Interim Results-Statutory

Royal Bank of Scotland Group PLC 1 August 2000 THE ROYAL BANK OF SCOTLAND GROUP plc CONTENTS PAGE STATUTORY RESULTS Basis of Preparation 2 Consolidated Profit and Loss Account for the six 3 months to 31 March 2000 Consolidated Balance Sheet at 31 March 2000 5 Consolidated Profit and Loss Account for the nine 6 months to 30 June 2000 Consolidated Balance Sheet at 30 June 2000 8 Acquisition of NatWest 9 Notes 10 INDEPENDENT REVIEW REPORT BY THE AUDITORS 12 CONTACT 13 THE ROYAL BANK OF SCOTLAND GROUP plc BASIS OF PREPARATION On 6 March 2000 the Group completed the acquisition of National Westminster Bank Plc ('NatWest') and on 19 April 2000 announced a change of financial year end to 31 December. The Group's statutory accounts will therefore be for the fifteen month period ending on 31 December 2000 and will include the results of NatWest from 6 March 2000. These statutory accounts will also include the fair value and other adjustments required to account for the acquisition of NatWest. On 4 May 2000 the Group announced its results for the six months ended 31 March 2000 excluding the results of NatWest from the date of acquisition on 6 March. In order to comply with the Listing Rules this announcement includes the enlarged Group's results for the six months ended 31 March 2000 including NatWest. The consolidated profit and loss account for the six months ended 31 March 2000 set out on pages 3 and 4 and for the nine months ended 30 June 2000 set out on pages 6 and 7 incorporate the results of NatWest from the date of acquisition, 6 March 2000. Pro forma results The acquisition has had a significant effect on the Group's financial position. As a consequence, comparisons with the prior year on a statutory basis (which only includes NatWest from 6 March 2000) are of limited benefit. In order to provide shareholders with relevant and meaningful information, the Group has also published results on a pro forma basis. The pro forma results assume that the acquisition of NatWest took place on 1 January 1999. This approach facilitates meaningful comparisons with the prior year and provides a benchmark against which the Group's future performance can be judged. THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited) 6 6 12 months months months ended ended ended 31 31 30 March March September 2000 1999 1999 £m £m £m Interest receivable 3,255 2,503 4,853 Interest payable 1,948 1,642 3,105 ------ ------ -------- Net interest income 1,307 861 1,748 ------ ------ -------- Dividend income 24 16 34 Fees and commissions receivable 792 497 1,081 Fees and commissions payable (110) (64) (129) Dealing profits 184 81 199 Other operating income 234 210 459 ------ ------ -------- 1,124 740 1,644 General insurance - earned premiums 560 408 869 - reinsurance (94) (73) (159) ------ ------ -------- Non-interest income 1,590 1,075 2,354 ------ ------ -------- Total income 2,897 1,936 4,102 ------ ------ -------- Administrative expenses - staff costs 777 502 1,012 - premises and equipment 196 131 271 - other 363 213 460 Depreciation and amortisation - tangible fixed assets 175 153 278 - goodwill 56 - 1 ------ ------ -------- Operating expenses 1,567 999 2,022 ------ ------ -------- Profit before other operating 1,330 937 2,080 charges General insurance - gross claims 479 364 720 - reinsurance (84) (62) (130) ------ ------ -------- Profit before provisions for bad 935 635 1,490 and doubtful debts Provisions for bad and doubtful 162 103 266 debts Amounts written off investments 1 1 13 ------ ------ -------- Operating profit 772 531 1,211 Profit on disposal of businesses 100 - - ------ ------ -------- Profit on ordinary activities 872 531 1,211 before tax ------ ------ -------- THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited) 6 6 12 months months months ended ended ended 31 31 30 March March September 2000 1999 1999 £m £m £m Profit on ordinary activities 872 531 1,211 before tax Tax on profit on ordinary (275) (164) (361) activities ------ ------ -------- Profit on ordinary activities 597 367 850 after tax Minority interests - 2 6 ------ ------ -------- Profit after minority interests 597 369 856 Preference dividends 74 36 80 ------ ------ -------- Profit attributable to ordinary 523 333 776 shareholders Ordinary dividends - 73 254 ------ ------ -------- Retained profit 523 260 522 ------ ------ -------- Basic earnings per ordinary share 46.0p 37.9p 87.8p ------ ------ -------- Adjusted earnings per ordinary 46.6p 37.9p 87.8p share (Note 4) ------ ------ -------- Diluted earnings per ordinary 45.3p 37.3p 86.6p share ------ ------ -------- Comparative figures relating to the year ended 30 September 1999 do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 ('the Act'). The statutory accounts for that year have been filed with the Registrar of Companies and have been reported on by the auditors under Section 235 of the Act. