RBS 2003 Annual Report Download - page 182

180
Notes on the accounts continued
Notes on the accounts
42 Acquisitions
The Group made a number of acquisitions during the year, all of which were accounted for using acquisition accounting principles.
The most significant of these was Churchill Insurance Group PLC which was acquired by the company in September 2003 for a
consideration of £1.1 billion.
The provisional fair values of the assets and liabilities of all acquisitions made during the year and the consideration paid are shown
in the table below:
Book value of
net assets Fair value Fair value to
acquired adjustments the Group
At respective dates of acquisition £m £m £m
Cash and balances at central banks 153 4 157
Treasury and other eligible bills 13 — 13
Loans and advances to banks 622 — 622
Loans and advances to customers 3,326 (11) 3,315
Debt securities 1,921 (3) 1,918
Equity shares 5 (3) 2
Interest in associates 21 — 21
Intangible fixed assets 52 (52) —
Tangible fixed assets 603 (7) 596
Other assets 1,144 (61) 1,083
Prepayments and accrued income 616 (35) 581
Deposits by banks (1,416) — (1,416)
Customer accounts (2,446) (7) (2,453)
Other liabilities (537) 80 (457)
Accruals and deferred income (2,801) (300) (3,101)
Deferred tax provisions (34) — (34)
Other provisions (9) — (9)
Minority interest – non-equity (16) — (16)
Net assets acquired 1,217 (395) 822
Goodwill 1,456
Total consideration 2,278
Satisfied by:
Payment of cash 2,228
Loan notes 26
Fees and expenses relating to the acquisition 24
2,278
Fair value adjustments reflect the restatement of balances to their estimated fair values at the date of acquisition, and the related tax effect.
Litigation
In December 2003, members of the Group were joined as
defendants in a number of legal actions in the United States
following the collapse of Enron. Collectively, the claims are, to
a substantial degree, unquantified and in each case they are
made against large numbers of defendants. The Group intends
to defend these claims vigorously. The US Courts dealing with
the main Enron actions have ordered that the Group join the
non-binding, multi-party mediation which commenced in late
2003. Based on current knowledge including applicable
defences and given the unquantified nature of these claims,
the directors are unable at this stage to predict with certainty
the eventual loss, if any, in these matters. The Group continues
to co-operate fully with the appropriate authorities.
Members of the Group are engaged in other litigation in the
United Kingdom and a number of overseas jurisdictions,
including the United States, involving claims by and against
them arising in the ordinary course of business. The directors
of the company have reviewed the actual, threatened and
known potential claims and proceedings and, after consulting
with the Group’s legal advisers are satisfied that the outcome
of these claims and proceedings will not have a material
adverse effect on the Group’s consolidated net assets, results
of operations or cash flows.
41 Memorandum items (continued)