RBS 2003 Annual Report Download - page 172

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Exchange gains of £604 million (2002 – £281 million) arising
on foreign currency borrowings have been offset in the
Group’s profit and loss account reserves against differences
on retranslating the net investment in overseas subsidiary and
associated undertakings financed by these borrowings.
The tax effect of gains and losses taken directly to reserves
was nil (2002 – £7 million charge).
Included in the closing balances of the Group’s revaluation
reserves and profit and loss account at 31 December 2003 are
cumulative net gains of £90 million (2002 – £55 million) relating
to the retranslation of opening net assets of subsidiary and
associated undertakings offset by foreign currency borrowing.
At 31 December 2003, 790,019 (2002 – 919,255) ordinary
shares of 25p each of the company were held by the 1992
Employee Share Trust in respect of options under the executive
option scheme and awards under the restricted share scheme.
Included in ‘Other assets’ is an amount which reflects the
exercise price of the options that the shares are expected to
be used to satisfy.
Notes on the accounts continued
Notes on the accounts
34 Reserves
2003 2002 2001 2003
The Group The Group The Group The company
£m £m £m £m
Share premium account
At 1 January 7,608 7,465 6,530 7,608
Currency translation adjustments (203) (283) 58 (203)
Shares issued during the year 760 685 870 760
Preference shares redeemed during the year — (268) — —
Other movements 10 9710
At 31 December 8,175 7,608 7,465 8,175
Merger reserve
At 1 January 11,455 12,029 12,604 —
Shares issued — — 2,007 —
Transfer to profit and loss account (574) (574) (2,582) —
At 31 December 10,881 11,455 12,029 —
Other reserves
At 1 January 387 212 191 156
Redemption of preference shares — 150 — —
Transfer of increase in value of long-term life assurance business 32 25 17 —
Other movements — —4—
At 31 December 419 387 212 156
Revaluation reserve
At 1 January 80 113 40 6,001
Revaluation of interests in subsidiary undertakings — ——10,856
Revaluation of premises (69) (33) 72 —
Transfer (to)/from profit and loss account (4) —1—
At 31 December 7 80 113 16,857
Profit and loss account
At 1 January 6,768 5,956 2,786 3,547
Currency translation adjustments and other movements 33 27 (14) —
Retention for the year 825 704 783 (595)
Employee share option payments —(136) (163) —
Redemption of preference shares (364) (332) — (364)
Goodwill previously written off 40 ———
Transfer from merger reserve 574 574 2,582 —
Transfer of increase in value of long-term life assurance business (32) (25) (17) —
Transfer from/(to) revaluation reserve 4 — (1) —
At 31 December 7,848 6,768 5,956 2,588
The cumulative goodwill arising on acquisitions of subsidiary and associated undertakings which are still part of the Group and
written off directly against profit and loss account reserves of the Group amounted to £1,133 million at 31 December 2003.