Using the latest public information available, the table below shows an estimate of the most significant changes that would have affected the accompanying the consolidated balance sheet and consolidated income statement if the Group had used the proportionate consolidation method for the stake in SegurCaixa Adeslas, SA de Seguros Generales y Reaseguros at December 31, 2011 and for the stake in Gas Natural SDG, SA at December 31, 2011 and 2010. No details are shown for Comercia Global Payments, Entidad de Pago, SL for 2011 and 2010, or for Port Aventura Entertainment, SA for 2010, since the impacts of the amounts were immaterial.
(Millions of Euros) 2011 2011 2010
SEGURCAIXA
ADESLAS GAS NATURAL
Balance sheet
Increase in total assets at the ”la Caixa” Group 769(*) 11,234 11,956
Main changes in liabilities:
Customer deposits (52) (250) (46)
Deposits from credit institutions 39 6,386 6,182
Other financial liabilities 148 2,687 2,909
Liabilities under insurance contracts 385
Income statement
Revenue from the provision of non-financial services 1,087 5,402 5,101
Other operating expenses, administrative expenses and depreciation
and amortization (1,003) (4,154) (3,841)
Profit attributable to non-controlling interests 0 49 55
(*) The Group would also have recorded €486 million in intangible assets (see Note 19).
All changes in the consolidated income statement would be offset by a decrease in the amount of “Share of profit (loss) from entities accounted for using the equity method”.
17. Reinsurance assets
The breakdown of “Reinsurance assets” in the consolidated balance sheet at December 31, 2011 and 2010 is as follows: (Thousands of Euros) 2011 2010 Unearned premiums 168 6,012 Mathematical provisions 1,023 813 Services 6,225 15,847 Total 7,416 22,672
18. Property and equipment
Changes in items of “Property and equipment” and of the related accumulated depreciation in 2011 and 2010 are as follows: (Thousands of Euros) 2011 2010 LAND AND BUILDINGS FURNITURE, FACILITIES AND OTHER TOTAL LAND AND BUILDINGS FURNITURE, FACILITIES AND OTHER TOTAL Cost
Balance at the beginning
of the year 2,950,054 3,029,739 5,979,793 2,834,108 2,767,080 5,601,188
Additions 182,119 130,824 312,943 98,252 143,243 241,495
Disposals (301,745) (328,476) (630,221) (18,111) (93,061) (111,172)
Transfers 3,949 75,044 78,993 35,805 212,477 248,282
Balance at the end of the year 2,834,377 2,907,131 5,741,508 2,950,054 3,029,739 5,979,793
Accumulated depreciation
Balance at the beginning
of the year (433,253) (2,186,227) (2,619,480) (377,589) (1,905,587) (2,283,176)
Additions (30,109) (138,252) (168,361) (23,484) (210,258) (233,742)
Disposals 57,264 204,750 262,014 836 73,173 74,009
Transfers (54,470) (69,702) (124,172) (33,016) (143,555) (176,571)
Balance at the end of the year (460,568) (2,189,431) (2,649,999) (433,253) (2,186,227) (2,619,480)
Own use, net 2,373,809 717,700 3,091,509 2,516,801 843,512 3,360,313 Cost
Balance at the beginning
of the year 0 366,657 366,657 0 823,901 823,901
Additions 0 0 183,395 183,395
Disposals 583 583 (640,639) (640,639)
Transfers (228,954) (228,954) 0
Balance at the end of the year 0 138,286 138,286 0 366,657 366,657
Accumulated depreciation
Balance at the beginning
of the year 0 (212,805) (212,805) 0 (203,471) (203,471)
Additions (3,864) (3,864) (98,773) (98,773)
Disposals 4,077 4,077 89,439 89,439
Transfers 200,160 200,160 0 0
Balance at the end of the year 0 (12,432) (12,432) 0 (212,805) (212,805)
Impairment losses
Balance at the beginning
of the year 0 0 0 0 (33,875) (33,875)
Allowances and transfers 0 7,205 7,205
Amounts recovered and used 0 26,670 26,670
Balance at the end of the year 0 0 0 0 0 0
Operating leases, net 0 125,854 125,854 0 153,852 153,852
Cost
Balance at the beginning
of the year 358,749 155,580 514,329 349,582 153,382 502,964
Additions 49,239 3,390 52,629 88,922 1,116 90,038
Disposals (48,651) (839) (49,490) (74,169) (1,382) (75,551)
Transfers (1,725) 1,723 (2) (5,586) 2,464 (3,122)
Balance at the end of the year 357,612 159,854 517,466 358,749 155,580 514,329
Accumulated depreciation
Balance at the beginning
of the year (90,414) (59,900) (150,314) (79,455) (57,209) (136,664)
Additions (8,759) (2,711) (11,470) (10,381) (2,888) (13,269)
Disposals 2,281 791 3,072 938 1,297 2,235
Transfers 114 (112) 2 (1,516) (1,100) (2,616)
Balance at the end of the year (96,778) (61,932) (158,710) (90,414) (59,900) (150,314)
Assigned to welfare projects
(Thousands of Euros) 2011 2010 LAND AND BUILDINGS FURNITURE, FACILITIES AND OTHER TOTAL LAND AND BUILDINGS FURNITURE, FACILITIES AND OTHER TOTAL Cost
Balance at the beginning
of the year 1,360,066 68,442 1,428,508 1,006,118 59,090 1,065,208
Additions 418,086 32,905 450,991 292,326 595 292,921
Disposals (102,183) (31,937) (134,120) (45,158) (3,841) (48,999)
Transfers 114,349 2,666 117,015 106,780 12,598 119,378
Balance at the end of the year 1,790,318 72,076 1,862,394 1,360,066 68,442 1,428,508
Accumulated depreciation
Balance at the beginning
of the year (50,708) (31,130) (81,838) (33,053) (20,345) (53,398)
Additions (51,808) (18,555) (70,363) (14,904) (5,781) (20,685)
Disposals 13,686 11,523 25,209 6,623 2,996 9,619
Transfers (5,691) (2,267) (7,958) (9,374) (8,000) (17,374)
Balance at the end of the year (94,521) (40,429) (134,950) (50,708) (31,130) (81,838)
Impairment losses
Balance at the beginning
of the year (74,720) 0 (74,720) (30,478) 0 (30,478)
Allowances and transfers (36,990) (36,990) (92,635) (92,635)
Amounts recovered and used 11,289 11,289 48,393 48,393
Balance at the end of the year (100,421) 0 (100,421) (74,720) 0 (74,720)
Investment property 1,595,376 31,647 1,627,023 1,234,638 37,312 1,271,950 Total property and equipment 4,230,019 973,123 5,203,142 4,019,774 1,130,356 5,150,130
In 2011, disposals of property and equipment for own use are the result of the deconsolidation of SegurCaixa Adeslas following the sale of a 50% stake to Mutua Madrileña (see Note 6).
