United States against a large number of defendants, including the Group, following the collapse of Enron. The claims against the Group could be significant; the class plaintiff’s position is that each defendant is responsible for an entire aggregate damage amount less settlements – they have not quantified claimed damages against the Group in particular. The Group considers that it has substantial and credible legal and factual defences to these claims and will continue to defend them vigorously. Recent Supreme Court and Fifth Circuit decisions provide further support for the Group’s position. The Group is unable reliably to estimate the liability, if any, that might arise or its effect on the Group’s consolidated net assets, its operating results or cash flows in any particular period.
Group to determine the legal status and enforceability of certain charges relating to unauthorised overdrafts. The hearing of the test case commenced on 17 January 2008. The
Members of the Group are engaged in other litigation in the
Notes on the accounts continued 34 Net cash inflow from operating activities
(Increase)/decrease in prepayments and accrued income (662) 322 1,064 (1) — 4
Unwind of discount on impairment losses (166) (142) (144) — — —
Cash contribution to defined benefit pension schemes (599) (536) (452) — — —
(Increase)/decrease in loans and advances to banks and customers (90,829) (44,525) (36,778) (8) 346 (14)
Net cash inflow from operating activities 25,604 17,441 4,140 18,353 3,648 4,413
Pre-acquisition Provisional Recognised carrying Disposal fair value acquisition amounts groups (1) adjustments (2) values (2)
(3) Goodwill arising on the acquisition is attributable to anticipated cost and revenue synergies and long-term earnings potential of the acquired businesses.
35 Analysis of the net investment in business interests and intangible assets
Share capital, Share capital, share premium share premium and paid-in equity Subordinated liabilities and paid-in equity Subordinated liabilities £m £m £m £m £m £m £m £m
Net cash inflow/(outflow) from financing 4,750 381 (690) 1,709 4,750 381 (469) (148)
Comprising: Cash and balances at central banks 17,428 5,752 4,456 — — —
Treasury bills and debt securities 6,818 1,596 998 — — —
Loans and advances to banks 124,709 64,303 47,095 1,573 657 1,126
Reserve Bank in the US. Such reserve balances amounted to US$1 million at 31 December 2007 (2006 – US$13 million). ABN AMRO
• Ulster Bank Group brings together the Ulster Bank and First
Active businesses. Retail Markets serves personal customers through both brands and Corporate Markets caters for the banking needs of business and corporate customers.
• Citizens is engaged in retail and corporate banking activities through its branch network in 13 states in the United States and through non-branch offices in other states. Citizens includes the two banks, RBS Citizens, NA and Citizens Bank of Pennsylvania. Citizens also includes RBS Lynk, our merchant acquiring business, and Kroger Personal Finance, the credit card joint venture with the second largest US
insurance over the telephone and internet, as well as through brokers and partnerships. Direct Line, Churchill and Privilege sell general insurance products direct to the customer.
The Intermediary and Broker Division sells general insurance products through independent brokers.
ABN AMRO that are attributable to the other consortium banks including retail banking in the Netherlands and Brazil.
Ireland. These costs reflect activities that are shared between the various customer-facing divisions. These shared costs and related assets and liabilities are not allocated to divisions in the day-to-day management of the businesses but are allocated to customer-facing divisions for financial reporting purposes on a basis the directors consider to be reasonable.
RFS Holdings minority interest 1,980 (399) 1,581 — — — — — —
Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing and intangible assets assets Assets liabilities liabilities Liabilities assets assets assets 2007 £m £m £m £m £m £m £m £m £m
Cost to acquire fixed assets and Assets – Liabilities – intangible Cost to before before assets – before acquire allocation of Allocation of allocation of Allocation of allocation of Allocation of fixed assets
Currency translation and other adjustments 4 — (8) (7) (9) (904) — — — (924)
Currency translation and other adjustments 2 (7) 10 7 38 (126) 1 1,274 — 1,199
Transfer between divisions — — (54) — 54 — — — — —
Impairment of goodwill — — (40) — — — — — — (40)
UK USA Europe the World Total 2007 £m £m £m £m £m
Net assets attributable to equity owners and minority interests 35,724 13,671 29,696 12,335 91,426
Cost to acquire property, plant and equipment and intangible assets 3,040 254 1,427 19 4,740
Retirement benefits are accruing to five directors (2006 – five) under defined benefit schemes, one (2006 – two) of whom also accrued benefits under defined contribution schemes.
legislation, were £527,021 in respect of loans to 15 persons who were directors of the company (or persons connected with them) at any time during the financial period.
