IFRS Restatement - Part 1
Standard Chartered PLC
12 May 2005
TO CITY EDITORS 12 MAY 2005
FOR IMMEDIATE RELEASE
STANDARD CHARTERED PLC RESULTS FOR 2004 RESTATED UNDER INTERNATIONAL FINANCIAL
REPORTING STANDARDS
STANDARD CHARTERED PLC
Restatement of primary financial information and the provision of pro-forma
financial information for 2004 under International Financial Reporting Standards
From 1 January 2005, Standard Chartered PLC and its subsidiaries (the Group) is
required by European Directives to report its consolidated financial statements
under International Financial Reporting Standards (IFRS), as endorsed by the
European Union. As part of this transition, the Group is presenting today a
restatement of its 2004 results under IFRS. This will form the comparative to
the 2005 Interim Report and the 2005 Annual Report.
Effect of restatement
• The effect of the restatement is modest.
• Profit before tax changes by 4 per cent to $2,251 million from $2,158
million.
• Normalised earnings per share is 124.6 cents compared to 125.9 cents.
• Normalised return of equity is 18.6 per cent compared to 20.1 per cent.
• Normalised cost income ratio changes to 54.0 per cent from 53.5 per cent.
• Total capital ratio changes to 15.2 per cent from 15.0 per cent.
The principal accounting policy changes from the transition to IFRS are:
• recording the cost of share options awarded to employees on a fair value
basis;
• ceasing goodwill amortisation;
• not accruing a liability for dividends that have not been declared and
approved;
• consolidating certain assets and liabilities previously permitted to be
reported off balance sheet; and
• tax effecting IFRS adjustments.
Peter Sands, Finance Director, commented:
'The transition to IFRS has had a limited impact on the restated 2004 results.
IFRS does not change net cash flows, the underlying economics of our business or
the way we take commercial decisions.'
STANDARD CHARTERED PLC
Pro-forma financial information
The Group has excluded the effects of IAS 39 'Financial Instruments: recognition
and measurement' and IAS 32 'Financial instruments: disclosure and presentation'
from the restated 2004 results, as permitted in the transitional rules.
However, pro-forma financial information including the impact of IAS 32 and 39
has been included for illustrative purposes.
The principal changes arising out of IAS 32 and IAS 39 are:
• reclassification between liabilities and shareholders' funds of
certain subordinated securities and preference shares;
• recording interest on a 'level yield' basis;
• recording all derivatives at fair value on the balance sheet;
• new classification of assets and liabilities and related measurement
requirements;
• recording bad debt charges for time-value discount provisions and
portfolio specific provisions; and
• grossing up of balance sheet for items no longer permitted to be
netted.
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
Romy Murray, Head of Investor Relations
+44 20 7280 7245
Betty Ku, Head of Investor Relations, Asia Pacific
+852 2821 1310
Cindy Tang, Head of Media Relations
+44 20 7280 6170
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.
STANDARD CHARTERED PLC - TABLE OF CONTENTS
2004 Restatement under IFRS Page
Introduction 4
Basis of preparation 4
Overview of impact of restatement of 2004 results 5
Transitional arrangements 5
Explanation of IFRS income statement and balance sheet adjustments 5
Appendices Restatement at 31 December 2004 and 30 June 2004:
Appendix 1A Balance sheet 9
Appendix 1B Income statement 10
Appendix 1C Cash flow statement 11
Appendix 1D Statement of recognised income and expense 12
Appendix 1E Reconciliation of balance sheet at 31 December 2004 13
Appendix 1F Reconciliation of balance sheet at 30 June 2004 14
Appendix 1G Reconciliation of income statement at 31 December 2004 15
Appendix 1H Reconciliation of income statement at 30 June 2004 16
Appendix 1I Reconciliation of equity at 1 January 2004 17
Appendix 1J Segmental information by geographic segment at 31 Dec 2004 18
Appendix 1K Segmental information by class of business at 31 Dec 2004 19
Appendix 1L Earnings per ordinary share 20
Appendix 2A Special purpose Audit Report of KPMG Audit Plc 21
Appendix 2B Special purpose Review Report of KPMG Audit Plc 23
Pro-forma Financial Information: 25
Appendix 3A Balance sheet 30
Appendix 3B Income statement 31
Appendix 3C Cash flow statement 32
Appendix 3D Statement of recognised income and expense 33
Appendix 3E Reconciliation of balance sheet at 31 December 2004 34
Appendix 3F Reconciliation of balance sheet at 30 June 2004 35
Appendix 3G Reconciliation of income statement at 31 December 2004 36
Appendix 3H Reconciliation of income statement at 30 June 2004 37
Appendix 3I Reconciliation of equity at 1 January 2004 38
Appendix 3J Summarised asset classifications 39
Appendix 3K Segmental information by geographic segment at 31 Dec 2004 40
Appendix 3L Segmental information by class of business at 31 Dec 2004 41
Appendix 3M Earnings per ordinary share 42
Appendix 4 Accounting policies as revised under IFRS 43
Appendix 5 Additional accounting policies relating to pro-forma financial
information 48
Unless another currency is specified, the word 'dollar' or symbol '$' in this
document means United States dollar.
