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Financial results
To facilitate comparisons, the
results for the year ended 31 December 2001 are compared with the pro forma
results for the year ended 31 December 2000 which have been prepared on the
basis described on page 38.
Profit before tax, goodwill
amortisation and integration costs was £5,801 million (year ended 31 December
2000 – £4,401 million on a pro forma basis). Profit before tax for the year
ended 31 December 2001 was £4,275 million (year ended 31 December 2000 – £3,327
million on a pro forma basis). Statutory results for the year ended 31 December
2001 with comparative figures for the previous accounting period, the 15 months
ended 31 December 2000, are shown on page 42.
Consolidated profit and
loss account for the year ended 31 December 2001
|
|
Pro
forma |
|
2001 |
2000 |
|
£m |
£m |
|
Interest
receivable |
14,421 |
14,626 |
|
Interest payable |
7,552 |
8,697 |
| Net
interest income |
6,869 |
5,929 |
|
Dividend income |
54 |
46 |
| Fees
and commissions receivable |
4,735 |
4,079 |
| Fees
and commissions payable |
(930) |
(804) |
|
Dealing profits |
1,426 |
1,131 |
| Other
operating income |
1,052 |
998 |
|
6,337 |
5,450 |
|
General insurance |
|
|
| –
earned premiums |
1,804 |
1,346 |
| –
reinsurance |
(429) |
(367) |
|
Non-interest income |
7,712 |
6,429 |
| Total
income |
14,581 |
12,358 |
|
Administrative expenses |
|
|
| –
staff costs |
3,461 |
3,440 |
| –
premises and equipment |
809 |
839 |
| –
other |
1,715 |
1,566 |
|
Depreciation of tangible fixed assets |
856 |
769 |
|
Operating expenses |
6,841 |
6,614 |
| Profit
before other operating charges |
7,740 |
5,744 |
|
General insurance |
|
|
| –
gross claims |
1,263 |
982 |
| –
reinsurance |
(315) |
(284) |
|
Operating profit before provisions |
6,792 |
5,046 |
|
Provisions for bad and doubtful debts |
984 |
602 |
|
Amounts written off fixed asset investments |
7 |
43 |
| Profit
before goodwill amortisation and integration costs |
5,801 |
4,401 |
|
Goodwill amortisation |
651 |
640 |
|
Integration costs |
875 |
434 |
| Profit
before tax |
4,275 |
3,327 |
| Tax
|
1,537 |
1,171 |
| Profit
after tax |
2,738 |
2,156 |
|
Minority interests (including non-equity) |
90 |
54 |
| Profit
after minority interests |
2,648 |
2,102 |
|
Preference dividends |
358 |
328 |
|
Perpetual regulatory securities interest |
23 |
— |
|
2,267 |
1,774 |
|
Additional Value Shares dividend |
399 |
— |
| Profit
attributable to ordinary shareholders |
1,868 |
1,774 |
|
|
|
| Basic
earnings per 25p ordinary share |
67.6p |
66.7p |
|
Adjusted earnings per 25p ordinary share |
127.9p |
102.0p |
|
|
|
Basis of preparation and
presentation of results
(a)
Basis of preparation
The
profit and loss account for the year ended 31 December 2001 is extracted from
the audited accounts, modified as described in note (b) below.
The pro
forma results for the year ended 31 December 2000 have been prepared on the
following basis:
1 They
incorporate the full year results of NatWest for 2000 and assume that the fair
value adjustments were made on 31 December 1998.
2
Goodwill arising on the acquisition of NatWest of £11,483 million has been
amortised over its estimated economic life of 20 years.
Goodwill
arising on other acquisitions made by the Group after 1 January 1999 has been
amortised from the effective dates of acquisition, generally also over 20 years.
Goodwill arising on acquisitions prior to 1 January 1999 was written off
directly to reserves and has not been reinstated, as permitted by Financial
Reporting Standard 10.
3 A
surplus of £1,070 million in NatWest Pension Funds has been amortised, from 1
January 1999, over the estimated average remaining service life of members of
the schemes.
4 An
adjustment has been made to reflect the net funding of the acquisition of
NatWest as if acquired on 1 January 1999. The net funding comprises cash paid
and loan notes issued to NatWest shareholders of £7,349 million and fees and
expenses relating to the acquisition of £176 million less net proceeds of £3,910
million from the issue of new ordinary and preference shares and £20 million of
proceeds from the exercise of options over NatWest ordinary shares.
5 The
results of businesses disposed of since 1 January 1999 and the profit arising on
their sale have been excluded from the pro forma accounts. The principal
disposals were RBS Trust Bank, Gartmore and the venture capital investments of
NatWest.
A funding
adjustment has been made to recognise the benefit of estimated net proceeds of
£1,500 million assuming that these funds were received on 1 January 1999.
(b)
Basis of presentation
The
results for the year ended 31 December 2001 and the pro forma results for the
year ended 31 December 2000 have been presented on the following basis:
1
Operating profit is stated before goodwill amortisation and integration costs
which are shown separately on the face of the profit and loss account.
2 Integration costs comprise
expenditure incurred in respect of cost reduction and revenue enhancement
targets set in connection with the acquisition of NatWest and costs of
integrating the regional retail and commercial banking operations acquired from
Mellon Financial Corporation in December 2001, together with expenditure
incurred on the related cost reduction and revenue enhancement targets.
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