Aviva 2013 Annual Report Download - page 211

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
209
Notes to the consolidated financial statements continued
50 – Borrowings continued
The classifications between Upper Tier 2, Lower Tier 2 and Senior debt shown above are as defined by the PRA in GENPRU Annex 1
‘Capital Resources’. All the above borrowings are stated at amortised cost.
As described in note 59, the Group has designated a portion of its euro denominated debt as a hedge of the net investment in
its European subsidiaries. The carrying value of the debt, included in the table above, at 31 December 2013 was £1,428 million
(2012: £1,741 million).
(ii) The contractual maturity dates of undiscounted cash flows for these borrowings are:
2013 2012
Principal
£m
Interest
£m
Total
£m
Principal
£m
Interest
£m
Total
£m
Within one year 556 314 870 603 307 910
1 to 5 years 200 1,204 1,404 200 1,197 1,397
5 to 10 years 242 1,348 1,590 241 1,342 1,583
10 to 15 years — 1,341 1,341 527 1,192 1,719
Over 15 years 4,165 2,950 7,115 3,608 2,610 6,218
Total contractual undiscounted cash flows 5,163 7,157 12,320 5,179 6,648 11,827
Borrowings are considered current if the contractual maturity dates are within a year. Where subordinated debt is undated or
loan notes are perpetual, the interest payments have not been included beyond 15 years. Annual interest payments for these
borrowings are £73 million (2012: £72 million).
Contractual undiscounted interest payments are calculated based on underlying fixed interest rates or prevailing market
floating rates as applicable. Year-end exchange rates have been used for interest projections on loans in foreign currencies.
(c) Operational borrowings
(i) The carrying amounts of these borrowings are:
2013
£m
Restated1
2012
£m
Amounts owed to financial institutions
Loans 1,410 1,853
Securitised mortgage loan notes
UK lifetime mortgage business 1,313 1,332
Total 2,723 3,185
1 Restated for the adoption of IFRS 10. See note 1 for further details.
All the above borrowings are stated at amortised cost, except for the loan notes issued in connection with the UK lifetime
mortgage business of £1,313 million (2012: £1,332 million). These loan notes are carried at fair value, their values are modelled on
risk-adjusted cash flows for defaults discounted at a risk-free rate plus a market-determined liquidity premium, and are therefore
classified as either ‘Level 2’ or ‘Level 3’ in the fair value hierarchy, depending on whether observable market prices are available for
the loan note. These have been designated at fair value through profit and loss in order to present the relevant mortgages,
borrowings and derivative financial instruments at fair value, since they are managed as a portfolio on a fair value basis. This
presentation provides more relevant information and eliminates any accounting mismatch.
The securitised mortgage loan notes are at various fixed, floating and index-linked rates. Further details about these notes are
given in note 25.
(ii) The contractual maturity dates of undiscounted cash flows for these borrowings are:
2013
Restated1
2012
Principal
£m
Interest
£m
Total
£m
Principal
£m
Interest
£m
Total
£m
Within one year 558 81 639 725 64 789
1 to 5 years 659 330 989 951 259 1,210
5 to 10 years 437 396 833 399 364 763
10 to 15 years 707 306 1,013 611 284 895
Over 15 years 766 125 891 940 291 1,231
Total contractual undiscounted cash flows 3,127 1,238 4,365 3,626 1,262 4,888
1 Restated for the adoption of IFRS 10. See note 1 for further details.
Contractual undiscounted interest payments are calculated based on underlying fixed interest rates or prevailing market floating
rates as applicable. Year-end exchange rates have been used for interest projections on loans in foreign currencies.