Aviva 2002 Annual Report Download - page 83

17 – Subsidiary undertakings continued
(iv) In July 2002, the Group completed the disposal of its wholly-owned subsidiary, Plus Ultra Compania Anonima de Seguros y
Reaseguros, for a total cash consideration of £152 million. Net assets at the date of disposal amounted to £52 million and the profit on
disposal, after transaction costs, was £94 million.
(v) In October 2002, the Group entered into a binding agreement to dispose of its Australian and New Zealand general insurance
businesses which became unconditional on 24 December 2002. Under the terms of the agreement, the Group sold its wholly-owned
subsidiaries CGU Australia Limited and Belves Investments Limited, which are the holding companies for all of Aviva’s general insurance
businesses in Australia and New Zealand, for a total cash consideration of £651 million including a pre-completion dividend of
£106 million. At the date of disposal, the combined businesses had total net assets of £293 million, including the value of acquired
goodwill. The loss on disposal, after writing back goodwill of £300 million previously written off to reserves and after deducting
associated costs of sale, was £66 million.
In calculating the £86 million loss on the disposal of Sabre Insurance Company Limited, CGU Australia Limited and Belves Investments
Limited, £310 million of goodwill previously written off to reserves has been brought back into account, as required by FRS10 “Goodwill
and Intangible Assets”. The same goodwill amount is also credited directly to the profit and loss account reserve and therefore has a
neutral effect on shareholders’ funds.
(d) The Company’s subsidiary undertakings
Movements in the Company’s shares in subsidiary undertakings are set out below:
Restated
2002 2001
£m £m
Net asset value
At 1 January 13,579 13,309
Additions –1,238
Movement in net asset value (2,964) (968)
At 31 December 10,615 13,579
Shares in subsidiary undertakings are valued at net asset value computed in accordance with the Company’s accounting policies.
The resulting gain over book value of £115 million (2001: £3,079 million, restated) has been credited to the Company’s revaluation
reserve (see note 35). The directors are satisfied that the aggregate value of all such investments is not less than the aggregate amount
at which they are stated in the balance sheet.
(e) Principal subsidiary undertakings at 31 December 2002 are listed on page 99.
18 – Goodwill
The carrying value of goodwill comprises:
Positive Negative Total Total
goodwill goodwill 2002 2001
£m £m £m £m
Cost:
At 1 January 1,382 (42) 1,340 881
Additions (17b) 76 – 76 496
Disposals (67) – (67) (37)
Foreign exchange rate movements (1) (6) (7) –
At 31 December 1,390 (48) 1,342 1,340
Amortisation:
At 1 January 204 (5) 199 134
Charge in the year 125 (3) 122 74
Disposals (19) – (19) (8)
Foreign exchange rate movements 1(1) – (1)
At 31 December 311 (9) 302 199
Carrying value at 31 December 1,079 (39) 1,040 1,141
Positive and negative goodwill is being amortised on a straight-line basis over its useful economic life. Useful economic lives have been
determined in respect of each acquisition to match the period over which the value of the underlying businesses will exceed the value of
their identifiable net assets. No useful economic lives are in excess of 20 years. As explained in accounting policy J on page 45, goodwill
arising in 1997 and prior years was charged directly to reserves.
69 Aviva plc
Annual report + accounts 2002