RBS 2006 Annual Report Download - page 160
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159
RBS Group • Annual Report and Accounts 2006
Financial statements
2006 2005
£m £m
Contracts for future capital expenditure not provided for in the accounts
at the year end (excluding investment properties and operating lease assets) 117 38
Contractual obligations to purchase, construct or develop investment
properties or to repair, maintain or enhance investment properties 6 4
Property, plant and equipment pledged as security 1,222 1,250
Investment properties are valued to reflect fair value, that is,
the market value of the Group’s interest at the reporting date
excluding any special terms or circumstances relating to the
use or financing of the property and transaction costs that
would be incurred in making a sale. Observed market data
such as rental yield, replacement cost and useful life, reflect
relatively few transactions involving property that, necessarily,
is not identical to property owned by the Group.
Valuations are carried out by qualified surveyors who are
members of the Royal Institution of Chartered Surveyors, or an
equivalent overseas body. The 31 December 2006 valuation for
a significant majority of the Group’s investment properties was
undertaken by external valuers.
The fair value of investment properties includes £451 million
(2005 – £100 million) of appreciation since purchase.
Rental income from investment properties was £278 million
(2005 – £250 million; 2004 – £241 million). Direct operating
expenses of investment properties were £54 million (2005 –
£61 million; 2004 – £72 million).
Property, plant and equipment, excluding investment properties,
include £607 million (2005 – £84 million) assets in the course of
construction.