4th Feb 2009 07:00
Part 2 of 4
Page 15
Aviva MCEV financial statements
Page 16
Summarised consolidated income statement - MCEV basis
|
Reviewed 6 months 2008 £m |
Audited Full year 2007 £m |
|
|
Operating profit before tax attributable to shareholders' profits |
||
|
Life MCEV operating earnings |
1,280 |
2,544 |
|
Fund management1 |
30 |
90 |
|
General insurance and health |
528 |
1,021 |
|
Other: |
||
|
Other operations and regional costs2 |
(57) |
(70) |
|
Corporate centre |
(71) |
(157) |
|
Group debt costs and other interest |
(201) |
(363) |
|
Operating profit before tax attributable to shareholders' profits |
1,509 |
3,065 |
|
Adjusted for the following: |
||
|
Economic variances on long-term business |
(4,086) |
(19) |
|
Short-term fluctuation in return of investments backing general insurance and health business |
(314) |
(184) |
|
Economic assumption changes on general insurance and health business |
6 |
2 |
|
Impairment of goodwill |
(42) |
(10) |
|
Amortisation and impairment of intangibles |
(44) |
(89) |
|
Profit on the disposal of subsidiaries and associates |
9 |
20 |
|
Integration and restructuring costs |
(132) |
(153) |
|
Exceptional items |
(155) |
- |
|
(Loss)/profit before tax |
(3,249) |
2,632 |
|
Tax on operating earnings |
(453) |
(924) |
|
Tax on other activities |
1,341 |
238 |
|
(Loss)/profit for the period |
(2,361) |
1,946 |
|
Attributable to: |
||
|
Equity shareholders of Aviva plc |
(2,401) |
1,704 |
|
Minority interests |
40 |
242 |
|
|
(2,361) |
1,946 |
All profit is from continuing operations.
1. Excludes the proportion of the results of Aviva Investors fund management businesses and other fund management operations within the Group that arises from the provision of fund management services to our Life businesses. These results are included within the Life MCEV operating earnings consistent with Aviva's MCEV methodology.
2. Excludes the proportion of the results of subsidiaries providing services to the Life business. These results are included within the life MCEV operating earnings.
Earnings per share - MCEV basis
|
Earnings per share |
Reviewed 6 months 2008 |
Audited Full year 2007 |
|
Operating earnings on an MCEV basis after tax, attributable to ordinary shareholders of Aviva plc |
||
|
Basic (pence per share) |
33.9p |
70.4p |
|
Diluted (pence per share) |
33.6p |
69.8p |
|
Earnings after tax on an MCEV basis, attributable to ordinary shareholders of Aviva plc |
||
|
Basic (pence per share) |
(91.6)p |
63.8p |
|
Diluted (pence per share) |
(91.6)p |
63.2p |
Page 17
Consolidated statement of recognised income and expense - MCEV basis
|
Reviewed 6 months 2008 £m |
Audited Full year 2007 £m |
|
|
Fair value (losses)/gains on AFS securities, owner-occupied properties and hedging instruments |
(130) |
45 |
|
Fair value gains transferred to profit |
(10) |
(12) |
|
Impairment losses on revalued assets |
74 |
- |
|
Actuarial (losses)/gains on pension schemes |
(690) |
648 |
|
Actuarial gains/(losses) on pension schemes transferred to unallocated divisible surplus and other movements |
71 |
(61) |
|
Foreign exchange rate movements |
984 |
1,159 |
|
Aggregate tax effect - shareholder tax |
11 |
(246) |
|
Net income recognised directly in equity |
310 |
1,533 |
|
(Loss)/profit for the period |
(2,361) |
1,946 |
|
Total recognised (expense)/income for the period |
(2,051) |
3,479 |
|
Attributable to: |
||
|
Equity shareholders of Aviva plc |
(2,274) |
3,044 |
|
Minority interests |
223 |
435 |
|
(2,051) |
3,479 |
Reconciliation of movements in consolidated shareholders' equity - MCEV basis
|
Reviewed 6 months 2008 £m |
Audited Full year 2007 £m |
|
|
Balance at 1 January |
23,689 |
20,443 |
|
Total recognised income and expense for the period |
