Aviva 2009 Annual Report Download - page 121

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Performance review
Aviva plc Additional information for Shareholders continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
Income from associates predominantly relates to our
investments in the Royal Bank of Scotland (RBS) life and
collective investment companies listed in the ‘Financial
Statements IFRS – Note 19 – Interest in, and loans to,
associates.’ Under management service agreements with
these associates, our UK life insurance companies provide
administration services, the cost of which is recharged to the
RBS companies. In addition, our fund management companies
provide fund management services to these associates, for
which they charge fees based on the level of funds under
management.
Transactions with joint ventures relate to the property
management undertakings. At 31 December 2009, there were
18 such joint ventures, the most material of which are listed in
the ‘Financial Statement IFRS – Note 13 – Interest in, and loans
to, joint ventures.’ Our interest in these joint ventures comprises
a mix of equity and loans, together with the provision of
administration services and financial management to many
of them. Our UK life insurance companies earn interest on
loans advanced to these entities and our fund management
companies charge fees for administration services and for
arranging external finance.
Our UK fund management companies manage most of the
assets held by the Group’s main UK staff pension scheme, for
which they charge fees based on the level of funds under
management. The main UK scheme and the Dutch scheme hold
investments in Group-managed funds and insurance policies
with other Group companies, as explained in ‘Financial
Statement IFRS – Note 41(e)(iv) – Pension obligations’.
The other related parties’ receivables are not secured and
no guarantees were received in respect thereof. The receivables
will be settled in accordance with normal credit terms. Details of
guarantees, indemnities and warranties provided on behalf of
related parties are given in ‘Financial Statements IFRS – Note
45(h) – Contingent liabilities and other risk factors – Other’.
Loans to joint ventures
We make loans to our property management joint ventures to
fund property developments which we undertake with our joint
venture partners. Movements in these loans may be found in
‘Financial Statements IFRS – Note 18 – Interests in, and loans to,
joint ventures’. Total loans at 31 December 2009 and at the
end of each of the last three financial years are shown in the
table below:
2009 2008 2007
£m £m £m
Loans to joint ventures 327 297 167
These constitute loans to joint ventures to fund shopping,
business or distribution centres or properties in Europe, as well
as a film studio development in the UK. The largest of these is
part of a facility granted in November 2005 and had a balance
of £255 million as of 31 December 2009 and bears an interest
rate of 8%.
Dividend Data
Our dividend policy is to sustain a target dividend cover of
between one and a half and two times our IFRS adjusted
operating profit after tax before amortisation of goodwill and
adjusting items. Under UK company law, we may only pay
dividends if the company has “distributable profits” available.
“Distributable profits” are accumulated, realised profits not
previously distributed or capitalised, less accumulated,
unrealised losses not previously written off based on IFRS.
Even if distributable profits are available, we pay dividends only
if the amount of our net assets is not less than the aggregate of
our called-up share capital and undistributable reserves and the
payment of the dividend does not reduce the amount of our
net assets to less than that aggregate.
As a holding company, we are dependent upon dividends
and interest from our subsidiaries to pay cash dividends. Many
of our subsidiaries are subject to insurance regulations that
restrict the amount of dividends that they can pay to us.
Historically, we have declared an interim and a final dividend
for each year (with the final dividend being paid in the year
following the year to which it relates). Subject to the restrictions
set out above, the payment of interim dividends on ordinary
shares is made at the discretion of our Board of Directors, while
payment of any final dividend requires the approval of our
shareholders at a general meeting. Ordinary preference shares
are irredeemable and dividends on ordinary preference shares
are made at the discretion of our Board of Directors.
We pay our cash dividends in pounds sterling, although our
Articles of Association permit payment of dividends on ordinary
shares in other currencies and in forms other than cash, such
as ordinary shares. If dividends on ordinary shares held by the
American Depositary Shares (ADS) depositary are paid in pounds
sterling, the ADS depositary will convert the pounds that it
receives on behalf of the ADS holders into US dollars according
to the prevailing market rate on the date that the ADS
depositary actually receives the dividends.
For the 2007 final dividend and previous final and interim
dividends, shareholders on record were provided with the
opportunity to elect to receive dividends in the form of newly
issued ordinary shares through our scrip dividend scheme.
For the 2008 interim dividend the scrip dividend scheme was
replaced by a dividend reinvestment plan (DRIP). For those
shareholders participating in the DRIP, we paid a cash dividend,
which was then used to buy existing shares on the open market.
For the 2008 final dividend we withdrew the DRIP and
reintroduced the scrip dividend scheme.
An interim dividend is generally paid in November of each
year. A final dividend is proposed by our Board of Directors
after the end of the relevant year and generally paid in May.
The following table shows certain information regarding the
dividends that we paid on ordinary shares for the periods
indicated in pounds sterling and converted into US dollars at
the noon buying rate in effect on each payment date.
Interim Interim Final Final
dividend dividend dividend dividend
per share per share per share per share
Year (pence) (cents) (pence) (cents)
2004 9.36 17.39 16.00 29.44
2005 9.83 16.90 17.44 32.82
2006 10.82 20.49 19.18 37.88
2007 11.90 24.37 21.10 41.31
2008 13.09 19.69 19.91 30.31
2009 9.00 14.75 15.00 23.55
Controls and procedures
Disclosure controls and procedures
Management has evaluated, with the participation of Aviva’s
Group Chief Executive and Group Chief Financial Officer, the
effectiveness of the disclosure controls and procedures as at
31 December 2009. There are inherent limitations to the
effectiveness of any system of disclosure controls and
Shareholder information