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Aviva plc
Annual Report and
Accounts 2007
154
Financial
statements
Notes to the consolidated financial statements continued
13 Tax continued
(c) Tax reconciliation
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the tax rate of the
home country of the Company as follows:
2007 2006
£m £m
Profit before tax 1,857 3,323
Tax calculated at standard UK corporation tax rate of 30% (2006: 30%) 557 997
Different basis of tax for UK life insurance 5209
Adjustment to tax charge in respect of prior years (49) (287)
Non-assessable dividends (124) (55)
Non-taxable profit on sale of subsidiaries and associates (18) (80)
Disallowable expenses 746
Different local basis of tax on overseas profits 56 201
Reduction in future UK tax rate (net of movements in unallocated divisible surplus) (64) –
Deferred tax valuation difference 1(60)
Other (19) (37)
Total tax charged to income statement (note 13a) 352 934
14 – Earnings per share
This note shows how we calculate earnings per share, based both on the present shares in issue (the basic earnings per
share) and the potential future shares in issue, including conversion of share options granted to employees (the diluted
earnings per share). We have also shown the same calculations based on our operating profit as we believe this gives a
better indication of operating performance.
(a) Basic earnings per share
(i) The profit attributable to ordinary shareholders is:
2007 2006
Operating Adjusting Operating Adjusting Restated
profit items Total profit items Total
£m £m £m £m £m £m
Profit before tax 2,228 (386) 1,842 2,609 368 2,977
Tax attributable to shareholders’ profits (607) 270 (337) (645) 57 (588)
Profit for the year 1,621 (116) 1,505 1,964 425 2,389
Minority interests (191) 13 (178) (179) 5 (174)
Preference dividends (17) – (17) (17) – (17)
Coupon payments in respect of direct
capital instruments (net of tax) (37) – (37) (37) – (37)
Profit attributable to ordinary shareholders 1,376 (103) 1,273 1,731 430 2,161
(ii) Basic earnings per share is calculated as follows:
2007 2006
Net of tax, Net of tax,
minorities, minorities,
preference preference
dividends dividends Restated
Before tax and DCI Per share Before tax and DCI per share
£m £m p £m £m p
Operating profit attributable to ordinary shareholders 2,228 1,376 53.2 2,609 1,731 70.1
Non-operating items:
Investment return variances and economic assumption
changes on long-term business (note 8) 15 79 3.1 401 336 13.6
Impairment of goodwill (note 16a) (10) (10) (0.4) (94) (94) (3.8)
Amortisation and net impairment of intangibles
(note 17) (103) (72) (2.8) (64) (48) (1.9)
Short-term fluctuation in return on investments
backing general insurance and health business
(note 9b) (184) (38) (1.5) 149 189 7.7
Profit on the disposal of subsidiaries and associates
(note 3b) 49 52 2.0 222 235 9.5
Integration and restructuring costs (note 3c) (153) (114) (4.4) (246) (188) (7.7)
Profit attributable to ordinary shareholders 1,842 1,273 49.2 2,977 2,161 87.5