11th Aug 2005 07:01
Aviva PLC11 August 2005 PART 3 OF 4 ---------------------------------------------------------------------------------------------------------------------Page 45 IFRS basis Summarised consolidated income statement - IFRS basis For the six months ended 30 June 2005 Page 6 months 6 months 6 months Full year 2005 2005 2004 2004 •m £m £m £m Income64,66 18,365 Premiums written net of reinsurance 12,672 11,677 23,351--------------------------------------------------------------------------------------------------------------------- 17,909 Net premiums earned 12,357 11,380 23,175 777 Fee and commission income 536 379 872 14,607 Net investment income 10,079 2,934 16,050 36 Share of profit after tax of joint ventures and associates 25 36 99 772 Other operating income 533 258 357--------------------------------------------------------------------------------------------------------------------- 34,101 23,530 14,987 40,553 Expenses (7,939) Change in insurance liabilities, net of reinsurance (5,478) (1,508) (6,104) (13,566) Claims and benefits paid, net of recoveries from reinsurers (9,360) (8,811) (17,625) (4,351) Expenses attributed to investment contracts (3,002) (1,715) (5,635) (514) Change in unallocated divisible surplus (355) 890 (1,330) (2,926) Fee and commission expense (2,019) (1,868) (4,734) (2,358) Other operating expenses (1,627) (1,338) (2,655) (401) Finance costs (277) (209) (445)---------------------------------------------------------------------------------------------------------------------- 2,046 Profit before tax 1,412 428 2,025 (417) Tax attributable to policyholders' returns (288) 21 (383)--------------------------------------------------------------------------------------------------------------------- 1,629 Profit before tax attributable to shareholders' profits 1,124 449 1,642 Tax expense (642) United Kingdom tax (443) (44) (280) (220) Overseas tax (152) (115) (374)--------------------------------------------------------------------------------------------------------------------- (862) (595) (159) (654) 417 Less: tax attributable to policyholders' returns 288 (21) 383--------------------------------------------------------------------------------------------------------------------- (445) Tax attributable to shareholders' profits (307) (180) (271)--------------------------------------------------------------------------------------------------------------------- 1,184 Profit for the period 817 269 1,371===================================================================================================================== Attributable to: 1,096 Equity shareholders of Aviva plc 756 234 1,275 88 Minority interests 61 35 96--------------------------------------------------------------------------------------------------------------------- 1,184 817 269 1,371===================================================================================================================== All profit is from continuing operations. 6 months 6 months 6 months Full year 2005 2005 2004 2004 Earnings per share - IFRS basis 47.1c Basic (pence per share) 32.5p 10.0p 55.8p 46.5c Diluted (pence per share) 32.1p 9.9p 55.3p Subsequent to 30 June 2005, the directors proposed an interim dividend for 2005 of 9.83p (interim 2004: 9.36p) per ordinary share, £233 million (interim 2004: £211 million) in total. This will be accounted for as an appropriation ofretained earnings in the full year ending 31 December 2005. ---------------------------------------------------------------------------------------------------------------------Page 46 Reconciliation of Group operating profit to retained profit for the period - IFRS basisFor the six months ended 30 June 2005 Page 6 months 6 months 6 months Full year 2005 2005 2004 2004 •m £m £m £m IFRS operating profit before tax attributable to shareholders' profits 53 739 Long term business 510 520 1,116 53 48 Fund management 33 17 40 53 1,006 General insurance and health 694 583 1,259 55 3 Other: 55 (120) Other operations 2 (35) (121) Corporate costs (83) (99) (188) 55 (309) Unallocated interest charges (213) (205) (437)--------------------------------------------------------------------------------------------------------------------- 1,367 IFRS operating profit before tax attributable to shareholders' profits 943 781 1,669 (14) Impairment of goodwill (10) - (41) (65) Amortisation and impairment of acquired value of in-force business (44) (35) (85) (23) Amortisation and impairment of other intangibles (16) (2) (7) - Financial Services Compensation Scheme and other levies - (25) (49) 54 174 Short term fluctuation in return on investments backing general insurance and health business 120 (238) 161 52 210 Profit on the disposal of subsidiaries and associates 145 8 34 52 (20) Integration costs (14) - - 52 - Exceptional costs for termination of operations - (40) (40)--------------------------------------------------------------------------------------------------------------------- 1,629 Profit before tax attributable to shareholders' profits 1,124 449 1,642 Tax attributable to shareholders' profits 56 (371) Operating profit (256) (245) (319) 56 (74) Other activities (51) 65 