References to IFRS throughout this document refer to the application of
International Accounting Standards and International Financial Reporting
Standards.
Restatement of primary financial information and the provision of pro-forma
financial information for 2004 under International Financial Reporting Standards
Introduction
Standard Chartered PLC and its subsidiaries (the Group) has for accounting
periods up to 31 December 2004 prepared its primary consolidated financial
statements under UK Generally Accepted Accounting Principles (UK GAAP). From 1
January 2005, the Group is required by European Directives to report its
consolidated financial statements under International Financial Reporting
Standards (IFRS), as endorsed by the European Union. Our first published
results under IFRS will be the 2005 Interim Report.
This press release explains the restatement of the Group's 2004 results under
IFRS that will be presented as the comparatives in the 2005 Interim and Annual
Report. The Group has excluded the effects of IAS 39 'Financial Instruments:
Recognition and measurement' and IAS 32 'Financial instruments: disclosure and
presentation' from the restated 2004 results, as permitted in the transitional
rules. However, pro-forma financial information including the impact of IAS 32
and 39 is presented in Appendix 3 for illustrative purposes. Other transitional
arrangements are set out below.
Basis of preparation
The directors are responsible for the restated financial information which has
been prepared on the basis of EU endorsed IFRS and those expected to be
applicable at 31 December 2005. These are subject to ongoing review and
endorsement by the EU or possible amendment by interpretative guidance from the
International Accounting Standards Board (IASB) and are therefore still subject
to change. We will update our restated information for any such changes should
they occur.
The financial information for the full year ended 31 December 2004, as prepared
on the above basis, has been audited by KPMG Audit Plc. They have also reviewed
the financial information for the half year. Their reports to the Company are
set out on pages 21 to 24. Subject to EU endorsement of outstanding standards
and no further changes from the International Accounting Standards Board (IASB),
this information is expected to form the basis for comparatives when reporting
financial results for 2005, and for subsequent reporting periods.
The financial information included in this document does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The consolidated statutory accounts for Standard Chartered PLC in respect of the
year ended 31 December 2004, on which the auditors made a report under section
235 of the Companies Act 1985, have been delivered to the registrar of
companies. The auditors' report in respect of the statutory accounts for the
year ended 31 December 2004 was unqualified and did not contain a statement
under section 237(2) or (3) of the Companies Act 1985.
Overview of impact of restatement of 2004 results
H1 2004 2004
UK GAAP IFRS Change UK GAAP IFRS Change
Profit before taxation ($m) 1,106 1,107 1 2,158 2,251 93
Profit attributable to ordinary
shareholders ($m) 717 727 10 1,421 1,520 99
Shareholders funds ($m) 8,005 8,232 227 8,435 9,105 670
EPS - normalised basis 57.9c 57.1c (0.8)c 125.9c 124.6c (1.3)c
RoE - normalised 19.1% 18.0% (100)bp 20.1% 18.6% (150)bp
Total assets ($bn) 129.1 132.6 3.5 141.7 147.1 5.4
The most significant elements contributing to the change in financial
information for 2004 are:
• recording the cost of share options awarded to employees on a fair
value basis;
• ceasing goodwill amortisation;
• not accruing a liability for dividends that have not been declared and
approved;
• consolidating certain assets and liabilities previously permitted to
be reported off balance sheet; and
• tax effecting IFRS adjustments.
Details of adjustment by type are set out in Appendices 1E - 1I and are
explained below.
Transitional arrangements
The rules for first time adoption of IFRS are set out in IFRS 1 'First-time
Adoption of International Financial Reporting Standards'. In general a company
is required to determine its IFRS accounting policies and apply these
retrospectively to determine its opening balance sheet under IFRS. The standard
allows a number of exceptions to this general principle to assist companies as
they transition to reporting under IFRS. Where the Group has taken advantage of
these exemptions they are noted below.
