)

Recognition of deferred tax assets on losses

carried forward

(754,193)

21,689

Total tax expense

9,633,320

(21,805,664)

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

2022

2021

CHF

(Loss) profit from continuing operations

(87,282,549)

130,325,338

Income tax expense calculated at 13.87%

(2021: 13.87%)

12,103,782

(18,072,678)

Effect of non-deductible and not taxable items

(776,244)

(684,910)

Effect of expenses that are not deductible in

determining taxable profit

(874,217)

(776,455)

Other items

(6,253)

Effect of different tax rates of subsidiaries

operating in other jurisdictions

(820,001)

(2,265,368)

Total tax expense

(9,633,320)

(21,805,664)

- 21 -

SOFISA SA

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,

2022

2021

Discount rate(s)

5.05

3.00

Expected rate(s) of salary

increase

2.75

Inflation

2.00

Mortality

CPM2014 Priv

Table – Fully generational

Improvement Scale CPM-B

CPM2014 Priv

Table –Fully generational

Improvement Scale CPM-B

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

2022

2021

CHF

Current service cost

131,117

168,135

Net interest cost

(2,527)

13,993

Administrative expenses

6,829

7,213

Defined benefit cost recognised in profit or loss

135,419

189,341

Remeasurements – recognised in OCI

(645,204)

(733,778)

Total defined benefit cost recognised in profit or loss

and OCI

(509,785)

(544,437)

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

and other comprehensive income.

- 22 -

SOFISA SA

Present value of defined benefit obligation is as follows:

2022

2021

CHF

Present value of funded defined benefit obligation

(3,739,834)

(5,104,351)

Fair value of plan assets

4,339,693

5,152,967

Present value of defined benefit (obligation)

599,859

48,616

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

as follows:

2022

2021

CHF

Opening defined benefit obligation

5,104,351

4,985,647

Current service cost

131,117

168,135

Interest cost

142,590

130,267

Employees' contributions

17,004

19,475

Benefits paid

(157,613)

(147,506)

Remeasurements (Actuarial loss (gain)):

a. changes in demographic assumptions

b. changes in financial assumptions

(1,305,090)

(391,233)

c. experience adjustments

79,216

141,952

Exchange difference

(271,741)

197,614

Closing defined benefit obligation

3,739,834

5,104,351

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

2022

2021

CHF

Opening fair value of plan assets

5,152,967

4,419,853

Interest income

145,116

116,274

Return on plan assets (excluding amount

included in net interest income)

(580,670)

484,497

Employer contributions

44,047

92,398

Employees' contributions

17,004

19,475

Other operating costs paid from plan assets

(6,829)

(7,213)

Benefits paid

(157,613)

(147,506)

Exchange difference

(274,329)

175,189

Closing fair value of plan assets

4,339,693

5,152,967

- 23 -

SOFISA SA

The major categories of plan assets are as follows:

2022

2021

Equity instruments

Debt instruments

Cash and short-term

Total

100

The actual return on plan assets was CHF – 435,554 (2021: (CHF 600,771).

Supplemental plan

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

Valuation at December 31,

2022

2021

Discount rate(s)

5.05

3.00

Expected rate(s) of salary increase

N/A

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

Remeasurements - recognised in OCI

2022

2021

CHF

Interest cost

13,453

14,210

Defined benefit cost recognised in profit or loss

13,453

14,210

Remeasurements - recognised in OCI

(40,974)

(41,114)

Total defined benefit cost recognised in profit or loss

and OCI

(27,521)

(26,904)

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:

2022

2021

CHF

Present value of unfunded defined benefit

obligation

398,950

502,602

- 24 -

SOFISA SA

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:

2022

2021

CHF

Unfunded defined benefit obligation

398,950

502,602

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

as follows:

2022

2021

CHF

Opening defined benefit obligation

502,602

560,590

Interest cost

13,453

14,210

Benefits paid

(49,374)

(53,304)

Remeasurements (Actuarial loss (gain)):

a. changes in demographic assumptions

b. changes in financial assumptions

(65,558)