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Act. THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED BALANCE SHEET (unaudited) 31 31 30 March March September 2000 1999 1999 £m £m £m Assets Cash and balances at central banks and items in the course 6,018 2,624 3,049 of collection Treasury bills and other eligible 3,716 649 701 bills Loans and advances to banks 37,405 8,909 10,375 Loans and advances to customers 153,726 45,732 49,340 Debt securities and equity shares 50,625 15,039 16,302 Intangible fixed assets 12,209 12 11 Other assets 25,184 6,933 7,061 ------- ------ -------- 288,883 79,898 86,839 Long-term assurance assets 10,257 2,082 2,013 attributable to policyholders ------- ------ -------- Total assets 299,140 81,980 88,852 ------- ------ -------- Liabilities Deposits by banks and items in the course of transmission to other banks 30,876 5,253 7,393 Customer accounts 163,246 51,962 55,180 Debt securities in issue 23,741 7,825 9,199 Other liabilities 38,353 8,109 7,687 Subordinated liabilities 9,754 3,091 3,032 Minority interests 764 111 146 Shareholders' funds including 22,149 3,547 4,202 non-equity interests ------- ------ -------- 288,883 79,898 86,839 Long-term assurance liabilities 10,257 2,082 2,013 to policyholders ------- ------ -------- Total liabilities 299,140 81,980 88,852 ------- ------ -------- Memorandum items: Contingent liabilities and 94,923 21,185 23,650 commitments ------ ------ -------- THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited) 9 9 12 months months months ended ended ended 30 30 30 June June September 2000 1999 1999 £m £m £m Interest receivable 6,904 3,488 4,853 Interest payable 4,156 2,181 3,105 ------ ------ -------- Net interest income 2,748 1,307 1,748 ------ ------ -------- Dividend income 65 25 34 Fees and commissions receivable 1,785 783 1,081 Fees and commissions payable (333) (92) (129) Dealing profits 456 131 199 Other operating income 402 349 459 ------ ------ -------- 2,375 1,196 1,644 General insurance - earned premiums 884 629 869 - reinsurance (246) (115) (159) ------ ------ -------- Non-interest income 3,013 1,710 2,354 ------ ------ -------- Total income 5,761 3,017 4,102 ------ ------ -------- Administrative expenses - staff costs 1,700 760 1,012 - premises and equipment 389 192 271 - other 784 352 460 Depreciation and amortisation - tangible fixed assets 387 220 278 - goodwill 212 1 1 ------ ------ -------- Operating expenses 3,472 1,525 2,022 ------ ------ -------- Profit before other operating 2,289 1,492 2,080 charges General insurance - gross claims 685 536 720 - reinsurance (201) (97) (130) ------ ------ -------- Profit before provisions for bad 1,805 1,053 1,490 and doubtful debts Provisions for bad and doubtful 310 176 266 debts Amounts written off investments 26 12 13 ------ ------ -------- Operating profit 1,469 865 1,211 Profit on disposal of businesses 100 - - ------ ------ -------- Profit on ordinary activities 1,569 865 1,211 before tax ------ ------ -------- THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited) 9 9 12 months months months ended ended ended 30 30 30 June June September 2000 1999 1999 £m £m £m Profit on ordinary activities 1,569 865 1,211 before tax Tax on profit on ordinary (538) (258) (361) activities ------ ------ -------- Profit on ordinary activities 1,031 607 850 after tax Minority interests (15) 2 6 ------ ------ -------- Profit after minority interests 1,016 609 856 Preference dividends 156 59 80 ------ ------ -------- Profit attributable to ordinary 860 550 776 shareholders Ordinary dividends 253 73 254 ------ ------ -------- Retained profit 607 477 522 ------ ------ -------- Basic earnings per ordinary share 52.5p 62.4p 87.8p ------ ------ -------- Adjusted earnings per ordinary 67.9p 62.4p 87.8p share (Note 4) ------ ------ -------- Diluted earnings per ordinary 51.8p 61.6p 86.6p share ------ ------ -------- Comparative figures relating to the year ended 30 September 1999 do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 ('the Act'). The statutory accounts for that year have been filed with the Registrar of Companies and have been reported on by the auditors under Section 235 of the Act. