RBS 2004 Annual Report Download - page 118

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Report of the directors
Report of the directors
The directors have pleasure in presenting their report together
with the audited accounts for the year ended 31 December 2004.
Profit and dividends
The profit attributable to the ordinary shareholders of the
company for the year ended 31 December 2004 amounted to
£4,256 million (after preference dividends of £256 million)
compared with £2,254 million for the year ended 31 December
2003, as set out in the consolidated profit and loss account on
page 143.
An interim dividend of 16.8p per ordinary share was paid on 8
October 2004 totalling £529 million (2003 – £431 million). The
directors now recommend that a final dividend of 41.2p per
ordinary share totalling £1,308 million (2003 – £1,059 million)
be paid on 3 June 2005 to members on the register at the
close of business on 11 March 2005. If this recommendation is
approved by shareholders at the annual general meeting on 20
April 2005, the retained profit for the year will amount to £2,419
million (2003 – £764 million). Subject to the approval of the
dividend by shareholders at the annual general meeting,
shareholders will be offered the choice of taking ordinary
shares in lieu of cash in respect of the final dividend.
Activities and business review
The company is a holding company owning the entire issued
ordinary share capital of the Royal Bank, the principal direct
operating subsidiary undertaking of the company. The “Group”
comprises the company and all its subsidiary and associated
undertakings, including the Royal Bank and NatWest. The
Group is engaged principally in providing a comprehensive
range of banking, insurance and other financial services.
Details of the principal subsidiary undertakings of the
company are shown in Note 17. A review of the business for
the year to 31 December 2004, of recent events and of likely
future developments is contained in the Operating and
financial review.
Business developments
In January 2004, Citizens completed the acquisition of Thistle
Group Holdings, Co., the holding company of Pennsylvania-
based Roxborough Manayunk Bank.
In January 2004, Ulster Bank completed the acquisition of
First Active plc.
In March 2004, Citizens completed the purchase of the credit
card portfolio of People’s Bank in the US.
In May 2004, NatWest completed the acquisition of Bibit,
a leading international internet payment specialist.
In August 2004, Citizens completed the acquisition of
Charter One Financial, Inc.
In September 2004, Citizens completed the acquisition of Lynk
Systems Inc, a US based merchant acquiring business.
Going concern
The directors are satisfied that the Group has adequate
resources to continue in business for the foreseeable future.
For this reason, they continue to adopt the ‘going concern’
basis for preparing the accounts.
Ordinary share capital
During the year ended 31 December 2004, the ordinary share
capital was increased by the following issues:
(a) 165 million ordinary shares placed at an issue price of
£16.20 per share;
(b) 12.9 million ordinary shares allotted as a result of the
exercise of options under the company’s executive,
sharesave and option 2000 schemes and a further 5.6
million ordinary shares allotted in respect of the exercise of
options under the NatWest executive and sharesave schemes
which had been exchanged for options over the company’s
shares following the acquisition of NatWest in 2000;
(c) 23.4 million ordinary shares allotted in lieu of cash
dividends; and
(d) 2.4 million ordinary shares allotted under the company’s
employee share ownership plan.
Details of the authorised and issued ordinary share capital at
31 December 2004 are shown in Note 33.
Preference share capital
Details of issues of preference shares during the year and the
authorised and issued share capital at 31 December 2004 are
shown in Note 33.
Trust preferred securities
Details of issues of trust preferred securities by subsidiaries of
the Group are shown in Note 32.
Subordinated liabilities
Details of issues and redemptions of dated and undated loan
capital and the subordinated liabilities at 31 December 2004
are shown in Notes 30 and 31.