4. Profit on the disposal of subsidiaries and associates
The profit on the disposal of subsidiaries, joint ventures and associates comprises:
| 2007 £m |
2006 £m |
|
|---|---|---|
| United Kingdom (see below) | (7) | 69 |
| Turkey | 71 | - |
| Ireland | - | 86 |
| France | - | 79 |
| Other small operations | (15) | (12) |
| Profit on disposal before tax | 49 | 222 |
| Tax on profit on disposal | 3 | 13 |
| Profit on disposal after tax | 52 | 235 |
In June 2007, the Group sold its holding in its associate, the British Aviation Insurance Company Limited to Berkshire Hathaway for £15 million, resulting in a loss on disposal of £7 million.
On 31 October 2007, the Group entered into a joint venture agreement with Aksigorta AS ("Aksigorta"), the insurance company of the Sabanci Holding Group, to form a new Turkish life and pensions joint venture. Under the terms of the agreement, the Group's Turkish life and pensions business, Aviva Hayat ve Emeklilik A.S. ("Aviva HE") merged with Ak Emeklilik A.S ("Ak E") Aksigorta's life and pensions business. The joint venture entered into an exclusive long-term bancassurance agreement with Akbank TAS, Turkey's second-largest privately-owned bank.
The Group and Sabanci jointly control the joint venture through equal shareholdings of 49.7%, with the remaining 0.6% being held by individual shareholders. The new company, AvivaSA Emeklilik ve Hayat A.S began trading on 1 November 2007.
As consideration for its shareholding, the Group contributed the business of Aviva HE to the joint venture and paid £49 million to Aksigorta. The transaction has been accounted for as an acquisition of a 49.7% joint venture and the disposal of 50.3% of Aviva HE. The disposal consideration was £83 million, net of transaction costs, giving rise to a profit on disposal of £71 million.
On an EEV basis, the profit on disposal before tax falls to £20 million (£161 million) due to the inclusion of in-force business in the assets disposed of.
