Interim Results-Part 2 of 2

Royal Bank of Scotland Group PLC 1 August 2000 THE ROYAL BANK OF SCOTLAND GROUP plc Part 2 ULSTER BANK (pro forma basis) 6 6 12 months months months ended ended ended 30 30 31 June June December 2000 1999 1999 £m £m £m Net interest income 139 133 270 Non-interest income 88 73 147 ------ ----- ------ Total income 227 206 417 Expenses 120 113 234 ------ ----- ----- Profit before provisions 107 93 183 Provisions for bad and 11 10 17 doubtful debts ------ ----- ------ Profit before tax 96 83 166 ------ ----- ------ Cost:income ratio (%) 52.9 54.9 56.1 Total assets (£bn) 11.1 9.5 9.2 Employees at period end - permanent 4,500 4,600 4,500 - temporary 300 200 400 ------ ----- ------ - total 4,800 4,800 4,900 ------ ----- ------ Average exchange rate - Irish 1.288 1.173 1.196 punt/£ Ulster Bank provides a comprehensive range of retail and wholesale financial services in Northern Ireland and the Republic of Ireland. Retail Banking has a network of branches throughout Ireland and operates in the personal, small business and wealth management sectors. Corporate Banking and Financial Markets provides a wide range of services and investment banking products in the corporate and institutional markets. Total income increased by 10%, £21 million to £227 million. Net interest income rose by 5%, £6 million to £139 million. Non-interest income was up 21%, £15 million to £88 million. Expenses increased by 6%, £7 million to £120 million. Provisions for bad and doubtful debts were up £1 million, 10% to £11 million. Profit before tax of £96 million was 16%, £13 million higher. At constant exchange rates, profit rose by £18 million, 22%. The cost:income ratio improved from 54.9% to 52.9%. THE ROYAL BANK OF SCOTLAND GROUP plc CITIZENS (pro forma basis) 6 6 12 months months months ended ended ended 30 30 31 June June December 2000 1999 1999 £m £m £m Net interest income 317 205 431 Non-interest income 111 63 145 ------ ----- ------ Total income 428 268 576 Expenses 246 137 301 ------ ----- ------ Profit before provisions 182 131 275 Provisions for bad and 15 6 17 doubtful debts ------ ----- ------ Profit before goodwill amortisation 167 125 258 ------ ----- ------ Cost:income ratio 57.5 51.1 52.3 Total assets (£bn) 19.6 12.2 14.0 Employees at period end - permanent 7,300 5,200 5,500 - temporary 200 100 100 ------ ----- ------ - total 7,500 5,300 5,600 ------ ----- ------ Average exchange rate - US$/£ 1.569 1.620 1.618 Spot exchange rate - US$/£ 1.515 1.575 1.617 Citizens is engaged in retail and corporate banking activities carried out through its branch network in the states of Rhode Island, Connecticut, Massachusetts and New Hampshire and is the second largest bank in New England. Profit before goodwill amortisation was up 34%, £42 million to £167 million reflecting strong organic loan and deposit growth and the contribution from the acquisitions of UST Corp. in January 2000 and the commercial banking business of State Street in October 1999. Total income increased by 60%, £160 million to £428 million. Approximately £90 million of the increase in total income related to the acquisitions. Expenses were up 80%, £109 million, to £246 million - approximately £70 million of this increase related to acquisitions. Provisions for bad and doubtful debts were £15 million compared with £6 million in the first half of 1999. The increase in the cost:income ratio from 51.1% to 57.5% reflects the effects of the acquisitions and the related funding cost. THE ROYAL BANK OF SCOTLAND GROUP plc CENTRAL ITEMS (pro forma basis) 6 6 12 months months months ended ended ended 30 30 31 June June December 2000 1999 1999 £m £m £m Funding costs (105) (94) (210) Central department costs (128) (131) (268) Other corporate items - net (152) (35) (86) ----- ----- ----- Loss before goodwill amortisation and integration costs (385) (260) (564) ------ ----- ------- Employees at period end - permanent 1,700 2,100 2,000 - temporary 200 300 300 ------ ----- ------ - total 1,900 2,400 2,300 ------ ----- ------ As well as group corporate functions, which