Final Results - Part 2

Standard Chartered PLC 16 February 2005 Part 2 STANDARD CHARTERED PLC - NOTES 1. Consolidated Cash Flow Statement Reconciliation between operating profit before taxation and net cash inflow from operating activities: 2004 2003* $m $m Operating profit 2,158 1,550 Adjustments for items not involving cash flow or shown separately: Amortisation of goodwill 181 134 Depreciation and amortisation of premises and equipment 239 247 Gain on disposal of tangible fixed assets (4) (14) Gain on disposal of investment securities (164) (62) Amortisation of investments (41) (107) Charge for bad and doubtful debts and contingent liabilities 214 536 Amounts written off fixed asset investments 1 11 Debts written off, net of recoveries (504) (807) Increase in accruals and deferred income 59 201 (Increase)/decrease in prepayments and accrued income (165) 80 Net increase in mark-to-market adjustment*** (259) (403) Interest paid on subordinated loan capital 338 298 Net cash inflow from trading activities 2,053 1,664 Net increase in cheques in the course of collection (45) (27) Net increase in treasury bills and other eligible bills (78) (76) Net (increase)/decrease in loans and advances to banks and customers (16,216) 2,398 Net increase in deposits from banks, customer accounts and debt securities in issue 14,927 2,128 Net increase in dealing securities (1,174) (1,550) Net increase/(decrease) in other accounts** 3,036 (789) Net cash inflow from operating activities 2,503 3,748 Analysis of changes in cash Balance at beginning of period 5,661 3,496 Exchange translation differences 57 (7) Net cash (outflow)/inflow (1,366) 2,172 Balance at end of period 4,352 5,661 * Comparative restated (see note 12 on page 51). ** This includes the effect of foreign exchange translation in the local books of subsidiaries and branches. *** Mark-to-market adjustments are being reclassified from the reconciliation to 'Net cash inflow from operating activities', to the reconciliation to 'Net cash inflow from trading activities', as this better reflects their impact on cash flows. STANDARD CHARTERED PLC - NOTES 2. Segmental Information by Geographic Segment The following tables set out profit and loss information, average loans and advances to customers, net interest margin and selected balance sheet information by geographic segment for the years ended 31 December 2004 and 31 December 2003: 2004 Asia Pacific Other Hong Asia Kong Singapore Malaysia Pacific India $m $m $m $m $m Interest receivable 1,389 720 343 798 541 Interest payable (461) (408) (159) (320) (254) Net interest income 928 312 184 478 287 Other finance income 4 1 - - - Fees and commissions 324 114 51 197 111 receivable, net Dealing profits and 99 81 30 121 67 exchange Other operating income 53 5 5 19 1 Net revenue 1,408 513 270 815 466 Costs (654) (226) (144) (510) (251) Amortisation of goodwill - - - - - Total operating expenses (654) (226) (144) (510) (251) Operating profit before 754 287 126 305 215 provisions Charge for debts (125) (33) (2) (40) (22) Amounts written off - - - - 2 fixed asset investments Income from joint - - - 2 - venture Operating profit before 629 254 124 267 195 taxation Loans and advances to 21,608 10,414 5,272 7,932 3,779 customers - average Net interest margin (%) 2.2 1.6 2.4 2.5 3.6 Loans and advances to 21,744 11,765 6,374 9,274 4,610 customers - period end Loans and advances to 2,852 2,399 480 3,554 325 banks - period end Total assets employed 48,459 20,419 7,130 21,424 8,528 Total risk weighted 20,337 13,892 4,411 13,344 6,413 assets and contingents 2004 Other Americas Middle UK & East & Group Other Head UAE S Asia Africa Office Total $m $m $m $m $m Interest receivable 204 324 536 1,463 6,318 Interest payable (53) (109) (185) (1,201) (3,150) Net interest income 151 215 351 262 3,168 Other finance income - - 4 1 10 Fees and commissions 87 116 153 181 1,334 receivable, net Dealing profits and 33 42 74 101 648 exchange Other operating income - 4 2 118 207 Net revenue 271 377 584 663 5,367 Costs (99) (169) (357) (405) (2,815) Amortisation of goodwill - - - (181) (181) Total operating expenses (99) (169) (357) (586) (2,996) Operating profit before 172 208 227 77 2,371 provisions Charge for debts (1) (1) (12) 22 (214) Amounts written off fixed - - - (3) (1) asset investments Income from joint venture - - - - 2 Operating profit before 171 207 215 96 2,158 taxation Loans and advances to 2,582 3,718 1,834 7,421 64,560 customers - average Net interest margin (%) 2.6 3.5 7.6 0.6 2.7 Loans and advances to 3,132 3,840 2,013 8,844 71,596 customers - period end Loans and advances to 535 932 510 7,335 18,922 banks - period end Total assets employed 6,371 6,493 6,407 52,821 178,052 Total risk weighted 4,150 4,611 2,749 24,895 94,802 assets and contingents See note 2a) to 2f) on page 41. STANDARD CHARTERED PLC - NOTES (continued) 2. Segmental Information by Geographic Segment (continued) 2003* Asia Pacific Other Hong Asia Kong Singapore Malaysia Pacific India $m $m $m $m $m Interest receivable 1,473 621 318 700 513 Interest payable (531) (287) (145) (300) (258) Net interest income 942 334 173 400 255 Other finance income (3) (2) (1) (1) (2) Fees and commissions 313 118 47 160 88 receivable, net Dealing profits and 96 43 12 109 60 exchange Other operating income 7 (7) 4 13 65 Net revenue 1,355 486 235 681 466 Costs (618) (210) (136) (429) (212) Amortisation of goodwill - - - - - Total operating expenses (618) (210) (136) (429) (212) Operating profit before 737 276 99 252 254 provisions Charge for debts (305) (33) 2 (99) (60) Amounts written off - - - - (4) fixed asset investments Operating profit/(loss) 432 243 101 153 190 before taxation Loans and advances to 21,428 8,624 4,329 6,675 2,811 customers - average Net interest margin (%) 2.4 1.8 2.5 2.4 4.0 Loans and advances to 20,845 9,781 5,009 7,124 3,106 customers - period end Loans and advances to 2,113 1,045 204 2,784 239 banks - period end Total assets employed 39,390 15,747 6,676 16,756 7,590 Total risk weighted 19,438 12,423 4,018 8,569 4,560 assets and contingents 2003* Other Americas Middle UK & East & Group Other Head UAE S Asia Africa Office Total* $m $m $m $m $m Interest receivable 215 291 409 1,182 5,722 Interest payable (71) (94) (161) (907) (2,754) Net interest income 144 197 248 275 2,968 Other finance income - - - (4) (13) Fees and commissions 66 82 118 164 1,156 receivable, net Dealing profits and 24 33 65 83 525 exchange Other operating income - 3 12 7 104 Net revenue 234 315 443 525 4,740 Costs (91) (145) (282) (386) (2,509) Amortisation of goodwill - - - (134) (134) Total operating expenses (91) (145) (282) (520) (2,643) Operating profit before 143 170 161 5 2,097 provisions Charge for debts (2) 4 (9) (34) (536) Amounts written off fixed - - - (7) (11) asset investments Operating profit/(loss) 141 174 152 (36) 1,550 before taxation Loans and advances to 1,929 3,328 1,416 7,249 57,789 customers - average Net interest margin (%) 3.4 3.8 6.7 0.8 2.8 Loans and advances to 2,110 3,484 1,739 6,546 59,744 customers - period end Loans and advances to 605 889 308 5,167 13,354 banks - period end Total assets employed 4,962 5,465 4,557 38,292 139,435 Total risk weighted 3,234 4,138 2,115 22,019 80,514 assets and contingents * Comparative restated (see note 12 on page 51). See note 2a) to 2f) on page 41. STANDARD CHARTERED PLC - NOTES (continued) 2. Segmental Information by Geographic Segment (continued) (a) Total interest receivable and total interest payable include intra-group interest of $1,086 million (2003: $932 million). (b) Group central expenses have been distributed between segments in proportion to their direct costs and the benefit of the Group's capital has been distributed between segments in proportion to their risk weighted assets. (c) Business acquisitions are a result of corporate decisions made at the centre and the amortisation of purchased goodwill is included in the Americas, UK and Group Head Office segment. (d) Total assets employed include intra-group items of $28,801 million (2003: $11,726 million) and balances of $7,563 million (2003: $7,507 million) which are netted in the Summarised Consolidated Balance Sheet. Assets held at the centre have been distributed between geographic segments in proportion to their total assets employed. (e) Total risk weighted assets and contingents include $2,678 million (2003: $2,352 million) of balances which are netted in calculating capital ratios. (f) In 