48--------------------------------------------------------------------------------------------------------------------- 1,184 Profit after tax attributable to shareholders 817 269 1,371--------------------------------------------------------------------------------------------------------------------- 6 months 6 months 6 months Full year 2005 2005 2004 2004 Earnings per share - IFRS operating profit basis 39.3c Basic (pence per share) 27.1p 21.8p 54.1p ----------------------------------------------------------------------------------------------------------------------Page 47 Summarised consolidated balance sheet - IFRS basisAs at 30 June 2005 30 June 30 June 30 June* 31 December 2005 2005 2004 2004 •m £m £m £m Assets Intangible assets 3,366 Goodwill 2,289 1,137 1,184 1,350 Acquired value of in-force business and other intangible assets 918 466 516 1,287 Property and equipment 875 895 812 16,284 Investment property 11,073 10,267 11,057 2,050 Investments in joint ventures 1,394 1,115 1,242 1,313 Investments in associates 893 841 886 Financial investments145,204 Debt securities 98,739 90,348 98,719 70,449 Equity securities 47,905 42,214 47,291 33,432 Other investments 22,734 17,603 20,346 32,237 Loans 21,921 19,098 22,055 12,912 Reinsurance assets 8,780 7,520 8,503 72 Current tax assets 49 8 - 1,234 Deferred tax assets 839 704 908 14,081 Receivables and other financial assets 9,575 6,901 7,509 4,728 Deferred acquisition costs and other assets 3,215 3,645 3,189 3,794 Prepayments and accrued income 2,580 2,285 2,307 21,184 Cash and cash equivalents 14,405 10,002 12,779 163 Assets of operations classified as held for sale 111 - ---------------------------------------------------------------------------------------------------------------------365,140 Total assets 248,295 215,049 239,303==================================================================================================================== Equity 874 Share capital 594 566 570 6,487 Capital reserves 4,411 3,839 3,878 749 Other reserves 509 237 736 3,056 Retained earnings 2,079 1,107 1,709-------------------------------------------------------------------------------------------------------------------- 11,166 Equity attributable to shareholders of Aviva plc 7,593 5,749 6,893 1,750 Preference share capital and direct capital instrument 1,190 200 1,190 1,453 Minority interests 988 767 910-------------------------------------------------------------------------------------------------------------------- 14,369 Total equity 9,771 6,716 8,993==================================================================================================================== Liabilities188,324 Gross insurance liabilities 128,060 113,222 124,122104,419 Gross liability for investment contracts 71,005 58,932 69,555 11,371 Unallocated divisible surplus 7,732 9,128 7,549 3,678 Provisions 2,501 1,872 2,125 1,584 Current tax liabilities 1,077 871 922 2,434 Deferred tax liabilities 1,655 979 1,543 15,735 Borrowings 10,700 8,817 10,090 10,362 Payables and other financial liabilities 7,047 8,639 7,240 9,184 Other liabilities 6,245 3,820 4,917 3,631 Net asset value attributable to unitholders 2,469 2,053 2,247 49 Liabilities of operations classified as held for sale 33 - ---------------------------------------------------------------------------------------------------------------------350,771 Total liabilities 238,524 208,333 230,310--------------------------------------------------------------------------------------------------------------------365,140 Total equity and liabilities 248,295 215,049 239,303==================================================================================================================== * Balance sheet at 30 June 2004 has not been restated for FRS 27 Life Assurance as the Group considers this is impracticable, as a consequence of the need for hindsight. ---------------------------------------------------------------------------------------------------------------------Page 48 Summarised consolidated statement of recognised income and expense - IFRS basisFor the six months ended 30 June 2005 6 months 6 months Full year 2005 2004 2004 £m £m £m Fair value gains/(losses), net of transfers to the income statement 1 (38) 151Actuarial (losses)/gains on pension schemes (46) 18 (145)Foreign exchange rate movements (265) (230) 59Aggregate tax effect - shareholder tax 18 41 (15)--------------------------------------------------------------------------------------------------------------------- Net (expense)/income recognised directly in equity (292) (209) 50Profit for the period* 817 269 1,371---------------------------------------------------------------------------------------------------------------------Total recognised income and expense for the period 525 60 1,421===================================================================================================================== * Stated before the effect of foreign exchange rate movements, which are reported within the foreign exchange rate movements line. Summarised consolidated statement of changes in equity - IFRS basisFor the six months ended 30 June 2005 6 months 6 months Full year 2005 2004 2004 £m £m £m Balance at 1 January 8,993 7,024 7,024Total recognised income and expense for the period 525 60 