(2,051) |
3,479 |
|
Dividends and appropriations |
(563) |
(871) |
|
Other issues of share capital, net of transaction costs |
31 |
48 |
|
Shares issued in lieu of dividends |
170 |
301 |
|
Capital contribution from minority shareholders |
7 |
- |
|
Minority share of dividends declared in the period |
(75) |
(66) |
|
Minority interest in acquired/disposed subsidiaries |
59 |
315 |
|
Movement in shares held by employee trust |
- |
(10) |
|
Changes in minority interest in existing subsidiaries |
(78) |
- |
|
Reserves credit for equity compensation plans |
27 |
50 |
|
Total equity |
21,216 |
23,689 |
|
Minority interests |
(2,637) |
(2,501) |
|
Balance at 30 June/31 December |
18,579 |
21,188 |
Page 18
Summarised consolidated balance sheet - MCEV basis
|
Reviewed 30 June 2008 £m |
Audited 31 December 2007 £m |
Audited 31 December 2006 £m |
|
|
Assets |
|||
|
Goodwill |
3,048 |
3,082 |
2,910 |
|
Acquired value of in-force business and intangible assets |
3,170 |
3,197 |
2,728 |
|
Additional value of in-force long-term business1 |
6,542 |
7,758 |
6,698 |
|
Interests in, and loans to, joint ventures |
2,588 |
2,576 |
2,795 |
|
Interests in, and loans to, associates |
1,211 |
1,206 |
895 |
|
Property and equipment |
996 |
942 |
904 |
|
Investment property |
14,668 |
15,391 |
15,123 |
|
Loans |
37,387 |
36,193 |
28,574 |
|
Financial investments |
|||
|
Debt securities |
124,176 |
121,312 |
114,466 |
|
Equity securities |
48,517 |
58,829 |
56,762 |
|
Other investments |
38,476 |
36,269 |
33,050 |
|
Reinsurance assets |
8,273 |
8,054 |
7,764 |
|
Deferred tax assets |
249 |
590 |
1,199 |
|
Current tax assets |
534 |
376 |
344 |
|
Receivables and other financial assets |
10,750 |
8,619 |
8,098 |
|
Deferred acquisition costs and other assets |
5,074 |
4,487 |
3,476 |
|
Prepayments and accrued income |
3,183 |
2,986 |
2,585 |
|
Cash and cash equivalents |
18,783 |
16,089 |
13,117 |
|
Assets of operations classified as held for sale |
6,643 |
1,128 |
- |
|
Total assets |
334,268 |
329,084 |
301,488 |
|
Equity |
|||
|
Ordinary share capital |
664 |
655 |
641 |
|
Capital reserves |
4,516 |
4,494 |
4,460 |
|
Other reserves |
1,601 |
1,179 |
530 |
|
Shares held by employee trusts |
(10) |
(10) |
- |
|
Retained earnings |
5,244 |
6,338 |
5,195 |
|
Additional retained earnings on an MCEV basis2 |
5,374 |
7,342 |
6,610 |
|
Equity attributable to ordinary shareholders of Aviva plc |
17,389 |
19,998 |
17,436 |
|
Preference share capital and direct capital instruments |
1,190 |
1,190 |
1,190 |
|
Minority interests3 |
2,637 |
2,501 |
1,817 |
|
Total equity |
21,216 |
23,689 |
20,443 |
|
Liabilities |
|||
|
Gross insurance liabilities |
154,593 |
152,839 |
144,016 |
|
Gross liabilities for investment contracts |
98,627 |
98,244 |
88,358 |
|
Unallocated divisible surplus |
4,065 |
6,785 |
9,465 |
|
Net asset value attributable to unitholders |
7,452 |
6,409 |
4,241 |
|
Provisions |
2,398 |
1,937 |
2,850 |
|
Deferred tax liabilities |
1,257 |
2,532 |
3,079 |
|
Current tax liabilities |
1,125 |
1,225 |
1,301 |
|
Borrowings |
13,373 |
12,657 |
12,137 |
|
Payables and other financial liabilities |
19,720 |
18,060 |
11,364 |
|
Other liabilities |
4,537 |
3,765 |
4,234 |
|
Liabilities of operations classified as held for sale |
5,905 |
942 |
- |
|
Total liabilities |
313,052 |
305,395 |
281,045 |
|
Total equity and liabilities |
334,268 |
329,084 |
301,488 |
The summarised consolidated balance sheet presented above is unaltered from the corresponding IFRS summarised consolidated balance sheet, with the exception of the following:
1. Adding the excess of the Life MCEV, including minority interests, over the corresponding Life IFRS net assets represented as the additional value of in-force long-term business.