2004 other operating income includes profits and losses arising from corporate decisions to dispose of investments in KorAm Bank ($95 million in Americas, UK & Group Head Office) and BOC Hong Kong (Holdings) Limited ($36 million in Hong Kong) and the premium on repurchase of surplus subordinated debt ($23 million in India). Costs include $18 million related to the incorporation of the Hong Kong business (Hong Kong) and the $5 million donation to the Tsunami relief effort (Malaysia, India, Other APR and Other MESA). These decisions resulted in non-recurring gains and charges of $85 million. They are included in the Geographic segmental information, but are not allocated to businesses in the Business segmental information shown in note 2. STANDARD CHARTERED PLC - NOTES (continued) 2. Segmental Information by Geographic Segment (continued) The following tables set out the structure of Standard Chartered's deposits by principal geographic region where it operates at 31 December 2004 and 31 December 2003: 2004 Asia Pacific Other Hong Asia Kong Singapore Malaysia Pacific India $m $m $m $m $m Non interest bearing 3,602 2,040 989 1,228 1,224 current and demand accounts Interest bearing current 15,300 2,329 130 2,831 2 and demand accounts Savings deposits 24 528 437 1,715 970 Time deposits 13,155 9,847 3,423 6,189 3,441 Other deposits 2 50 569 894 2 Total 32,083 14,794 5,548 12,857 5,639 Deposits by banks 1,204 3,150 813 3,361 1,109 Customer accounts 30,879 11,644 4,735 9,496 4,530 32,083 14,794 5,548 12,857 5,639 Debt securities in issue 1,508 758 401 1,063 387 Total 33,591 15,552 5,949 13,920 6,026 2004 Other Americas Middle UK & East & Group Other Head UAE S Asia Africa Office Total $m $m $m $m $m Non interest bearing 1,114 1,146 1,159 16 12,518 current and demand accounts Interest bearing current 661 429 1,603 3,920 27,205 and demand accounts Savings deposits 249 1,350 512 9 5,794 Time deposits 2,529 1,657 679 10,410 51,330 Other deposits 187 215 69 1,550 3,538 Total 4,740 4,797 4,022 15,905 100,385 Deposits by banks 1,007 355 110 4,704 15,813 Customer accounts 3,733 4,442 3,912 11,201 84,572 4,740 4,797 4,022 15,905 100,385 Debt securities in issue - - 1 3,260 7,378 Total 4,740 4,797 4,023 19,165 107,763 2003 Asia Pacific Other Hong Asia Kong Singapore Malaysia Pacific India $m $m $m $m $m Non interest bearing 2,997 1,814 781 944 1,049 current and demand accounts Interest bearing current 14,294 1,538 94 1,906 3 and demand accounts Savings deposits 22 492 453 978 786 Time deposits 12,671 7,751 2,833 4,993 2,987 Other deposits 16 45 593 803 230 Total 30,000 11,640 4,754 9,624 5,055 Deposits by banks 1,097 921 733 1,725 1,234 Customer accounts 28,903 10,719 4,021 7,899 3,821 30,000 11,640 4,754 9,624 5,055 Debt securities in issue 2,068 346 351 783 87 Total 32,068 11,986 5,105 10,407 5,142 2003 Other Americas Middle UK & East & Group Other Head UAE S Asia Africa Office Total $m $m $m $m $m Non interest bearing 775 920 867 433 10,580 current and demand accounts Interest bearing current 599 325 991 3,863 23,613 and demand accounts Savings deposits 214 1,080 520 4 4,549 Time deposits 2,108 1,480 749 8,105 43,677 Other deposits 169 246 150 20 2,272 Total 3,865 4,051 3,277 12,425 84,691 Deposits by banks 955 305 160 3,794 10,924 Customer accounts 2,910 3,746 3,117 8,631 73,767 3,865 4,051 3,277 12,425 84,691 Debt securities in issue - - 1 2,426 6,062 Total 3,865 4,051 3,278 14,851 90,753 STANDARD CHARTERED PLC - NOTES (continued) 3. Segmental Information by Class of Business 2004 Consumer Wholesale Corporate Banking Banking items not Total $m $m allocated $m Net interest income 1,952 1,216 - 3,168 Other finance income 3 7 - 10 Other income 738 1,343 108 2,189 Net revenue 2,693 2,566 108 5,367 Costs (1,388) (1,404) (23) (2,815) Amortisation of goodwill - - (181) (181) Total operating expenses (1,388) (1,404) (204) (2,996) Operating profit before provisions 1,305 1,162 (96) 2,371 Charge for debts (242) 28 - (214) Amounts written off fixed asset - (1) - (1) investments Income from joint venture 1 1 - 2 Operating profit before taxation 1,064 1,190 (96) 2,158 Total assets employed 37,047 104,641 - 141,688 Total risk weighted assets and 28,069 64,055 - 92,124 contingents 