Explanation of IFRS income statement and balance sheet adjustments
1. Dividends: IAS 10 Events after the balance sheet date
UK GAAP:
Under UK GAAP proposed dividends at the half-year and year-end were accrued
although there is no obligation to pay until the dividend is declared.
IFRS:
Under IAS 10, assets and liabilities should be adjusted for subsequent events
that existed at the balance sheet date, but not for events that are indicative
of conditions that arose subsequent to the balance sheet date. The main effect
of this is that under IAS 10, entities are not permitted to recognise a
liability for dividends declared after the balance sheet date.
Impact:
Interim and final dividends are now recorded as an appropriation of
shareholders' funds in the period that they are declared by the Board.
Shareholders' funds increase by $208 million and $532 million as at 30 June 2004
and 31 December 2004 respectively. This is the single largest item that affects
equity, but is only a timing difference.
2. Goodwill: IFRS 3 Business combinations
UK GAAP:
Purchased goodwill is capitalised and amortised to nil, on a straight-line
basis, over its estimated useful life. The amortisation period was up to 20
years.
IFRS:
IFRS 3 prohibits the amortisation of goodwill. The standard requires goodwill to
be carried at cost with impairment reviews both annually and when there are
indications that the carrying value may not be recoverable. After transition,
the balance remains on the Group's balance sheet unless it becomes impaired. If
impairment occurs, a charge to the income statement will be made for the
difference between the carrying amount and the realisable value of the goodwill.
Under the transitional arrangements of IFRS 1 a company has the option of
applying IFRS 3 prospectively from the transition date to IFRS. The Group has
chosen this option rather than to restate previous business combinations.
Impact:
The amount of $181 million that was charged to profit and loss under UK GAAP for
2004 in respect of goodwill amortisation has been reversed, net of an impairment
charge of $67 million (net reversal $114 million). The goodwill balance of $1.9
billion at 1 January 2004 under UK GAAP has been taken as the IFRS opening
balance at this date. The Group will review for impairment at each reporting
date.
3. Fixed assets: IAS 16 Property, plant and equipment, IAS 17 Leases, and
IAS 38 Intangible assets
UK GAAP:
a) Freehold and long leasehold premises were included in the accounts at
their historical cost or at the amount of any subsequent valuation. Freehold
premises are amortised on a straight-line basis over the estimated residual
lives. Leasehold premises are amortised over the remaining term of each lease,
also on a straight-line basis.
b) Downward revaluations were permitted to be charged to the revaluation
reserve to the extent that it is not an impairment or a clear consumption of
economic benefits.
c) UK GAAP requires leasehold property that was classified as a finance
lease to be treated as if it were a purchased fixed asset, including the minimum
lease payments on the land element.
d) Capitalised software was classified as fixed assets.
IFRS:
a) The Group has elected under the transitional provisions of IFRS 1 to
cease revaluing freehold and long leasehold premises and to use the carrying
amount as at 1 January 2004 as 'deemed cost'.
b) IFRS requires all negative revaluations to be charged to the income
statement to the extent that there is not a previous positive revaluation.
c) IFRS does not permit land to be classified as a finance lease unless
certain conditions are met, including title transferring to the lessor at the
end of the lease. Revaluations relating to the land element are reversed if
they are classified as operating leases. The Group has reclassified the land
element of all leased premises as operating leases where the conditions for
recording them as a finance lease has not been met.
d) Capitalised software is classified as intangible assets under IAS 38.
Impact:
a) No adjustments are required to restate 2004 financial statements from
ceasing revaluation.
b) Negative revaluations of $81 million have been transferred from the
revaluation reserve to retained earnings. There is no net profit impact.
c) $88 million of minimum lease payments relating to the land element of
leased premises has been reclassified from fixed assets to prepayments, less $3
million of revaluation relating to land which has been reversed.
d) $224 million of capitalised software and work in progress has been
reclassified to intangible assets. There is no net profit impact.
4. Share awards: IFRS 2 Share-based Payments
UK GAAP:
UK GAAP requires the intrinsic value, being the difference between the share
price at the date of award and the strike price, to be taken to the income
statement. This expense is recorded over the vesting period of each award
within each scheme. Save As You Earn (SAYE) schemes were excluded from the
requirements.