(19,331)

c. experience adjustments

24,584

(21,783)

Exchange difference

(26,757)

22,220

Closing defined benefit obligation

398,950

502,602

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

other comprehensive income at December 31 are as follows:

2022

Salaried plan Supplemental

TOTAL

plan

CHF

Present value of defined benefit (obligation)

599,859

(398,950)

200,909

Other comprehensive income (loss / (gain))

(645,204)

(40,974)

686,178

- changes in demographic assumptions

- changes in financial assumptions

(1,305,090)

(65,558)

(1,370,648)

- experience adjustments

79,216

24,584

103,800

- return on plan assets (excluding amount

included in net interest income)

580,670

2021

Salaried plan Supplemental

TOTAL

plan

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)

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

risk, longevity risk and salary risk.

- 25 -

SOFISA SA

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

239,698 (increase by CHF 266,331).

13,317 (increase by CHF 14,273).

Inflation /

If the expected inflation/pension

pension

increase rate is 0.5 points higher

increase rate

(lower), the defined benefit

obligation would increase by CHF

195,787 (decrease by CHF 181,037).

13,726 (decrease by CHF 12,975).

Salary increase

If the expected salary growth rate is

N/A

rate

0.5 points higher (lower), the defined

benefit obligation would increase by

CHF 24,926 (decrease by CHF

23,355).

Mortality

If the life expectancy increases

(decreases) by one year for both

men and women, the defined

benefit obligation would increase by

benefit obligation would increase

CHF 196,948 (decrease by CHF

by CHF 28,682 (decrease by CHF

145,663).

27,726).

- 26 -

SOFISA SA

13)

INVENTORIES

Residential property under development and land

Held for future development

2022

2021

CHF

Balance beginning of year

117,267,497

116,139,956

Add (deduct):

Development costs

42,348,891

35,999,233

Carrying costs

2,045,026

(1,606,001)

Cost of sales

(9,078,397)

(37,907,657)

Net foreign currency exchange differences

(8,692,654)

4,641,965

Total

143,890,363

117,267,497

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. The updated value as at December 31, 2022 was

estimated by the appraiser at CAD 850 million (CHF 580 million).

14)

OTHER ASSETS

2022

2021

CHF

Current assets

Prepaid expenses

94,019

106,659

Prepaid real estate commissions

1,719,580

773,258

Total

1,813,599

879,917

Non-current assets

Right-of-use assets

798,779

965,044

Total

798,779

965,044

- 27 -

SOFISA SA

15)

PROPERTY, PLANT AND EQUIPMENT

Fixtures,

Computer,

fittings,

Leasehold

office

2022

improvements

equipment

Buildings

Total

Cost

CHF

At January 1, 2022

144,595

538,493

198,610

2,213,861 3,095,558

Additions (Disposals)

14,259

11,385

424,928

450,573

Net foreign currency

exchange differences

(7,698)

(28,668)

(10,573)

(117,860) (164,799)

At December 31, 2022

136,897

524,084

199,422

2,520,929

3,381,332

Accumulated depreciation

At January 1, 2022

144,411

502,480

190,275

2,024,543 2,861,709

Depreciation charge for

the year

27,669

3,466

42,003 73,233

Net foreign currency

exchange differences

(7,695)

(28,670)

(10,370)

(110,695) (157,429)

At December 31, 2022

136,811

501,479

183,371

1,955,851

2,777,512

Carrying amount

At January 1, 2022

183

36,013

8,335

189,317 233,849

At December 31, 2022

22,605

16,051

565,078

603,820

Fixtures,

Computer,

fittings,

Leasehold

office

2021

improvements

equipment

Buildings

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

- 28 -

SOFISA SA

16) INVESTMENT IN OTHER COMPANIES

In the current year, one development site acquired in 2018 was sold with a net gain on sale

of USD 359,000 representing an average net return per annum of 31.2% and complementary

distributions totalling USD 636,800 were received from development sites sold in 2021. Also

Group has increased its investments in the State of Georgia by USD 2,216,722 (CHF 2,050,911).

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).