1,421Dividends and appropriations (note 14) (373) (351) (570)Movement in shares held by employee trusts - 1 1Issue of share capital for the acquisition of RAC 530 - -Other issue of share capital 27 23 25Shares issued in lieu of dividends 12 - 103Issue of direct capital instrument, net of transaction costs of £9 million - - 981Capital contributions from minority shareholders 93 - 4Minority share of dividends declared in the period (36) (41) (41)Minority interest in acquired subsidiaries - - 45---------------------------------------------------------------------------------------------------------------------Total equity 9,771 6,716 8,993Minority interests (988) (767) (910)---------------------------------------------------------------------------------------------------------------------Balance at 30 June/31 December 8,783 5,949 8,083===================================================================================================================== ---------------------------------------------------------------------------------------------------------------------Page 49 Summarised consolidated cash flow statement - IFRS basisFor the six months ended 30 June 2005 The cash flows presented in this statement cover all the Group's activities and include flows from policyholder and shareholder activities. 6 months 2005 ---------------------------------- Non-long- Long-term term Total Total Total business business 6 months 6 months Full year operations operations 2005 2004 2004 £m £m £m £m £mCash flows from operating activitiesCash generated from operations 3,586 1,630 5,216 4,670 14,568Tax (paid)/received (155) 138 (17) (48) (290)---------------------------------------------------------------------------------------------------------------------Net cash from operating activities 3,431 1,768 5,199 4,622 14,278--------------------------------------------------------------------------------------------------------------------- Cash flow from investing activities:Acquisition of subsidiaries, joint ventures and associates, net of cash acquired (77) (623) (700) - (294)Disposal of subsidiaries, joint ventures and associates, net of cash transferred - 192 192 174 308Net purchases of property and equipment (10) (34) (44) (99) (61)Net purchases of other financial investments (1,814) (544) (2,358) (4,474) (12,806)Net loans granted to joint ventures and associates - - - - (129)Dividends received from associates and joint ventures 16 - 16 41 52---------------------------------------------------------------------------------------------------------------------Net cash from investing activities (1,885) (1,009) (2,894) (4,358) (12,930)===================================================================================================================== Cash flow from financing activities:Proceeds from issue of shares, net of transaction costs - 27 27 3 3Proceeds from issue of Direct Capital Instrument, net of transaction costs - - - - 981Dividends and appropriations paid to group equity - (373) (373) (351) (467) capital holders Dividends paid to minority interests of subsidiaries (20) (16) (36) (41) (41)Movement in shares held by employee trusts - - - 1 1Interest paid on borrowings (118) (159) (277) (209) (445) Net drawdown/(repayment) of borrowings (365) 420 55 714 1,713Finance lease payments - (5) (5) (6) (26)Non-trading cash flows between operations (58) 58 - - -Capital contributions from minority shareholders 93 - 93 - 4---------------------------------------------------------------------------------------------------------------------Net cash from financing activities (468) (48) (516) 111 1,723---------------------------------------------------------------------------------------------------------------------Total cash flow 1,078 711 1,789 375 3,071--------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 1,078 711 1,789 375 3,071Cash and cash equivalents at 1 January 9,086 3,040 12,126 9,023 9,023Effect of exchange rate changes on cash and cash equivalents (214) (118) (332) (87) 32---------------------------------------------------------------------------------------------------------------------Cash and cash equivalents at 30 June/31 December 9,950 3,633 13,583 9,311 12,126-====================================================================================================================Cash and cash equivalents at 30 June/31 December comprised:Cash at bank and in hand 2,709 1,388 4,097 1,626 1,631Cash equivalents 7,623 2,685 10,308 8,376 11,148--------------------------------------------------------------------------------------------------------------------- 10,332 4,073 14,405 10,002 12,779Bank overdrafts (382) (440) (822) (691) (653)--------------------------------------------------------------------------------------------------------------------- 9,950 3,633 13,583 9,311 12,126===================================================================================================================== --------------------------------------------------------------------------------------------------------------------Page 50 1. Basis of preparation - IFRS basis (a) From 2005, all European Union listed companies are required to prepare consolidated financial statements using