2003* Consumer Wholesale Corporate Banking Banking items not Total* $m $m Allocated $m Net interest income 1,830 1,138 - 2,968 Other finance income (4) (9) - (13) Other income 662 1,123 - 1,785 Net revenue 2,488 2,252 - 4,740 Costs (1,259) (1,250) - (2,509) Amortisation of goodwill - - (134) (134) Total operating expenses (1,259) (1,250) (134) (2,643) Operating profit before provisions 1,229 1,002 (134) 2,097 Charge for debts (478) (58) - (536) Amounts written off fixed asset - (11) - (11) investments Income from joint venture - - - - Operating profit before taxation 751 933 (134) 1,550 Total assets employed 33,890 86,312 - 120,202 Total risk weighted assets and 24,253 53,909 - 78,162 contingents * Comparative restated (see note 12 on page 51). See note 2b), 2c) and 2f) on page 41. STANDARD CHARTERED PLC - NOTES (continued) 4. Taxation 2004 2003* $m $m Analysis of taxation charge in the period The charge for taxation based upon the profits for the period comprises: United Kingdom corporation tax at 30% (2003: 30%): Current tax on income for the period 407 353 Adjustments in respect of prior periods 17 (34) Double taxation relief (357) (286) Foreign tax: Current tax on income for the period 559 491 Adjustments in respect of prior periods (14) (26) Total current tax 612 498 Deferred tax: Origination/reversal of timing differences - current year 38 7 Adjustments in respect of prior periods (13) (8) 25 (1) Tax on profits on ordinary activities 637 497 Effective tax rate 29.5% 32.1% *Comparative restated (see note 12 on page 51). Overseas taxation includes taxation on Hong Kong profits of $122 million (2003: $134 million) provided at a rate of 17.5 per cent (2003: 17.5 per cent) on the profits assessable in Hong Kong. The Group's total deferred tax asset is $322 million at 31 December 2004, (2003: $339 million). $276 million (2003: $290 million) is disclosed in other assets. The balance of $46 million in December 2004 (2003: $49 million) represents the deferred tax on pension liabilities, so is offset against the pension liabilities amount included in other liabilities. STANDARD CHARTERED PLC - NOTES (continued) 5. Dividends on Preference Shares 2004 2003 $m $m Non-cumulative irredeemable preference shares: 7 3/8% preference shares of Â£1 each 14 12 8 1/4% preference shares of Â£1 each 15 13 Non-cumulative redeemable preference shares: 8.9% preference shares of $5 each 29 30 58 55 6. Dividends on Ordinary Equity Shares 2004 2003 Cents per Cents per share share Cents per $m Cents per $m share share Interim 17.06 201 15.51 182 Final 40.44 524 36.49 429 57.50 725 52.00 611 The 2004 final dividend of 40.44 cents per share will be paid in either sterling, Hong Kong dollars or US dollars on 13 May 2005, to shareholders on the UK register of members at the close of business on 25 February 2005 and to shareholders on the Hong Kong branch register of members at the opening of business in Hong Kong (9:00am Hong Kong time) on 25 February 2005. It is intended that shareholders will be able to elect to receive shares credited as fully paid instead of all or part of the interim cash dividend. Details of the dividend will be sent to shareholders on or around 14 March 2005. STANDARD CHARTERED PLC - NOTES (continued) 7. Earnings per Ordinary Share 2004 2003* Average Per Average Per number of share number of share Profit shares amount Profit shares amount $m ('000) cents $m ('000) cents Basic EPS Profit attributable to ordinary shareholders 1,421 1,172,921 969 1,167,333 Premium and costs paid on repurchase of - - (12) - preference shares Basic earnings per ordinary share 1,421 1,172,921 121.2c 957 1,167,333 82.0c Effect of dilutive potential ordinary shares: Convertible bonds 23 34,488 21 34,488 Options - 3,444 - 6,161 Diluted EPS 1,444 1,210,853 119.3c 978 1,207,982 81.0c The Group measures earnings per share on a normalised basis. This differs from earnings defined in Financial Reporting Standard 14. The table below provides a reconciliation. 