support the Group Executive, central department costs and employee numbers quoted above include functions such as Human Resources and Internal Audit which provide services to the operating divisions. The loss before goodwill amortisation and integration costs increased by £125 million to £385 million. The increase includes restructuring costs of £44 million related to Citizens' acquisition of UST in January 2000 and other corporate items which are held centrally. THE ROYAL BANK OF SCOTLAND GROUP plc NOTES TO PRO FORMA BASIS RESULTS 1. Basis of preparation The basis of preparation of the pro forma results is set out on page 4. 2. Accounting policies and presentation (i) Implementation by the Group of Financial Reporting Standard ('FRS') 15 'Tangible Fixed Assets' and FRS 16 'Current Tax' had no material effect on reported profits. From 1 January 2000, the Group's freehold and long leasehold buildings, following a reassessment of their useful economic lives, are being depreciated over 50 years. There have been no other changes to the Group's principal accounting policies as set out on pages 39 to 41 of the 1999 Annual Report and Accounts. (ii)Changes have been made to align NatWest accounting presentation with that adopted by the Group. However, in the following instances the NatWest presentation has been adopted: a) Interest receivable and interest payable on trading assets and liabilities previously shown in net interest income are now included in dealing profits. As a result of this change there are reductions of £104 million, (1999 first half £78 million; full year £155 million) and £98 million (1999 first half £73 million; full year £150 million) in interest receivable and interest payable respectively and an increase of £6 million (1999 first half £5 million; full year £5 million) in dealing profits. b) Fraud losses, formerly included in provisions for bad and doubtful debts are included in administrative expenses. The charge for bad and doubtful debt provisions has decreased by £5 million (1999 first half £5 million; full year £10 million) with a corresponding increase in administrative expenses - other. c) Credit card processing costs are now reported in fees and commissions payable increasing this profit and loss caption by £21 million (1999 first half £17 million; full year £37 million) and reducing administrative expenses - other. d) Following an analysis of staff costs, £9 million (1999 first half £8 million; full year £18 million) has been transferred within administrative expenses from staff costs to other costs. Comparative figures have been restated to reflect these changes in presentation which do not affect profit before tax. 3. Provisions for bad and doubtful debts Group operating profit is stated after charging provisions for bad and doubtful debts of £284 million (30 June 1999 - £242 million). The balance sheet provisions for bad and doubtful debts increased in the six months to 30 June 2000 from £1,910 million to £1,973 million, and the movements thereon were: Specific General Total £m £m £m At 1 January 2000 1,344 566 1,910 Currency translation 27 9 36 adjustment Amounts written off net of (320) - (320) recoveries Acquisition of subsidiaries 63 - 63 Transfers between 9 (9) - provisions Charge to profit & loss 273 11 284 account -------- -------- ------ At 30 June 2000 1,396 577 1,973 -------- -------- ------ At 30 June 1999 1,413 587 2,000 -------- -------- ------- THE ROYAL BANK OF SCOTLAND GROUP plc NOTES TO PRO FORMA BASIS RESULTS (continued) 4. Goodwill The amortisation of goodwill is based on an estimated economic life of 20 years, and comprises: 12 months 6 months 6 months ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m Goodwill arising on the acquisition of NatWest assuming acquisition on 280 280 560 1 January 1999 Other - from actual date of 28 - 6 acquisition -------- -------- ------- 308 280 566 -------- -------- ------- 5. Taxation The charge for taxation is based on a UK corporation tax rate of 30% for the six months to 30 June 2000 (30 June 1999 - 30.25%; 31 