IFRS:
IFRS 2 requires that an expense for all share based payments (including SAYE
schemes) be recognised in the income statement based on their fair value at the
date of grant. This expense is recorded over the vesting period of each award
within each scheme. For equity settled awards, the transition requirements
permit only the restatement of awards made on or after 7 November 2002 (which
have not vested at 1 January 2004). All cash settled awards must be restated.
The Group has adopted a binomial model for calculating the fair value of share
based awards under IFRS.
Impact:
For the year ended 31 December 2004, staff costs increase by $23 million from
applying IFRS. Because the vesting period for most equity settled awards is
three years and equity settled awards made before 7 November 2002 were not
restated under IFRS 2, the full impact of the new requirements will not be
reflected in the income statement until 2005.
5. Consolidation of securitisations and investment funds: IAS 27
Consolidated and separate financial statements and SIC 12 Consolidation -
Special Purpose Entities
UK GAAP:
FRS 5 permitted certain securitisations to be disclosed by means of a 'linked
presentation' on the balance sheet and an investment fund managed by the Group
was not recognised on the Group's balance sheet.
IFRS:
Under IFRS linked presentation is not permitted and investment funds managed by
the Group are more likely to be consolidated.
Impact:
The stricter requirement of IFRS has resulted in assets amounting to $4,211
million brought on to the balance sheet at 31 December 2004. Operating income
and expenses have increased by $9 million and $5 million respectively for the
year ended 31 December 2004.
6. Joint Ventures: IAS 31 Interest in Joint Ventures
UK GAAP:
Interests in joint ventures were stated at the Group's share of gross assets
including attributable goodwill, less its share of gross liabilities.
IFRS:
Interests in jointly controlled entities are recognised using proportionate
consolidation whereby the assets, liabilities, income and expenses are combined
line by line with similar items in the Group's financial statements.
Impact:
Gross assets of $1,070 million have been consolidated. There is no net impact
on profit but operating income is increased by $7 million, operating expenses by
$5 million and income from joint venture is reduced by $2 million.
7. Tax: IAS 12 Income Tax
The adjustments made under IFRS have been tax effected. This resulted in a tax
credit of $7 million for the year ended 31 December 2004. The effective tax
charge for 2004 as restated under IFRS is 28.0 per cent (UK GAAP 29.5 per cent).
This arises mainly from the reversal of amortised goodwill.
8. Cash flow Statement: IAS 7 Cash Flow Statements
UK GAAP:
Cash is defined as 'cash in hand and deposits repayable on demand'. As at 31
December 2004 this amounted to $4,351 million.
IFRS:
The movement in cashflows under IFRS are represented by cash and cash
equivalents. Cash is defined as 'cash on hand and demand deposits', similar to
UK GAAP. Cash equivalents includes short term, highly liquid investments that
are readily convertible to known amounts of cash. As at 31 December 2004 the
total of cash and cash equivalents amounted to $24,023 million.
Impact:
Although the definition and, therefore, the amount reported as cash is different
between UK GAAP and IFRS, there in no change in the actual cashflows of the
underlying business.
$1,614 million of restricted cash balances held with central banks have been
transferred from loans and advances to banks to cash and balances at central
banks.