2. Corresponding item within equity represented by the additional retained profit on an MCEV basis.
3. Corresponding adjustments to minority interests.
The balance sheet has been restated for the conversion to MCEV, the change in accounting for latent claims and consolidation of funds. Details of the latter two changes are set out on page 26.
Page 19
Reconciliation between shareholders' equity on an IFRS basis and an MCEV basis
|
Reviewed 30 June 2008 |
|||
|
IFRS £m |
Adjustment £m |
MCEV £m |
|
|
Ordinary share capital |
664 |
- |
664 |
|
Capital reserves |
4,516 |
- |
4,516 |
|
Other reserves |
1,211 |
390 |
1,601 |
|
Shares held by employee trusts |
(10) |
- |
(10) |
|
Retained earnings |
5,244 |
- |
5,244 |
|
Additional retained earnings on an MCEV basis |
- |
5,374 |
5,374 |
|
Equity attributable to ordinary shareholders of Aviva plc |
11,625 |
5,764 |
17,389 |
|
Preference share capital |
200 |
- |
200 |
|
Direct capital instruments |
990 |
- |
990 |
|
Minority interests |
1,859 |
778 |
2,637 |
|
Total equity |
14,674 |
6,542 |
21,216 |
|
Audited 31 December 2007 |
|||
|
IFRS £m |
Adjustment £m |
MCEV £m |
|
|
Ordinary share capital |
655 |
- |
655 |
|
Capital reserves |
4,494 |
- |
4,494 |
|
Other reserves |
1,469 |
(290) |
1,179 |
|
Shares held by employee trusts |
(10) |
- |
(10) |
|
Retained earnings |
6,338 |
- |
6,338 |
|
Additional retained earnings on an MCEV basis |
- |
7,342 |
7,342 |
|
Equity attributable to ordinary shareholders of Aviva plc |
12,946 |
7,052 |
19,998 |
|
Preference share capital |
200 |
- |
200 |
|
Direct capital instruments |
990 |
- |
990 |
|
Minority interests |
1,795 |
706 |
2,501 |
|
Total equity |
15,931 |
7,758 |
23,689 |
|
Audited 31 December 2006 |
|||
|
IFRS £m |
Adjustment £m |
MCEV £m |
|
|
Ordinary share capital |
641 |
- |
641 |
|
Capital reserves |
4,460 |
- |
4,460 |
|
Other reserves |
992 |
(462) |
530 |
|
Retained earnings |
5,195 |
- |
5,195 |
|
Additional retained earnings on an MCEV basis |
- |
6,610 |
6,610 |
|
Equity attributable to ordinary shareholders of Aviva plc |
11,288 |
6,148 |
17,436 |
|
Preference share capital |
200 |
- |
200 |
|
Direct capital instruments |
990 |
- |
990 |
|
Minority interests |
1,267 |
550 |
1,817 |
|
Total equity |
13,745 |
6,698 |
20,443 |
Page 20
Group MCEV analysis of earnings
|
Reviewed 6 months 2008 |
||||||
|
Covered business1 £m A |
Non-covered but related to life business2 £m B |
Total life business3£m A+B |
Non-covered relating to non-life £m C |
Total non- covered business £m B+C |
Total £m A+B+C |
|
|
Opening Group MCEV |
