Aviva 2002 Annual Report Download - page 84

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19 – Land and buildings
The carrying value of land and buildings comprises:
Long-term business Non-long-term business Group
2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m
Freeholds 7,027 6,276 599 759 7,626 7,035
Long leaseholds – over 50 years 1,692 1,877 12 22 1,704 1,899
Short leaseholds – under 50 years 29 31 57 76 86 107
8,748 8,184 668 857 9,416 9,041
The cost of land and buildings at 31 December 2002 was £7,741 million (2001: £7,211 million). The carrying value of land and buildings
occupied by the Group for its own activities was £355 million (2001: £554 million).
The valuation of properties has been undertaken by qualified external valuers or prepared or monitored by qualified members of staff
reporting to the Head of Property of Morley Fund Management Limited, who is a Fellow of The Royal Institution of Chartered Surveyors,
or by local qualified staff of the Group in overseas operations. All properties are valued at market value.
20 – Investments in joint ventures
(a) As part of their investment strategy, the UK long-term business policyholder funds have invested in a number of property limited
partnerships (“PLPs”) during the year, through a mix of capital and loans. The PLPs are managed by general partners (“GPs”), in which
the UK long-term business shareholder companies hold equity stakes and which themselves hold nominal stakes in the PLPs.
Most of the PLPs have raised external debt, secured on their respective property portfolios. The lenders are only entitled to obtain
payment, of both interest and principal, to the extent that there are sufficient resources in the respective PLPs. The lenders have no
recourse whatsoever to the policyholder or shareholders’ funds of any company of the Aviva Group.
Accounting for the PLPs as subsidiary undertakings, joint ventures or other financial investments depends on the shareholdings in the
GPs and the terms in each partnership agreement. Where the Group exerts control over a PLP, it has been treated as a subsidiary and its
results, assets and liabilities have been consolidated. Where the partnership is managed by a contractual agreement such that no one
party exerts control, notwithstanding that the Group’s partnership share in the PLP (including its indirect stake via the relevant GP) may
be greater than 50%, such PLPs have been accounted for as joint ventures. Here, the Group’s share of the respective PLPs’ gross assets
and gross liabilities are shown on the face of the consolidated balance sheet, in accordance with the requirements of FRS9 “Associates
and joint ventures”. Where the Group holds minority stakes in PLPs, with no disproportionate influence, the relevant investments are
included in other financial investments at their market value.
In addition to the PLPs described above, the Group has invested in a joint venture life assurance company in China which had not
commenced operations at 31 December 2002. Details of the principal joint ventures are given in section (c) below.
(b) Movements in the Group’s investments in joint ventures comprise:
Long-term business
2002 2001
£m £m
Share of result for the year after tax 29 –
Unrealised investment gains after tax 72 –
Dividends received (27) –
Additions 707 –
Movements in investments in joint ventures 781 –
Balance at 1 January ––
Balance at 31 December 781 –
(c) The principal joint ventures included above are as follows:
(i) Property management undertakings
GP PLP
Company proportion held proportion held
Ashtenne Industrial Partnership 66.7% 57.6%
Bishopsbridge Limited Partnership 50% 50%
The Junction Limited Partnership 50% 50.7%
The Mall Limited Partnership 50% 50%
Quercus Property Partnership Limited 50% 80%
All the above undertakings perform property ownership and management activities, and are incorporated and operate in Great Britain.
All these investments are held by subsidiary undertakings.
(ii) Other
The Group also has a 50% holding in AVIVA-COFCO Life Insurance Company Limited, a life assurance company incorporated and
operating in China. These shares are held by the Company, with a cost of £20 million and share of net assets of £20 million.
Notes to the accounts continued
70 Aviva plc
Annual report + accounts 2002