Aviva 2005 Annual Report Download - page 110

Financial statements continued
Notes to the consolidated financial statements continued
3 – Subsidiaries continued
(iv) Unaudited pro forma 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 year had been 1 January 2005, after giving effect to purchase accounting adjustments 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.
2005
£m
Revenues (premiums and fee income) 27,842
Profit before tax attributable to shareholders 2,578
Of the above pre-tax profit, £21 million has arisen since acquisition.
(v) Non-adjusting post-balance sheet events:
Irish bancassurance agreement
On 22 November 2005, the Group announced a new bancassurance agreement in Ireland between its wholly-owned subsidiary
Hibernian Group plc (“Hibernian”) and Allied Irish Banks plc (“AIB”). This will create a leading force in the Irish life and pensions market
and bring further opportunities for growth in this market. The transaction completed on 27 January 2006, following the receipt of
regulatory and European Commission approval.
Under the terms of the agreement, Hibernian Life Holdings Limited (HLH), the parent company of Hibernian Life & Pensions Limited, has
acquired all the shares of Ark Life Assurance Company Limited (Ark Life) from AIB in exchange for a 24.99% stake in the enlarged HLH
and a balancing cash payment of a195.4 million which also reflects the management of Ark Life funds by Hibernian Investment
Managers Limited, part of the Group’s fund management business. A further deferred cash payment of up to a10 million is payable,
subject to the fulfilment of certain performance criteria.
AIB calculate embedded value on a different basis to that used by the Group and, in particular, do not use EEV principles. In view of
the very recent timing of completion, it is currently impractical to comply with the requirements of paragraph 67 of IFRS 3, Business
Combinations, and to state with any certainty the fair values of the assets and liabilities acquired, and therefore to estimate the goodwill
arising on this acquisition and the unrealised gain on disposal of the Group’s 24.99% interest in HLH.
The gain on disposal of this interest in HLH will be calculated in accordance with SIC 13, Jointly Controlled Entities – Non-Monetary
Contributions by Venturers, and will be recognised in 2006.
Acquisition in Sri Lanka
On 1 February 2006, the Group acquired a 51% interest in Eagle Insurance Limited (Eagle), the third largest insurer in Sri Lanka, by
buying a majority shareholding in Eagle’s immediate holding company, NDB Finance Lanka (Pvt) Limited, for cash of £15 million. At the
same time, Eagle has entered into a bancassurance agreement with National Development Bank Limited (NDB), Sri Lanka’s biggest
development bank and Eagle’s other major shareholder. In view of the very recent timing of completion, it is currently impractical to
comply with the requirements of paragraph 67 of IFRS 3, Business Combinations, and to state with any certainty the fair values of the
assets and liabilities acquired, and therefore to estimate the goodwill arising on this acquisition.
(b) Disposals of subsidiaries and associates
The profit on disposal was determined as follows:
2005 2004
£m £m
Proceeds from sale 421 327
Net assets sold (245) (293)
Transaction costs (23) –
Profit on disposal before tax 153 34
Tax on profit on disposal (43) –
Profit on disposal after tax 110 34
Aviva plc 2005 Financial statements
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