Aviva 2009 Annual Report Download - page 280

278
Aviva plc Notes to the Company’s
Annual Report and Accounts 2009
financial statements
A – Restatement of prior year figures
The Company runs sterling and currency intercompany accounts with subsidiaries. During the year, it was discovered that incorrect
foreign exchange rates had been applied to one of these accounts, with the result that the Company incorrectly recorded a foreign
exchange loss of £87 million in 2008. The correcting entry has resulted in a reduction in expenses in 2008 of £87 million, an
increase to the 2008 tax charge of £25 million, a reduction in the 2008 current tax asset of £25 million, an increase in other
amounts owed by subsidiaries of £87 million and an increase in retained earnings of £62 million as at 31 December 2008.
B – Investments in subsidiaries
(i) Movements in the Company’s investments in its subsidiaries are as follows:
2009 2008 2007
£m £m £m
Fair value as at 1 January 16,353 24,466 27,886
Movement in fair value 883 (8,113) (3,420)
At 31 December 17,236 16,353 24,466
Fair values are estimated using applicable valuation models underpinned by the Company’s market capitalisation, and are classified
as Level 2 in the fair value hierarchy described in note 24(b) to the Group consolidated financial statements.
(ii) At 31 December 2009, the Company has two wholly-owned subsidiaries, both incorporated in Great Britain. These are General
Accident plc and Aviva Group Holdings Limited. Aviva Group Holdings Limited is an intermediate holding company, whilst General
Accident plc no longer carries out this function. The principal subsidiaries of the Aviva Group at 31 December 2008 are listed on
pages 33 and 34.
C – Operating expenses
(i) Operating expenses
Operating expenses comprise:
2009
£m
Restated
2008
£m
Staff costs and other employee related expenditure (see below)
Other operating costs
Net foreign exchange losses/(gains)
130
20
44
86
109
(170)
Total 194 25
(ii) Staff costs
Total staff costs were:
2009 2008
£m £m
Wages and salaries 85 49
Social security costs 9 7
Post-retirement obligations
Defined benefit schemes (see (iii) below) 6 6
Defined contribution schemes 6 3
Profit sharing and incentive plans 9 3
Equity compensation plans (see (iv) below) 12 11
Termination benefits 3 7
Total 130 86
(iii) Pension costs
The Company is one of a number of UK companies being charged for its employees participating in the Aviva Staff Pension
Scheme, and its contributions are affected by the financial position of the scheme. There is no contractual agreement or policy for
charging the net defined benefit cost for this scheme across the participating Group entities but, instead, this cost is recognised in
the financial statements of the main UK employing company. The Company therefore recognises a pension expense equal to its
contributions payable in the year for its staff, together with the service cost of any unfunded benefits, within staff costs above.
Full disclosure on the Group’s pension schemes is given in the Group consolidated financial statements, note 47.