Balance sheet of Migros Group

Mortgage and other customer receivables as well as customer deposits and liabilities of the Financial Services sector have had a considerable effect on the balance sheet of the Migros Group. Compared to 31 December 2008, total assets rose by CHF 2.0 billion to CHF 50.8 billion as a result of a renewed increase in customer deposits in the financial services business. Customer deposits as per 31 December 2009 amounted to approx. 45.4 per cent of the balance sheet total (31 December 2008: 43.3 per cent).

Balance sheet of Retail and Industry sector

The balance sheet total for the Retail and Industry sector increased by 2.5 per cent to CHF19,564 million year-on-year. Increases in the balance sheet total and changes in the balance sheet structure from the previous year were mainly due to our operating businesses and financing activities. A loan from the Migros Pension Fund for CHF 340.0 million was repaid from operating cash flow in the 2009 reporting period. The balance sheet item Other financial liabilities was reduced accordingly. The increase in Receivables due from banks is caused by the prudent extension of the investment horizon for fixed-term deposits to 180 days maximum. Cash and cash equivalents fell accordingly. The carrying amount of tangible assets increased by CHF 348.0 million over the previous year as a result of extensive investment activities by the Migros Group. During the past financial year the Migros Group invested CHF 1,402.7 million (previous year 1,580.4 million) mainly in renewing its branch network and plants in Switzerland. The Cooperatives were able to commence operations not only at 13 new sales locations, but also at 4 major redevelopments/expansions of sales locations. The Geneva Cooperative successfully opened an innovative leisure centre, the Vitam’Parc, on 19 October 2009 after several years of construction. Migros Cooperative Eastern Switzerland totally renovated the popular leisure centre Säntispark.

The carrying amount of Intangible assets was CHF 1,094.4 million (previous year CHF 1,132.5 million) as at 31 December 2009 and of goodwill (Intangible assets with unlimited useful life) CHF 633.4 million (previous year CHF 636.3 million). An important item in this figure is the goodwill acquired in 2007 with the Denner acquisition.

Migros recognises actuarial gains and losses on defined benefit pension schemes in profit or loss, using the "corridor approach". This approach means that the recognition of actuarial losses caused by the financial crisis as an expense in the income statement is partially deferred. Some actuarial losses had to be capitalised in the reporting period, which is the reason why Other assets are well over CHF 200 million more than in the previous year (see also the notes in section H and Notes 10 and 38).

The quoted debt securities of the Migros Group were awarded an A/outlook stable rating by Standard & Poor’s. The balance sheet structure of the Retail and Industry sector remains healthy. The interest bearing net financial debts of CHF 1.6 billion (previous year CHF 2.0 billion), relative to total assets of CHF 19.6 billion, decreased by CHF 375.1 million from the previous year. Based on current EBITDA these debts can be paid off within 0.8 years. With an increase in equity of CHF 936.4 million, the proportion of shareholders’ equity in total capital increased to 59.5 per cent. The principle of matched maturities, whereby shareholders’ equity and long-term loan capital cover noncurrent assets, has been maintained.

Balance sheet of Financial Services sector

During the reporting year Mortgages and other customers receivables rose by 4.0 per cent from the previous year to CHF 27.6 billion.

Interest servicing by mortgage customers remains very good. Interest outstanding (without past due and problem receivables) amount to only 0.4 per cent of total interest income from mortgages.

In order to ensure refinancing of loans to customers at any time, also under changed market conditions, Migros Bank holds significant cash reserves in the form of securities. Securities shown under the balance sheet item Other financial assets amount to CHF 2.2 billion and mainly consist of debt securities and widely diversified investment funds. During the reporting year, these cash reserves were increased by a total of CHF 234 million.

The marked credit growth was fully financed with new customer deposits. As a result of the financial crisis, Migros Bank profited from a considerable increase in new cash flow. Customer deposits and liabilities increased by CHF 2.2 million or 10.1 per cent. Customer deposits totalled CHF 23.7 billion, corresponding to 85.8 per cent of customer lending at the end of 2009. Migros Bank consequently continues to benefit from a comfortable refinancing structure.

Due to the positive result for the year, the bank once again managed to significantly strengthen its own equity. As of 31 December 2009, the Bank's equity amounted to CHF 2,456 million, significantly above the coverage required under Swiss banking law.