International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB). The FSA listing rules in the UK require that the 2005 interim results must also be presented on a basis consistent with IFRS. Accordingly, the results for the six months to 30 June 2005 have been prepared using the Group's accounting policies under IFRS published in the market release on 5 July 2005, "Impact of International Financial Reporting Standards on the results for 31 December 2004". This is the Group's first set of financial results prepared in accordance with IFRS accounting policies and its previously reported 2004 consolidated financial statements have accordingly been restated to comply with IFRS, with the date of transition to IFRSs being 1 January 2004. The Group's accounting policies are in accordance with IFRS issued by the IASB. The European Union has endorsed all relevant IFRS with the exception of the amendment to IAS19 Employee Benefits (2004), the amendments to IAS39 The Fair Value Option published by the IASB in June 2005 and Interpretation 4 of the International Financial Reporting Interpretations Committee Determining whether an Arrangement contains a Lease (IFRIC4). These amendments and IFRIC4 are expected to be endorsed by the European Commission during 2005 and, although they are not mandatory until 2006, the Group has decided to adopt them early and reflect their impact within this interim announcement. The Group's full year financial statements at 31 December 2005 will be prepared in accordance with these endorsed IFRSs and this announcement reflects the accounting policies expected to apply at the year end. The IFRSs themselves are subject to possible amendment by interpretative guidance from the IASB or external bodies and are therefore subject to change prior to publication of the Group's full year financial statements for the year ended 31 December 2005. (b) In line with the requirements of International Financial Reporting Standard 1, First-Time Adoption of International Financial Reporting Standards (IFRS1), Aviva has applied the Group's accounting policies under IFRS retrospectively at the date of transition being 1 January 2004, with exception of a number of permitted exemptions. These are detailed in the market release of 5 July 2005, "Impact of International Financial Reporting Standards on the results for 31 December 2004". (c) Aviva has chosen to revisit its longer term investment return ("LTIR") methodology from 2005 as part of a discretionary change not required by IFRS. This change in accounting policy was adopted and detailed in the market release of 5 July "Impact of International Financial Reporting Standards on the results for 31 December 2004. (d) The requirements of International Financial Reporting Standard 5, Non-current Assets Held for Sale and Discontinued Operations have been applied prospectively from 1 January 2005. (e) Financial Reporting Standard 27, Life Assurance (FRS27) was issued by the UK's Accounting Standards Board (ASB) on 13 December 2004, following the Penrose inquiry. Aviva, along with other major insurance companies and the Association of British Insurers (ABI), has signed a Memorandum of Understanding (MoU) with the ASB relating to FRS27. Under this MoU, Aviva has agreed to adopt voluntarily in full the standard from 2005 within the Group's IFRS financial statements. Within FRS27, the ASB acknowledged the difficulty of applying the requirements retrospectively and indeed it is the Group's view that it would be impractical to do so. Hence, in accordance with IAS8 and FRS 27, only the balance sheet at 31 December 2004 has been restated for the impact of FRS27. No adjustments have been made, nor are any required, to the 2004 income statement, the opening balance sheet at 1 January 2004 or the balance sheet at 30 June 2004. (f) In accordance with Phase 1 of International Financial Reporting Standard 4, Insurance Contracts (IFRS 4), the Group has applied existing accounting practices for insurance and participating investment contracts, modified as appropriate to comply with the IFRS framework and applicable standards. (g) Items included in the financial statements of each of the Group's entities are measured in the currency of the primary economic environment in which that entity operates (the "functional currency"). The consolidated financial statements are stated in sterling, which is the Company's functional and presentation currency. As supplementary information, consolidated financial information is also presented in Euros. (h) The results for the six months to 30 June 2005 and the results for the six months to 30 June 2004 are unaudited but have been reviewed by the auditor, Ernst & Young LLP. The interim accounts do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The results on an IFRS basis for the full year 2004 have been audited by Ernst & Young LLP. The Group's 2004 Annual Report and Accounts have been filed with the Registrar of Companies. The auditors have reported on the 2004 accounts and their report was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 2. Exchange rates The euro rates employed in this announcement are an average rate of 1 euro = £0.69 (6 months to 30 June 2004: 1 euro = £0.68; full