18,248 |
2,059 |
20,307 |
881 |
2,940 |
21,188 |
|
Opening adjustments |
- |
- |
- |
- |
- |
- |
|
Adjusted opening Group MCEV |
18,248 |
2,059 |
20,307 |
881 |
2,940 |
21,188 |
|
Operating MCEV earnings |
774 |
- |
774 |
126 |
126 |
900 |
|
Non-operating MCEV earnings |
(2,836) |
(19) |
(2,855) |
(446) |
(465) |
(3,301) |
|
Total MCEV earnings |
(2,062) |
(19) |
(2,081) |
(320) |
(339) |
(2,401) |
|
Other movements in IFRS net equity |
- |
(88) |
(88) |
(674) |
(762) |
(762) |
|
Capital and dividend flows |
(559) |
- |
(559) |
264 |
264 |
(335) |
|
Foreign exchange variances |
800 |
102 |
902 |
(13) |
89 |
889 |
|
Acquired/divested businesses |
190 |
117 |
307 |
(307) |
190 |
- |
|
Closing Group MCEV |
16,577 |
2,171 |
18,748 |
(169) |
2,002 |
18,579 |
|
Preference share capital and direct capital instruments |
(1,190) |
|||||
|
Equity attributable to ordinary shareholders of Aviva plc on an MCEV basis |
17,389 |
|||||
|
Audited Full year 2007 |
||||||
|
Covered business1£m A |
Non-covered but related to life business2£m B |
Total life business3£m A+B |
Non-covered relating to non-life £m C |
Total non- covered business £m B+C |
Total £m A+B+C |
|
|
Opening Group MCEV |
16,506 |
1,594 |
18,100 |
528 |
2,122 |
18,628 |
|
Opening adjustments |
- |
- |
- |
- |
- |
- |
|
Adjusted opening Group MCEV |
16,506 |
1,594 |
18,100 |
528 |
2,122 |
18,628 |
|
Operating MCEV earnings |
1,567 |
- |
1,567 |
309 |
309 |
1,876 |
|
Non-operating MCEV earnings |
52 |
(33) |
19 |
(191) |
(224) |
(172) |
|
Total MCEV earnings |
1,619 |
(33) |
1,586 |
118 |
85 |
1,704 |
|
Other movements in IFRS net equity |
- |
124 |
124 |
316 |
440 |
440 |
|
Capital and dividend flows |
(829) |
- |
(829) |
347 |
347 |
(482) |
|
Foreign exchange variances |
851 |
61 |
912 |
(14) |
47 |
898 |
|
Acquired/divested businesses |
101 |
313 |
414 |
(414) |
(101) |
- |
|
Closing Group MCEV |
18,248 |
2,059 |
20,307 |
881 |
2,940 |
21,188 |
|
Preference share capital and direct capital instruments |
(1,190) |
|||||
|
Equity attributable to ordinary shareholders of Aviva plc on an MCEV basis |
19,998 |
|||||
1. Covered business represents the business that the MCEV calculations cover, as detailed in the Basis of preparation note. The embedded value is presented net of minority interests and tax.
2. Non-covered but related to life business represents the adjustments to the MCEV, including goodwill, to calculate the long-term business net assets on an MCEV basis. An analysis of net assets on an MCEV basis gross of minority interests is provided on page 21.