17)

OTHER LIABILITIES

2022

2021

CHF

Current liabilities

Accrued expenses

12,090,989

10,172,961

Deferred revenue

10,560,157

11,314,120

Lease liability

83,479

90,193

Total

22,734,625 21,577,274

Non-current liabilities

Other liabilities

68,290

72,130

Lease liability

715,300

874,851

Total

783,590 946,981

18)

INTEREST BEARING LIABILITIES

2022

2021

CHF

Bank overdraft

31,384,827

25,182,726

Short term part of the loans

22,793,645

22,609,876

Long term part of the loans

9,339,960

23,286,880

63,518,432

Total fixed-term loans

71,079,482

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, 2022. 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 22,868,173 as at December 31,

2022 (2021: CHF 24,092,922).

- 29 -

SOFISA SA

The Group benefits from another CAD 75,000,000 (2021: 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 27,076,438 (2021: CAD 23,375,607) were issued. The bank

overdraft from this facility amounted to CAD 45,958,160 or CHF 31,384,827 as at December

31, 2022 (2021: CHF 25,182,726).

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

chartered bank in the amount of CHF 31,754,850 (CAD46,500,000) for purposes of developing

the Courtenay, a multi-unit residential development. The loan was secured by the Courtenay

land and improvements and a joint and several corporate guarantee to a maximum of CHF

10,479,101 (CAD 15,345,000). The loan was repaid in January 2022.

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

the amount of CHF 5,463,200 (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. A further CHF 1,314,905 (CAD 1,925,472) was funded by the mezzanine loan

during the year ended December 31, 2022.

On April 7, 2022 the Group secured a non-revolving Mezzanine loan with a third party in the

amount of CHF 2,390,150 (CAD 3,500,000) for the purposes of developing the Wildwood, a

residential town home development. The loan is secured by the Wildwood land in Rodgers

Creek Area 6. Repayment of the loan and accrued interest is due upon the closing of the

sale of each individual town home unit, or the third party can demand repayment if the

Group fails to complete the project. A further CHF 171,706 (CAD 251,436) was funded by the

mezzanine loan during the year ended December 31, 2022.

19)

SHARE CAPITAL

2022

2021

CHF

3’960 fully paid ordinary shares

3,960,000

Number Share

Fully paid ordinary shares

of shares capital

Balance at January 1, 2021 and 2022 3,960 3,960,000

Balance at December 31, 2021 and 2022 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%.

- 30 -

SOFISA SA

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.

20)

RESERVES

2022

2021

CHF

General

1,560,000

Special

170,000,000

Balance at the year end

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 2022.

21)

RETAINED EARNINGS

2022

2021

CHF

Balance at beginning of year

380,162,617

277,880,203

Net (loss) profit for the year

(77,649,229)

108,519,674

Other comprehensive income

501,607

562,740

Payment of dividends

(15,149,634)

(6,800,000)

Balance at the end of year

287,865,361

380,162,617

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 addition, dividends of CHF 78,000 (2021: CHF 71,250) have been paid on shares numbered

3.961 to 6,960 classified as liabilities. Those dividends were recorded in the income statement

under financial expense as disclosed in note 25.

On December 22, 2022, based on retained earnings as at December 31, 2021, a preferred

and extraordinary dividend of CHF 16,423.50 per share was paid to the holders of shares

numbered 2,445 to 2,904, following the approval by shareholders at the Extraordinary General

Meeting on December 20, 2022. This preferred and extraordinary dividend amounts of CHF

7,554,810.

- 31 -

SOFISA SA

In respect of the current year, the Board of the Directors proposes a dividend of CHF 2,000

per share be paid on 6 June 2023 to eligible holders of shares numbered 1 to 2,394 and 2,445

to 3,960 and a total of CHF 111,600 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.

22)

CUMULATIVE TRANSLATION DIFFERENCES

2022

2021

CHF

Balance at beginning of year

(29,220,397)

(42,472,645)

Arising on translation of foreign operations

72,631

13,252,248

Balance at the end of year

(29,147,766)

(29,220,397)

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.