year 2004: 1 euro = £0.68) and a closing rate of 1 euro = £0.68 (30 June 2004: 1 euro = £0.67; 31 December 2004: 1 euro = £0.71). --------------------------------------------------------------------------------------------------------------------Page 51 3. Acquisitions (a) RAC plc On 4 May 2005, the Group acquired 100% of the share capital of RAC plc. The results of RAC plc's operations have been included in the consolidated financial statements of the Group with effect from 4 May 2005, and contributed £17 millionto the consolidated profit before tax. £mPurchase costCash paid 566Fair value of 88 million shares issued, based on their published price at date of exchange (average of £6.03 per share) 530Costs attributable 17--------------------------------------------------------------------------------------------------------------------Total 1,113==================================================================================================================== The assets and liabilities at the date of acquisition were: Fair value Goodwill and reversal and Pension accounting Book intangible scheme policy Fair value revaluation valuation adjustments value £m £m £m £m £mAssetsGoodwill 510 (510) - - -Intangible assets 59 333 - - 392Tax assets 58 - - (58) -Other assets 608 - - 52 660-------------------------------------------------------------------------------------------------------------------Total assets 1,235 (177) - (6) 1,052=================================================================================================================== LiabilitiesProvisions Pension deficit (257) - (56) - (313) Other (8) - - (4) (12)Tax liabilities - (118) 17 47 (54)Other liabilities (708) - - (5) (713)-------------------------------------------------------------------------------------------------------------------Total liabilities (973) (118) (39) 38 (1,092)=================================================================================================================== Shareholders' funds acquired 262 (295) (39) 32 (40)-------------------------------------------------------------------------------------------------------------------Goodwill (including £118 million arising from the creation of the deferred tax liability on intangibles) 1,153-------------------------------------------------------------------------------------------------------------------Intangible assets 392-------------------------------------------------------------------------------------------------------------------Total goodwill and intangible assets 1,545Less: deferred tax liability (118)-------------------------------------------------------------------------------------------------------------------Total value of goodwill and intangible assets net of associated tax included on balance sheet 1,427================================================================================================================== Separable intangible assets have been identified and valued by an independent third party at £392 million, using estimated post-tax cash flows and post-tax discount rates. These comprise the RAC, BSM and Lex brands and contractualcustomer relationships. Of this £260 million has been assessed as having an indefinite life with the remaining £132 million being amortised over 9 to 22 years. A deferred tax liability of £118 million has been provided against these intangible assets, resulting in an increase in residual goodwill by this amount. Although this liability has been recognised in accordance with IAS12, and aproportion will be amortised to the income statement as the related intangible asset is amortised, this liability is only payable if the intangible asset is sold separately and this is not expected to happen. The pension scheme valuation adjustment and associated deferred taxation represents the effect of aligning the assumptions of the RAC plc schemes to those of Aviva. The fair value of the RAC pension deficit at the date ofacquisition amounted to £313 million (£219 million after deferred tax). The residual goodwill of £1,153 million essentially represents synergies, both in increased revenues and in reduced costs, expected to arise in RAC plc and our UK general insurance business as a result of the acquisition. £14 million of integration costs for the restructuring of the combined Norwich Union Insurance and RAC businesses has been included in the results to 30 June 2005. ---------------------------------------------------------------------------------------------------------------------Page 52 In July 2005, the Group completed the transfer of ownership of Hyundai Cars (UK) to motor manufacturer Hyundai Motor UKLimited. Accordingly, the assets and liabilities of this business have been presented as held for sale on the balance sheet. (b) Gresham Insurance Company Limited On 31 March 2005, the Group acquired 100% of the share capital of Gresham Insurance Company Limited. The cash consideration including purchase costs was £75 million. The fair value of the net assets acquired, includingintangibles of £14 million, was £75 million, giving rise to no goodwill on acquisition. (c) Solus Automotive Limited On 11 May 2005, the Group acquired 100% of the share capital of Solus Automotive