Aviva 2006 Annual Report Download - page 165

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Aviva plc
Annual Report and Accounts 2006 161
32 – Reserves
(a) Merger reserve
2006 2005
£m £m
Balance at 1 January 3,271 2,763
Merger relief on acquisition of AmerUs (note 3(a)(iv)) 871 –
Merger relief on acquisition of RAC plc –508
Transfer to retained earnings on realisation (note 33) (871) –
Balance at 31 December 3,271 3,271
The issue of new shares to fund the acquisition of AmerUs was effected by a share placing. As part of the share placing, the Company
issued 129,000,000 ordinary shares for consideration of £903 million through a special purpose entity. £32 million was taken to share
capital and the balance of £871 million was taken to a merger reserve, since the placing structure utilised attracted merger relief under
s.131 of the Companies Act 1985. £871 million was then transferred to retained earnings following the redemption of shares in the
special purpose entity.
(b) Other reserves
Owner-
Currency occupied Investment Hedging Equity
translation properties valuation instruments compensation
reserve (see reserve (see reserve (see reserve (see reserve (see
accounting accounting accounting accounting accounting
policy D) policy N) policy R) policy S) policy Y) Total
£m £m £m £m £m £m
Balance at 1 January 2005 57 146 498 14 21 736
Arising in the year:
Fair value gains/(losses) –32 (65) (19) –(52)
Fair value losses transferred to profit – – 411 – – 411
Shareof fair value changes in joint ventures
and associates taken to equity – 2 – – – 2
Impairment losses on revalued assets – – (45) – – (45)
Reserves credit for equity compensation plans (note 28d) – – – –2222
Foreign exchange rate movements (2) – – 19 – 17
Aggregate tax effect – policyholders’ tax – 3 – – – 3
Aggregate tax effect – shareholders’ tax – (4) 45 5 – 46
Balance at 31 December 2005 55 179 844 19 43 1,140
Arising in the year:
Fair value gains – 26 347 – – 373
Fair value gains transferred to profit – – (162) – – (162)
Fair value gains transferred to retained earnings on disposals (note 33) – (9) – – – (9)
Impairment losses on revalued assets – (2) – – – (2)
Reserves credit for equity compensation plans (note 28d) – – – – 48 48
Shares issued under equity compensation plans (note 33) – – – – (18) (18)
Foreign exchange rate movements (386) – – 59 – (327)
Aggregate tax effect – policyholders’ tax – – ––––
Aggregate tax effect – shareholders’ tax – – (50) – – (50)
Balance at 31 December 2006 (331) 194 979 78 73 993
The above reserves are shown net of minority interests.