251
Performance review
Aviva plc
Annual Report and Accounts 2011
Notes to the consolidated financial statements continued
34 – Merger reserve
This note gives details of the various reserves forming part of the Group’s consolidated equity and shows the movements during
the year.
Movements in the year comprised:
Balance at 1 January 2010
Arising in the year:
Fair value gains/(losses)
Fair value gains transferred to profit on disposals
Transfer to profit on disposal of subsidiary
Share of fair value changes in joint ventures and associates taken to other
comprehensive income (notes 18a & 19a)
Impairment losses on assets previously revalued directly through other comprehensive
income now taken to income statement
Reserves credit for equity compensation plans
Shares issued under equity compensation plans (note 36)
Transfer to non-controlling interests following Delta Lloyd IPO
Foreign exchange rate movements
Aggregate tax effect – shareholders’ tax
2,224
104
163
—
—
(2)
(25)
—
—
—
—
—
—
(3)
(41)
5
Balance at 31 December 2010
Arising in the year:
Fair value gains
Fair value gains transferred to profit on disposals
Transfer to profit on disposal of subsidiary (note 3b)
Fair value gains transferred to retained earnings on disposals (note 36)
Share of fair value changes in joint ventures and associates taken to other
comprehensive income (notes 18a & 19a)
Impairment losses on assets previously revalued directly through other comprehensive
income now taken to income statement
Reserves credit for equity compensation plans
Shares issued under equity compensation plans (note 36)
Transfer to profit on deconsolidation of Delta Lloyd
Transfer to retained earnings on deconsolidation of Delta Lloyd
Foreign exchange rate movements
Aggregate tax effect – shareholders’ tax
Balance at 31 December 2011
The above reserves are shown net of non-controlling interests.
Equity
compensation reserve
(see
accounting
policy AA)
£m
Total
£m
(771)
109
1,829
579
(123)
—
—
—
—
—
—
—
554
(123)
(2)
—
(15)
—
—
(15)
—
—
—
—
—
4
136
—
—
(1)
—
(166)
—
—
—
—
78
—
—
41
(51)
—
—
—
136
41
(51)
(4)
37
(157)
2,183
83
573
(693)
99
—
—
(3)
—
2
—
—
(6)
424
(189)
—
—
—
—
—
—
—
—
—
—
426
(189)
(3)
(6)
—
1
(86)
—
—
(85)
—
—
—
(485)
—
(174)
9
—
—
—
—
(2)
—
1
21
—
—
(115)
—
—
(98)
—
—
—
—
—
30
—
—
48
(61)
—
—
—
—
21
48
(61)
(600)
(2)
(144)
(88)
1,530
79
530
(663)
86
1,562
Hedging
instruments
reserve (see
accounting
policy T)
£m
2,245
Financial statements MCEV
Investment
valuation
reserve (see
accounting
policy S)
£m
Financial statements IFRS
Owner
occupied
properties
reserve (see
accounting
policy O)
£m
Shareholder information
Currency
translation
reserve (see
accounting
policy E)
£m
Governance
35 – Other reserves
Corporate responsibility
This note describes the use of the merger reserve.
Prior to 1 January 2004, certain significant business combinations were accounted for using the ‘pooling of interests method’
(or merger accounting), which treats the merged groups as if they had been combined throughout the current and comparative
accounting periods. Merger accounting principles for these combinations gave rise to a merger reserve in the consolidated statement
of financial position, being the difference between the nominal value of new shares issued by the Parent Company for the acquisition
of the shares of the subsidiary and the subsidiary’s own share capital and share premium account.
The merger reserve is also used where more than 90% of the shares in a subsidiary are acquired and the consideration includes
the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 1985 and, from 1 October 2009,
the Companies Act 2006.
The balance on the reserve of £3,271 million (2010: £3,271 million) has arisen through the mergers of Commercial Union, General
Accident and Norwich Union companies, forming Aviva plc in 2000, together with the acquisition of RAC plc (RAC) in 2005. Because
RAC ownership was immediately transferred from Aviva plc to a subsidiary company, this reserve is unaffected by the disposal of RAC
in 2011.
Other information