(b) For the purposes of IAS 24 ‘Related Party Disclosures’, key management comprise directors of the company and members of the Group Executive Management Committee.
(a) Group companies provide development and other types of capital support to businesses in their roles as providers of finance. These investments are made in the normal course of business and on arm’s-length terms. In some instances, the investment may extend to ownership or control over 20% or more of the voting rights of the investee company.
Additional information 214 Financial summary 214 Amounts in accordance with IFRS
Profit before other operating charges and impairment losses 33,098 16,680 15,522 13,956 13,029
Loss from discontinued operations, net of tax 270 136 — — —
(3) Includes integration expenditure of £108 million in 2007 (2006 – £134 million; 2005 – £458 million; 2004 – £520 million).
(4) Includes purchased intangibles amortisation of £274 million in 2007 (2006 – £94 million; 2005 – £97 million; 2004 – £45 million).
The Group’s financial statements are prepared in accordance with IFRS as issued by the IASB. Selected data under IFRS for each of the four years ended 31 December 2007 are presented on page 214 to 222. Selected data under UK GAAP
for each of the two years ended 31 December 2004 are presented on pages 223 to 229. The dollar financial information included below has been converted from sterling at a rate of £1.00 to US$1.9843, being the Noon Buying Rate on
The per share data in the table below have been restated for the effect of the bonus issue of ordinary shares in May 2007.
Adjusted earnings per ordinary share – pence 78.7 66.7 58.6 56.7
Share price per ordinary share at year end – £ 4.44 6.64 5.85 5.84
Market capitalisation at year end – £bn 44.4 62.8 56.1 55.6
Return on average ordinary shareholders’ equity (4) 18.8% 18.5% 17.5% 18.3%
(4) Return on average ordinary shareholders’ equity represents profit attributable to ordinary shareholders expressed as a percentage of average ordinary shareholders’ equity.
Loans and advances to customers – gross 402,891 155,534 277,263 835,688 470,826 421,110 351,419
Cross border exposures are defined as loans to banks and customers (including finance lease and instalment credit receivables) and other monetary assets, including non-local currency claims of overseas offices on local residents.
‘Critical accounting polices – Loan impairment provisions’ on pages 131 and 132.
Loan impairment provisions at end of year: Specific provisions – customers 3,607
Average loans and advances to customers (gross) 567,900 445,766 402,473 299,430
Amounts written-off (net of recoveries) – customers 0.31% 0.36% 0.46% 0.44%
The following table analyses customer loan impairment provisions by geographical area and type of domestic customer.
Service industries and business activities 562 6.5 647 9.3 647 9.7 516 8.8
Finance leases and instalment credit 132 1.9 103 3.0 88 3.3 122 3.7
Note: (1) Excludes £2 million written-off in respect of loans and advances to banks in 2005.
Loans accounted for on a non-accrual basis (2): Accruing loans which are contractually overdue 90 days or more as to principal or interest (3): Loans not included above which are classified as ‘troubled debt restructurings’ by the SEC: Foreign — — — 10
Closing provisions for impairment as a % of total risk elements in lending 60% 62% 65% 76%
Closing provisions for impairment as a % of total risk elements in lending and potential
Notes: (1) For the analysis above, ‘Domestic’ consists of the United Kingdom domestic transactions of the Group. ‘Foreign’ comprises the Group’s transactions conducted through offices outside the UK and through those offices in the UK specifically organised to service international banking transactions.
(2) All loans against which an impairment provision is held are reported in the non-accrual category.
SEC in the US. The following table shows the estimated amount of loans that would be reported using the SEC’s classifications.