December 1999 - 30.25%) and is made up as follows: 12 6 6 months months months ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m Tax on profit before goodwill amortisation and integration costs 604 484 951 Tax relief on integration (56) - (34) costs and goodwill ------- -------- -------- 548 484 917 ------- -------- -------- The tax charge of £548 million, equivalent to 36.2% of pre-tax profit, is higher than the standard UK tax rate of 30% mainly due to goodwill amortisation, which is not allowable for UK tax. 6. Pro forma earnings per share The pro forma earnings per share figures have been calculated based on the following: 12 months 6 months 6 months ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m Earnings: Profit attributable to 782 703 1,425 ordinary shareholders -------- -------- -------- Number of shares - millions Weighted average number of ordinary shares: In issue during the period 2,652 2,639 2,643 -------- -------- -------- Basic earnings per share 29.5p 26.6p 53.9p Integration costs 5.1p - 3.0p Goodwill amortisation 11.5p 10.6p 21.4p -------- -------- -------- Adjusted earnings per share 46.1p 37.2p 78.3p -------- -------- -------- Adjusted earnings are calculated by adjusting the profit attributable to ordinary shareholders for the after tax effect of integration costs and goodwill amortisation. THE ROYAL BANK OF SCOTLAND GROUP plc NOTES TO PRO FORMA BASIS RESULTS (continued) 7. Ordinary Dividends The directors have declared an interim dividend of 9.5p per share on the ordinary shares. This interim dividend will be paid on 13 October 2000 to shareholders registered on 18 August 2000. As an alternative to cash, a scrip dividend election is to be offered and shareholders will receive details of this by letter. 8. Additional Value Shares (AVS's) Following approval at the Extraordinary General Meeting on 20 June 2000, approximately 2.7 billion AVS's with a total nominal value of £27 million were issued to shareholders by way of a bonus issue on 12 July. 9. Auditors' Review The pro forma interim results have been reviewed by the Group's auditors, Deloitte & Touche, and their review report is set out on page 33. 10.Interim Report An interim report is being sent to shareholders and copies will be available at the Company's registered office at 36 St Andrew Square, Edinburgh, EH2 2YB. 11.Final Results The Group's final results will be announced on Thursday 1 March 2001. THE ROYAL BANK OF SCOTLAND GROUP plc INTEGRATION INFORMATION In the Offer Document issued on 16 December 1999, the Group made various estimates in respect of cost savings, staff reductions and revenue benefits. Those estimates were based on the latest available published information at that time, namely NatWest interim accounts for the half year to 30 June 1999 and the Group's accounts for the year to 30 September 1999. All the benefits detailed below are measured against this published information ('base numbers'). On 19 April 2000, the Group revised its estimates as a consequence of the experience gained by having detailed access to NatWest following the acquisition on 6 March 2000. These revised estimates are shown in the tables below as 'plan' and the Group remains on track to achieve these. THE ROYAL BANK OF SCOTLAND GROUP plc REVENUE BENEFITS Period ending Annualised amount of December December December March gross revenues 2000 2001 2002 2003 implemented in each period (£m) plan 120 230 200 45 actual as at 30 June 46 2000 The plan indicated gross revenue improvements with an annualised effect on the base numbers of £120 million by 31 December 2000. Annualised gross revenue improvements of £46 million have been implemented by 30 June 2000. All of these benefits arise from initiatives started after 6 March 2000. Period ending Impact on profit before December December December December tax (£m) 2000 2001 2002 2003 plan 50 120 240 390 actual half year to 30 5 June 2000 The gross revenue improvements, less the related operating costs, generated a profit of £5 million in the half year to 30 June 2000. All of these benefits arise