Aviva 2014 Annual Report Download - page 165

Aviva plc Annual report and accounts 2014
161
17 – Goodwill
This note analyses the changes to the carrying amount of goodwill during the year, and details the results of our impairment
testing on both goodwill and intangible assets with indefinite lives.
(a) Carrying amount
2014
£m
2013
£m
Gross amount
At 1 January 1,770 2,774
Acquisitions and additions 36
Disposals (191) (1,034)
Movements in contingent consideration (39)
—
Foreign exchange rate movements (40) 24
At 31 December 1,503 1,770
Accumulated impairment
At 1 January (290) (1,071)
Impairment losses charged to expenses
—
(48)
Disposals 73 842
Foreign exchange rate movements 16 (13)
At 31 December (201) (290)
Carrying amount at 1 January 1,480 1,703
Carrying amount at 31 December 1,302 1,480
Less: Assets classified as held for sale —(4)
Carrying amount at 31 December 1,302 1,476
Goodwill from acquisitions and additions arose on the acquisition of a small insurance broker in Canada.
There were no goodwill impairment charges on subsidiaries recognised in the income statement. The total charge for
impairment of goodwill, joint ventures, and associates for the year was £24 million, comprising an impairment charge recognised
in respect of goodwill within interests in associates (refer to note 20).
Goodwill disposed of during the year primarily relates to CxG, a Spanish long-term business, and River Road, a US equity
manager. See note 4 for further details.
Movements in contingent consideration in 2014 relate to contingent consideration received in respect of acquisitions of
subsidiaries made prior to 1 January 2010.
(b) Goodwill allocation and impairment testing
A summary of the goodwill and intangibles with indefinite useful lives allocated to cash generating units is presented below.
Carrying amount of
goodwill
Carrying amount of
intangibles with
indefinite useful lives
(detailed in note 18) Total
2014
£m
2013
£m
2014
£m
2013
£m
2014
£m
2013
£m
United Kingdom
–
general insurance and health 924 924 — — 924 924
Ireland
–
general insurance and health 107 115 — — 107 115
France
–
long-term business
—
—
48 52 48 52
Poland
–
long-term business 89— — 89
Italy
Long-term business 14 15 — — 14 15
General insurance and health 28 30 — — 28 30
Spain
–
long-term business 148 259 — — 148 259
Aviva Investors
–
fund management
—
27 — —
—
27
Canada 23 49 — — 23 49
Asia 50 52 — — 50 52
1,302 1,480 48 52 1,350 1,532
Goodwill in all business units is tested for impairment by comparing the carrying value of the cash generating unit to which the
goodwill relates, to the recoverable value of that cash generating unit. The recoverable amount is the value in use of the cash
generating unit unless otherwise stated.
Long-term business
Value in use is calculated as an actuarially determined appraisal value, based on the embedded value of the business calculated in
accordance with market consistent embedded value (‘MCEV’) principles, together with the present value of expected profits from
future new business. If the embedded value of the business tested is sufficient to demonstrate goodwill recoverability on its own,
then it is not necessary to estimate the present value of expected profits from future new business.
If required, the present value of expected profits arising from future new business written over a given period is calculated on
an MCEV basis, using profit projections based on the most recent three year business plans approved by management. These plans
reflect management’s best estimate of future profits based on both historical experience and expected growth rates for the
relevant cash generating unit. The underlying assumptions of these projections include market share, customer numbers, mortality,
morbidity and persistency.
Aviva plc Annual report and accounts 2014 |161
IFRS Financial statements