Designated as at fair value through profit or loss 7,505 3,922 3,683
Maximum outstanding at any month end during the year 81,187 14,402 16,853
Approximate weighted average interest rate at year end 5.5% 5.0% 4.2%
Maximum outstanding at any month end during the year 312,557 130,867 117,913
Approximate weighted average interest rate at year end 4.1% 4.5% 3.5%
Average interest rates during the year are computed by dividing total interest expense by the average amount borrowed. Average interest rates at year end are average rates for a single day and as such may reflect one-day market distortions which may not be indicative of generally prevailing rates. Original maturities of commercial paper are not in excess of one year. ‘Other short-term borrowings’ consist principally of borrowings in the money markets included within
Within but within but within Over 2007 3 months 6 months 12 months 12 months Total £m £m £m £m £m
Summary consolidated profit and loss account – UK GAAP £m £m
Note: (1) Includes integration expenditure of £269 million in 2004 (2003 – £229 million).
Average shareholders’ equity as a percentage of average total assets 5.7% 5.9%
(5) Adjusted return on average equity shareholders’ funds represents profit attributable to ordinary shareholders before integration costs, goodwill amortisation and the AVS
The following table analyses loans and advances to customers before provisions by geographical area and type of customer.
The table below sets out the Group’s cross border outstandings in excess of 0.75% of Group total assets (including acceptances), which totalled £583.8 billion at 31 December 2004 (2003 – £455.0 billion). None of these countries has experienced repayment difficulties that have required refinancing of outstanding debt.
Provisions at end of year: Specific provisions – customers 3,648 3,356
As a % of average loans and advances to customers during the year: Total customer provisions charged to profit and loss 0.48% 0.59%
The following table analyses customer provisions for bad and doubtful debts by geographical area and type of domestic customer.
The following table analyses amounts written-off by geographical area and type of domestic customer.
Closing provisions for bad and doubtful debts as a % of total risk elements in lending 76% 76%
Notes: (1) For the analysis above, ‘Domestic’ consists of the UK domestic transactions of the Group. ‘Foreign’ comprises the Group’s transactions conducted through offices outside the UK
(2) The classification of a loan as non-accrual, past due 90 days or troubled debt restructuring does not necessarily indicate that the principal of the loan is uncollectable in whole or in part. Collection depends in each case on the individual circumstances of the loan, including the adequacy of any collateral securing the loan and therefore classification of a loan as non-accrual, past due 90 days or troubled debt restructuring does not always require that a provision be made against such a loan. In accordance with the Group’s provisioning policy for bad and doubtful debts, it is considered that adequate provisions for the above risk elements in lending have been made.
Except as stated, the following tables show, for the dates or periods indicated, the Noon Buying Rate in New York for cable transfers in sterling as certified for customs’ purposes by the Federal Reserve Bank of New York (the “Noon Buying Rate”): January December November October September August
(3) On 26 February 2008, the Noon Buying Rate was £1.00 = US$1.9747.
Policy Committee (MPC) first hiking the Bank Rate from 5% to 5.75% in three successive 25bps moves in January, May and
depreciation on a trade-weighted basis only partly offset the dampening impact from strains in money markets and high inflation-adjusted interest rates, which only started to fall towards the end of the year.
by the end of 2007, US bond markets did not seem overly concerned about rising inflationary pressure in the longer term, as the long-end of the yield curve shifted downwards too.
UK or the US, partly because domestic demand had been less reliant on credit.
In addition to influencing the level of effective demand countries face, exchange rates affect earnings reported by the
The UK Financial Services Authority (FSA) is the consolidated supervisor of the Group and the Royal Bank.
Wholesale activities, other than Group Treasury activities, are concentrated in the Group’s Corporate Markets division and are undertaken under the names of the Royal Bank and NatWest. UK retail banking activities are managed by the Retail Markets division. The exception is Ulster Bank
Investment management business is principally undertaken by companies in the Retail Markets division, including
Adam & Company Investment Management Limited, and in the Corporate Markets division, RBS Asset Management
Group will apply the Standardised Approach for operational risk, migrating to the Advanced Measurement
Approach (AMA) in line with the US timescales. The Group has implemented Pillar 2 and Pillar 3 in line with regulatory requirements.