from initiatives after 6 March 2000. COST SAVINGS Period ending Annualised amount December December December March implemented in each 2000 2001 2002 2003 period (£m) plan 550 350 300 140 actual as at 30 June 360 2000 The plan indicated cost savings with an annualised effect on the base numbers of £550 million by December 2000. By 30 June 2000, annualised cost savings of £360million have been implemented. As stated in the Offer Document the estimates of efficiency cost savings include amounts already promised by NatWest. Within the £360 million, approximately 60% relates to NatWest cost reduction initiatives between 1 July 1999 and 6 March 2000. Period ending Impact on profit before December December December December tax (£m) 2000 2001 2002 2003 plan 290 700 1,050 1,300 actual half year to 30 146 June 2000 In the half year to 30 June 2000, the profit and loss account has benefited by £146 million in respect of cost saving initiatives. Of this amount, approximately 70% relates to NatWest cost reduction initiatives between 1 July 1999 and 6 March 2000. STAFF REDUCTIONS Period ending Cumulative total December December December March 2000 2001 2002 2003 plan 9,000 14,000 16,000 18,000 actual as at 30 June 7,500 2000 Staff numbers have reduced by 7,500 from the base numbers to 30 June 2000,with approximately 5,000 leaving NatWest between 1 July 1999 and 6 March 2000. THE ROYAL BANK OF SCOTLAND GROUP plc AVERAGE BALANCE SHEET (pro forma basis) 2000 1999 Average Average Balance Rate Balance Rate Six months ended 30 June £m % £m % Assets Treasury and other eligible bills UK 461 4.3 751 5.3 Overseas 136 4.4 460 2.2 Loans and advances to banks UK 16,852 5.8 18,285 5.1 Overseas 8,815 6.4 8,911 5.0 Loans and advances to customers UK 100,263 7.9 88,155 7.4 Overseas 21,272 7.6 15,054 6.9 Lease and HP receivables UK 13,902 8.7 14,441 9.0 Overseas 1,883 6.2 1,155 7.3 Debt securities UK 18,586 6.2 18,719 6.2 Overseas 9,351 6.1 8,054 5.7 ------ ------ Interest-earning assets 191,521 7.4 173,985 6.9 - banking business Interest-earning-assets 53,617 6.0 46,525 6.0 - trading business ------- ------- Total interest-earning assets 245,138 7.1 220,510 6.7 Non-interest earning assets 53,250 54,018 ------ ------- Total assets 298,388 274,528 ------ ------- Liabilities Deposits by banks UK 13,724 4.5 14,722 4.0 Overseas 7,433 5.3 7,94 4.8 Customer accounts UK 104,426 4.6 96,457 4.2 Overseas 20,584 4.4 15,464 3.9 Debt securities in issue UK 15,899 6.2 16,994 6.1 Overseas 8,298 6.0 6,388 4.8 Loan capital UK 9,413 7.1 7,556 6.8 Overseas 477 11.3 474 10.5 Internal funding of trading business UK (11,238) 4.6 (9,370) 6.3 Overseas (962) 4.8 (3,436) 4.5 ------- ------- Interest-bearing liabilities - 168,054 5.0 153,194 4.5 banking business Interest-bearing liabilities - 50,405 5.7 44,188 5.5 trading business ------- ------- Total interest-bearing 218,459 5.2 197,382 4.7 liabilities Non-interest-bearing liabilities demand deposits 21,150 18,268 other liabilities 36,705 38,103 Shareholders' equity 22,074 20,775 ------ ------- Total liabilities and 298,388 274,528 shareholders' equity ------ ------- The analysis into UK and overseas in the above table has been compiled on the basis of location of office. THE ROYAL BANK OF SCOTLAND GROUP plc AVERAGE INTEREST RATES, YIELDS, SPREADS AND MARGINS (pro forma basis) Pro Pro forma forma 2000 1999 Average Average Rate Rate Six months ended 30 June % % The Group's base rate 5.9 5.5 London inter-bank offered rate: three month sterling 6.2 5.4 three month eurodollar 6.4 5.0 Yields, spreads and margins of the banking business: Gross yield (1) Group 7.4 6.9 UK 7.5 7.1 Overseas 6.9 6.1 Interest spread (2) Group 2.4 2.4 UK 2.5 2.6 Overseas 1.9 1.6 Net interest margin (3) Group 3.0 3.0 UK 3.1 3.1 Overseas 2.6 2.5 (1) Gross yield is the average interest rate earned on average interest- earning assets of the banking business. (2) Interest spread is the difference between the gross yield and the average interest rate paid on average interest-bearing liabilities of the banking business. (3) Net interest margin is