Limited. The cash consideration including purchase costs was £20 million, including £12 million of cash and £8 million of deferred consideration. The fair value of the net assets acquired was nil, giving rise to £20 million of goodwill on acquisition. (d) Unaudited proforma combined revenues and profit Shown below are unaudited pro forma figures for combined revenues and profit as though the acquisition date for all business combinations effected during the period had been 1 January 2005, after giving effect to purchase accountingadjustments and the elimination of intercompany transactions. The pro forma financial information is not necessarily indicative of the combined results that would have been attained had the acquisitions taken place at 1 January 2005, nor is it necessarily indicative of future results. 6 months 2005 £mRevenues (premiums and fee income) 13,636IFRS profit before tax attributable to shareholders 1,138==================================================================================================================== 4. Exceptional costs for termination of operations In February 2004, the Group announced the closure of its UK national broker subsidiary, Hill House Hammond (HHH) together with the sale of its commercial business. The associated pre-tax costs of the closure of HHH were £40 millionand relate to termination activities, including redundancy costs and closure provisions. 5. Profit on the disposal of subsidiaries and associates The net profit on the disposal of subsidiary and associated undertakings comprises: 6 months 6 months Full year 2005 2004 2004 £m £m £m General insurance businessesUnited Kingdom - - 28France 1 7 6Asia (a) 145 - -Other small operations (1) 1 ---------------------------------------------------------------------------------------------------------------------- 145 8 34===================================================================================================================== (a) Sale of Asian general insurance businesses On 7 September 2004, the Group announced the disposal of its Asian general insurance businesses to Mitsui Sumitomo Insurance (MSI) for a total of US$450 million in cash. The sale was subject to obtaining regulatory clearance andapproval from other shareholders in the Asian businesses. Under the terms of the agreement, MSI will acquire all of Aviva's general insurance businesses in Asia. These comprise the general insurance business of Aviva Limited and the general insurance assets of Aviva Asia Pte Limited inSingapore; Aviva Insurance Berhad in Malaysia (including its branch in Brunei); Aviva Insurance (Thai) Company Limited in Thailand; PT Aviva Insurance in Indonesia; Dah Sing General Insurance Co Limited in Hong Kong; and Aviva'sbranch operations in Hong Kong, the Philippines, Marianas, Macau and Taiwan. The transaction will be achieved through share purchase of Aviva's interests in joint venture operations, business purchase and asset purchase in Singapore, andtransfer of Aviva's general insurance branch operations in Hong Kong, the Philippines, Marianas, Macau and Taiwan. The transaction is expected to complete in phases. Phase I completed on 28 February 2005 and included all businesses above except for Malaysia, Indonesia, Macau, Marianas, Taiwan, Dah Sing and the Philippines. The businesses in Macauand Dah Sing were then sold prior to 30 June 2005. The sale of Indonesia completed in July 2005 and the remaining businesses will be included as part of the completion of Phase II, expected in the second half of 2005. The assets andliabilities of these businesses are included in the totals held for sale on the balance sheet. Subject to the receipt of regulatory approval, the total proceeds for the sale of these businesses were fixed by reference to the net assets of the businesses as at 31 December 2003 and are not adjusted to reflect the results in the period from 1 January 2004 to completion. The Group does not bear any continuing operating risk from 31 December 2003. The results of the Asian general insurance business have been consolidated with those of the Group's ongoing operations until the completion of each transaction. Although the Group has retained no economic interest in theoperations of this business beyond 31 December 2003, the post-tax operating profits are incorporated in the Group's consolidated income statement from 1 January 2004 to the date of completion. This will be offset by a correspondingchange to the final profit on sale. Total profit on sale on the first tranche of the disposal was £145 million and £102 million after tax. ---------------------------------------------------------------------------------------------------------------------Page 53 6. Geographical analysis of life IFRS operating profit 6 months 6 months Full year 2005 2004 2004 £m £m £mUnited KingdomWith-profit 33 49 97Non-profit 178 179 256 Europe (excluding UK)France 131 89 213Ireland 14 14 31Italy 24 19 49Netherlands (including Belgium and Luxembourg) 58 54 214Poland 48 39 80Spain 39 24 72Other 1 (4) 5International (16) 57 99---------------------------------------------------------------------------------------------------------------------Total 510 520 