Markets in Financial Instruments Directive (‘MiFID’) by the implementation date of 1 November 2007. MiFID
The FSA’s high level principles require all regulated firms to treat their customers fairly and a specific industry wide project on Treating Customers Fairly (‘TCF’) was launched in 2004. The FSA emphasised that TCF will be a key area of focus for the regulator over the coming years. In the summer of 2007 it followed this up by setting out specific targets that it would expect all firms to meet during 2008 in relation to management information required to evidence
TCF embeddedness. The Group already had several underlying principles built into the existing customer proposition which clearly demonstrated the concept of fairness in action. These fundamental business values include demonstrating fairness, transparency and honesty throughout the whole relationship with our customers, ensuring that any representations we make are clear, fair and not misleading, and having mechanisms in place to avoid things going wrong and correct any deficiencies.
Notes were issued on 13 November 2007 to take into account the new Money Laundering Regulations 2007.
These Regulations came into force on 15 December 2007 and implemented the EU’s Third Money Laundering
The Information Commissioner’s Office (ICO) is the UK’s independent public body set up to promote access to official information and to protect personal information. The
Information Regulations 2004, regulating the organisations that come within their remits. They promote awareness of information rights and obligations and ensure compliance.
The consolidated supervisor of ABN AMRO is the Dutch central bank, De Nederlandsche Bank (DNB). It operates partly as the Dutch central bank and prudential supervisor of banks and insurance companies; and also as part of the European System of Central Banks. Following the acquisition of ABN AMRO the Group now operates in over 50 countries.
The Group is both a bank holding company and financial holding company within the meaning of the US Bank
Holding Company Act of 1956. As such, it is subject to the regulation and supervision of the Board of Governors of
A d d it io n a l in fo rm a ti o n the Federal Reserve System (the “Federal Reserve”).
RBS’s US branches are also subject to supervision and regulation by a variety of other U.S. regulatory agencies.
As of 1 September 2007, Citizens Financial Group’s statechartered bank subsidiaries (with the exception of its bank subsidiary in the State of Pennsylvania) were merged and consolidated into a single nationally chartered bank, RBS
Greenwich Capital Markets, Inc., is subject to regulation and supervision by the US Securities and Exchange
The Group is subject to extensive regulations that impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to ensure compliance with US economic sanctions against designated foreign countries, nationals and others. Antimoney laundering, anti-terrorism and economic sanctions regulations have become a major focus of US government policy relating to financial institutions and are rigorously enforced by US government agencies.
The Group and Bank of China have established an exclusive strategic partnership. The Group and Bank of
China have agreed to co-operate across a range of business activities, building on Bank of China’s distribution strength and the Group’s product skills in areas including credit cards, wealth management, corporate banking and personal lines insurance. The Group also continues to grow its other Asian activities, having recently set up new branches in the Middle East and Far East. As in all jurisdictions in which the Group undertakes business, it considers regulatory risk as a key component of is new products approval process to ensure that it meets with local regulatory requirements.
June 2007). Negotiations are continuing to enable a written agreement to be concluded.
Total capital expenditure on premises (excluding investment properties), computers and other equipment in the year ended
At 27 February 2008, the directors of the company had options to purchase a total of 8,603,307 ordinary shares of the company.
denominated preference shares and ADSs representing ordinary shares were held by shareholders registered in the
Consortium and Shareholders’ Agreement dated 28 May 2007, among the company, Banco Santander Central Hispano, S.A.
Fortis N.V., Fortis SA/NV and RFS Holdings B.V., which governs the relationships amongst these parties in relation to the offers by RFS Holdings B.V. to the holders of ABN AMRO ordinary shares and American Depositary Shares, as more fully described in the section entitled ‘Summary of the Consortium and Shareholders’ Agreement’ included in the company’s Form
Santander (a related party for the purposes of the FSA Listing
Shareholdings in the company may be checked by visiting our website (www.rbs.com/shareholder). You will need the shareholder reference number printed on your share certificate or tax voucher to gain access to this information.
