RBS 2007 Annual Report Download - page 30

RBS Group • Annual Report and Accounts 2007
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Presentation of information
Business review
In the Report and Accounts, and unless specified otherwise,
the term ‘company’ means The Royal Bank of Scotland Group
plc, ‘RBS’ or the ‘Group’ means the company and its subsidiary
undertakings, ‘the Royal Bank’ means The Royal Bank of
Scotland plc and ‘NatWest’ means National Westminster Bank Plc.
The company publishes its financial statements in pounds
sterling (“£” or “sterling”). The abbreviations ‘£m’ and ‘£bn’
represent millions and thousands of millions of pounds
sterling, respectively, and references to ‘pence’ represent
pence in the United Kingdom (“UK”). Reference to ‘dollars’ or
‘$’ are to United States of America (“US”) dollars. The
abbreviations ‘$m’ and ‘$bn’ represent millions and thousands
of millions of dollars, respectively, and references to ‘cents’
represent cents in the US. The abbreviation ‘’ represents the
‘euro’, the European single currency and the abbreviations ‘m’
and ‘bn’ represent millions and thousands of millions of euros,
respectively.
Certain information in this report is presented separately for
domestic and foreign activities. Domestic activities primarily
consist of the UK domestic transactions of the Group. Foreign
activities comprise the Group’s transactions conducted
through those offices in the UK specifically organised to
service international banking transactions and transactions
conducted through offices outside the UK.
The geographic analysis in the average balance sheet and
interest rates, changes in net interest income and average
interest rates, yields, spreads and margins in this report have
been compiled on the basis of location of office – UK and
overseas. Management believes that this presentation provides
more useful information on the Group’s yields, spreads and
margins of the Group’s activities than would be provided by
presentation on the basis of the domestic and foreign activities
analysis used elsewhere in this report as it more closely
reflects the basis on which the Group is managed. ‘UK’ in this
context includes domestic transactions and transactions
conducted through the offices in the UK which service
international banking transactions.
The results, assets and liabilities of individual business units
are classified as trading or non-trading based on their
predominant activity. Although this method may result in some
non-trading activity being classified as trading, and vice versa,
the Group believes that any resulting misclassification is not
material.
International Financial Reporting Standards
As required by the Companies Act 1985 and Article 4 of the
European Union IAS Regulation, the consolidated financial
statements of the Group are prepared in accordance with
International Financial Reporting Standards issued by the
International Accounting Standards Board (“IASB”) and
interpretations issued by the International Financial Reporting
Interpretations Committee of the IASB (together “IFRS’) as
adopted by the European Union. It also complies with IFRS as
issued by the IASB. On implementation of IFRS on 1 January
2005, the Group took advantage of the option in IFRS 1 ‘First-
time Adoption of International Financial Reporting Standards’
to implement IAS 39 ‘Financial Instruments: Recognition and
Measurement’, IAS 32 ‘Financial Instruments: Disclosure and
Presentation’ and IFRS 4 ‘Insurance Contracts’ from 1 January
2005 without restating its 2004 income statement and balance
sheet. The date of transition to IFRS for the Group and the
company and the date of their opening IFRS balance sheets
was 1 January 2004.
The Group’s published 2004 financial statements were prepared
in accordance with then current UK generally accepted
accounting principles (“UK GAAP” or “previous GAAP”)
comprising standards issued by the UK Accounting Standards
Board, pronouncements of the Urgent Issues Task Force,
relevant Statements of Recommended Accounting Practice
and provisions of the Companies Act 1985.
Acquisition of ABN AMRO
On 17 October 2007, RFS Holdings B.V. (“RFS Holdings”), a
company jointly owned by RBS, Fortis N.V., Fortis SA/NV and
Banco Santander S.A. (the “Consortium Banks”) and controlled
by RBS, completed the acquisition of ABN AMRO Holding N.V.
(“ABN AMRO”).
In due course, RFS Holdings will implement an orderly
separation of the business units of ABN AMRO with RBS
retaining the following ABN AMRO business units:
•Continuing businesses of Business Unit North America;
•Business Unit Global Clients and wholesale clients in the
Netherlands (including former Dutch wholesale clients) and
Latin America (excluding Brazil);
•Business Unit Asia (excluding Saudi Hollandi); and
•Business Unit Europe (excluding Antonveneta).
Certain other assets will continue to be shared by the
Consortium Banks.
Statutory results
RFS Holdings is jointly owned by the Consortium Banks. It is
controlled by the company and is therefore fully consolidated
in its financial statements. Consequently, the statutory results of
the Group for the year ended 31 December 2007 include the
results of ABN AMRO for the period from 17 October 2007 to
31 December 2007. The interests of Fortis and Santander are
included in minority interests.