Aviva 2006 Annual Report Download - page 220
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Aviva plc
Annual Report and Accounts 2006 216
Financial statements of the Company continued
Notes to the Company financial statements continued
Financial statements continued
D – Tax continued
(iv) The movement in the net deferred tax asset was as follows:
2006 2005
£m£m
Net asset at 1 January 27
Amounts credited/(charged) to profit 7(5)
Net asset at 31 December 92
The Company has unrecognised tax losses of £nil (2005: £167 million) to carry forward against future taxable profits.
E – Reserves
Investment Equity
Merger valuation compensation Retained
reserve reserve reserve earnings
£m £m £m £m
Balance at 1 January 2005 227 11,801 21 888
Arising in the year:
Profit for the year – – – 1,347
Fair value gains on investments in subsidiaries – 1,521 – –
Dividends and appropriations – – – (657)
Reserves credit for equity compensation plans – – 22 –
Shares issued in lieu of dividends – – – 100
Merger relief on acquisition of RAC plc 508 –––
Aggregate tax effect – – – 13
Other movements – – – (1)
Balance at 31 December 2005 735 13,322 43 1,690
Arising in the year:
Loss for the year – – – (24)
Fair value gains on investments in subsidiaries – 4,075 – –
Fair value gains transferred to income statement –(94) – –
Actuarial losses on pension schemes – – – (4)
Dividends and appropriations – – – (762)
Reserves credit for equity compensation plans – – 48 –
Shares issued in lieu of dividends – – – 203
Issue of sharecapital under equity compensation scheme – – (18) 18
Merger relief on acquisition of AmerUs (note 3 (a)(iv)) 871 – – –
Transfer to retained earnings on realisation of merger reserve (871) – – 871
Aggregate tax effect – – – 15
Other movements – – – (2)
Balance at 31 December 2006 735 17,303 73 2,005
The issue of new shares to fund the acquisition of AmerUs was effected by a share placing. The placing structure utilised attracted merger
relief under section 131 of the Companies Act 1985, resulting in a credit to the merger reserve of £871 million. Subsequent internal
transactions required to complete the placing structure have resulted in this part of the merger reserve being realised. Consequently,
atransfer of £871 million has been made from the merger reserve to retained earnings.