Aviva 2009 Annual Report Download - page 66

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Aviva plc Basis of preparation
Annual Report and Accounts 2009
Basis of preparation
This review complies with the recommendations of the
European Union (EU) Modernisation Directive, the Companies
Act 2006 (Contents of Directors’ report: Business review) and is
in line with current best practice. It is addressed to, and written
for, the members of Aviva plc with the aim of providing a fair
review of our business development, performance and position
at the current time. In producing this review, we aim to present
a view that is balanced and comprehensive and that is
consistent with the size and complexity of our business. The
review is written in the context of the risks and uncertainties
facing our business. We anticipate that the format and content
of the review will evolve over time, along with developments in
our business and the external environment.
Key performance indicators
The Companies Act requires that a fair review of the business
contains financial and, where applicable, non-financial key
performance indicators (KPIs). We consider that our financial
KPIs are those that communicate to the members the financial
performance and strength of the group as a whole.
These KPIs comprise:
— Earnings per share (International Financial Reporting
Standards basis)
— Proposed ordinary dividend per share and dividend cover
— Operating profit (Market Consistent Embedded Value basis)
— Operating profit (IFRS basis)
— Worldwide sales
— Return on equity shareholders’ funds
Management also use a variety of other performance indicators
(OPIs) in both running and assessing the performance of
individual business segments and units, rather than the group as
a whole. OPIs include measures such as new business margins,
combined operating ratio and underwriting profit.
In addition to reporting on our financial performance, it is
important that as a forward thinking company we are aware of
our wider responsibilities and report on the non-financial
aspects of our performance. We consider that our employees
and customers are fundamental to the success of our business;
as such, they form the basis for our non-financial measures, and
include:
— Leadership and employee engagement
— Customer advocacy
Accounting basis of preparation
In addition to presenting our results and financial position on an
International Financial Reporting Standards basis, we also use
Market Consistent Embedded Value (MCEV) as an alternative
performance measure. Details of the accounting basis of
preparation are set out on the following page.
Forward-looking statements
This business review contains “forward-looking statements”
about:
— Our future plans
— Our current goals
— Our expectations of our future financial condition,
performance and results
By their nature, all forward-looking statements involve risk and
uncertainty because they relate to future events that are beyond
our control. For example, certain insurance risk disclosures are
dependent on our choices about assumptions and models,
which by their nature are estimates. As such, actual future gains
and losses could differ materially from those that we have
estimated. Other factors that could cause actual results to differ
materially from those estimated by the forward-looking
statements include, but are not limited to:
— Global economic business conditions
— Monetary and interest rate policies
— Foreign currency exchange rates
— Equity and property prices
— The impact of competition, inflation and deflation
— Changes to regulations, taxes and legislation
— The timing and impact of acquisitions and business
combinations in relevant industries
— Natural and other disasters
— Changes to consumer saving and spending habits
— Our success in managing the above factors
Consequently, our actual future financial condition,
performance and results could differ materially from the plans,
goals and expectations set out in our forward-looking
statements. We undertake no obligation to update the forward-
looking statements contained in this review or any other
forward-looking statements we make.