Aviva 2014 Annual Report Download - page 133

Aviva plc Annual report and accounts 2014
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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
which would otherwise arise from using different measurement
bases for these three items.
(AE) Share capital and treasury shares
Equity instruments
An equity instrument is a contract that evidences a residual
interest in the assets of an entity after deducting all its liabilities.
Accordingly, a financial instrument is treated as equity if:
(i) there is no contractual obligation to deliver cash or other
financial assets or to exchange financial assets or liabilities
on terms that may be unfavourable; and
(ii) the instrument is a non-derivative that contains no
contractual obligation to deliver a variable number of shares
or is a derivative that will be settled only by the Group
exchanging a fixed amount of cash or other assets for a
fixed number of the Group’s own equity instruments.
Share issue costs
Incremental external costs directly attributable to the issue of
new shares are shown in equity as a deduction, net of tax, from
the proceeds of the issue and disclosed where material.
Dividends
Interim dividends on ordinary shares are recognised in equity in
the period in which they are paid. Final dividends on these
shares are recognised when they have been approved by
shareholders. Dividends on preference shares are recognised in
the period in which they are declared and appropriately
approved.
Treasury shares
Where the Company or its subsidiaries purchase the Company’s
share capital or obtain rights to purchase its share capital, the
consideration paid (including any attributable transaction costs
net of income taxes) is shown as a deduction from total
shareholders’ equity. The Group’s only such holding comprises
shares purchased by employee trusts to fund certain awards
under the equity compensation plans described in accounting
policy AB above. Gains and losses on sales of own shares are
charged or credited to the treasury share account in equity.
(AF) Fiduciary activities
Assets and income arising from fiduciary activities, together with
related undertakings to return such assets to customers, are
excluded from these financial statements where the Group has
no contractual rights in the assets and acts in a fiduciary
capacity such as nominee, trustee or agent.
(AG) Earnings per share
Basic earnings per share is calculated by dividing net income
available to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year, excluding
the weighted average number of ordinary shares purchased by
the Group and held as Treasury shares.
Earnings per share has also been calculated on the adjusted
operating profit before impairment of goodwill and other
adjusting items, after tax, attributable to ordinary shareholders,
as the directors believe this figure provides a better indication of
operating performance. Details are given in note 15.
For the diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares, such as
convertible debt and share options granted to employees.
Potential or contingent share issuances are treated as
dilutive when their conversion to shares would decrease net
earnings per share.
(AH) Operations held for sale
Assets and liabilities held for disposal as part of operations
which are held for sale are shown separately in the consolidated
statement of financial position. Operations held for sale are
recorded at the lower of their carrying amount and their fair
value less the estimated selling costs.
Aviva plc Annual report and accounts 2014 |129
IFRS Financial statements