Aviva 2006 Annual Report Download - page 128

Aviva plc
Annual Report and Accounts 2006 124
Notes to the consolidated financial statements continued
3 – Subsidiaries continued
The net assets disposed of, which total £310 million, comprised investment in joint ventures of £239 million, tangible assets of
£102 million, other assets of £95 million and other liabilities of £126 million. The pension curtailment gain arose from the remeasurement
of pension liabilities in the RAC plc defined benefit pension scheme, following the MSS and LVL disposals.
(i) Sale of MSS
The MSS disposal was completed in three stages during the first six months of 2006, following the disposals of certain operational assets
and liabilities of Hyundai Cars (UK) and the commercial fleet business of Lex Transfleet in 2005. On 10 January 2006, the Group sold
Hyundai Car Finance Limited, which provides vehicle instalment finance and leasing, to Lloyds TSB. On 14 February 2006, the Group
sold Lex Autologistics Limited, Lex Commercials Limited and associated properties to Imperial Holdings. On 27 April 2006, the Group
completed the sale of the remaining vehicle solutions businesses, comprising Lex Transfleet Limited, Lex Defence Limited, Lex Defence
Management Limited and RAC Software Solutions Limited, to VT Group plc. Receipts from the completion of the disposal of the
MSS division totalled £111 million, resulting in a profit of £12 million before tax.
In 2005, the Group sold certain operational assets and liabilities of Hyundai Cars (UK) and the commercial fleet business of Lex Transfleet
for total consideration of £139 million. The sale resulted in a profit of £5 million, which is included in the 2005 figures above.
Of the total consideration of £250 million received for MSS disposals in 2005 and 2006, £73 million was in respect of retained liabilities to
be settled by the Group.
(ii) Sale of LVL
On 31 May 2006, the sale of Aviva’s 50% stake in Lex Vehicle Leasing (Holdings) Limited to HBOS plc was completed. Under the terms
of the joint venture agreement, the change of control of RAC provided HBOS with the right to acquire Aviva’s interest in LVL which HBOS
chose to exercise. The proceeds consisted of a net cash receipt of £227 million, from which Aviva’s estimated contribution of £16 million
to the statutory debt funding of the RAC plc defined benefit pension scheme had been deducted. The gross consideration was therefore
£243 million. In additional to the disposal of the investment in the joint venture of £239 million, HBOS will make an equivalent
contribution to the statutory debt funding of the defined benefit pension scheme, estimated at £16 million. The sale resulted in a
profit of £18 million before tax. A further £3 million profit arose on the sale of the Lex brand.
No other disposal is considered material for further disclosure.
(c) Integration and restructuring costs
£246 million of integration and restructuring costs have been included in the results for 2006. £21 million related to the restructuring of
the combined Norwich Union Insurance and RAC businesses and this completes the integration spend on the RAC businesses. £8 million
relates to the integration of Ark Life into the Hibernian business and £12 million to the integration of AmerUs into the US business.
The remaining £205 million relates to Norwich Union’s restructuring to reduce duplication and improve efficiency.
(d) Operations classified as held for sale
2005
£m
Intangible assets 9
Investment and property and equipment 320
Receivables and other financial assets 68
Deferred acquisition costs and other assets 40
Cash and cash equivalents 25
Total assets 462
Payables and financial liabilities (96)
Other liabilities (49)
Total liabilities (145)
Net assets 317
As described in note 3(b) above, the RAC non-core businesses, which were treated as held for sale as at 31 December 2005, have been
sold during 2006. No operations have been classified as held for sale as at 31 December 2006.
Financial statements continued