net interest income of the banking business as a percentage of average interest- earning assets of the banking business. THE ROYAL BANK OF SCOTLAND GROUP plc RISK ELEMENTS IN LENDING The Group's loan control and review procedures do not include the classification of loans as non-accrual, accruing past due, restructured and potential problem loans, as defined by the Securities and Exchange Commission ('SEC') in the US. The following table shows the estimated amount of loans which would be reported using the SEC's classifications. The figures incorporate estimates and are stated before deducting the value of security held or related provisions. Actual Pro Pro 30 June forma forma 2000 30 June 31 1999 December 1999 £m £m £m Loans accounted for on a non-accrual basis: Domestic 1,286 1,566 1,364 Foreign 614 816 629 Accruing loans which are contractually overdue 90 days or more as to principal or interest*: Domestic 565 565 558 Foreign 187 176 144 Loans not included above which are classified as 'troubled debt restructurings' by the SEC: Domestic 22 23 22 Foreign 104 108 110 ------- ------- -------- Total 2,778 3,254 2,827 ------- ------- ------- Provisions as a % of risk 71 61 68 elements in lending * Generally, lending by way of overdraft has no fixed repayment schedule and consequently is not included in this category. Loans that are current as to payment of principal and interest and not reflected in the above table, but in respect of which management has serious doubts about the ability of the borrower to comply with contractual repayment terms, totalled approximately £816 million at 30 June 2000 (30 June 1999 - £1,061 million; 31 December 1999 - £898 million). Substantial security is held in respect of these loans and appropriate provisions have already been made in accordance with the Group's provisioning policy for bad and doubtful debts. THE ROYAL BANK OF SCOTLAND GROUP plc MARKET RISK The Group manages the market risk in its trading and treasury portfolios through value-at-risk (VaR) limits as well as stress testing, position and sensitivity limits. VaR is a technique that produces estimates of the potential negative change in the market value of a portfolio over a specified time horizon at a given confidence level. The table below sets out the VaR for the Group as if NatWest had been part of the Group throughout the periods presented. The Group's VaR assumes a 95% confidence level and one-day time horizon. Six months to 30 June At 30 Maximum Minimum Average June £m £m £m £m Trading 2000 10.3 11.6 8.5 9.7 1999 9.8 10.5 7.4 9.2 Treasury 2000 4.0 5.0 3.0 3.7 1999 8.8 12.9 8.8 11.6 The Group's VaR should be interpreted in the light of the assumptions underlying the methodologies adopted and their limitations. Historical data used in computing VaR may not be indicative of future market conditions. VaR in the Group's treasury portfolios has decreased compared with the six months to 30 June 1999. Positions were reduced in the run up to the Millennium and kept lower in the unfavourable interest rate environment of the first half of 2000. Limits were also cut as the integration of the Group's treasury operations got underway. THE ROYAL BANK OF SCOTLAND GROUP plc REGULATORY RATIOS AND OTHER INFORMATION Actual 30 June 2000 Weighted risk assets (£m) - on balance sheet 139,338 - off balance sheet 26,226 ------- 165,564 ------- Risk asset ratio - tier 1 6.4% - total 11.4% Employee numbers (pro forma basis) Actual Pro Pro 30 June forma forma 2000 30 June 31 December 1999 Corporate Banking and Financial 13,700 15,200 14,600 Markets Retail Banking 31,800 36,600 34,300 Retail Direct 6,400 5,700 6,200 Manufacturing 19,900 21,400 20,800 Wealth Management 6,800 6,900 6,800 Direct Line Insurance Group 6,400 4,900 5,800 Ulster Bank 4,800 4,800 4,900 Citizens 7,500 5,300 5,600 Central items 1,900 2,400 2,300 ------- ------- -------- Group total 99,200 103,200 101,300 ------- ------- -------- Effect of acquisitions by:- Direct Line 800 - 800 Citizens 1,900 - 200 ------- ------- -------- Underlying 96,500 103,200 100,300 ------- ------- -------- Forward looking statements Certain sections of this document contain forward-looking statements. We use words such as 'expect', 'believe', 'risk' and 'VaR' to identify forward- looking statements. Our statements are subject to certain risks and uncertainties, as discussed in the Operating and Financial Review and Risk Management sections of the Annual Report and Accounts. These risks and uncertainties could cause actual results to differ materially from our statements. THE ROYAL BANK OF SCOTLAND GROUP plc DERIVATION OF PRO FORMA INFORMATION 12 months ended 31 December 1999 RBS Net Group RBS adjustment NatWest Pro forma pro forma year quarters year adjustments year ended 30 ended ended 31 (see ended 31 September 31 December December Notes on December 1999 1999/1998 1999 (1) page 32) 1999 £m £m £m £m £m Net interest income 1,756 88 3,715 (285) 5,274 ------- ------- ------- ------ ------- Dividend income 34 1 19 (17) 37 Fees and commissions 1,084 33 2,809 (329) 3,597 receivable Fees and commissions (93) (7) (575) - (675) payable Dealing profits 191 10 844 (18) 1,027 Other operating 456 (16) 441 192 1,073 income ------- ------- ------- ------ ------- 1,672 21 3,538 (172) 5,059 General insurance - earned premiums 869 60 - - 929 - reinsurance (159) (38) - - (197) ------- ------- ------- ------ ------- Non-interest income 2,382 43 3,538 (172) 5,791 ------- ------- ------- ------ ------- Total income 4,138 131 7,253 (457) 11,065 ------- ------- ------- ------ ------- Administrative expenses - staff costs 1,003 19 2,633 (143) 3,512 - premises and 298 (1) 747 (152) 892 equipment - other 468 19 1,010 (92) 1,405 Depreciation and amortisation - tangible fixed 278 (10) 255 231 754 assets - goodwill 1 5 51 509 566 Integration costs - - 116 (3) 113 ------- ------- ------- ------ ------- Operating expenses 2,048 32 4,812 350 7,242 ------- ------- ------- ------ ------- Profit before other operating charges 2,090 99 2,441 (807) 3,823 General insurance - gross claims 720 44 - - 764 - reinsurance (130) (33) - - (163) ------- ------- ------- ------ ------- Profit before provisions for bad 1,500 88 2,441 (807) 3,222 and doubtful debts Provisions for bad 276 23 237 (10) 526 and doubtful debts Amounts written off 13 - 23 (20) 16 investments ------- ------- ------- ------ ------- Group operating 1,211 65 2,181 (777) 2,680 profit Profit/(loss) on disposal/termination - 100 82 (182) - of businesses ------- ------- ------- ------ ------- Profit on ordinary activities before tax 1,211 165 2,263 (959) 2,680 Tax on profit on (361) (53) (584) 81 (917) ordinary activities ------- ------- ------- ------ ------- Profit on ordinary activities after tax 850 112 1,679 (878) 1,763 Minority interests 6 1 (11) (39) (43) ------- ------- ------- ------ ------- Profit after minority 856 113 1,668 (917) 1,720 interests Preference dividends 80 12 39 164 295 ------- ------- ------- ------ ------- Profit attributable to ordinary shareholders 776 101 1,629 (1,081) 1,425 ------- ------- ------- ------ ------- (1) Restated to include income from associated undertakings and profit on disposal of fixed assets within 'Other operating income'. THE ROYAL BANK OF SCOTLAND GROUP plc DERIVATION OF PRO FORMA INFORMATION (continued) 6 months ended 30 June 1999 RBS Net adjustment quarters Group RBS ended NatWest Pro forma pro forma 6 months 30 June 6 months adjustments 6 months ended 1999/31 ended (see ended 30 31 March December 30 June Notes on June 1999 1998 1999 (1) page 32) 1999 £m £m £m £m £m Net interest income 865 36 1,841 (149) 2,593 -------- -------- ------- ------- -------- Dividend income 16 1 8 (7) 18 Fees and commissions 498 47 1,372 (164) 1,753 receivable Fees and commissions (47) (4) (276) (7) (334) payable Dealing profits 77 (14) 482 (19) 526 Other operating 209 38 212 93 552 income -------- -------- ------- ------- -------- 753 68 1,798 (104) 2,515 General insurance - earned premiums 408 17 - - 425 - reinsurance (73) (5) - - (78) -------- -------- ------- ------- -------- Non-interest income 1,088 80 1,798 (104) 2,862 -------- -------- ------- ------- -------- Total income 1,953 116 3,639 (253) 5,455 -------- -------- ------- ------- -------- Administrative expenses - staff costs 499 6 1,351 (85) 1,771 - premises and 143 (11) 357 (59) 430 equipment - other 216 19 493 (55) 673 Depreciation and amortisation - tangible fixed 153 (5) 135 116 399 assets - goodwill - - 25 255 28 -------- -------- ------- ------- -------- Operating expenses 1,011 9 2,361 172 3,553 -------- -------- ------- ------- -------- Profit before other operating charges 942 107 1,278 (425) 1,902 General insurance - gross claims 364 (8) - - 356 - reinsurance (62) (5) - - (67) ------- ------- ------- ------- -------- Profit before provisions for bad 640 120 1,278 (425) 1,613 and doubtful debts Provisions for bad 108 13 126 (5) 242 and doubtful debts Amounts written off 1 11 13 (13) 12 investments -------- ------- ------- ------- ------- Group operating 531 96 1,139 (407) 1,359 profit Profit/(loss) on disposal/termination - - 1 (1) - of businesses -------- -------- ------- ------- -------- Profit on ordinary activities before tax 531 96 1,140 (408) 1,359 Tax on profit on (164) (29) (337) 46 (484) ordinary activities -------- -------- ------- ------- -------- Profit on ordinary activities after tax 367 67 803 (362) 875 Minority interests 2 (2) (6) (21) (27) -------- -------- ------- ------- -------- Profit after minority 369 65 797 (383) 848 interests Preference dividends 36 7 21 81 145 -------- ------- ------- ------- -------- Profit attributable to ordinary 333 58 776 (464) 703 shareholders -------- ------- ------- ------- ------- (1) Restated to include income from associated undertakings and profit on disposal of fixed assets within 'Other operating income'. THE ROYAL BANK OF SCOTLAND GROUP plc DERIVATION OF PRO FORMA INFORMATION (continued) 1. The pro forma adjustments include the changes in accounting presentation detailed in note 2(ii) on page 20. 2. The reduction in profit on ordinary activities before taxation comprises: Six months to Year ended 30 June 31 December 1999 1999 £m £m Additional funding costs (net of 74 147 benefit of disposal proceeds) Amortisation of pension fund surplus 41 82 Amortisation of goodwill arising on 280 560 acquisition of NatWest Goodwill amortisation charged in (25) (51) NatWest accounts Bid defence costs incurred by NatWest - (45) Profits of businesses sold 37 84 Profits on sale of businesses 1 72 Additional consideration on sale of - 110 Bancorp ------- ------- Reduction in profit on ordinary activity before taxation 408 959 ------- ------- THE ROYAL BANK OF SCOTLAND GROUP plc Independent Review Report to The Royal Bank of Scotland Group plc Introduction We have been instructed by the company to review the pro forma interim financial information set out on pages 4 to 22 and 30 to 32, which has been prepared as described on page 4 and in accordance with the accounting policies referred to on page 20. This pro forma interim financial information is not subject to the Listing Rules of the UK Listing Authority. We have read the other information contained in the results announcement and, solely on that basis, have considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The results announcement, including the pro forma interim financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors have determined that the accounting policies and presentation applied to the figures are consistent with those applied in preparing the preceding annual accounts except for those changes that are disclosed. Review work performed We conducted our review having regard to guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the pro forma interim financial information as presented for the six months ended 30 June 2000. Deloitte & Touche Chartered Accountants Edinburgh 31 July 2000 THE ROYAL BANK OF SCOTLAND GROUP plc CONTACTS Fred Goodwin Group Chief Executive 020 7427 8116 0131 523 2033 Grahame Whitehead Deputy Group Finance Director 020 7427 9450 0131 523 2970 1 August 2000

Companies

NATWEST GROUP (NWG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today