2004 2003* $m $m Profit attributable to ordinary shareholders, as above 1,421 957 Amortisation of goodwill 181 134 Premium and costs paid on repurchase of preference shares - 12 Profit on sale of shares in - KorAm (95) - - Bank of China (36) - Premium and costs paid on repurchase of subordinated debt 23 - Costs of Hong Kong incorporation 18 - Tsunami donation 5 - (85) Profits less losses on disposal of investment securities (33) (62) Profit on sale of tangible fixed assets (4) - Profit on disposal of subsidiary undertakings (4) - Amounts written off fixed asset investments 1 11 Normalised earnings 1,477 1,052 Normalised earnings per ordinary share 125.9c 90.1c * Comparative restated (see note 12 on page 51). STANDARD CHARTERED PLC - NOTES (continued) 8. Contingent Liabilities and Commitments The table below shows the contract or underlying principal amounts, credit equivalent amounts and risk weighted amounts of unmatured off-balance sheet transactions at the balance sheet date. The contract or underlying principal amounts indicate the volume of business outstanding and do not represent amounts at risk. The credit equivalent and risk weighted amounts have been calculated in accordance with the Financial Services Authority guidelines implementing the Basel Accord on capital adequacy, after taking account of collateral and guarantees received. 2004 2003 Contract or Contract or underlying Credit Risk underlying Credit Risk principal equivalent weighted principal equivalent weighted amount amount amount amount amount amount $m $m $m $m $m $m Contingent liabilities Acceptances and endorsements 976 976 842 716 716 535 Guarantees and irrevocable letters of credit 15,942 9,976 8,146 12,350 8,480 5,773 Other contingent liabilities 3,139 2,414 1,221 4,802 3,364 2,132 20,057 13,366 10,209 17,868 12,560 8,440 Commitments Documentary credits and short term trade- 2,924 585 494 2,157 431 394 related transactions Forward asset purchases and forward 54 54 11 26 26 5 deposits placed Undrawn formal standby facilities, credit lines and other commitments to lend: One year and over 9,140 4,570 4,133 7,182 3,591 3,259 Less than one year 8,903 - - 5,203 - - Unconditionally cancellable 25,933 - - 26,589 - - 46,954 5,209 4,638 41,157 4,048 3,658 STANDARD CHARTERED PLC - NOTES (continued) 9. Fair Values These tables analyse the notional principal amounts and the positive and negative fair values of the Group's derivative financial instruments. Positive and negative fair values are the mark-to-market values of the derivative contracts adjusted for any amounts recognised in the Consolidated Profit and Loss Account for non-trading items. Notional principal amounts are the amount of principal underlying the contract at the reporting date. Fair values at the period end are representative of the Group's typical position during the period. Trading activities are defined as positions held in financial instruments with the intention of benefiting from short term rates or price movements. The risk section of the Financial Review on pages 17 to 32 explains the Group's risk management of derivative contracts. 2004 2003 Notional Notional principal Positive Negative principal Positive Negative amounts fair value fair value amounts fair value fair value $m $m $m $m $m $m Trading book Forward foreign exchange contracts 409,003 6,789 6,500 405,983 8,936 8,535 Foreign exchange derivative contracts Currency swaps and options 116,734 2,592 2,532 124,138 1,875 1,931 Exchange traded futures and options 238 - - 327 - - Total 116,972 2,592 2,532 124,465 1,875 1,931 Interest rate derivative contracts Swaps 409,418 3,359 3,125 253,359 2,834 2,941 Forward rate agreements and options 57,475 101 127 61,506 89 81 Exchange traded futures and options 96,282 54 54 108,995 24 27 Total 563,175 3,514 3,306 423,860 2,947 3,049 Total trading book derivative financial 1,089,150 12,895 12,338 954,308 13,758 13,515 instruments Effect of netting (7,563) (7,563) (7,507) (7,507) 5,332 4,775 6,251 6,008 STANDARD CHARTERED PLC - NOTES (continued) 9. Fair Values (continued) Non-trading activities are defined as positions held with respect to management of the Group's assets and liabilities and related hedges. 