The company pays its dividends in pounds sterling although shareholders may choose to receive payment in US dollars or euros.
Completed instruction forms must be returned to the registrar no later than 15 working days before the relevant dividend payment date.
The company is aware that shareholders who hold a small number of shares may be retaining these shares because dealing costs make it uneconomical to dispose of them.
For shareholders who held RBS ordinary shares at 31 March 1982, the market value of one ordinary share held was 103p.
After adjusting for the 1 March 1985 rights issue, the 1
It was announced in the Pre-Budget Report on 9 October 2007 that the capital gains tax treatment for individuals will change for disposals made on or after 6 April 2008. There will be a single rate of capital gains tax set at 18%. Indexation allowance and taper relief will no longer be available and for assets held on 31 March 1982, the market value of the asset on that date will automatically be used for the purpose of calculating the gain or loss arising on a disposal.
It does not deal with the position of shareholders other than individual shareholders, shareholders who are resident outside the United Kingdom for tax purposes or certain types of shareholders, such as dealers in securities.
American Depositary Shares (“ADSs”) representing non-cumulative dollar preference shares of the company, in the United States, which were outstanding at 31 December 2007: 8,000,000 Series F (“Series F ADSs”) representing 8,000,000 non-cumulative dollar preference shares, Series F; 12,000,000 Series H (“Series H ADSs”) representing 12,000,000 non-cumulative dollar preference shares, Series H; 34,000,000 Series L (“Series L ADSs”) representing 34,000,000 non-cumulative dollar preference shares, Series L; 37,000,000 Series M (“Series M ADSs”) representing 37,000,000 non-cumulative dollar preference shares, Series M; 40,000,000 Series N (“Series N ADSs”) representing 40,000,000 non-cumulative dollar preference shares, Series N; 22,000,000 Series P (“Series P ADSs”) representing 22,000,000 non-cumulative dollar preference shares, Series P; 27,000,000 Series Q (“Series Q ADSs”) representing 27,000,000 non-cumulative dollar preference shares, Series Q; 26,000,000 Series R (“Series R ADSs”) representing 26,000,000 non-cumulative dollar preference shares, Series R; 38,000,000 Series S (“Series S ADSs”) representing 38,000,000 non-cumulative dollar preference shares, Series S; 64,000,000 Series T (“Series T ADSs”) representing 64,000,000 non-cumulative dollar preference shares, Series T; and 15,000 Series U (“Series U ADSs”) representing 15,000 non-cumulative dollar preference shares, Series U.
non-cumulative preference shares of US$0.01 each, the 10 million Series G non-cumulative preference shares of US$0.01 each and the 16 million Series K non-cumulative preference shares of US$0.01 each.
Series T ADSs and 1 registered shareholder of Series U ADSs.
On 20 August 2001, the company issued US$1.2 billion of perpetual regulatory tier one securities (‘PROs’) in connection with a public offering in the United States. The PROs are listed on the NYSE.
ADSs were issued in connection with the company’s bid for the outstanding share capital of ABN AMRO Holding N.V.
The following table shows, for the periods indicated, the high and low sales prices for each of the outstanding ADSs representing non-cumulative dollar preference shares and PROs, as reported on the NYSE composite tape: Series F Series H Series L Series M Series N Series P Series Q Series R Series S Series T Series U
Figures in US$ ADSs ADSs ADSs ADSs ADSs ADSs ADSs ADSs ADSs ADSs ADSs PROs (1)
Stock Exchange, as derived from the Daily Office List of the UK Listing Authority: Ordinary
On 26 February 2008, the closing price of shares on the London Stock Exchange was £4.135, equivalent to $8.17 per share translated at the Noon Buying Rate of $1.9747 per £1.00 on 26 February 2008.
– Series T (issued September 2007) 0.47 0.23 — — — —
Additional Value Shares of £1 — — — — — — 0.55
Ordinary dividends per share for prior years in the table below have been restated for the effect of the bonus issue of ordinary shares in May 2007.