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS
SUMMARISED CONSOLIDATED BALANCE SHEET
As at 31 December 2004
Audited Reviewed
IFRS IFRS
31.12.04 30.06.04
$m $m
Assets
Cash and balances at central banks 3,960 3,447
Treasury bills and other eligible bills 4,425 5,978
Loans and advances to banks 17,382 17,387
Loans and advances to customers 72,159 63,743
Debt securities 32,842 28,900
Equity shares 253 179
Intangible fixed assets 2,353 2,154
Property, plant and equipment 555 525
Deferred tax assets 272 251
Prepayments, accrued income and other assets 12,877 10,084
Total assets 147,078 132,648
Liabilities
Deposits by banks 15,814 16,999
Customer accounts 85,458 78,219
Debt securities in issue 11,627 9,985
Current tax liabilities 295 258
Accruals, deferred income and other liabilities 17,047 12,402
Subordinated liabilities:
Undated loan capital 1,588 1,572
Dated loan capital 5,180 4,351
Total liabilities 137,009 123,786
Equity
Shareholders' funds 9,105 8,232
Minority interest 964 630
Total equity 10,069 8,862
Total equity and liabilities 147,078 132,648
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
SUMMARISED CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2004
Audited Reviewed Reviewed
IFRS IFRS IFRS
12 months 6 months 6 months
ended ended ended
31.12.04 30.06.04 31.12.04
$m $m $m
Interest and similar income 5,312 2,568 2,744
Interest expense and similar charges (2,130) (1,017) (1,113)
Net interest income 3,182 1,551 1,631
Other finance income 10 3 7
Fees and commissions income 1,614 793 821
Fees and commissions expense (282) (130) (152)
Net trading income 651 333 318
Other operating income 207 175 32
2,190 1,171 1,019
Total operating income 5,382 2,725 2,657
Administrative expenses:
Staff (1,559) (793) (766)
Premises (321) (158) (163)
Other (731) (336) (395)
Depreciation and amortisation (238) (123) (115)
Total operating expenses (2,849) (1,410) (1,439)
Operating profit before provisions 2,533 1,315 1,218
Impairment losses on loans and advances (214) (139) (75)
Amounts written off fixed assets (68) (69) 1
Operating profit before taxation 2,251 1,107 1,144
Taxation (630) (331) (299)
Operating profit after taxation 1,621 776 845
Minority interest (43) (20) (23)
Profit for the period attributable to shareholders 1,578 756 822
Dividends on other equity interests (58) (29) (29)
Dividends on ordinary equity shares (630) (429) (201)
Retained profit 890 298 592
Basic earnings per share 129.6c 62.1c 67.5c
Diluted earnings per ordinary share 127.4c 61.1c 66.3c
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2004
Audited Reviewed
IFRS IFRS
12 months 6 months
ended ended
31.12.04 30.06.04
$m $m
Cash flow from operating activities
Operating profit before taxation 2,251 1,107
Adjustment for items not involving cash flow or shown separately
Depreciation and amortisation of premises, plant and equipment 238 123
Gain on disposal of tangible fixed assets (4) (5)
Gain on disposal of investment securities (164) (159)
Amortisation of investments (41) 18
Loss on disposal of subsidiary undertakings - (4)
Charge for bad and doubtful debts and contingent liabilities 214 139
Amounts written off fixed assets 68 69
Debts written off, net of recoveries (504) (74)
Increase/(decrease) in accruals and deferred income 80 (178)
Increase in prepayments and accrued income (164) (197)
Net (increase)/decrease in mark to market adjustment (259) 473
Interest paid on subordinated loan capital 338 253
UK and overseas taxes paid (573) (271)
Net cash inflow from trading activities 1,480 1,294
Net increase in cheques in the course of collection (45) (83)
Net (increase)/decrease in treasury bills and other eligible bills (78) 52
Net (increase) in loans and advances to banks and customers (11,999) (6,927)
Net increase in deposits from banks, customer accounts/debt securities in issue 15,004 12,103
Net increase in dealing securities (2,118) (286)
Net increase/(decrease) in other accounts 3,037 (18)
Net cash inflow from operating activities 5,281 6,135
Net cash flows from investing activities
Purchase of tangible fixed assets (240) (95)
Acquisition of subsidiaries, net of cash acquired (333) -
Acquisition of treasury bills (9,188) (6,346)
Acquisition of debt securities (75,353) (33,931)
Acquisition of equity shares (121) (42)
Disposal of subsidiaries, associated undertakings and branches 6 6
