RBS 2004 Annual Report Download - page 196

194
Notes on the accounts
Notes on the accounts continued
Summary consolidated statements of cash flows presented on a US GAAP basis for each of the three years ended
31 December 2004 are set out below:
2004 2003 2002
£m £m £m
Cash flows from operating activities 8,062 8,534 11,008
Cash flows from investing activities (82,113) (31,879) (44,892)
Cash flows from financing activities 77,644 34,872 37,245
Effect of exchange rate changes on cash and cash equivalents (807) (863) (115)
Change in cash and cash equivalents 2,786 10,664 3,246
Cash and cash equivalents at beginning of the year 20,937 10,273 7,027
Cash and cash equivalents at end of the year 23,723 20,937 10,273
The composition of cash at 31 December 2004, 2003 and 2002 and the movement in cash for the years then ended are shown
in Note 47 and Note 48 on the accounts respectively.
Stock-based compensation costs
The Group grants share options to executive officers under an
executive share option scheme (the “executive scheme”) and
to employees under a savings-related sharesave scheme (the
“savings scheme”) and the option 2000 scheme.
Executive scheme
Under the terms of the executive scheme, senior management
employees and executive directors of Group companies may
participate in the executive scheme at the discretion of the
Board of directors of the company. The executive scheme
involves a participant being granted an option to subscribe for
ordinary shares of the company at the higher of nominal value
and market value of ordinary shares on the date of grant.
Normally, options may be granted only within six weeks after
the announcement of final or interim results of the Group
for any particular year. Options may not be transferred or
assigned. A participant may not be granted options over new
shares to the extent that the aggregate subscription price
would exceed four times his compensation. Options granted
under the executive scheme are issued on a UK Inland Revenue
approved or unapproved basis. Options are exercisable
between the third and tenth anniversaries of the grant date,
only if performance criteria are met. For options granted from
1996 to 1998, the criterion is the average growth in adjusted
earnings per ordinary share to exceed the average increase in
the UK Retail Prices Index by 2% per annum over a three year
period. For options granted since 1999, the relevant
percentage has been increased to 3% per annum.
53 Significant differences between UK and US generally accepted accounting principles (continued)
Cash flow statements
There are many similarities between SFAS 95, ‘Statement of Cash Flows’ as amended by SFAS 104 ‘Statement of Cash Flows – Net
Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions’, and FRS 1
‘Cash Flow Statements’ (Revised). The principal differences are the classifications of certain transactions.
Classification under FRS 1 Classification under SFAS 95
Equity dividends paid Equity dividends paid Financing activities
Dividends paid on non-equity shares Returns on investments and Financing activities
servicing of finance
Tax paid Taxation Operating activities
Purchase and sale of associated and Acquisitions and disposals Investing activities
subsidiary undertakings
Purchase and sale of investment securities Capital expenditure and Investing activities
and fixed assets financial investment
Net change in loans and advances, Operating activities Investing activities
including finance lease receivables
Net change in deposits Operating activities Financing activities
Net change in debt securities in issue Operating activities Financing activities
Short-term funding not Operating activities Financing activities
included in cash