Amount per share and American Depository Shares (1) cents pence pence pence pence pence
(“ordinary ADSs”), ADSs representing non-cumulative dollar preference shares (“preference ADSs”) or PROs by a beneficial owner that is a citizen or resident of the United
This summary does not address the tax consequences to a US
Holder (i) that is resident (or, in the case of an individual, ordinarily resident) in the UK for UK tax purposes or (ii)
and UK tax laws, including the US/UK double taxation convention relating to income and capital gains which entered into force on 31 March 2003 (the “Treaty”), and the US/UK
This summary is not exhaustive of all possible tax considerations and holders are advised to satisfy themselves as to the overall tax consequences, including specifically the consequences under US federal, state, local and other laws, and possible changes in taxation law, of the acquisition, ownership and disposition of ordinary shares, non-cumulative dollar preference shares, ordinary ADSs, preference ADSs or
The following discussion assumes that the Company is not, and will not become, a passive foreign investment company
Holders of ADSs. Such actions would also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received by certain non-corporate US Holders. Accordingly, availability of the reduced tax rate for dividends received by certain non-corporate US Holders of ordinary ADSs could be affected by actions taken by such parties or intermediaries.
A US Holder that is not resident (or, in the case of an individual, ordinarily resident) in the UK will not normally be liable for UK tax on capital gains realised on the disposition of an ordinary share, a non-cumulative dollar preference share, an ordinary ADS or a preference ADS unless at the time of the disposal, in the case of a corporate US Holder, such US
A US Holder will, upon the sale or other disposition of an ordinary share, a non-cumulative dollar preference share, an ordinary ADS or a preference ADS, or upon the redemption of a non-cumulative dollar preference share or preference ADS, generally recognise capital gain or loss for US federal income tax purposes (assuming that in the case of a redemption of a noncumulative dollar preference share or a preference ADS, such US
and the US Holder’s tax basis in such share or ADS. This capital gain or loss will be long-term capital gain or loss if the US
Holder held the share or ADS so sold, disposed or redeemed for more than one year.
Subject to the discussion of the Estate Tax Treaty in the next paragraph, ordinary shares, non-cumulative dollar preference shares, ordinary ADSs or preference ADSs beneficially owned by an individual may be subject to UK inheritance tax (subject to exemptions and reliefs) on the death of the individual or in certain circumstances, if such shares or ADSs are the subject of a gift (including a transfer at less than market value) by such individual. (Inheritance tax is not generally chargeable on gifts to individuals made more than seven years before the death of the donor). Ordinary shares, non-cumulative dollar preference shares, ordinary ADSs or preference ADSs held by the trustees of a settlement will also be subject to UK inheritance tax.
ADS, except in certain cases where the share or ADS (i) is comprised in a settlement (unless, at the time of the settlement, the settlor was domiciled in the United States and was not a national of the UK); (ii) is part of the business property of a UK permanent establishment of an enterprise; or
consequences of transferring an ADS or ADR in registered form (otherwise than to the custodian on cancellation of the
ADS) or of transferring an ordinary share or a non-cumulative dollar preference share. A transfer of a registered ADS or ADR
executed and retained in the United States will not give rise to stamp duty and an agreement to transfer a registered ADS or
ADR will not give rise to SDRT. Stamp duty or SDRT will normally be payable on or in respect of transfers of ordinary shares or non-cumulative dollar preference shares and accordingly any holder who acquires or intends to acquire ordinary shares or non-cumulative dollar preference shares is advised to consult its own tax advisers in relation to stamp duty and SDRT.
Payments of interest on a PRO (including any UK withholding tax, as to which see below) will constitute foreign source dividend income for US federal income tax purposes to the extent paid out of the current or accumulated earnings and profits of the company, as determined for US federal income tax purposes. Payments will not be eligible for the dividendsreceived deduction allowed to corporate US Holders. A US
A US Holder will, upon the sale, exchange or redemption of a
Payments on the PROs will constitute interest rather than dividends for UK withholding tax purposes. However, the PROs will constitute ‘quoted eurobonds’ within the meaning of section 987 of the Income Tax Act 2007 and therefore payments of interest will not be subject to withholding or deduction for or on account of UK taxation as long as the
Revenue & Customs directs otherwise). Where interest has been paid under deduction of UK withholding tax, US Holders may be able to recover the tax deducted under the Treaty.
