RBS 2004 Annual Report Download - page 172

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Notes on the accounts
Notes on the accounts continued
Exchange gains of £1,024 million (2003 – £604 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 (2003 – nil).
Included in the closing balances of the Group’s revaluation
reserves and profit and loss account at 31 December 2004
are cumulative net losses of £320 million (2003 – net gains
£90 million) relating to the retranslation of opening net assets
of subsidiary and associated undertakings offset by foreign
currency borrowing.
At 31 December 2004, 707,247 (2003 – 790,019) ordinary
shares of 25p each of the company were held by the 1992
Employee Share Trust and 63,098 (2003 – nil) ordinary shares
of 25p each were held by the 2001 Employee Share Trust in
respect of options under the executive option scheme and
awards under the medium term performance plan.
34 Reserves
2004 2003 2002 2004
The Group The Group The Group The company
£m £m £m £m
Share premium account
At 1 January 8,175 7,608 7,465 8,175
Currency translation adjustments (231) (203) (283) (231)
Shares issued during the year 4,550 760 685 4,550
Conversion of exchangeable undated loan capital 460 ——460
Preference shares redeemed during the year — — (268) —
Other movements 10 10 9 10
At 31 December 12,964 8,175 7,608 12,964
Merger reserve
At 1 January 10,881 11,455 12,029 —
Transfer to profit and loss account (574) (574) (574) —
At 31 December 10,307 10,881 11,455 —
Other reserves
At 1 January 419 387 212 156
Redemption of preference shares — — 150 —
Transfer of increase in value of long-term life assurance business 38 32 25 —
At 31 December 457 419 387 156
Revaluation reserve
At 1 January 7 80 113 16,857
Revaluation of interests in subsidiary undertakings — ——(1,887)
Revaluation of premises 56 (69) (33) —
Transfer from/(to) profit and loss account 29 (4) — —
At 31 December 92 78014,970
Profit and loss account
As previously reported 7,848 6,768 5,956 2,588
Prior year adjustment arising on implementation of FRS 17 (2,001) (1,981) (353) —
At 1 January as restated 5,847 4,787 5,603 2,588
Currency translation adjustments and other movements (409) 38 28 (1)
Retention for the year 2,419 764 767 785
Employee share option payments — — (136) —
Redemption of preference shares — (364) (332) —
Actuarial (losses)/gains recognised in post-retirement benefit schemes (1,134) 36 (1,692) —
Own shares held in relation to employee share schemes (7) ——(7)
Goodwill previously written off — 40 — —
Transfer from merger reserve 574 574 574 —
Transfer of increase in value of long-term life assurance business (38) (32) (25) —
Transfer (to)/from revaluation reserve (29) 4——
At 31 December 7,223 5,847 4,787 3,365
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 2004.