Report on the Financial Situation of Migros Group
Balance Sheet
Mortgage and other customer receivables and customer deposits and liabilities of the Financial Services sector have had a considerable effect on the balance sheet of Migros Group. Compared to 31 December 2010, the balance sheet total rose by CHF 2.8 billion to CHF 55.2 billion as a result of a renewed increase in customer deposits in the Financial Services sector. Customer deposits as at 31 December 2011 amounted to approximately 46.9% of the balance sheet total (31 December 2010: 46.4%).
Balance sheet of the Retail and Industry sector
The balance sheet total assets for the Retail and Industry sector increased by 1.4% to CHF 20'256.8 million on the previous year. Increases in the balance sheet total and changes in the balance sheet structure from the previous year were mainly due to acquisitions and operating business.
The generated cash flow of the Retail and Industry sector is used on a continuous basis to reduce liabilities due to commercial banks, among other things. Maturing receivables due from commercial banks were not renewed due to the currently low interest rates, but assigned to the cash and cash equivalents. The carrying amount of tangible assets increased by CHF 148.5 million on the previous year as a result of extensive investment activities by Migros Group. During the last financial year, companies in the Retail and Industry sector invested CHF 1'243.3 million (previous year CHF 1'458.7 million) mainly in renewing the branch network and plants in Switzerland. The Cooperatives were able to commence operations not only at 17 new sales locations and 11 replacement buildings, but also at 4 major redevelopments/expansions of sales locations. One example: the Marin Centre shopping centre was built in three stages over a period of almost four years, and was opened on 11 November 2011. The centre houses 56 stores over a total sales area measuring 36'000 m2. The Marin Centre is different from other major shopping centres in Switzerland in that it focuses consistently on sustainable development. The energy requirement of the shopping centre is approximately 20% of that for comparable centres. The building meets the Minergie standard and incorporates a number of additional innovative, resource-friendly technical solutions.
Intangible assets amounted to CHF 1'285.7 million as at 31 December 2011, a figure which is therefore slightly up on the previous year (CHF 1'167.8 million). The increase in intangible assets is mainly due to the company acquisitions made in the Commerce segment. Goodwill (intangible assets with an unlimited period of use) is CHF 811.5 million (previous year CHF 725.3 million). An important item in this figure is the goodwill acquired in 2007 with the acquisition of Denner.
Migros recognises actuarial gains and losses on defined benefit pension schemes in the income statement, using the ''corridor approach''. This approach means that the actuarial losses, which mainly arose during the debt crisis, if at all, are recorded only as expenditure pro rata and with a delay. Actuarial losses of CHF 225.6 million (previous year CHF 221.6 million) are still capitalised in other assets in the reporting year (see also explanation in Section H and Notes 10 and 38).
The balance sheet structure of the Retail and Industry sector remains very healthy. The net finance debts of CHF 955.6 million (previous year CHF 1'016.7 million) are set against a balance sheet total of CHF 20.3 billion and have decreased by CHF 61.1 million on the previous year. Based on the current EBITDA, these debts can be paid off within half a year. With an increase in equity of CHF 480.8 million, the proportion of shareholder equity in the total capital increased to 63.6%. The principle of matched maturities, whereby shareholder equity and long-term loan capital cover non-current assets, has been maintained.
Balance sheet of the Financial Services sector
During the reporting year, mortgages and other customer receivables rose by 6.9% from the previous year to CHF 30.9 billion.
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 1.3 billion in total and mainly consist of debt securities and widely diversified investment funds. During the reporting year, these cash reserves were reduced by CHF 808.2 million as a result of risk considerations, and invested as cash and cash equivalents.
This marked credit growth was mainly financed with new customer deposits. Customer deposits and liabilities increased by CHF 1.2 billion or 4.8%. Customer deposits totalled CHF 26.0 billion, corresponding to 84.2% of customer lending at the end of 2011. 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 equity base. As of 31 December 2011, the bank's equity amounted to CHF 2'711.5 million, significantly above the coverage required under Swiss banking law.