Disposal of tangible fixed assets 51 53
Disposal and maturity of treasury bills 10,778 5,363
Disposal and maturity of debt securities 71,482 31,788
Disposal of equity shares 356 352
Dividend paid on minority shareholders of subsidiary undertakings (17) (3)
Net cash used in investing activities (2,579) (2,855)
Net cash (outflow)/inflow from financing activities
Interest paid on subordinated loan capital (338) (253)
Gross proceeds from issue of subordinated loan capital 499 4
Repayment of subordinated liabilities (25) (21)
Dividends paid on preference shares (58) (29)
Equity dividends paid to members of the company (587) (396)
Net cash outflow from financing activities (509) (695)
Net increase in cash and cash equivalents 2,193 2,585
Cash and cash equivalents at beginning of period 21,773 21,773
Effect of exchange rate changes on cash and cash equivalents 57 (39)
Cash and cash equivalents at end of period 24,023 24,319
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 December 2004
Audited Reviewed Reviewed
IFRS IFRS IFRS
12 months 6 months 6 months
ended ended ended
31.12.04 30.06.04 31.12.04
$m $m $m
Operating profit after taxation 1,621 776 845
Exchange translation differences 96 (66) 162
Actuarial (loss)/gain on retirement benefits (5) 15 (20)
Deferred tax on actuarial gain/(loss) 1 (5) 6
Deferred tax on items taken directly to reserves 19 24 (5)
Total recognised income and expense for the period 1,732 744 988
Attributable to:
Equity holders of the parent 1,689 724 965
Minority interest 43 20 23
1,732 744 988
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
RECONCILIATION OF SUMMARISED CONSOLIDATED BALANCE SHEET
At 31 December 2004
UK GAAP Fixed Share
31.12.04 Dividends Goodwill assets options
$m $m $m $m $m
Assets
Cash and balances at central banks 2,269 - - - -
Treasury bills and eligible bills 4,425 - - - -
Loans and advances to banks 18,922 - - - -
Loans and advances to customers 71,596 - - - -
Debt securities 28,295 - - - -
Equity shares 253 - - - -
Interest in joint ventures 187 - - - -
Intangible fixed assets 1,900 - 114 224 -
Property, plant and equipment 844 - - (312) -
Deferred income tax assets 276 - - - -
Prepayments, accrued income and other assets 12,721 - - 85 -
Total assets 141,688 - 114 (3) -
Liabilities
Deposits by banks 15,813 - - - -
Customer accounts 84,572 - - - -
Debt securities in issue 7,378 - - - -
Current tax liabilities 295 - - - -
Accruals, deferred income and other liabilities 17,507 (532) - - (16)
Subordinated liabilities:
Undated loan capital 1,588 - - - -
Dated loan capital 5,144 - - - -
Total liabilities 132,297 (532) - - (16)
Equity
Share capital/premium and redemption reserve 3,818 - - - -
Premises revaluation (5) - - 81 -
Own shares held in ESOP Trust (8) - - - -
Retained earnings 4,630 532 114 (84) 16
Minority interest 956 - - - -
Total equity 9,391 532 114 (3) 16
Cash/ Audited
cash IFRS
Consolidations Tax equivalents Other 31.12.04
$m $m $m $m $m
Assets
Cash and balances at central banks 77 - 1,614 - 3,960
Treasury bills and eligible bills - - - - 4,425
Loans and advances to banks 74 - (1,614) - 17,382
Loans and advances to customers 559 - - 4 72,159
Debt securities 4,547 - - - 32,842
Equity shares - - - - 253
Interest in joint ventures (187) - - - -
Intangible fixed assets 115 - - - 2,353
Property, plant and equipment 25 - - (2) 555
Deferred income tax assets - (4) - - 272
Prepayments, accrued income and other assets 71 - - - 12,877
Total assets 5,281 (4) - 2 147,078
Liabilities
Deposits by banks 1 - - - 15,814
Customer accounts 885 - - 1 85,458
Debt securities in issue 4,249 - - - 11,627
Current tax liabilities - - - - 295
Accruals, deferred income and other 75 - - 13 17,047
liabilities
Subordinated liabilities:
Undated loan capital - - - - 1,588
Dated loan capital 36 - - - 5,180
Total liabilities 5,246 - - 14 137,009
Equity
Share capital/premium and redemption reserve - - - - 3,818
Premises revaluation - - - - 76
Own shares held in ESOP Trust - - - - (8)
Retained earnings 27 (4) - (12) 5,219
Minority interest 8 - - - 964
Total equity 35 (4) - (12) 10,069
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
RECONCILIATION OF SUMMARISED CONSOLIDATED BALANCE SHEET
At 30 June 2004
UK GAAP Fixed Share
30.06.04 Dividends Goodwill assets options
$m $m $m $m $m
Assets
Cash and balances at central banks 2,243 - - - -