1,116===================================================================================================================== 7. Geographical analysis of fund management IFRS operating profit 6 months 6 months Full year 2005 2004 2004 £m £m £mMorley - UK business 11 4 10 - European and International business 7 3 8Other fund management operationsUK - Royal Bank of Scotland (3) (6) (6) - Norwich Union investment funds 3 5 4France 10 8 15Other Europe 1 - 2International 4 3 7---------------------------------------------------------------------------------------------------------------------Total 33 17 40===================================================================================================================== 8. Geographical analysis of general insurance and health (a) Operating result Operating profit Underwriting result ----------------------------- ------------------------------ 6 months 6 months Full year 6 months 6 months Full year 2005 2004 2004 2005 2004 2004 £m £m £m £m £m £m United Kingdom 431 364 797 104 52 146 Europe (excluding UK)France 17 20 33 (12) (9) (16)Ireland 83 60 135 53 38 82Netherlands 55 53 88 14 2 10Other 19 12 32 2 (4) 6 InternationalCanada 67 52 133 14 5 37Other 22 22 41 7 8 6--------------------------------------------------------------------------------------------------------------------Total 694 583 1,259 182 92 271==================================================================================================================== -------------------------------------------------------------------------------------------------------------------Page 54 (b) Investment return information Actual investment return credited to income Longer-term investment return ----------------------------- ----------------------------- 6 months 6 months Full year 6 months 6 months Full year 2005 2004 2004 2005 2004 2004 £m £m £m £m £m £m United Kingdom 280 301 569 327 312 651 Europe (excluding UK) France 23 24 48 29 29 49Ireland 24 18 39 30 22 53Netherlands 53 19 83 41 51 78Other 14 12 20 17 16 26InternationalCanada 44 39 83 53 47 96Other 15 15 33 15 14 35--------------------------------------------------------------------------------------------------------------------Total longer-term investment return 512 491 988 ===========================Total actual investment income 453 428 875Realised gains/(losses) 55 (6) 47Unrealised gains/(losses) 124 (169) 227----------------------------------------------------------------------------------Total actual investment return 632 253 1,149================================================================================== The total short-term fluctuation in investment return of £120 million (six months 30 June 2004: £(238) million; full year 2004: £161 million) is the difference between the total actual investment return of £632 million (six months 30 June 2004: £253 million; full year 2004: £1,149 million) and the total longer-term investment return of £512 million (six months 30 June 2004: £491 million; full year 2004: £988 million). Actual income and longer-term investment return both contain the amortisation of the discount/premium arising on the acquisition of fixed income securities. The longer-term investment return is calculated separately for each principal general insurance and health business unit. In respect of equities and properties, the return is calculated by multiplying the opening market value of the investments, adjusted for sales and purchases during the period, by the longer-term rate of investment return. The longer-term rate of investment return is determined using consistent assumptions between operations, having regard tolocal economic and market forecasts of investment return. The allocated longer-term return for other investments is the actual income receivable for the year. The principal assumptions underlying the calculation of the longer-term investment return are: Longer-term rates of return Longer-term rates of return Equities Properties --------------------------- --------------------------- 2005 2004 2005 2004 % % % %United Kingdom 7.6% 7.8% 6.6% 6.8%France 6.7% 7.3% 5.7% 6.3%Ireland 6.7% 7.3% 5.7% 6.3%Netherlands 6.7% 7.3% 5.7% 6.3%Canada 7.4% 7.7% 6.4% 6.7%------------------------------------------------------------------------------------------------------------------ The table below shows the sensitivity of Group operating profit before tax to changes in the longer-term rates of return: 6 months 6 months 2005 2004 £m £mMovement in investment return for By Change in By ByEquities 1% higher/lower Group operating profit 27 25Properties 1% higher/lower Group operating profit 4 3------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------Page 55 9. Other operations 6 months 6 months Full year 2005 2004 2004 £m £m £m RAC 11 - -Hill House Hammond - (9) (8)Personal finance subsidiaries 1 - (1)Your Move - 8 9Norwich Union Life Services (38) (15) (80)Other 28 (19) (41)--------------------------------------------------------------------------------------------------------------------- 2 (35) (121)===================================================================================================================== 10. Corporate costs 6 months 6 months Full year 2005 2004 2004 £m £m £mRelated Shares:
Aviva