2009 Mid-year report: Significantly improved operating performance

Investment property revaluation gains were lower than the high mid-2008 level. The Tivona integration proceeded according to plan. Retail trade turnover at the House of Brands maintained a good level despite demanding market conditions.

After successful implementation of the strategic plan, this interim report refl ects Jelmoli for the fi rst time purely as a Swiss real estate group focusing on retail trade. The integration of Tivona AG, taken over in full per end of February 2009, is proceeding according to plan. The Tivona AG employees have been assimilated by Jelmoli, and the Tivona properties administratively integrated, with promising input thereby of real estate project development competence as well as of high-quality properties. The Athris Holding AG divisions spun off per end of March 2009 in connection with the new strategy implementation are included in the accounts as discontinued operations.

Real estate rental income for the fi rst six months of 2009 rose signifi cantly by CHF 15.6 million to CHF 96.5 million in total, exceeding the prior year level by 19.3 %. The market value of investment properties was independently reassessed per June 30, 2009, resulting in corporate revaluation gains of CHF 46.5 million (prior year CHF 106.5 million). However, around 50 % of these revaluations gains come from an amended accounting standard.

Real estate rental income for the fi rst six months of 2009 rose signifi cantly by CHF 15.6 million to CHF 96.5 million in total, exceeding the prior year level by 19.3 %. The market value of investment properties was independently reassessed per June 30, 2009, resulting in corporate revaluation gains of CHF 46.5 million (prior year CHF 106.5 million). However, around 50 % of these revaluations gains come from an amended accounting standard.

Net financial costs increased to CHF - 29.5 million (prior year CHF - 12.1 million). The rise in net interest charges is mainly attributable to increased debt in connection with the Tivona acquisition and to reduction of the very high liquidity maintained in preparation for the strategic split in spring 2009.

Total income rose by 9.9 % to CHF 183.6 million. Despite signifi cantly lower real estate portfolio revaluation gains, the net income of continued operations matched the prior level at CHF 113.8 million. This includes CHF 47.4 million pro rata earnings of the associate company Tivona. Net asset value of the Jelmoli registered share taking account of full market value, i. e. without correction for self-utilized real estate, is CHF 431. Since the strategic realignment and share unification per end of March 2009, trading price of the Jelmoli registered share rose by 20 % to CHF 394 as per June 30, 2009. On June 23, 2009 Jelmoli paid out a dividend of CHF 10 per share, equivalent to a 2.5 % return.

Outlook for the year
On September 24, 2009 the Stücki Shopping Center in Basle will be opened after successful completion of development work. This will further enhance rental income in future. A positive outcome for the rest of the real estate business is also expected for the second half of 2009.

The retail trade turnover is expected to decline slightly, mainly because of ongoing renovations at the Jelmoli House of Brands department store. We cannot yet estimate how economy developments will affect business, in particular during the important festive season.

On July 29, 2009 Swiss Prime Site AG launched its bid for Jelmoli shares within the framework of the public exchange offer.

Real estate

19.3 % rise in rental income
In the real estate segment, rental income for the period under review rose by 19.3 % to CHF 96.5 million. Rental income fi gures include for the Tivona properties as of full integration per end of February 2009. During the period under review the St. Gall Shopping Arena, opened in March 2008, and Thônex (Geneva) district shopping center, opened in September 2008, contributed full rental incomes for the fi rst time. Adjusted for these expansion effects, the comparable rise in rental income over prior year is 1.8 %. Vacant fl oor areas remained at a consistently low level of 3.2 %. As before, 5 % of total rental income is attributable to turnover-linked rentals.

Value appreciation thanks to property development competence
On September 24, 2009 the Stücki Shopping Center in Basle will be opened after extensive developments costing about CHF 270 million. The 32 000 m2 of sales fl oor area thus created are expected to bring annual turnover totalling around CHF 300 million. The development gain on this investment was accounting-wise largely taken into account with the Tivona acquisition per end of February 2009.

Reconstruction work currently underway at the Jelmoli House of Brands department store in Zurich will bring signifi cant quality appreciation on the property. By enhancing the productivity of sales fl oor areas and brand shops, this successful development will increase rental income. Development gains of CHF 26 million are included in the mid-year accounts accordingly.
The higher revaluation gains during the fi rst half of 2008 were largely attributable to the St. Gall Shopping Arena opening.

Greater effi ciency thanks to integrated organization
For better integration of business and management processes, the management team has been expanded. Apart from the CEO, the CFO and the Secretary General, it now includes the heads of real estate in German and French speaking Switzerland, project development, administration, IT, and the Jelmoli House of Brands department store in Zurich. This interdisciplinary management team structure will enhance the effi ciency of Jelmoli investment property administration and project development.

Integration of Tivona proceeding according to plan
The employees of Tivona AG, taken over in full per end of February 2009, have been assimilated by Jelmoli and signifi cantly strengthen the project development competence, also in the extended management team.
The Tivona properties have been integrated in the Jelmoli real estate portfolio both with regard to management and administration.

Outlook for the year
Completion and opening of the Stücki Shopping Center in Basle will bring additional rental income during the second half-year. Good results in general are expected for 2009 as a whole.

Retail Trade

Retail Trade stability despite demanding market conditions
Retail Trade segment turnover as a whole declined by 5.1 % to CHF 80.8 million. Despite demanding market conditions, turnover at the Jelmoli House of Brands store in Zurich remained gratifying stable in the fi rst half of 2009, with gross turnover of CHF 76.1 million only 4.8 % less than the good level of prior year. Liquidation of the household goods department in favor of more attractive sales fl oor areas made a notable contribution to turnover.
Over turnover at the Jelmoli House of Brands store in Zurich, including that of external tenants, was likewise about 5 % lower at CHF 153 million than the very high prior-year level.

Zurich House of higher-end Brands - thanks to store renovations
The 2010 renovation project is proceeding according to plan. Structural improvements currently underway in the escalators, light-well and pillar areas, together with new shop buildings and more attractive corridors, will result in a completely new kind of shopping experience.

This has already led to the acquisition of several new high-end brands in ladies' and gentlemen's fashion and accessories/ handbags.

The redesigned New Wave takeaway has already been opened in its new basement location. By combining the Gourmet Factory with an international array of food providers, a spacious new gourmet world for connoisseurs has been created. The attractively restyled Lingerie and Interior Design sales fl oors on the third fl oor will be opened in November 2009. Full opening of the entire rebuild is scheduled for autumn 2010.

Jelmoli Bonus Card AG: higher operating income
Net earnings by Jelmoli Bonus Card AG for the fi rst half of 2009 rose steeply compared with prior year. Credit card debt losses remained at the very low level of prior year. Turnover in connection with the Swiss Rail half-fare season card / Visa card combination offer improved thanks to greater marketing efforts.

Outlook for the year
The infl uence of economy developments on retail trade business during the second half of 2009 cannot yet be estimated. 1500 to 3500 m2 of sales fl oor area will be closed at the Jelmoli House of Brands store until the completion of renovation/ conversion work. The cost reduction measures there are already taking effect. Furthermore, preparations are in place for the fi rst Yuletide Market to be held at the House of Brands - a unique festive Season experience not to be missed, despite the ongoing renovations.