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Act. THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED BALANCE SHEET (unaudited) 30 30 30 June June September 2000 1999 1999 £m £m £m Assets Cash and balances at central banks and items in the course of collection 6,449 2,588 3,049 Treasury bills and other eligible 5,332 791 701 bills Loans and advances to banks 37,324 11,066 10,375 Loans and advances to customers 156,292 46,967 49,340 Debt securities and equity shares 54,297 17,986 16,302 Intangible fixed assets 12,121 11 11 Other assets 24,132 6,899 7,061 ------- ------ -------- 295,947 86,308 86,839 Long-term assurance assets 10,258 2,275 2,013 attributable to policyholders ------- ------ -------- Total assets 306,205 88,583 88,852 ------- ------ -------- Liabilities Deposits by banks and items in the course of transmission to other banks 35,472 8,088 7,393 Customer accounts 166,221 54,726 55,180 Debt securities in issue 23,614 8,039 9,199 Other liabilities 37,348 8,414 7,687 Subordinated liabilities 10,092 3,108 3,032 Minority interests 759 137 146 Shareholders' funds including 22,441 3,796 4,202 non-equity interests ------- ------ -------- 295,947 86,308 86,839 Long-term assurance liabilities 10,258 2,275 2,013 to policyholders ------- ------ -------- Total liabilities 306,205 88,583 88,852 ------- ------ -------- Memorandum items: Contingent liabilities and 99,699 21,263 23,650 commitments ------ ------ -------- THE ROYAL BANK OF SCOTLAND GROUP plc ACQUISITION OF NATWEST £m £m Consideration paid: Issue of 1,563.5 million new RBSG 25 pence ordinary shares to NatWest ordinary shareholders (Note a) 13,462 Payment of cash to NatWest ordinary 7,110 shareholders (Note b) Issue of loan notes to NatWest ordinary 239 shareholders (Note b) Fees and expenses related to the 176 acquisition ------- 20,987 ------- Net assets acquired: Shareholders' funds 9,648 Less: preference shares (488) ------- NatWest net assets as at 6 March 2000 9,160 ------- Fair value adjustments: Goodwill in NatWest (533) Disposal of businesses: (Note c) - Gartmore 866 - Other 271 ------- 1,137 Pension fund surplus 1,070 Contingent asset 70 Fixed assets excluding property (40) Property (172) Financial instruments carried at cost (203) Other (428) Tax on fair value adjustments (274) ------- Total fair value adjustments 627 ------- Adjusted net assets acquired 9,787 ------- Goodwill arising on acquisition (Note d) 11,200 ------- Notes (a) The 'Consideration paid' information above is based on the closing price on the London Stock Exchange on 3 March 2000, the trading day immediately prior to the offer for NatWest being declared unconditional in all respects, of 861 pence per RBSG ordinary share of 25 pence. (b) NatWest ordinary shareholders had the right to receive, for each NatWest share held, 0.968 new RBSG 25 pence ordinary shares plus 400 pence in cash or loan notes. A 'Partial cash alternative' was also offered, which, for each NatWest share held, consisted of 0.92 new RBSG 25 pence ordinary shares plus 450 pence in cash or loan notes. (c) The fair value adjustment relating to the disposal of businesses reflects the excess of sale proceeds over the net tangible asset value of these businesses in NatWest's consolidated balance sheet at 6 March 2000. (d) The goodwill arising on acquisition is being amortised over its estimated economic life of 20 years, resulting in a charge of £560 million per annum. THE ROYAL BANK OF SCOTLAND GROUP plc NOTES 1. Basis of preparation The basis of preparation of the statutory results is set out on page 2. 