Aviva 2007 Annual Report Download - page 218
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52 – Cash flow statement continued
(b) Cash flows in respect of the acquisition of subsidiaries, joint ventures and associates
2007 2006
£m £m
Cash consideration for subsidiaries, joint ventures and associates acquired 857 2,321
Less: Cash and cash equivalents acquired with subsidiaries (88) (432)
Cash flows on acquisitions 769 1,889
(c) Cash flows in respect of the disposal of subsidiaries, joint ventures and associates
2007 2006
£m £m
Cash proceeds from disposal of subsidiaries, joint ventures and associates 295 616
Net cash and cash equivalents divested with subsidiaries (12) –
Cash flows on disposals 283 616
(d) Cash and cash equivalents in the Cash flow statement at 31 December comprised:
2007 2006
Restated
£m £m
Cash at bank and in hand 4,004 4,087
Cash equivalents 11,866 9,030
15,870 13,117
Bank overdrafts (621) (696)
15,249 12,421
Of the total cash and cash equivalents shown above, £96 million has been classified as held for sale (2006: £nil)
(see note 3d).
53 – Group capital structure
The Group maintains an efficient capital structure from a combination of equity shareholders’ funds, preference capital,
subordinated debt and borrowings, consistent with our overall risk profile and the regulatory and market requirements of
our business. This note describes the way we manage our capital and shows where this is employed.
(a) Capital management objectives
Aviva’s capital management philosophy is focused on capital efficiency and effective risk management to support a
progressive dividend policy and EPS growth. Rigorous capital allocation is one of the Group’s primary strategic priorities and
is ultimately overseen by the Group Executive Committee.
The Group’s overall capital risk appetite is set and managed with reference to the requirements of a range of different
stakeholders including shareholders, policyholders, regulators and rating agencies. In managing capital we seek to:
– maintain sufficient, but not excessive, financial strength to support new business growth and satisfy the requirements
of our stakeholders
– optimise our overall debt to equity structure to enhance our returns to shareholders, subject to our capital risk appetite
and balancing the requirements of the range of stakeholders
– retain financial flexibility by maintaining strong liquidity, including significant unutilised committed credit lines and
access to a range of capital markets
– allocate capital rigorously across the Group, to drive value adding growth in accordance with risk appetite.
– increase the dividend on a basis judged prudent, while retaining capital to support future business growth, using
dividend cover on an IFRS operating earnings after tax basis in the 1.5 to 2.0 times range as a guide.
Further detail over the management and allocation of capital resources is set out in the following sections and in note 55
on risk management.
Aviva plc
Annual Report and
Accounts 2007
214
Financial
statements
Notes to the consolidated financial statements continued