Aviva 2014 Annual Report Download - page 189

Aviva plc Annual report and accounts 2014
185
33 – Shares held by employee trusts
Prior to 2014, we satisfied awards and options granted under the Group’s share plans primarily through shares purchased in the
market and held by employee share trusts. During 2014 we have moved to a general practice of issuing new shares except where it
is necessary to use shares held by an employee share trust. This note gives details of the shares held in these trusts. Movements in
the carrying value of shares held by employee trusts comprise:
2014 2013
Number £m Number £m
Cost debited to shareholders' funds
At 1 January 8,561,382 31 10,053,515 32
Acquired in the year 19,603 — 7,863,726 32
Distributed in the year (5,995,161) (23) (9,355,859) (33)
Balance at 31 December 2,585,824 8 8,561,382 31
The shares are owned by employee share trusts with an undertaking to satisfy awards of shares in the Company under the
Company’s share plans and schemes. Details of the features of the plans can be found in the directors’ remuneration report and/or
in note 32.
These shares were purchased in the market and are carried at weighted average cost. At 31 December 2014, they had an
aggregate nominal value of £646,456 (2013: £2,140,346) and a market value of £12,528,317 (2013: £38,500,535). The trustees
have waived their rights to dividends on the shares held in the trusts.
34 – Preference share capital
This note gives details of Aviva plc’s preference share capital.
The preference share capital of the Company at 31 December was:
2014
£m
2013
£m
Issued and paid up
100,000,000 8.375% cumulative irredeemable preference shares of £1 each 100 100
100,000,000 8.75% cumulative irredeemable preference shares of £1 each 100 100
200 200
The issued preference shares are non-voting except where their dividends are in arrears, on a winding up or where their rights are
altered.
On a winding up, they carry a preferential right of return of capital ahead of the ordinary shares. Holders are entitled to receive
dividends out of the profits available for distribution and resolved to be distributed in priority to the payment of dividends to
holders of ordinary shares. The Company does not have a contractual obligation to deliver cash or other financial assets to the
preference shareholders and therefore the directors may make dividend payments at their discretion.
35 – Direct capital instruments and fixed rate tier 1 notes
Notional amount
2014
£m
2013
£m
Issued November 2004
5.9021% £500 million direct capital instrument 500 500
4.7291% €700 million direct capital instrument
—
490
500 990
Issued May 2012
8.25% US $650 million fixed rate tier 1 notes 392 392
892 1,382
The euro and sterling direct capital instruments (the DCIs) were issued on 25 November 2004 and qualify as Innovative Tier 1
capital, as defined by the PRA in GENPRU Annex 1 ‘Capital Resources’. On 28 November 2014 the Company exercised its option to
redeem the euro DCI on its first redemption date. The remaining sterling DCI has no fixed redemption date but the Company may,
at its sole option, redeem all (but not part) of the principal amount on 27 July 2020, at which date the interest rate changes to a
variable rate, or on any respective coupon payment date thereafter. The sterling DCI variable rate will be the six month sterling
deposit rate plus margin.
The fixed rate tier 1 notes (the FxdRNs) were issued on 3 May 2012 and also qualify as Innovative Tier 1 capital. The FxdRNs are
perpetual but are subject to a mandatory exchange into non-cumulative preference shares in the Company after 99 years. The
Company may, at its sole option, redeem all (but not part) of the FxdRNs at their principal amounts on 3 November 2017, or on
any respective coupon payment date thereafter.
On the occurrence of a Capital Disqualification Event as defined in the terms and conditions of the issue for both the DCI and
FxdRNs, the Company may at its sole option substitute at any time not less than all of the DCI or FxdRNs for, or vary the terms of
the DCI so that they become, Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities.
In addition, on the occurrence of a Substitution Event as defined in the terms and conditions of the issue for the DCI, the
Company may at its sole option substitute not less than all of the DCI for fully paid non-cumulative preference shares in the
Company. These preference shares can only be redeemed on 27 July 2020, or on any dividend payment date thereafter. For the
FxdRNs, having given the required notice, the Company has the right to substitute not less than all of the notes for fully paid non-
cumulative preference shares at any time. These preference shares can only be redeemed on 3 November 2017, or on any dividend
payment date thereafter. The Company has the right to choose whether or not to pay any dividend on the new shares, and any
such dividend payment will be non-cumulative.
Aviva plc Annual report and accounts 2014 |185
IFRS Financial statements