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Aviva plc Annual report and accounts 2014

Notes to the Company’s financial statements continued

244

E – Reserves

Merger

Reserve

£m

Investment

valuation

reserve

£m

Equity-

compensation

reserve

£m

Retained

earnings

£m

Balance at 1 January 2013 735 6,794 60 3,060

Arising in the year:

Profit for the year

—

602

Fair value gains on investments in subsidiaries and joint ventures

—

2,108

—

Remeasurements of pension schemes

—

(2)

Dividends and appropriations

—

(538)

Reserves credit for equity compensation plans

—

— 37

—

Trust shares distributed in the year

—

(33)

Issue of share capital under equity compensation scheme

—

— (43) 47

Aggregate tax effect

—

Balance at 31 December 2013 735 8,902 54 3,158

Arising in the year:

Profit for the year

—

563

Fair value gains on investments in subsidiaries and joint ventures

—

866

—

Remeasurements of pension schemes

—

(1)

Dividends and appropriations

—

(551)

Reserves credit for equity compensation plans

—

— 39

—

Trust shares distributed in the year

—

(18)

Issue of share capital under equity compensation scheme

—

— (28) 24

Redemption of direct capital instrument

—

(57)

Aggregate tax effect

—

Balance at 31 December 2014 735 9,768 65 3,137

Tax of £19 million (2013: £22 million) is deductible in respect of coupon payments of £88 million (2013: £92 million) on the direct

capital instruments and fixed rate tier 1 notes.

Details of the Merger reserve are given in the Group consolidated financial statements, note 36.

The remeasurement of pension schemes relates to a small unfunded defined benefit scheme which is closed to new entrants.

F – Borrowings

The Company’s borrowings comprise:

2014

£m

2013

£m

Subordinated debt 4,594 4,370

9.5% guaranteed bonds 2016 200 199

Commercial paper 516 556

5,310 5,125

Maturity analysis of contractual undiscounted cash flows:

2014 2013

Principal

£m

Interest

£m

Total

£m

Principal

£m

Interest

£m

Total

£m

Within 1 year 516 304 820 556 314 870

1 - 5 years 200 1,149 1,349 200 1,204 1,404

5 - 10 years

—

1,340 1,340 242 1,348 1,590

10 - 15 years 1,188 1,322 2,510 — 1,341 1,341

Over 15 years 3,442 2,924 6,366 4,165 2,950 7,115

Total contractual undiscounted cash flows 5,346 7,039 12,385 5,163 7,157 12,320

Where subordinated debt is undated, the interest payments have not been included beyond 15 years. Annual interest payments for

these borrowings are £72 million (2013: £73 million).

The fair value of the subordinated debt at 31 December 2014 was £5,188 million (2013: £4,707 million), calculated with

reference to quoted prices. The fair value of the 9.5% guaranteed bonds 2016 at 31 December 2014 was £223 million (2013:

£236 million), calculated with reference to quoted prices. The fair value of the commercial paper is considered to be the same as its

carrying value.

Further details of these borrowings and undrawn committed facilities can be found in the Group consolidated financial

statements, note 50, with details of the fair value hierarchy in relation to these borrowings in note 23.

G – Contingent liabilities

Details of the Company’s contingent liabilities are given in the Group consolidated financial statements, note 53.

244 | Aviva plc Annual report and accounts 2014