RBS 2014 Annual Report Download - page 77

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RBS – Interim Results 2015
Notes
1. Basis of preparation
The Group’s condensed consolidated financial statements have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct Authority and IAS 34 ‘Interim Financial
Reporting’. They should be read in conjunction with the Group’s 2014 Annual Report and Accounts which
were prepared in accordance with International Financial Reporting Standards issued by the International
Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the
IASB as adopted by the European Union (EU) (together IFRS).
The condensed consolidated financial statements have been prepared in compliance with the British
Bankers’ Association Code for Financial Reporting Disclosure published in September 2010.
Going concern
RBS’s business activities and financial position, and the factors likely to affect its future development and
performance are discussed on pages 11 to 122. Its objectives and policies in managing the financial risks to
which it is exposed and its regulatory capital resources, liquidity and funding management are discussed in
the Capital and risk management appendix. A summary of the risk factors which could materially affect
RBS’s future results are described on pages 125 to 128.
Having reviewed RBS’s forecasts, projections and other relevant evidence, the directors have a reasonable
expectation that RBS will continue in operational existence for the foreseeable future. Accordingly, the
results for the half year ended 30 June 2015 have been prepared on a going concern basis.
Restatements
Citizens was classified as a disposal group on 31 December 2014 and its assets and liabilities from that date
have been aggregated and presented as separate lines in accordance with IFRS 5. Citizens was also
reclassified as a discontinued operation; comparatives for the periods ended 30 June 2014 have been re-
presented.
2. Citizens Financial Group
In March 2015, RBS sold 155.25 million shares in CFG (28.4% of CFG’s common stock) for proceeds of £2.5
billion. Transaction costs of £29 million were taken to owners’ equity. In April 2015, CFG purchased 10.5
million of its shares from RBS; RBS’s shareholding at 30 June 2015 was 40.8%.
As required by IFRS 10 ‘Consolidated Financial Statements’, RBS consolidates CFG despite holding a
minority of voting rights. Given the significance of its voting interest and the dispersion of other
shareholdings, RBS is deemed under IFRS 10 to have ‘de facto’ control.
CFG is classified as a disposal group and measured at the lower of carrying value and fair value less costs
to sell. At 30 June 2015, the carrying value of CFG was £8.4 billion.