RBS 2004 Annual Report Download - page 6

04
Chairman’s statement
In 2004 we maintained the momentum of
our good performance of recent years.
We achieved strong organic growth across
our activities. In addition, through various
acquisitions, we strengthened our existing
businesses outside the UK and established
additional options for future growth.
Financial performance
In 2004 the Group profit before tax, goodwill amortisation and
integration costs increased by 15% to £8,101 million (2003 –
£7,068 million). Total income grew by 18% to £22,754 million
(2003 – £19,281 million), while operating expenses grew by only
13% to £9,662 million (2003 – £8,524 million). The 2003 results
have been restated following the implementation of FRS 17.
Dividends
The Board has recommended a final ordinary dividend for the
year of 41.2p per share which, with the interim dividend of
16.8p per share, makes a total for the year of 58.0p per share,
an increase of 15%. The total amount payable to shareholders
in the form of ordinary dividends for 2004 is £1,837 million.
Staff profit sharing
Due to the strong financial performance of the Group, we
have again set the staff profit share for the year at 10% of
basic salaries.
Acquisitions
During 2004 we strengthened our activities outside the UK
through several acquisitions.
In the United States, we acquired Charter One, which enabled
Citizens to extend its franchise into six adjacent states. We
completed the acquisition of Roxborough Manayunk Bank,
in Pennsylvania, which had been announced in 2003, and also
acquired the credit card business of People’s Bank and the
merchant acquirer Lynk Systems, Inc.
In Continental Europe we acquired Bibit, the internet payment
specialist. In Ireland, we completed the acquisition of First
Active, announced in 2003.
Board of directors
At the forthcoming annual general meeting in April 2005,
Sir Angus Grossart and Lord Vallance will retire from the
Board, after 19 and 12 years service respectively. Both
Vice-chairmen have served the Board extremely well during
a period of unparalleled development of our Group. Their
contribution, wisdom and guidance has been greatly valued,
and their experience through the ups and downs of economic
cycles will be missed.
Iain Robertson, Chairman of Corporate Banking & Financial
Markets, will also retire at the annual general meeting. I recruited
Iain to the bank 13 years ago, and in this period he created
what is, in my opinion, the UK’s best corporate relationship
bank and increased its contribution to our profits some 50 fold.
I would also like to acknowledge the excellent service of
Norman McLuskie who retired from the Board in August 2004
as Chairman, Retail Direct. Norman joined the Group in 1982
and was appointed an executive director in 1992. He was a
valued member of my senior team and held a number of key
positions, including Deputy Chief Executive, UK Bank.
Emilio Botin and Juan Inciarte, both directors of SCH,
resigned from the Board in November 2004, having served
for over 15 and 9 years respectively. I would like to pass on
my personal thanks for their contribution which has brought
an extra dimension to Board discussions. During their Board
membership a highlight of our strategic alliance with SCH,
which began in 1988, was its financial support of the Group’s
successful acquisition of NatWest in 2000.
In September 2004, three new non-executive directors were
appointed. Archie Hunter was formerly Scottish senior partner
of KPMG, Bud Koch was formerly chairman, president and
chief executive officer of Charter One Financial, Inc., and
Joe MacHale was formerly a senior executive with JP Morgan.
Each of our new directors bring with them the experience to
further strengthen the Board.
Outlook
Economic growth during 2004 was strong in virtually all of the
economies in which we operate, and this trend is expected to
continue in 2005, though at a slightly lower rate.
We remain confident that the strength, diversity and flexibility of
our business will enable us to continue to deliver superior
performance for our shareholders.
Sir George Mathewson, Chairman
Chairman’s statement