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 £73 million and £143 million interest receivable for the six months ended 31 March 1999 and for the year ended 30 September 1999 respectively, reductions in interest payable of £69 million and £135 million for the six months ended 31 March 1999 and for the year ended 30 September 1999 respectively and an increase of £4 million for the six months ended 31 March 1999 and £8 million for the year ended 30 September 1999 respectively, in dealing profits. b) Fraud losses, formerly included in provisions for bad and doubtful debts are now included in administrative expenses. The charge for bad and doubtful debt provisions has decreased by £5 million for the six months ended 31 March 1999 and £10 million for the year ended 30 September 1999, 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 £17 million for the six months ended 31 March 1999 and £36 million for the year ended 30 September 1999 and reducing administrative expenses - other. d) Following an analysis of staff costs, £9 million for the six months ended 31 March 1999 and £18 million for the year ended 30 September 1999 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. Taxation The charge for taxation is based on a UK corporation tax rate of 30% (1999 - 30.5%). The tax charge of £538 million on profits of £1,569 million for the nine months ended 30 June 2000 is equivalent to 34.3% of pre-tax profit. This is higher than the standard UK tax rate of 30%, mainly due to goodwill amortisation, which is not allowable for tax purposes. The tax charge of £275 million on profits of £872 million for the six months to 31 March 2000 is equivalent to 31.5% of pre-tax profit. THE ROYAL BANK OF SCOTLAND GROUP plc NOTES (continued) 4. Earnings per share The earnings per share have been calculated as follows: 9 9 6 6 12 months months months months months ended ended ended ended ended 30 30 31 31 30 June June March March September 2000 1999 2000 1999 1999 £m £m £m £m £m Earnings: Profit attributable to 860 550 523 333 776 ordinary shareholders ------ ------ ------ ------ ------ Weighted average Number of shares - millions number of ordinary shares: In issue during 1,639 881 1,137 879 884 the period Effect of dilutive share options and 20 11 46 14 12 convertible preference shares ------ ------ ------ ------ -------- In issue during the period 1,659 892 1,183 893 896 - diluted ------ ------ ------ ------ -------- Basic earnings 52.5p 62.4p 46.0p 37.9p 87.8p per share Integration costs 6.8p - 1.8p - - Goodwill 12.8p - 4.8p - - amortisation Profit on sale of (4.2p) - (6.0p) - - businesses ------ ------ ------ ------ -------- Adjusted earnings 67.9p 62.4p 46.6p 37.9p 87.8p per share ------ ------ ------ ------ -------- Adjusted earnings are calculated by adjusting the profit attributable to ordinary shareholders for the after tax profits or losses on disposals of businesses, integration costs and goodwill amortisation. Integration costs, which are costs incurred in respect of cost reduction and revenue enhancement targets announced in connection with the acquisition of NatWest, amounted to £156 million in the period 6 March 2000 to 30 June 2000. 5. 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. 6. 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 2000. 7. Auditors' Review The interim financial statements have been reviewed by the Group's auditors, Deloitte & Touche, and their report is set out on page 12. 8. 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. 9. Final Results The Group's final results will be announced on Thursday 1 March 2001. 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 financial information set out on pages 2 to 11 and we have read the other information contained in the results announcement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The results announcement, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The Listing Rules of the UK Listing Authority require that the accounting policies and presentation applied to the figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of 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 financial information as presented for the six months ended 31 March 2000 and the nine months ended 30 June 2000. Deloitte & Touche Chartered Accountants Edinburgh 31 July 2000 THE ROYAL BANK OF SCOTLAND GROUP plc CONTACT 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