23)

SALES REVENUE

2022

2021

CHF

From a land sale

94,644,178

From single-family detached homes build on

speculation and individual residential units in multi-family

7,953,496

13,408,287

buildings

From servicing work

3,578,743

From custom built single-family detached homes

1,225,691

636,601

Total

12,757,930

108,689,066

24)

INVESTMENT INCOME AND OTHER FINANCIAL INCOME

2022

2021

CHF

Net income (loss) from securities

Dividend and interest income

7,610,497

6,493,638

Realised gain on securities

1,721,499

2,559,121

Realised loss on securities

(2,665,104)

(1,294,103)

Fees on portfolio management

(299,345)

(302,605)

(Decrease)/increase in value of securities

(80,987,890)

71,353,898

Total investment (loss) income

(74,620,343)

78,809,949

Other financial income

Interest received

366,769

6,060

Total other financial income

366,769

6,060

Total investment (loss) income and

other financial (loss) income

(74,253,574)

78,816,009

- 32 -

SOFISA SA

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

Fair value through profit or loss (FVTPL)

(74,620,343)

78,809,949

Loans and receivables (including cash)

366,769

6,060

Total investment (loss) income and

other financial (loss) income

(74,253,574)

78,816,009

25)

FINANCIAL EXPENSES

2022

2021

CHF

Bank charges

(230,748)

(352,730)

Interest on long term debt

(1,906,759)

(1,487,063)

Dividends on preferential registered shares

(94,800)

(74,625)

Exchange difference

(5,083,214)

(10,170,085)

Total

(7,315,521)

(12,084,503)

26) OTHER RELATED PARTY TRANSACTIONS

During the year the Group paid short-term benefits totalling CAD 245,000 CHF 167,311 (2021:

CHF 162,713) recorded in other operating costs to key subsidiary operating management. Key

subsidiary operating management is defined as directors and officers.

27) 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 403,987 (2021: CHF

1,766,216).

At December 31, 2022, the Group has outstanding letters of credit aggregating approximately

CHF 18,490,500 (2021: CHF 16,860,825) 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 1,270,323) in additional income taxes

and interest and transfer pricing penalties totaling CAD 718,929 (CHF 490,957) 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

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

in taxable income.

- 33 -

SOFISA SA

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.

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

2021 fiscal 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 rejected the settlement offer.

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 11.3 million excluding any interest or

penalties.

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. During the year, the Group

was notified by CRA that there were no adjustments stemming from the main income tax

audit, however, the rate of interest paid on an affiliate’s debt for fiscal 2017 through 2019 was

still subject to audit by CRA’s transfer pricing division.

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, interest and

penalties for any open taxation years, no amounts have been accrued in the December 31,

2021 or 2022 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.

28) 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.

- 34 -

SOFISA SA

Categories of financial instruments:

2022

Financial

At fair value

Financial Total

Fair

assets

through profit

liabilities carrying

value

amortised

cost

or loss

amortised

cost

amount

CHF CHF

CHF

Financial assets

Cash and cash equivalents

8,713,463 -

- 8,713,463

8,713,463

Restricted cash

201,010 -

- 201,010

201,010

Securities

364,946,336

Trade and other receivables

10,565,200 -

- 10,565,200

10,565,200

Total financial assets

19,479,673

364,946,336

384,426,009

Financial liabilities

Trade and other payables

- -

5,719,532 5,719,532

5,719,532

Short term part of interest-

bearing debt

- -

54,178,472

55,675,415

Long term part of interest-

bearing debt

- -

9,339,960

11,943,449

Other liabilities

- -

22,734,625

Preference shares

- -

2,260,800

Total financial liabilities

- -

94,233,389

98,333,821

2021

Financial

At fair value Financial

Total Fair

assets

through profit liabilities

carrying value

amortised

cost

or loss

amortised

cost

amount

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

- 35 -

SOFISA SA

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

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

102,220,303

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, 2022 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 36.54 million (CHF 43.94 million in 2021).

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

-1.20 % in 2022 (1.30 % in 2021).

