Aviva 2009 Annual Report Download - page 153

151
Performance review
Aviva plc
Corporate responsibility
Governance
Shareholder information
Notes to the consolidated
Annual Report and Accounts 2009
financial statements
Financial statements IFRS
Financial statements MCEV
Other information
1 – Exchange rates
The Group’s principal overseas operations during the year were located within the Eurozone and the United States. The results and
cash flows of these operations have been translated into sterling at an average rate for the year of €1 = £0.88
(2008: €1 = £0.80)
and £1 = US$1.57 (2008: £1= US$1.85) . Assets and liabilities have been translated at the year end rate of €1 = £0.88 (2008: €1 =
£0.97, 2007: €1 = £0.73)
and £1 = US$1.61 (2008: £1= US$1.44, 2007: £1 = US$1.99).
Total foreign currency movements during 2009 resulted in a gain recognised in the income statement of £154 million (2008:
£327 million loss).
2 – Presentation changes
(a) Changes to presentation
(i) The Group has adopted IAS 1 (Revised), Presentation of Financial Statements , as of 1 January 2009. The principal impact of this
has been in the following areas:
(a) The titles of some of the prime statements have changed, so that the consolidated statement of recognised gains and losses
is now called the consolidated statement of comprehensive income; the reconciliation of movements in consolidated
shareholders’ equity is now called the consolidated statement of changes in equity; the consolidated balance sheet is renamed
the consolidated statement of financial position; and the consolidated cash flow statement is renamed the consolidated
statement of cash flows.
(b) The standard requires the income tax effect of each component of comprehensive income to be disclosed. This information
is given in note 13.
(c) Changes in the year in each element of equity must now be shown on the face of the consolidated statement of changes
in equity, rather than in the notes.
(d) The standard requires entities to present a comparative consolidated statement of financial position as at the beginning
of the earliest comparative period when the entity has applied an accounting policy retrospectively, makes a retrospective
restatement or reclassifies items in the financial statements. As we have restated certain prior year figures, explained in
section (b) below, we have presented three consolidated statements of financial position and supporting notes in these
financial statements.
(ii) The Group has also adopted Amendments to IFRS 7,
Improving Disclosures about Financial Instruments , as of 1 January 2009.
The principal impact of these amendments is to require the following additional disclosures:
(a) An analysis of financial assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance
of inputs used in making the fair value measurements.
(b) An analysis of transfers of financial assets and liabilities between different levels of the fair value hierarchy.
(c) A reconciliation from beginning to end of period of financial assets and liabilities whose fair value is based on
unobservable inputs.
(d) An enhanced discussion and analysis of liquidity risk, including a maturity analysis of financial assets held for managing
liquidity risk, if that information is necessary to enable users of its financial statements to evaluate the nature and extent
of liquidity risk.
Comparative information for the disclosures required by the IFRS 7 amendments is not needed in the first year of application.
However, the Group has provided comparatives for the analysis of financial assets according to a fair value hierarchy, which we
had previously reported.
(iii)As explained in note 3(c), the Group completed the Initial Public Offering (IPO) of its subsidiary, Delta Lloyd NV (Delta Lloyd), in
November 2009. Although the Group has remained the majority shareholder after the IPO, Delta Lloyd is now managed
separately from our other European operations, reflecting the change in shareholder base. For this reason, the segmental
information given in note 4(a) has been modified to show Delta Lloyd and the Aviva Europe operations separately, with
comparatives analysed in the same way for consistency.
(b) Restatement of prior year figures
(i) During 2009, the Group undertook a review of our accounting policy for cash and cash equivalents. Previously, we defined
these as normally having a maturity of three months or less from date of acquisition. To avoid ambiguity, our accounting policy
has been refined to impose a cut-off date of exactly three months, allowing us to delete ‘normally’ from the policy wording.
This refinement of policy has resulted in a reclassification of certain short-dated instruments between cash and cash equivalents
and financial investments.
The impact of this refinement has been to increase financial investments and reduce cash and cash equivalents in 2008
by £538 million
(2007: £430 million) compared to the amounts previously stated. As a consequence of this, cash flows from
operating activities in 2008 have decreased by £58 million, with the effect of exchange rate movements accounting for the
remaining £50 million.
(ii) During 2009, the Group’s Dutch subsidiary, Delta Lloyd, carried out a review of the way it had been applying IAS 19, Employee
Benefits, in its own financial statements where the corridor method of smoothing actuarial gains and losses in its pension
schemes is followed; in accounting for its self-insured pension obligations and intercompany eliminations; and in its reporting to
Group where the corridor accounting is reversed. The review concluded that errors had been made locally in applying IAS 19 on
the transition to IFRS and in subsequent years, such that gains on certain assets had been reported in provisions, to be released
over time, rather than through other comprehensive income. The impact of correcting these errors is to reduce other liabilities
by £129 million as at 1 January 2008, increase deferred tax liabilities by £33 million and increase retained earnings at that date
by £96 million.
Financial statements IFRS