RBS 2008 Annual Report Download - page 25

RBS Group Annual Report and Accounts 200824
Presentation of information
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 subsidiaries, ‘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.
Acquisition of ABN AMRO
On 17 October 2007, RFS Holdings B.V. (‘RFS Holdings’), a company
jointly owned by RBS, Fortis Bank Nederland (Holding) N.V. (‘Fortis’)
and Banco Santander S.A. (‘Santander’) (together the ‘consortium
members’) and controlled by RBS, completed the acquisition of ABN
AMRO Holding N.V. (‘ABN AMRO’).
On 3 October 2008, the State of the Netherlands acquired Fortis Bank
Nederland (Holding) N.V. including the Fortis participation in RFS
Holdings that represents the acquired activities of ABN AMRO and their
participation in Dutch insurance activities.
RFS Holdings is implementing 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
members.
Pro forma results
Pro forma results have been prepared that include only those business
units of ABN AMRO that will be retained by RBS and assuming that the
acquisition of ABN AMRO was completed on 1 January 2007. No
adjustments have been made for the placing and open offer in
December 2008. The per share data have been calculated on the
assumption that the rights issue of 11 shares for 18 held for 200 pence
per share and the capitalisation issue of 1 share for every 40 held
occurred on 1 January 2007. The financial review and divisional
performance in the Business review include the pro forma results. The
basis of preparation of the pro forma results are detailed on page 74.
Given the significant write-downs on the Group’s credit market
exposures, and in order to provide a basis for comparison of underlying
performance, these write-downs and other one-off items including write-
down of goodwill and other intangible assets are shown separately in
the pro forma income statement.
Statutory results
RFS Holdings is jointly owned by the consortium members. 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 and 2008 include the results of ABN
AMRO for 76 days and the full year respectively. The interests of Fortis,
and its successor the State of the Netherlands, and Santander, in RFS
Holdings are included in minority interests.