In 2010, “Transfers” include property and equipment arising from the merger with Caixa d’Estalvis de Girona (see Note 6), the addition of assets from Compañía de Seguros Adeslas, SA (see Note 6) and the derecognition of assets of Mediterranea Beach & Golf Community, SA following their reclassification to “Inventories” (see Note 20).
In 2010, “Disposals” of assets classified as operating leases for 2010 relate mainly to the assets transferred by CaixaRenting, SAU to Arval Service Lease, SA amounting to €456 million (see Note 6).
Operating income from investment property is recognized under “Other operating income” in the consolidated income statement and operating expenses under “Other operating expenses” (see Note 34).
To obtain a better estimate of the fair value of the properties for own use of CaixaBank at December 31, 2011 and 2010, in view of the current situation of the real estate market, Tinsa, SA, an independent appraisal and valuation company approved by the Bank of Spain, was commissioned to perform a review of property appraisals. With the exception of special assets or those not suitable for repeat production, this review was carried out using statistical methods.
As a result of this review, the estimated gross capital gain at December 31, 2011 was €222 million (€376 million at December 31, 2010). At December 31, 2011, the ”la Caixa” Group did not have any significant commitments to acquire items of property and equipment.
19. Intangible assets
Goodwill
The table below shows the composition of goodwill at December 31, 2011 and 2010:
Goodwill
(Thousands of Euros) 2011 2010
Acquisition of the Morgan Stanley business in Spain 402,055 402,055
Acquisition of BankPyme, SA 39,406
Acquisition of VidaCaixa, SA de Seguros y Reaseguros
(VidaCaixa Grupo, SA Group) 330,929 330,929
Acquisition of SegurCaixa, SA de Seguros y Reaseguros
(VidaCaixa Grupo, SA)(*) 132,486
Acquisition of Compañía de Seguros Adeslas, SA(*) 313,702
Other 198
Total 772,588 1,179,172
(*) The two companies merged in December 2010 to become SegurCaixa Adeslas, SA de Seguros y Reaseguros. In 2011, part of the investment was sold and it was subsequently accounted for using the equity method (see Notes 6 and 16).
The changes in goodwill in subsidiaries in 2011 and 2010 were as follows:
Changes in goodwill
(Thousands of Euros) 2011 2010
Balance at the beginning of the year 1,179,172 865,470
Plus:
Additions through business combinations(Note 6) 39,406 313,702
Other 198
Less:
Disposals(*) (261,737)
Changes in consolidation method(**) (184,451)
Balance at the end of the year 772,588 1,179,172
(*) Sale of 50% of SegurCaixa Adeslas, SA de Seguros y Reaseguros (see Notes 6 and 16).
(**) Goodwill corresponding to the remaining stake in SegurCaixa Adeslas has been reclassified to Investments under jointly-controlled entities and associates.
“Additions due to business combinations” in 2011 relates to the acquisition of Banco de la Pequeña y Mediana Empresa (see Note 6).
In 2010, the goodwill acquired in the acquisition of a 99.77% stake in Compañía de Seguros Adeslas, SA was recognized. This asset was derecognized subsequent to the sale of 50% of SegurCaixa Adeslas (see Note 6). At the 2011 close, goodwill was tested for impairment, the results and relevant assumptions of which are described below:
• With respect to goodwill arising from the acquisition of the Morgan Stanley business in Spain, which was allocated to the CaixaBank personal banking and private banking cash-generating units (CGUs), a calculation was made based on the estimated cash flows expected from this activity. Cash flows from this activity for the next six years were estimated, assuming a constant subsequent growth rate of 2% (intended to include the effects of inflation). These expected flows have been discounted at a rate of 10%, similar to in the previous year.
• With respect to goodwill generated by the transaction to take control of CaiFor Group (VidaCaixa Grupo, SA, formerly SegurCaixa Holding, SA), a calculation was made of the cash flows expected over the next five years on the life business acquired, assuming a constant subsequent growth rate of 2% (intended to include the effects of inflation). These expected flows have been discounted at a rate of 9.9% (9.7% in the previous year). The discount rates applied for the projections were calculated on the rate of interest of the Spanish 10-year bond, plus a risk premium associated with each business.
The results of the tests carried out showed the value in use of the CGU to which the goodwill is assigned is much higher than carrying amount.