Annual Report
and Accounts 2008

Back to RBS.com

• Independent auditors' report
• Consolidated income statement
• Balance sheets
• Statements of recognised income and expense
• Cash flow statements
• Accounting policies
  • 1. Presentation of accounts
  • 2. Basis of consolidation
  • 3. Revenue recognition
  • 4. Assets held for sale and discontinued operations
  • 5. Pensions and other post-retirement benefits
  • 6. Intangible assets and goodwill
  • 7. Property, plant and equipment
  • 8. Impairment of intangible assets and property, plant and equipment
  • 9. Investment property
  • 10. Foreign currencies
  • 11. Leases
  • 12. Insurance
  • 13. Provisions
  • 14. Taxation
  • 15. Financial assets
  • 16. Impairment of financial assets
  • 17. Financial liabilities
  • 18. Loan commitments
  • 19. Derecognition
  • 20. Sale and repurchase transactions
  • 21. Netting
  • 22. Capital instruments
  • 23. Derivatives and hedging
  • 24. Share-based payments
  • 25. Cash and cash equivalents
  • 26. Shares in Group entities
  • Critical accounting policies and key sources of estimation uncertainty
  • Accounting developments
• Notes on the accounts

1. Presentation of accounts

The accounts 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 (EU). The EU has not adopted the complete text of IAS 39 'Financial Instruments: Recognition and Measurement'; it has relaxed some of the standard's hedging requirements. The Group has not taken advantage of this relaxation and has adopted IAS 39 as issued by the IASB: the Group's financial statements are prepared in accordance with IFRS as issued by the IASB. The date of transition to IFRS for the Group and the company (The Royal Bank of Scotland Group plc) and the date of their opening IFRS balance sheets was 1 January 2004.

The Group adopted IFRS 8 'Operating Segments' with effect from 1 January 2008. Early adoption of IFRS 8 has not materially affected segmental disclosures.

In October 2008, the IASB issued and, the European Union endorsed, amendments to IAS 39 'Financial Instruments: Recognition and Measurement' to permit the reclassification of financial assets out of the held-for-trading (HFT) and available-for-sale (AFS) categories subject to certain restrictions. Transfers must be made at fair value and this fair value becomes the instruments' new cost or amortised cost. The amendments are effective from 1 July 2008. Reclassifications made before 1 November 2008 were backdated to 1 July 2008; subsequent reclassifications were effective from the date the reclassification was made.

The Group has reclassified certain loans and debt securities out of the held-for-trading and available-for-sale categories into the loans and receivables category. It has also reclassified certain debt securities out of the held-for-trading category into the available-for-sale category. The balance sheet values of these assets, the effect of the reclassification on the income statement and the impairment losses relating to these assets are shown in Note 11 Financial instruments.

The 2007 comparative amounts have been restated for the netting of certain derivative asset and derivative liability balances with the London Clearing House as described in Note 13; the finalisation of the ABN AMRO acquisition accounting as set out in Note 34; and for the classification of Banco Real as a discontinued operation as described in Note 20.

The Group is not required to include reconciliations of shareholders' equity and net income under IFRS and US GAAP in its filings with the Securities and Exchange Commission in the US.

The company is incorporated in the UK and registered in Scotland. The accounts are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, held-for-trading financial assets and financial liabilities, financial assets and financial liabilities that are designated as at fair value through profit or loss, available-for-sale financial assets and investment property. Recognised financial assets and financial liabilities in fair value hedges are adjusted for changes in fair value in respect of the risk that is hedged.

The company accounts are presented in accordance with the Companies Act 1985.