iv   Accounting for share options
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 £862 million (2003 – £4,127 million, 2002 – £792 million loss), 10.0p (2003 – 47.9p, 2002 – 9.5p loss) and 9.9p (2003 – 47.6p, 2002 – 9.5p loss), respectively. See note 34 for the SFAS No. 123 disclosures of the fair value of options granted under employee schemes at date of grant.