Aviva 2007 Annual Report Download - page 141
Download and view the complete annual report
Please find page 141 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.3 – Subsidiaries continued
The value of the agreement to distribute through Banco Popolare’s branch network has been identified as a separate
intangible asset and has been valued by an independent third party at £386 million (100% share), using estimated
post-tax cash flows and discount rates. The intangible asset has been assessed as having an indefinite useful life, subject to
annual tests for impairment. The distribution agreement is initially for ten years, with five year automatic renewal periods.
It is expected to be renewed indefinitely, due to the unfavourable terms of the put option for failure to renew.
The residual goodwill represents the impact of recognising a deferred tax liability on the intangible asset.
The assets and liabilities as at the acquisition date in the table opposite are stated at their provisional values, and may be
amended in 2008, in accordance with paragraph 62 of IFRS 3, Business Combinations.
The results of Avipop Assicurazioni have been included in the consolidated financial statements of the Group with effect
from 14 December 2007, and have contributed £nil to the consolidated profit before tax.
(iv) Cyrte Investments
On 27 September 2007, the Group acquired an 85% stake in Cyrte Investments BV (Cyrte Investments), a Dutch fund
management company, for £37 million. The net assets of Cyrte Investments at the date of acquisition were £nil, giving rise
to residual goodwill of £37 million.
The residual goodwill represents the value of the company’s workforce and a premium paid for the investment concepts
developed in the company, based on Cyrte’s expertise in the telecommunications, media and technology sectors. No material
intangible assets were identified.
The net assets as at the acquisition date are stated at their provisional values, and may be amended in 2008, in accordance
with paragraph 62 of IFRS 3, Business Combinations.
The results of Cyrte Investments have been included in the consolidated financial statements of the Group with effect from
27 September 2007, and have contributed £2 million to the consolidated profit before tax.
The Group has also invested £209 million in three funds, managed by Cyrte Investments, giving it an ownership interest in
the three funds of between 13% and 18%. These funds have been accounted for as investments in associates, as Cyrte
Investments is the general partner of the funds and the Group’s holding gives it significant influence on the investment
committee, the management board of the funds. The Group’s investment of £209 million has been included in interests in
associates in note 19.
(v) Hamilton Insurance Company Limited and Hamilton Life Assurance Company Limited
On 1 November 2007, the Group completed the acquisition of Hamilton Insurance Company Limited and Hamilton Life
Assurance Company Limited (the Hamilton companies) from HFC Bank Limited, a subsidiary of HSBC Finance Corporation.
In addition, the Group’s UK general insurance businesses signed a number of five-year agreements to underwrite creditor
business for HFC Bank and some of its subsidiaries, and to provide home, protection and travel insurance products to
10.2 million of HSBC Bank’s UK customers.
The acquisition of Hamilton Insurance Company Limited has given rise to goodwill on acquisition of £2 million, calculated
as follows:
Purchase cost:
£m
Cash paid 55
Attributable costs 2
Total consideration 57
The book and fair values of the assets and liabilities at the date of acquisition were:
£m
Assets
Investments 68
Reinsurance assets 24
Cash and cash equivalents 25
Other assets 24
Total assets 141
Liabilities
Gross insurance liabilities (67)
Other liabilities (19)
Total liabilities (86)
Total net assets acquired 55
Goodwill arising on acquisition 2
Aviva plc
Annual Report and
Accounts 2007
137
Financial
statements