2   Change in realisation of gains on development real estate, change in presentation of consolidated statement of comprehensive income, and gross presentation of downpayments for development real estate

In the first half of 2012, as part of preliminary clarifications and an investigation, SIX Exchange Regulation determined facts relating to the 2011 IFRS annual financial statements of the Allreal Group, which, in accordance with IAS 8, lead to a retrospective adjustment of the previous year's accounts, see notes 2.2 to 2.5.

SIX Exchange Regulation and Allreal Holding AG reached a written agreement, under which the proceedings against the company are deemed to have been completed, subject to compliance with the conditions called for.

Up until now, gains on sales of development real estate have only been recognised in the statement of comprehensive income once ownership of the last units of own projects has been transferred. This does not meet the requirements of IAS 18, under which the gains resulting from a given transaction must be recorded at the same time as the revenues and expenditure from the same transaction. This means that when ownership of individual units of development real estate is transferred and the associated revenues are recognised in the statement of comprehensive income, the pro rata project costs and gains also have to be recorded.

For the 2011 financial year as a whole, this results in additional gains on sales of development real estate amounting to CHF 9.2 million and tax expenses amounting to CHF –3.2 million (2010: CHF –10.0 million/CHF 3.5 million). Compared to the previously published figures, this increases the net profit for 2011 by a net CHF 6.0 million (2010: CHF –6.5 million). In the consolidated balance sheet, these adjustments increase the value of development real estate as at 31 December 2011 by CHF 10.7 million (31.12.2010: CHF 1.4 million), while the value of the provisions for deferred taxes increases by CHF 3.8 million (31.12.2010: CHF 0.5 million). The year-back figures were restated accordingly and are recognised in the 2012 consolidated financial statements.

In relation to the first half of 2011, this results in lower gains of CHF –1.5 million on sales of development real estate and lower tax expenses of CHF 0.5 million. Compared with the previously published figures, the net profit for the first half of 2011 is thus reduced by a net CHF –1.0 million. The year-back figures were adjusted accordingly.

In the consolidated balance sheet, downpayments made by future owners of real estate units for development were previously offset against the book value of development real estate. This does not comply with the requirements of IAS 1 as assets and liabilities may only be offset where this is explicitly required by an IFRS standard, which is not the case in the present instance. For this reason, the downpayments for development real estate are now shown on the consolidated balance sheet as a separate position under liabilities. As at 31 December 2011, downpayments for development real estate amounted to CHF 18.2 million (31.12.2010: CHF 63.2 million). The year-back figures were adjusted accordingly.

As a minimum requirement for the reporting of comprehensive income, IAS 1 requires all sales revenues recognised during a period under review to be reported in accordance with IAS 18 (“Operating revenue”). IAS 33 furthermore specifies that adjusted earnings per share which are not based on the calculations laid down by IAS 33 may only be reported in the Notes.

To date, Allreal has reported sales revenues recognised under IAS 18 in the statement of comprehensive income broken down by business areas and has disclosed earnings per share excluding revaluation effect as information appended to the statement of comprehensive income. This does not comply with IFRS requirements.

The presentation of the statement of comprehensive income has therefore been adjusted to IFRS requirements. These changes do not affect net profit or consolidated equity.

Moreover, a revised statement of comprehensive income was already presented when the consolidated financial statements for the 2011 financial year were published as previously the project volume completed by the Projects & Development division (Projects & Development sales) was reported in the statement of comprehensive income as the sum of all income from third-party projects and revenues from the sales of development real estate – determined by the production method. At the same time, investment costs for unsold development real estate were charged to direct expenses from realisation Projects & Development. As IAS 2 and IAS 18 specify that revenue from the sale of development real estate and associated costs may only be recorded in the statement of comprehensive income on the transfer of benefits and risks, the result of the Projects & Development division was divided into earnings from realisation Projects & Development (third-party projects) and earnings from sales Development (own projects) and is incorporated into the 2011 half-yearly financial statements now published.

The following tables summarise the impact of the adjustments described in Notes 2.2 to 2.4:

Because of these adjustments, both the consolidated cash flow statement and segment information for the first half of 2011 have changed. In the consolidated cash flow statement, this resulted in corrections in the positions “Net profit before tax”, “Increase in development real estate” and “Decrease in downpayments for development real estate” without this necessitating adjustments to the positions “Cash flows from operating activities”, “Investment activities” or “Financing activities”.