Treasury bills and eligible bills 5,978 - - - -
Loans and advances to banks 18,587 - - - -
Loans and advances to customers 63,671 - - - -
Debt securities 25,515 - - - -
Equity shares 179 - - - -
Intangible fixed assets 1,895 - 21 238 -
Property, plant and equipment 794 - - (269) -
Deferred tax assets 256 - - - -
Prepayments, accrued income and other assets 10,017 - - 28 -
Total assets 129,135 - 21 (3) -
Liabilities
Deposits by banks 16,999 - - - -
Customer accounts 78,219 - - - -
Debt securities in issue 6,579 - - - -
Current tax liabilities 259 - - - -
Accruals, deferred income and other liabilities 12,525 (208) - - (10)
Subordinated liabilities:
Undated loan capital 1,572 - - - -
Dated loan capital 4,351 - - - -
Total liabilities 120,504 (208) - - (10)
Equity
Share capital/premium and redemption reserve 3,778 - - - -
Premises revaluation - - - 81 -
Own shares held in ESOP Trusts (74) - - - -
Retained earnings 4,301 208 21 (84) 10
Minority interest 626 - - - -
Total equity 8,631 208 21 (3) 10
Cash/ Reviewed
cash IFRS
Consolidations Tax equivalents Other 30.06.04
$m $m $m $m $m
Assets
Cash and balances at central banks - - 1,204 - 3,447
Treasury bills and eligible bills - - - - 5,978
Loans and advances to banks 4 - (1,204) - 17,387
Loans and advances to customers 72 - - - 63,743
Debt securities 3,385 - - - 28,900
Equity shares - - - - 179
Intangible fixed assets - - - - 2,154
Property, plant and equipment - - - - 525
Deferred tax assets - (5) - - 251
Prepayments, accrued income and other assets 39 - - - 10,084
Total assets 3,500 (5) - - 132,648
Liabilities
Deposits by banks - - - - 16,999
Customer accounts - - - - 78,219
Debt securities in issue 3,406 - - - 9,985
Current tax liabilities - (1) - - 258
Accruals, deferred income and other 73 - - 22 12,402
liabilities
Subordinated liabilities:
Undated loan capital - - - - 1,572
Dated loan capital - - - - 4,351
Total liabilities 3,479 (1) - 22 123,786
Equity
Share capital/premium and redemption reserve - - - - 3,778
Premises revaluation - - - - 81
Own shares held in ESOP Trusts - - - - (74)
Retained earnings 17 (4) - (22) 4,447
Minority interest 4 - - - 630
Total equity 21 (4) - (22) 8,862
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
RECONCILIATION OF SUMMARISED CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2004
UK GAAP
12 months
ended Fixed
31.12.04 Dividends Goodwill assets
$m $m $m $m
Interest and similar income 5,232 - - -
Interest expense and similar charges (2,064) - - -
Net interest income 3,168 - - -
Other finance income 10 - - -
Fees and commissions income 1,617 - - -
Fees and commissions expense (283) - - -
Net trading income 648 - - -
Other operating income 207 - - -
2,189 - - -
Total operating income 5,367 - - -
Administrative expenses:
Staff (1,534) - - -
Premises (321) - - -
Other (721) - - (1)
Depreciation and amortisation (420) - 181 1
Total operating expenses (2,996) - 181 -
Operating profit before provisions 2,371 - 181 -
Impairment losses on loans and advances (214) - - -
Income from joint venture 2 - - -
Amounts written off fixed assets (1) - (67) -
Operating profit before taxation 2,158 - 114 -
Taxation (637) - - -
Operating profit after taxation 1,521 - 114
Minority interest (42) - - -
Profit for the period attributable to shareholders 1,479 - 114 -
Dividends on other equity interests (58) - - -
Dividends on ordinary equity shares (725) 95 - -
Retained profit 696 95 114 -
Audited
IFRS
12 months
Share ended
options Consolidations Tax Other 31.12.04
$m $m $m $m $m
Interest and similar income - 77 - 3 5,312
Interest expense and similar charges - (66) - - (2,130)
Net interest income - 11 - 3 3,182
Other finance income - - - - 10
Fees and commissions income - 1 - (4) 1,614
Fees and commissions expense - 1 - - (282)
Net trading income - - - 3 651
Other operating income - 3 - (3) 207
- 5 - (4) 2,190
Total operating income - 16 - (1) 5,382
Administrative expenses:
Staff (23) (2) - - (1,559)
Premises - - - - (321)
Other - (8) - (1) (731)
Depreciation and amortisation - - - - (238)
Total operating expenses (23) (10) - (1) (2,849)
Operating profit before provisions (23) 6 - (2) 2,533
Impairment losses on loans and advances - - - - (214)
Income from joint venture - (2) - - -
Amounts written off fixed assets - - - - (68)
Operating profit before taxation (23) 4 - (2) 2,251
