Aviva 2014 Annual Report Download - page 216

Aviva plc Annual report and accounts 2014
Notes to the consolidated financial statements continued
212
50 – Borrowings continued
(ii) The contractual maturity dates of undiscounted cash flows for these borrowings are:
2014 2013
Principal
£m
Interest
£m
Total
£m
Principal
£m
Interest
£m
Total
£m
Within one year 342 65 407 558 81 639
1 to 5 years 199 278 477 659 330 989
5 to 10 years 508 307 815 437 396 833
10 to 15 years 702 212 914 707 306 1,013
Over 15 years 625 144 769 766 125 891
Total contractual undiscounted cash flows 2,376 1,006 3,382 3,127 1,238 4,365
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.
(d) Description and features
(i) Subordinated debt
A description of each of the subordinated notes is set out in the table below:
Notional amount Issue date Redemption date
Callable at par at option of
the Company from
In the event the Company does not call the notes,
the coupon will reset at each applicable reset date to
£700 million 14 Nov 2001 14 Nov 2036 16 Nov 2026 5 year Benchmark Gilt + 2.85%
€500 million 29 Sep 2003 Undated 29 Sep 2015 3 month Euribor + 2.35%
£800 million 29 Sep 2003 Undated 29 Sep 2022 5 year Benchmark Gilt + 2.40%
£600 million 20 May 2008 20 May 2058 20 May 2038 3 month LIBOR + 3.26%
€500 million 20 May 2008 22 May 2038 22 May 2018 3 month Euribor + 3.35%
£200 million1 1 Apr 2009 1 Apr 2019 1 Apr 2014 3 month LIBOR + 8.10%
€50 million1 30 Apr 2009 30 Apr 2019 30 Apr 2014 3 month Euribor + 8.25%
£450 million 26 May 2011 3 June 2041 3 June 2021 6 Month LIBOR + 4.136%
$400 million 22 November 2011 1 December 2041 1 December 2016 8.25%(fixed)
€650 million 5 July 2013 5 July 2043 5 July 2023 5 year EUR mid-swaps + 5.13%
€700 million 3 July 2014 3 July 2044 3 July 2024 5 year EUR mid-swaps + 3.48%
1 The £200 million and €50 million subordinated notes were redeemed at their first call dates on 1 April and 30 April 2014 respectively.
Subordinated notes issued by the Company rank below its senior obligations and ahead of its preference shares and ordinary share
capital. The dated subordinated notes rank ahead of the undated subordinated notes. The fair value of notes at 31 December 2014
was £5,188 million (2013: £4,707 million), calculated with reference to quoted prices.
(ii) Debenture loans
The 9.5% guaranteed bonds were issued by the Company at a discount of £1.1 million. This discount and the issue expenses are
being amortised over the full term of the bonds. Although these bonds were issued in sterling, the loans have effectively been
converted into euro liabilities through the use of financial instruments in a subsidiary.
All these borrowings are at fixed rates and their fair value at 31 December 2014 was £223 million (2013: £236 million),
calculated with reference to quoted prices.
(iii) Commercial paper
The commercial paper consists of £516 million issued by the Company (2013: £556 million) and is considered core structural
funding.
All commercial paper is repayable within one year and is issued in a number of different currencies, primarily sterling, euros and
US dollars. Its fair value is considered to be the same as its carrying value.
(iv) Loans
Loans comprise:
2014
£m
2013
£m
Non-recourse
Loans to property partnerships (see (a) below) 199 804
Loans to Irish investment funds (see (b) below)
—
7
UK Life reassurance (see (c) below) 178 208
Other non-recourse loans (see (d) below) 219 288
596 1,307
Other loans (see (e) below) 100 103
696 1,410
(a) As explained in accounting policy D, the UK long-term business policyholder funds have invested in a number of property funds
and structures (the “Property Funds”), some of which have raised external debt, secured on the relevant Property Fund’s property
portfolio. The lenders are only entitled to obtain payment of interest and principal to the extent there are sufficient resources in the
relevant Property Fund and they have no recourse whatsoever to the policyholder or shareholders’ funds of any companies in the
Group. Loans of £199 million (2013: £804 million) included in the table relate to those Property Funds which have been
consolidated as subsidiaries.
(b) External borrowings raised by one Irish policyholder investment fund, which has been fully consolidated in accordance with
accounting policy D, were repaid in full in 2014.
212 | Aviva plc Annual report and accounts 2014