Aviva 2007 Annual Report Download - page 137
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Please find page 137 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.2 – Presentation changes continued
(b) Restatement of prior year figures
(i) Gross up for cash collateral received
The Group enters into stock lending transactions and receives cash or non-cash collateral to reduce the Group’s exposure
to counterparty credit risk. Collateral received in the form of cash is then lent out at market rates of interest. During 2007,
we identified that certain cash collateral transactions should have been historically recognised on the balance sheet, with a
corresponding obligation to return this collateral, instead of showing a net nil position.
As a result, the figures for loan assets and payables and other financial liabilities as at 31 December 2006 have been
restated by increasing them both by £2,129 million. The equivalent adjustment at 1 January 2006, the start of the
comparative period, would have been to increase both loan assets and payables and other financial liabilities by
£120 million.
In addition, we identified that the interest paid on cash collateral received and the interest earned from onlending this cash
had previously been offset and reported as net interest income. The 2006 comparative figures have therefore been
restated in order to report this interest expense and interest income separately, by increasing both by £17 million.
Neither of these adjustments has any impact on profit for the year, operating profit or earnings per share in 2006, nor on
retained earnings, net assets or total equity at either 1 January 2006 or 31 December 2006.
(ii) Restatement of cash equivalents
As described in accounting policy X, cash equivalents include short-term highly liquid investments which normally have
maturity dates of less than three months from the date of acquisition. During the year, we have reviewed the application
of this policy to all such investments, as a result of which we have determined that certain investments, previously classified
as cash equivalents, would be more appropriately classified as financial investments.
The application of this review to prior year balances has led to a reduction of the cash equivalents balance at 31 December
2006 by £1,425 million, with a corresponding increase in the debt securities total of the same amount. This restatement
has no impact on net assets or total equity. The effect on the opening balances in the prior year is to reduce cash
equivalents and increase debt securities by £1,444 million. The effect on the cash flow statement is therefore to reduce the
prior year cash flows from operating activities by £19 million.
3 – Subsidiaries
This note provides details of the acquisitions and disposals of subsidiaries that the Group has made during the year,
together with details of businesses held for sale at the year end. The principal Group subsidiaries are listed on
page 268 to 269.
(a) Acquisitions
(i) Erasmus Group
On 26 March 2007, the Group’s Dutch subsidiary, Delta Lloyd, acquired 100% of the shares in Erasmus Groep BV
(“Erasmus”) in the Netherlands. Erasmus writes both general insurance and long-term business, and the acquisition has
further strengthened Delta Lloyd’s position in the Dutch insurance market.
The Erasmus acquisition has not given rise to any goodwill on acquisition. The relevant calculation is as follows:
Purchase cost:
£m
Cash paid 53
Attributable costs 1
Total consideration 54
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Annual Report and
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Financial
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