IFRS condensed financial statements
A3 - Subsidiaries
(a) Acquisitions
There were no material acquisitions in the six months ended 30 June 2009.
(i) Other goodwill arising
As disclosed in the 2008 financial statements, on 30 June 2008 the Group acquired Swiss Life Belgium ('SLB'). At 30 June 2009, the fair values of the assets and liabilities have been updated from their provisional values to reflect a decrease in the value of acquired inforce (AVIF). This has given rise to an increase of goodwill of €72 million (£64 million) to €132 million (£118 million).
(b) Disposal of subsidiaries, joint ventures and associates
(i) The profit/(loss) on the disposal of subsidiaries, joint ventures and associates comprises:
| 6 months 2009 £m |
6 months 2008 £m |
Full year 2008 £m |
|
|---|---|---|---|
| United Kingdom | - | - | (38) |
| Netherlands (see (ii) below) | 20 | - | 15 |
| Offshore operations | - | - | 14 |
| Other small operations | - | 9 | 16 |
| Profit on disposal before tax | 20 | 9 | 7 |
| Tax on profit on disposal | - | - | - |
| Profit on disposal after tax | 20 | 9 | 7 |
(ii) Assets and liabilities of operations sold in the six month period ended 30 June 2009
The operations sold in the period relate to our Dutch health insurance business. The profit on disposal was £20 million, calculated as
follows:
| £m | |
|---|---|
| Assets | |
| Investments and property and equipment | 396 |
| Receivables and other financial assets | 390 |
| Deferred acquisition costs and other assets | 1 |
| Prepayments and accrued income | 158 |
| Cash and cash equivalents | 486 |
| Total assets | 1,431 |
| Liabilities | |
| Gross insurance liabilities | (709) |
| Payables and financial liabilities | (15) |
| Pension obligations and other provisions | (13) |
| Other liabilities | (481) |
| Total liabilities | (1,218) |
| Net assets disposed of | 213 |
| Cash consideration | 235 |
| Less: transaction costs | (2) |
| Total consideration | 233 |
| Profit on disposal | 20 |
(iii) Dutch health insurance business
On 1 January 2009, the group’s Dutch subsidiary, Delta Lloyd Group (“DL”), sold its health insurance business to OWM CZ Groep
Zorgverkeraar UA (“CZ”), a mutual health insurer, for £231 million, realising a profit of £20 million. Under the terms of the agreement,
CZ purchased the DL health insurance business and took on its underwriting risk and policy administration. DL continues to market and
distribute health insurance products from CZ to its existing customers and continues to provide asset management for the transferred
business. DL also has exclusive rights to market life, general insurance and income protection products to CZ’s customers.
(iv) UK non-core operations
On 11 February 2009, the group sold The British School of Motoring Limited and its subsidiaries to Arques Consulting GmbH for a
consideration of £4 million. The resultant loss on disposal of £9 million was provided for in the 2008 financial statements.
(c) Operations and assets classified as held for sale
Assets held for sale as at 30 June 2009 comprise:
| 6 months 2009 £m | 6 months 2008 £m |
Full year 2008 £m |
|
|---|---|---|---|
| Property and equipment held for sale (see (i) below) | 106 | - | 102 |
| Assets of operations classified as held for sale (see (ii) below) | 2,345 | 6,643 | 1,448 |
| Total assets classified as held for sale | 2,451 | 6,643 | 1,550 |
(i) Property and equipment held for sale
As part of the restructuring of the UK businesses, the UK data centres, which were owned and managed by Aviva Central Services UK
Limited, were classified as held for sale at 31 December 2008 at their fair value of £102 million. In remeasuring the data centres at their
fair value at 30 June 2009, a reversal of an impairment charge of £4 million has been recognised in the income statement. The sale was
completed on 1 July 2009 at the fair value above.
(ii) Assets of operations classified as held for sale
On 21 June 2009, the group announced the sale of its Australian life and pensions business and wealth management platform to
National Australia Bank for cash of A$825 million (£403 million), plus an adjustment to reflect the performance of the businesses from
31 December 2008 to the date of completion forecast to be A$60 million(£30 million). In addition, the group will receive dividends of
A$40 million (£20 million). The sale is subject to regulatory approval and is expected to complete later in 2009. The relevant assets and
liabilities of these businesses have been classified as held for sale, at their carrying values, in the consolidated statement of financial
position as at 30 June 2009 and are as follows:
| 6 months 2009 £m | 6 months 2008 £m |
Full year 2008 £m |
|
|---|---|---|---|
| Assets | |||
| Goodwill and intangible assets | 1 | 260 | 14 |
| Investments and property and equipment | 2,058 | 5,072 | 396 |
| Receivables and other financial assets | 36 | 587 | 386 |
| Deferred acquisition costs and other assets | 18 | 57 | 1 |
| Prepayments and accrued income | 40 | 247 | 158 |
| Tax assets | - | 9 | - |
| Cash and cash equivalents | 192 | 411 | 493 |
| Total assets | 2,345 | 6,643 | 1,448 |
| Liabilities | |||
| Gross insurance liabilities and liabilities for investment contracts | 1,718 | 5,253 | 709 |
| Borrowings | - | 13 | - |
| Payables and financial liabilities | 26 | 197 | 22 |
| Other liabilities | 21 | 369 | 478 |
| Tax liabilities and other provisions | 220 | 73 | 12 |
| Total liabilities | 1,985 | 5,905 | 1,221 |
| Net assets | 360 | 738 | 227 |
The group has hedged its exposure to A$822 million of the sale proceeds through the purchase of foreign currency forward contracts.
The operations disclosed as held for sale at 31 December 2008 comprised the Dutch health insurance business and certain UK noncore operations, both of which were sold in the six month period ended 30 June 2009. Details are given in section (b) above. Operations disclosed as held for sale at 30 June 2008 comprised these same businesses, certain other UK non-core operations which were sold in the second half of 2008, and the Dutch bancassurance business with ABN AMRO. Following the change in control of ABN AMRO Bank Netherlands, we considered at that time that the existing agreement would be terminated but, in December 2008, both parties agreed that continuation of the partnership was the preferred and most sustainable option.
