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Under UK GAAP, the company
does not recognise compensation expense for the fair
value, at the date of grant, of share options granted
under the employee share option schemes. Under US GAAP,
the company adopted the disclosure-only provisions in
SFAS No. 123 ‘‘Accounting for Stock-Based Compensation’’.
Accordingly, the company accounts for share options
in accordance with APB Opinion No. 25 ‘‘Accounting for
Stock Issued to Employees’’, under which no compensation
expense is recognised. Had the group expensed recognised
compensation cost for options granted in accordance
with SFAS No. 123, the group’s pro forma net income
(loss), basic earnings (loss) per share and diluted
earnings (loss) per share under US GAAP would have been
£4,127 million (2002 – £792 million loss, 2001 – £2,419
million loss), 47.9p (2002 – 9.5p loss, 2001 – 33.2p
loss) and 47.6p (2002 – 9.5p loss, 2001 – 33.2p loss),
respectively. The SFAS No. 123 method of accounting
does not apply to share options granted before 1 January
1995, and accordingly, the resulting pro forma compensation
costs may not be representative of that to be expected
in future years. See note
34 for the SFAS No. 123 disclosures of the fair
value of options granted under employee schemes at date
of grant.
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