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

- 36 -

SOFISA SA

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, 2022, the Group’s

net income would have been CHF 21.78 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 26.59

million lower (higher).

If the CHF had been 10% stronger (weaker) against the EUR at December 31, 2022, the Group’s

net income would have been CHF 3.27 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 3.93

million lower (higher).

If the CHF had been 10% stronger (weaker) against the JPY at December 31, 2022, the Group’s

net income would have been CHF 2.03 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 2.44

million lower (higher).

If the CHF had been 10% stronger (weaker) against the GBP at December 31, 2022, the Group’s

net income would have been CHF 1.39 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 1.60

million lower (higher).

If the CHF had been 10% stronger (weaker) against the CNY at December 31, 2022, the Group’s

net income would have been CHF 1.33 million lower (higher). In the prior year, the same

percentage difference in the exchange rate would have caused net income to be CHF 1.60

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, 2022, the Group had the following undrawn committed borrowing facilities

available:

2022

2021

CHF

Expiring less than 1 year

1,342,173

12,053,949

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SOFISA SA

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.

2022

Weighted

average

Less

effective

than

interest rate

1 year

1 - 5 years 5 years Total

CHF CHF CHF CHF

Non-interest bearing

Trade and other

payables

5,719,532 - - 5,719,532

Other liabilities

11,939,707 68,290 - 12,007,997

Preference shares

2,260,800 -

2,260,800

Interest bearing

Bank overdraft

7.45%

33,722,997 - -

33,722,997

Bank short term debt

1.40%

5,571,854 - - 5,571,854

Bank short term debt

3.60%

10,612,266 - - 10,612,266

Bank short term debt

7,023,973 - - 7,023,973

Bank long term debt

11.13%

1,039,538

12,198,689 -

13,238,226

75,629,866

14,527,779 - 90,157,644

2021

Weighted

average

Less

effective

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

Bank short term debt

3.55%

22,676,956 - - 22,676,956

Bank short 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

70,000 7,023,973 - 7,093,973

64,306,979

26,036,043 -

90,343,022

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SOFISA SA

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

December

January 1 Cash flows

exchange Transfer

changes

2022

movements

2022

Short term part of

47,792,602

(13,863,430)

(2,554,345)

54,178,472

interest bearing

liabilities

22,793,645

Long term part of

23,286,880

(493,235)

9,339,960

interest bearing

liabilities

9,339,960

(22,793,645)

72,130

(3,840)

68,290

Other liabilities

Preference

2,244,000

94,800

2,260,800

(78,000)

73,394,612

(4,601,470)

94,800

65,847,523

(3,041,420)

Non-cash changes

Foreign

Other

December

January 1 Cash flows exchange Transfer

changes

2021

movements

2021

Short term part of

(17,938,168)

1,445,017

interest bearing

liabilities

47,142,777

17,142,976

47,792,602

Long term part of

412,410

interest bearing

liabilities

17,407,570

19,812,122

(14,345,222)

23,286,880

109,416

(2,797,755)

Other liabilities

2,760,469

72,130

Preference

2,240,625

2,244,000

(71,250)

74,625

69,551,441

1,802,703

1,966,843

74,625

73,394,612

Other changes include the transactions directly recognised in the statement of income.

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SOFISA SA

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 (2022: CHF 364,946,336 2021: CHF 438,716,764) 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.

29) RISK ASSESSMENT

The Board of Directors has performed a risk assessment on November 11, 2022.

30) DISCLOSURE OF BOARD COMPENSATION UNDER SECTION 663b bis OF SWISS CODE OF

OBLIGATIONS

2022

2021

Remuneration (net)

(261,095)

(258,704)

Contribution for old age and survivor

insurance and unemployment insurance

(27,173)

(27,263)

Total indemnity

(288,268)

(285,967)

31) 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

2022 2021 2022 2021

The Most Hon. Constantine Edmund

Walter Phipps Marquis of Normanby 551 551 7.92% 7.92%

Member of the Board of Directors

32) APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Board of Directors and authorised for issue on

April 18, 2023.

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SOFISA SA

33) 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.

34) 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 2022.

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