3. Net assets for the total life businesses on an MCEV basis presented net of minority interests.
Page 21
Segmentation of summarised consolidated balance sheet
|
Reviewed 30 June 2008 |
Audited 31 December 2007 |
Audited 31 December 2006 |
|||||||
|
Life and related businesses £m |
General business and other £m |
Group £m |
Life and related businesses £m |
General business and other £m |
Group £m |
Life and related businesses £m |
General business and other £m |
Group £m |
|
|
Total assets before acquired value of in-force long-term business |
282,765 |
43,155 |
325,920 |
278,128 |
41,500 |
319,628 |
255,113 |
37,871 |
292,984 |
|
Acquired additional value of in-force long-term business |
1,806 |
- |
1,806 |
1,698 |
- |
1,698 |
1,806 |
- |
1,806 |
|
Total assets included in the IFRS balance sheet |
284,571 |
43,155 |
327,726 |
279,826 |
41,500 |
321,326 |
256,919 |
37,871 |
294,790 |
|
Liabilities of the long-term business |
(270,179) |
- |
(270,179) |
(265,187) |
- |
(265,187) |
(244,021) |
- |
(244,021) |
|
Liabilities of the general insurance and other businesses |
- |
(42,873) |
(42,873) |
- |
(40,208) |
(40,208) |
- |
(37,024) |
(37,024) |
|
Net assets on a statutory IFRS basis |
14,392 |
282 |
14,674 |
14,639 |
1,292 |
15,931 |
12,898 |
847 |
13,745 |
|
Additional value of in-force long-term business1 |
6,542 |
- |
6,542 |
7,758 |
- |
7,758 |
6,698 |
- |
6,698 |
|
Net assets on an MCEV basis2 |
20,934 |
282 |
21,216 |
22,397 |
1,292 |
23,689 |
19,596 |
847 |
20,443 |
|
Equity capital, capital reserves, shares held by employee trusts and other reserves |
6,771 |
6,318 |
5,631 |
||||||
|
IFRS basis retained earnings |
5,244 |
6,338 |
5,195 |
||||||
|
Additional MCEV basis retained earnings |
5,374 |
7,342 |
6,610 |
||||||
|
Equity attributable to ordinary shareholders of Aviva plc on an MCEV basis |
17,389 |
19,998 |
17,436 |
||||||
|
Preference share capital and direct capital instruments |
1,190 |
1,190 |
1,190 |
||||||
|
Minority interests |
2,637 |
2,501 |
1,817 |
||||||
|
MCEV basis total equity |
21,216 |
23,689 |
20,443 |
||||||
1. The analysis between the group's and minority interests' share of the additional value of in-force long-term business is as follows:
|
Reviewed 30 June 2008 |
Audited 31 December 2007 |
Audited 31 December 2006 |
|
|
Group's share included in shareholders' funds |
5,374 |
7,342 |
6,610 |
|
Minority interests' share |
778 |
706 |
550 |
|
Movements in AFS securities |
390 |
(290) |
(462) |
|
Per balance at 30 June/31 December |
6,542 |
7,758 |
6,698 |
2. Analysis of net assets on an MCEV basis is made up as follows:
|
Reviewed 30 June 2008 |
Audited 31 December 2007 |
Audited 31 December 2006 |
|
|
Embedded value |
16,577 |
18,248 |
16,506 |
|
RBSG goodwill |
217 |
217 |
217 |
|
Goodwill and intangible assets allocated to long-term business |
2,278 |
2,142 |
1,554 |
|
Minority Interests |
2,002 |
1,848 |
1,498 |
|
Notional allocation of IAS19 pension fund deficit to long-term business 3,4 |
(140) |
(58) |
(179) |
|
Long-term business net assets on an MCEV basis |
20,934 |
22,397 |
19,596 |
3. The value of the Aviva Staff Pension Schemes deficit has been notionally allocated between segments, based on current funding and the life proportion has been included within the long-term business net assets on an MCEV basis.
4. The pensions fund deficit notionally allocated to long-term business is net of the proportion of funding borne by the UK with-profit funds.
End of Part 2 of 4
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