2004 2003 Notional Notional principal Positive Negative principal Positive Negative amounts fair value fair value amounts fair value fair value $m $m $m $m $m $m Non-trading book Interest rate derivative contracts Swaps 2,304 17 4 28 - 2 Forward rate agreements and options 495 - - 92 - - Exchange traded futures and options - - - 2,634 2 1 Total 2,799 17 4 2,754 2 3 Commodity derivative contracts* 6,030 33 33 866 1 1 Total non-trading book derivative 8,829 50 37 3,620 3 4 financial instruments * The increase in commodity derivative contracts relates to oil options entered into on a back-to-back basis to meet customer requirements. 2004 2003 Book Market Book Market value value value value $m $m $m $m Listed and publicly traded securities: Financial assets 16,627 16,689 17,542 17,548 Preference shares 676 856 649 768 Other financial liabilities 12,013 11,833 10,760 10,965 Financial liabilities 12,689 12,689 11,409 11,733 Financial assets include treasury bills, debt securities and equity shares. Other financial liabilities include debt securities in issue and subordinated loan capital. STANDARD CHARTERED PLC - NOTES (continued) 10. Credit Exposures in respect of Derivative Contracts The residual maturity analysis of the notional principal amounts of derivative contracts, excluding exchange traded futures and options, held at 31 December 2004 and 31 December 2003 for trading and non-trading purposes is set out below: 2004 Under One to Over one five five year years years Total $m $m $m $m Forward foreign exchange and foreign exchange derivative contracts Notional principal amount 479,468 41,409 4,860 525,737 Net replacement cost 7,640 1,504 237 9,381 Interest rate derivative contracts Notional principal amount 243,369 189,548 36,775 469,692 Net replacement cost 519 1,782 1,176 3,477 Commodity derivative contracts Notional principal amount 1,094 4,348 588 6,030 Net replacement cost 3 23 7 33 Counterparty risk Financial institutions 11,532 Non financial institutions 1,359 Total net replacement cost 12,891 2003 Under One to Over one five five year years years Total $m $m $m $m Forward foreign exchange and foreign exchange derivative contracts Notional principal amount 488,667 37,075 4,379 530,121 Net replacement cost 9,581 1,091 139 10,811 Interest rate derivative contracts Notional principal amount 166,138 119,008 29,839 314,985 Net replacement cost 474 1,520 929 2,923 Commodity derivative contracts Notional principal amount 445 421 - 866 Net replacement cost - 1 - 1 Counterparty risk Financial institutions 12,901 Non financial institutions 834 Total net replacement cost 13,735 The risk section of the Financial Review on pages 17 to 32 explains the Group's risk management of derivative contracts. STANDARD CHARTERED PLC - NOTES (continued) 11. Forward Looking Statements This document contains forward-looking statements, including such statements within the meaning of section 27A of the US Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These statements concern, or may affect, future matters. These may include the Group's future strategies, business plans, and results and are based on the current expectations of the directors of Standard Chartered. They are subject to a number of risks and uncertainties that might cause actual results and outcomes to differ materially from expectations outlined in these forward-looking statements. These factors are not limited to regulatory developments but include stock markets, IT developments, competitive and general operating conditions. 12. Restatement of Comparative Figures a) The Group has fully adopted the accounting requirements of FRS17 - Retirement Benefits. FRS17 replaces Statement of Standard Accounting Practice (SSAP) 24 and Urgent Issue Task Force (UITF) Abstract 6 as the accounting standard dealing with post-retirement benefits. The standard is being introduced in the UK in stages, starting with disclosures in the notes to the accounts. The full requirements of the standard are not mandatory until reporting periods starting on or after 1 January 2005, however early adoption is encouraged. The Group has adopted the standard one year early as there is now more certainty that similar requirements will be incorporated within IFRS, under which the Group will report for reporting periods starting on or after 1 January 2005. The new standard requires the Group to include the assets of its defined benefit schemes on its balance sheet together with the related liability to make benefit payments net