RBS 2004 Annual Report Download - page 92

Operating and financial review
Operating and financial review continued
Central items
2004 2003* 2002*
£m £m £m
Funding costs 284 215 215
Departmental and corporate costs 595 496 283
Total Central items 879 711 498
* prior periods have been restated following the implementation of FRS 17.
2004 compared with 2003
Total Central items increased by £168 million to £879 million.
Funding costs at £284 million, were up 32% or £69 million
reflecting the funding of the various acquisitions undertaken by
the Group during the year.
Changes in net pension costs on the adoption of FRS 17 are
reported in Central items. These comprise higher pension cost
of £81 million partially offset by the expected return on
pension scheme assets less interest on scheme liabilities of
£33 million.
Central departmental costs and other corporate items at £595
million were £99 million or 20% higher than 2003. This is
principally due to higher Group pension costs, up £48 million,
the centralisation of certain functions and expenditure on
Group-wide projects such as International Accounting
Standards and Basel II.
2003 compared with 2002
Total Central items increased by £213 million to £711 million.
Funding costs were £215 million. Increased income from
higher shareholders’ funds was offset by the funding costs
associated with the acquisition of Churchill in September 2003
and the £1.5 billion AVS dividend paid in December 2003.
Central departmental costs and other corporate items at £496
million were £213 million or 75% higher than 2002. Net pension
costs increased by £172 million reflecting lower returns on
pension scheme assets together with increased pension costs.
This was also partly due to staff costs and other costs relating to
certain departments such as Customer Relations which have
been centralised and additional resources devoted to Group
wide projects such as preparations for the implementation of
Basel II and International Accounting Standards.
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