RBS 2008 Annual Report Download - page 75

RBS Group Annual Report and Accounts 200874
Business review continued
Reconciliations of pro forma to statutory income statements
and balance sheets
Basis of preparation of pro forma results
The pro forma financial information shows the underlying performance
of the Group including the results of the ABN AMRO businesses to be
retained by RBS. This information is being provided to give a better
understanding of what the results of the operations might have looked
like had the acquisition of ABN AMRO as well as the transfers of
businesses to the other Consortium Members occurred on 1 January
2007.
Group operating profit on a pro forma basis:
Excludes
•ABN AMRO pre acquisition credit market write-downs and the impact
of the LaSalle sale;
•RBS share of ABN AMRO’s shared assets;
•amortisation of purchase accounting adjustments in 2007;
•amortisation of purchased intangible assets;
•write-down of goodwill and other intangible assets;
•integration costs;
•restructuring costs; and
Includes
•the cost of funding the ABN AMRO acquisition within Central items.
Whilst part of the acquisition consideration was funded by the issue
of preference shares, the pro forma results for 2007 assume that the
cash element of the consideration was debt funded. The results for
2008 reflect the actual amounts of interest and dividends on
preference shares.
In the presentation of the pro forma income statement credit market
write-downs, goodwill payments in respect of current account
administration fees and the gains on sale of Southern Water in 2007
and certain other assets have been shown in aggregate in income and
expenses as appropriate.
Income statement for the year ended 31 December 2008
Credit Amortisation Write-down
market of intangibles, of goodwill
RFS Share write-downs integration and and other
minority of shared and one-off restructuring intangible
Pro forma interest assets items costs assets Statutory
£m £m £m £m £m £m £m
Net interest income 15,939 2,911 (175) ———18,675
Non-interest income (excluding insurance net premium income) 5,227 1,299 (18) (5,641) ——867
Insurance net premium income 5,709 617 ————6,326
Non-interest income excluding credit market write-downs
and one-off items 10,936 1,916 (18) (5,641) ——7,193
Credit market write-downs and one-off items (5,641) ——5,641 ———
Non-interest income 5,295 1,916 (18) ———7,193
Total income 21,234 4,827 (193) ———25,868
Operating expenses 15,916 19,303 103 — 1,800 16,911 54,033
Profit/(loss) before other operating charges 5,318 (14,476) (296) — (1,800) (16,911) (28,165)
Insurance net claims 3,917 513 ————4,430
Operating profit/(loss) before impairment 1,401 (14,989) (296) — (1,800) (16,911) (32,595)
Impairment losses before reclassified asset impairments 6,962 640 4 466 ——8,072
Impairment losses on reclassified assets 466 ——(466) ———
Group operating loss (6,027) (15,629) (300) — (1,800) (16,911) (40,667)
Amortisation of purchased intangible assets 443 ———(443) ——
Write down of goodwill and other intangible assets 16,911 ————(16,911) —
Integration costs 1,050 ———(1,050) ——
Restructuring costs 307 ———(307) ——
Share of shared assets 300 — (300) ————
Loss before tax (25,038) (15,629) ————(40,667)
Tax (1,995) (328) ————(2,323)
Loss from continuing operations (23,043) (15,301) ————(38,344)
Profit/(loss) from discontinued operations, net of tax — 4,057 (86) ———3,971
Loss for the period (23,043) (11,244) (86) ———(34,373)
Minority interests 412 (11,244) ————(10,832)
Preference dividends 596 —————596
Loss attributable to ordinary shareholders (24,051) — (86) ———(24,137)