Any paying agent or other person by or through whom interest is paid to, or by whom interest is received on behalf of, an individual, may be required to provide information in relation to the payment and the individual concerned to HM Revenue &
HM Revenue & Customs confirmed at around the time of the issue of the PROs that interest payments would not be treated as distributions for UK tax purposes by reason of (i) the fact that interest may be deferred under the terms of issue; or
‘funded company’. A company will be associated with the company if, broadly speaking, it is part of the same group as the company. A company will be a ‘funded company’ for these purposes if there are arrangements involving that company being put in funds (directly or indirectly) by the company, or an entity associated with the company. In this respect, HM
PROs constitutes UK source income for UK tax purposes and, as such, may be subject to income tax by direct assessment even where paid without withholding. However, interest with a
UK source received without deduction or withholding on account of UK tax will not be chargeable to UK tax in the hands of a US Holder unless, in the case of a corporate US
The European Union has adopted a directive regarding the taxation of savings income. The Directive requires member states of the European Union to provide to the tax authorities of other member states details of payments of interest and other similar income paid by a person to an individual or certain other persons resident in another member state, except that
through a branch or agency and the PROs are, or have been, held or acquired for the purposes of that trade, branch or agency.
tax charges (or relief) by reference to fluctuations in exchange rates and in respect of profits, gains and losses arising from the PROs, but only if such corporate US Holders carry on a trade, profession or vocation in the UK through a UK
In relation to PROs held through DTC (or any other clearing system), the UK inheritance tax position is not free from doubt in respect of a lifetime transfer, or death of, a US Holder who is not domiciled nor deemed to be domiciled in the UK for inheritance tax purposes; HM Revenue & Customs is known to consider that the situs of securities held in this manner is not necessarily determined by the place where the securities are registered. In appropriate circumstances, there may be a charge to UK inheritance tax as a result of a lifetime transfer at less than market value by, or on the death of, such US Holder.
Treaty generally provides a credit against US federal estate or gift tax liability for the amount of any tax paid in the UK in a case where the PRO is subject to both UK inheritance tax and
“look-through rules,” either (i) at least 75% of its gross income is “passive income” or (ii) at least 50% of the average value of its assets is attributable to assets which produce passive income or are held for the production of passive income. The company does not believe that it was as a PFIC for its 2007 taxable year. Although interest income is generally passive income, a special rule allows banks to treat their banking business income as non-passive. To qualify for this rule, a bank must satisfy certain requirements regarding its licensing and activities. The company believes that it currently meets these requirements. The company’s possible status as a PFIC must be determined annually, however, and may be subject to change if the company fails to qualify under this special rule for any year in which a US Holder holds ordinary shares, noncumulative dollar preference shares, ordinary ADSs, preference ADSs or PROs. If the company were to be treated as a PFIC in any year during which a US Holder holds ordinary shares, non-cumulative dollar preference shares, ordinary
laws, decrees or regulations which would prevent the import or export of capital, including the availability of cash or cash equivalents for use by the Group, or the remittance of dividends, interest or other payments to non-UK resident holders of the company’s securities.
A resolution amending the Articles of Association will be proposed at the Annual General Meeting to be held on 23 April 2008. The proposed amendments are designed to update the
Memorandum and Articles of Association’ section of the company’s Annual Report on Form 20-F for the fiscal year ended 31 December 2004.
Group Limited. On 10 March 1982, it changed its name to its present name and was registered under the Companies Acts 1948 to 1980 as a public company with limited liability. The company is registered under Company No. SC 45551.
from post consumer sources (of which half are UK sourced) and virgin fibre from FSC-certified forests.
It has a protective laminate to prolong its shelf life and we await recyclable alternatives which the printing industry is addressing as a matter of urgency.