of deferred tax. The profit and loss account includes a charge in respect of the cost of accruing benefits for current employees and any benefit improvements. The expected return of the schemes' assets is included within other income less a charge in respect of unwinding the discount applied to the scheme's liabilities. Under SSAP24 the profit and loss account included a charge in respect of the cost of accruing surplus benefits for the current employees offset by a credit in respect of the amortisation of the surplus in the Group's defined benefit schemes. A net pension prepayment was included in the Group's balance sheet. A prior year adjustment has been made reducing shareholders' funds at 31 December 2003 by $202 million to reflect the revised policy. The effect of this change on the profit and loss account for the year ended 31 December 2004 has been to introduce other finance income of $10 million (2003: $13 million charge), and to decrease administrative expenses by $16 million (2003: $30 million decrease). Profit before tax has been increased by $26 million (2003: $17 million increase). The effect on the Group's balance sheet at 31 December 2004 has been to include a provision for defined benefit schemes of $110 million (2003: $124 million), to reduce prepayments and accrued income by $60 million (2003: $81 million) and to reduce shareholders' funds by $183 million (2003: $202 million). b) The cost recognition policy for the Group has been revised for share schemes to reflect their usage as long term incentive plans, in accordance with the Urgent Issues Task Force 17 Employee Share Schemes. In previous years costs have been recognised on an up front basis. From 2004 the Group will spread the cost of share schemes over the performance/vesting period. The effect of this change on the profit and loss account for the year ended 31 December 2004 has been to decrease staff costs by $14 million before tax (2003: $9 million increase staff costs). Shareholders' funds have been increased by $10 million (2003: $16 million). STANDARD CHARTERED PLC - NOTES (continued) 13. Dealings in the Company's listed securities Neither the Company nor any of its subsidiaries has bought, sold or redeemed any securities of the Company listed on The Stock Exchange of Hong Kong Limited during the year ended 31 December 2004. 14. Corporate Governance The directors confirm that, throughout the period, the Company has complied with the provisions of Appendix 14 of the Listing Rules of the Hong Kong Stock Exchange. The directors also confirm that the announcement of these results have been reviewed by the Company's Audit and Risk Committee. Financial Calendar Ex-dividend date 23 February 2005 Record date 25 February 2005 Posting to shareholders of 2004 Report and Accounts 14 March 2005 Annual General Meeting 5 May 2005 Payment date - final dividend on ordinary shares 13 May 2005 Copies of this statement are available from: Investor Relations, Standard Chartered PLC, 1 Aldermanbury Square, London, EC2V 7SB or from our website on http://investors.standardchartered.com For further information please contact: Tracy Clarke, Group Head of Corporate Affairs +44 20 7280 7708 Paul Marriage, Head of Corporate Communications +44 20 7280 7163 Romy Murray, Head of Investor Relations +44 20 7280 7245 Cindy Tang, Head of Media Relations +44 20 7280 6170 The following information is available on our website â€¢ A live webcast of the 2004 annual results analysts' presentation (available from 9:45am GMT) â€¢ A pre-recorded webcast including the Q/A session of the analysts' presentation in London (available 1:00pm GMT) â€¢ Interviews with Mervyn Davies, Group Chief Executive and Peter Sands, Group Finance Director (available from 8:00am GMT) â€¢ Slides of the Group's presentations (available after 11:00am GMT) Images of Standard Chartered are available for the media at www.newscast.co.uk Information regarding the Group's commitment to corporate responsibility is available at www.standardchartered.com/ourbeliefs The 2004 Report and Accounts will be made available on the website of the Stock Exchange of Hong Kong and on our website www.standardchartered.com. 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