Aviva 2014 Annual Report Download - page 293

Aviva plc Annual report and accounts 2014
289
May1. The following table shows certain information regarding
the dividends that we paid on ordinary shares for the periods
indicated in pounds sterling and converted into US dollars at the
noon buying rate in effect on each payment date.
Year
Interim
dividend
per share
(pence)
Interim
dividend
per share
(cents)
Final dividend
per share
(pence)
Final dividend
per share
(cents)
2009 9.00 14.75 15.00 23.55
2010 9.50 15.20 16.00 25.80
2011 10.00 15.70 16.00 25.27
2012 10.00 15.85 9.00 13.67
2013 5.60 9.01 9.40 15.79
2014 5.85 9.15 12.25 na
Guarantees, securitised assets and off-balance
sheet arrangements
As a normal part of our operating activities, various Group
companies have given financial guarantees and options,
including interest rate guarantees, in respect of certain long-
term assurance and fund management products, as set out in
Note 43 to the IFRS Financial Statements. These are accounted
for on-balance sheet as either part of the host insurance
contract or as financial instruments under IFRS.
Information on operating lease commitments can be found
in Note 54(b) to the IFRS Financial Statements.
It is standard business practice for our Group companies to
give guarantees, indemnities and warranties in connection with
disposals of subsidiaries, joint ventures and associates to third
parties. As of 31 December 2014, we believe no material loss
will arise in respect of these guarantees, indemnities and
warranties. Principal warranties include the accuracy and
completeness of the statement of financial position at an agreed
specified date, details of outstanding litigation, regulatory
matters, material contractual commitments, the position on tax
filings and other customary matters together with any specific
items identified during due diligence. In addition, specific
clauses cover such items as regulatory approvals and licences,
the basis of calculation regarding actuarial insurance liabilities,
reinsurance contracts and the status of employee pension plans.
Their exact terms are tailored to each disposal and are set out in
the respective sale and purchase agreement. Similarly, the open
warranty periods, within which the purchaser could claim, and
limits on the maximum amount potentially recoverable will vary
for each item covered in each disposal.
We have received notice of a number of claims on recent
disposals, and where appropriate, hold provisions in respect of
such claims. There are also open claim periods on other recent
disposals in respect of which we have neither received, nor have
any reason to believe we will receive, any claims. Accordingly, as
of 31 December 2014, we believe that appropriate provisions
have been made regarding known and expected material
warranty and indemnity claims relating to recent disposal
activity.
We have loans receivable, secured by mortgages, which
have then been securitised through non-recourse borrowings by
special purpose entities in our UK Life business, as set out in
Note 25 to the IFRS Financial Statements. These special purpose
entities have been consolidated and included in the statement
of financial position, as we retain the residual interest in them.
Limited liability partnerships classified as joint ventures
As part of their investment strategy, the UK and certain
European long-term business policyholder funds have invested
in a number of property limited partnerships (PLP), either directly
or via property unit trusts (PUT), through a mix of capital and
loans. The PLPs are managed by general partners (GP), in which
1 In December 2014, the directors proposed a final dividend subject to shareholder approval.
the long-term business shareholder companies hold equity
stakes and which themselves hold nominal stakes in the PLPs.
The PUTs are managed by a Group subsidiary.
Accounting for the PUTs and PLPs as subsidiaries, joint
ventures, associates or other financial investments depends on
whether the Group is deemed to have control or joint control
over the PUTs and PLPs’ shareholdings in the GPs and the terms
of each partnership agreement are considered along with other
factors that determine control.
Note 19 to the IFRS Financial Statements provides a list of
the principal PLPs accounted for as joint ventures, as well as
summarised information on the income, expenses, assets and
liabilities of the Group’s interests in its joint ventures in
aggregate. In respect of these PLPs, there are no significant
contingent liabilities to which we are exposed, nor do we have
any significant contingent liabilities in relation to our interests in
them. External debt raised by the PLPs is secured on their
respective property portfolios, and the lenders are only entitled
to obtain payment of both interest and principal to the extent
there are sufficient resources in the respective PLPs. The lenders
have no recourse whatsoever to the policyholder and
shareholders’ funds of any companies in the Aviva Group. At 31
December 2014, we had £70 million capital commitments to
these PLP joint ventures.
Liquidity and capital resources
Treasury function
The treasury function of our business is managed by our
centralised treasury team, headed by the Group treasurer. The
Group treasurer acts as owner of Group business standards for
liquidity and foreign exchange risk management within the
Group risk governance and oversight framework. Changes in
policy require the agreement of the Chief Risk Officer. These
policies are independently implemented and monitored by each
of our businesses. Our central treasury team is split into distinct
functions: a Group team, which develops our overall treasury
strategy and our treasury team at Aviva Investors, which
manages and monitors our treasury and cash flow positions for
our holding companies. Each business unit is responsible for
monitoring its own cash and liquidity positions, as well as its
ongoing funding requirements. It is our policy to make the
majority of our financing arrangements at the parent company
level for our business units, primarily through external
borrowings and equity offerings. This enables us to achieve the
efficiencies afforded by our collective size. A number of our
business units also raise debt on their own behalf.
Our principal objective in managing our liquidity and capital
resources is to maximise the return on capital to shareholders,
while enabling us to pay dividends, service our debt and our
holding companies’ cash flows. In the context of a financial
services company where our working capital is largely
representative of our liquidity, we believe that our working
capital is sufficient for our present operational requirements. For
additional information, see ‘IFRS Financial statements – Note 58
– Risk management – liquidity risk’.
Extraordinary market conditions
Starting in mid-September 2008, the global financial markets
experienced unprecedented disruption, adversely affecting the
business environment in general, as well as financial services
companies in particular. Markets have improved but continue to
be fragile. A return to adverse financial market conditions could
significantly affect our ability to meet liquidity needs and obtain
capital, although management believes that we have liquidity
and capital resources to meet business requirements under
current and stressed market conditions.
At 31 December 2014, total consolidated cash and cash
equivalents net of bank overdrafts amounted to £22,564
Other information
Aviva plc Annual report and accounts 2014 |289