Aviva 2013 Annual Report Download - page 255

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
253
Financial and operating performance continued
Consolidated results of operations
The table below presents our consolidated sales from continuing
operations for the three years ended 31 December 2013, 2012
and 2011.
Continuin
g
operations
2013
£m
2012
£m
2011
£m
United Kingdom & Ireland Life 12,424 13,300 14,333
United Kingdom & Ireland General Insurance 4,200 4,490 4,842
France 5,614 4,640 5,063
Poland 555 438 552
Italy, Spain and Other 4,430 4,182 5,938
Canada 2,250 2,176 2,083
Asia 1,896 2,014 2,076
Aviva Investors 2,741 2,819 1,659
Other group activities 33 67 77
Total sales 34,143 34,126 36,623
Sales (from continuing operations)
Year ended 31 December 2013
Total sales from continuing operations were stable at £34,143
million (2012: £34,126 million) for the reasons set out in the
market performance section below.
Year ended 31 December 2012
Total sales from continuing operations were 7% lower at
£34,126 million (2011: £36,623 million) for the reasons set out
in the market performance section below.
Adjusted operating profit
We report to our chief operating decision makers in the
businesses the results of our operating segments using a non-
GAAP financial performance measure we refer to as ‘adjusted
operating profit’. We define our segment adjusted operating
profit as profit before income taxes and non-controlling
interests in earnings, excluding the following items: investment
return variances and economic assumption changes on long-
term and non-long-term business, impairment of goodwill, joint
ventures and associates, amortisation and impairment of other
intangibles (excluding the acquired value of in-force business), profit
or loss on the disposal and remeasurement of subsidiaries, joint
ventures and associates, integration and restructuring costs and
exceptional items.
Whilst these excluded items are significant components in
understanding and assessing our consolidated financial
performance, we believe that the presentation of adjusted
operating profit enhances the understanding and comparability
of the underlying performance of our segments by highlighting
net income attributable to on-going segment operations.
Adjusted operating profit for long-term insurance and
savings business is based on expected investment returns on
financial investments backing shareholder and policyholder
funds over the period, with consistent allowance for the
corresponding expected movements in liabilities. The expected
rate of return is determined using consistent assumptions
between operations, having regard to local economic and
market forecasts of investment return and asset classification.
Where assets are classified as fair value through profit and loss,
expected return is based on the same assumptions used under
embedded value principles for fixed income securities, equities
and properties. Where fixed interest securities are classified as
available for sale, the expected return comprises interest or
dividend payments and amortisation of the premium or discount
at purchase. Adjusted operating profit includes the effect of
variances in experience for non-economic items, such as
mortality, persistency and expenses, and the effect of changes
in non-economic assumptions. Changes due to economic items,
such as market value movement and interest rate changes,
which give rise to variances between actual and expected
investment returns, and the impact of changes in economic
assumptions on liabilities, are disclosed as non-operating items.
Adjusted operating profit for non-long-term insurance business
is based on expected investment returns on financial
investments backing shareholder funds over the period.
Expected investment returns are calculated for equities and
properties by multiplying the opening market value of the
investments, adjusted for sales and purchases during the year,
by the longer-term rate of return. This rate of return is the same
as that applied for the long-term business expected returns. The
longer-term return for other investments is the actual income
receivable for the period. Changes due to market value
movement and interest rate changes, which give rise to
variances between actual and expected investment returns, are
disclosed as non-operating items. The impact of changes in the
discount rate applied to claims provisions is also treated outside
adjusted operating profit.
Adjusted operating profit is not a substitute for profit before
income taxes and non-controlling interests in earnings or net
income as determined in accordance with IFRS. Our definition of
adjusted operating profit may differ from similar measures used
by other companies, and may change over time.
The table below presents our consolidated adjusted
operating profit for the three years ended 31 December 2013,
2012 and 2011, as well as the reconciliation of adjusted
operating profit to profit/loss before tax attributable to
shareholders’ profits under IFRS.
Continuin
g
operations
2013
£m
Restated1
2012
£m
Restated1
2011
£m
United Kingdom & Ireland Life 1,124 903 970
United Kingdom & Ireland GI 465 480 524
France 448 422 471
Poland 184 167 167
Italy, Spain and Other 314 365 292
Canada 246 277 256
Asia 87 53 70
Aviva Investors (26) 42 53
Other Group activities (793) (783) (774)
Adjusted operating profit before tax
attributable to shareholders’ profit
(excluding Delta Lloyd as an associate) 2,049 1,926 2,029
Share of Delta Lloyd’s adjusted operating profit
(before tax) as an associate — 112 157
Adjusted operating profit before tax
attributable to shareholders’ profit 2,049 2,038 2,186
Integration and restructuring costs (363) (461) (261)
Adjusted operating profit before tax after
integration and restructuring costs 1,686 1,577 1,925
Adjusted for the following:
Investment return variances and economic
assumption changes on long-term business (49) (620) (897)
Short-term fluctuation in return on investments on
non long-term business (336) 7 (266)
Economic assumption changes on general
insurance and health business 33 (21) (90)
Impairment of goodwill, associates and joint
ventures and other amounts expensed (77) (60) (392)
Amortisation and impairment of intangibles (91) (128) (116)
Profit/(loss) on the disposal and remeasurement of
subsidiaries, joint ventures and associates 115 (164) 565
Exceptional items — — (57)
Non-operating items before tax (excluding
Delta Lloyd as an associate) (405) (986) (1,253)
Share of Delta Lloyd's non-operating items (before
tax) as an associate — (523) 10
Non-operating items before tax (405) (1,509) (1,243)
Share of Delta Lloyd's tax expense, as an associate — 107 (34)
Profit before tax attributable to shareholders'
profits – continuing operations 1,281 175 648
Profit/(loss) before tax attributable to
shareholders' profits – discontinued
operations 1,538 (2,696) (464)
Profit/(loss) before tax attributable to
shareholders’ profits 2,819 (2,521) 184
1 Following the adoption of IAS 19 ‘Employee benefits’ the Group has retrospectively applied the changes to the
comparative periods in these financial statements. This has led to an increase in profit before tax of £150 million
for 2012, and £97 million in 2011. For further detail of the impact of the restatement please see note 1 to the
IFRS financial statements.