RBS 2004 Annual Report Download - page 199

section
03
197
Annual Report and Accounts 2004
Notes on the accounts
Financial
statements
Goodwill and intangible assets other than goodwill
The Group fully implemented SFAS 142 ‘Goodwill and Other Intangible Assets’ from 1 January 2002. Under this standard, goodwill
and intangible assets deemed to have indefinite lives are not amortised and are subject to annual impairment tests. Other intangible
assets continue to be amortised over their useful lives. The Group has completed the impairment tests required under SFAS 142 and
no impairment has been recognised as a result.
Securitisations
The Group engages in securitisation activities pertaining to
certain of its assets including US commercial and residential
mortgage loans, commercial and residential mortgage related
securities, US Government agency collateralised mortgage
obligations, and other types of financial assets. Additionally,
the Group acts as an underwriter and depositor in securitisation
transactions involving both client and proprietary transactions.
The Group has classified these activities into three broad
securitisation categories, US Agency based, consumer based,
and commercial based securitisations.
During 2004, the Group received proceeds of approximately
£31.4 billion (2003 – £37.5 billion) from securitisation trusts in
connection with new securitisations.
The Group recognised net pre-tax gains of approximately
£111.1 million (2003 – £58.8 million) relating to these
securitisations. Net pre-tax gains are based on the difference
between the sales prices and previous carrying values of
assets prior to date of sale, are net of transaction specific
expenses, and exclude any results attributable to hedging
activities, interest income, funding costs, changes in asset
values prior to securitisation date, and retained interest values
subsequent to securitisation date.
Intangible assets other than goodwill
A summary of the carrying value of intangible assets other than goodwill is as follows:
2004 2003 2002
Gross Net Gross Net Gross Net
carrying Accumulated carrying carrying Accumulated carrying carrying Accumulated carrying
amount amortisation amount amount amortisation amount amount amortisation amount
£m £m £m £m £m £m £m £m £m.
Core deposit intangibles 690 (205) 485 459 (149) 310 461 (108) 353
Brands 367 (3) 364 338 — 338 — — —
Others 360 (39) 321 128 (6) 122 — — —
Total amortising intangible assets 1,417 (247) 1,170 925 (155) 770 461 (108) 353
The weighted average amortisation period of intangible assets,
other than goodwill, subject to amortisation are:
Years
Core deposit intangibles 7
Brands 10
Others 8
Amortisation charge on intangibles during 2004 was £115
million (2003 – £62 million; 2002 – £50 million). The Group
estimates amortisation expense for the next five years will be:
£m
2005 146
2006 145
2007 141
2008 133
2009 123