Taxation - - 7 - (630)
Operating profit after taxation (23) 4 7 (2) 1,621
Minority interest - (1) - - (43)
Profit for the period attributable to (23) 3 7 (2) 1,578
shareholders
Dividends on other equity interests - - - - (58)
Dividends on ordinary equity shares - - - - (630)
Retained profit (23) 3 7 (2) 890
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
RECONCILIATION OF SUMMARISED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2004
UK GAAP
6 months
ended Fixed
30.06.04 Dividends Goodwill assets
$m $m $m $m
Interest and similar income 2,543 - - -
Interest expense and similar charges (997) - - -
Net interest income 1,546 - - -
Other finance income 3 - - -
Fees and commissions income 795 - - -
Fees and commissions expense (130) - - -
Net trading income 332 - - -
Other operating income 176 - - -
1,173 - - -
Total operating income 2,722 - - -
Administrative expenses:
Staff (774) - - -
Premises (158) - - -
Other (332) - - -
Depreciation and amortisation (211) - 88 -
Total operating expenses (1,475) - 88 -
Operating profit before provisions 1,247 - 88 -
Impairment losses on loans and advances (139) - - -
Amounts written off fixed assets (2) - (67) -
Operating profit before taxation 1,106 - 21 -
Taxation (340) - - -
Operating profit after taxation 766 - 21 -
Minority interest (20) - - -
Profit for the period attributable to shareholders 746 - 21 -
Dividends on other equity interests (29) - - -
Dividends on ordinary equity shares (201) (228) - -
Retained profit 516 (228) 21 -
Reviewed
IFRS
6 months
Share ended
options Consolidations Tax Other 30.06.04
$m $m $m $m $m
Interest and similar income - 23 - 2 2,568
Interest expense and similar charges - (20) - - (1,017)
Net interest income - 3 - 2 1,551
Other finance income - - - - 3
Fees and commissions income - - - (2) 793
Fees and commissions expense - - - - (130)
Net trading income - - - 1 333
Other operating income - - - (1) 175
- - - (2) 1,171
Total operating income - 3 - - 2,725
Administrative expenses:
Staff (12) - - (7) (793)
Premises - - - - (158)
Other - (3) - (1) (336)
Depreciation and amortisation - - - - (123)
Total operating expenses (12) (3) - (8) (1,410)
Operating profit before provisions (12) - - (8) 1,315
Impairment losses on loans and advances - - - - (139)
Amounts written off fixed assets - - - - (69)
Operating profit before taxation (12) - - (8) 1,107
Taxation - 2 7 - (331)
Operating profit after taxation (12) 2 7 (8) 776
Minority interest - - - - (20)
Profit for the period attributable to (12) 2 7 (8) 756
shareholders
Dividends on other equity interests - - - - (29)
Dividends on ordinary equity shares - - - - (429)
Retained profit (12) 2 7 (8) 298
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
RECONCILIATION OF EQUITY
At 1 January 2004
UK
GAAP Fixed Share
01.01.04 Dividends assets options
Equity $m $m $m $m
Share capital/premium and redemption reserve 3,768 - - -
Premises revaluation (2) - 81 -
Own shares held in ESOP Trusts (60) - - -
Profit and loss account 3,823 439 (84) (3)
Minority interest 614 - - -
8,143 439 (3) (3)
Audited
IFRS
Consolidation Tax Other 01.01.04
Equity $m $m $m $m
Share capital/premium and redemption reserve - - - 3,768
Premises revaluation - (22) - 57
Own shares held in ESOP Trusts - - - (60)
Profit and loss account 25 (9) (9) 4,182
Minority interest 6 - - 620
31 (31) (9) 8,567
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
SEGMENTAL INFORMATION BY GEOGRAPHIC SEGMENT
For the year ended 31 December 2004
Other
Hong Asia
Kong Singapore Malaysia Pacific India
UK GAAP $m $m $m $m $m
Net Revenue 1,408 513 270 815 466
Costs (654) (226) (144) (510) (251)
Operating profit before provision 754 287 126 305 215
Charge for debts (125) (33) (2) (40) (22)
Impairment/other - - - 2 2
Operating profit before taxation 629 254 124 267 195
Change
Operating income (2) - - 10 -
Operating expenses (4) (2) (1) (8) (1)
Operating profit before provision (6) (2) (1) 2 (1)
Charge for debts - - - - -
Impairment/other - - - (2) -
Operating profit before taxation (6) (2) (1) - (1)
Audited IFRS
Operating income 1,406 513 270 825 466
Operating expenses (658) (228) (145) (518) (252)
Operating profit before provision 748 285 125 307 214
Charge for debts (125) (33) (2) (40) (22)
Impairment/other - - - - 2
Operating profit before taxation 623 252 123 267 194
US,
MESA UK &
UAE Other Africa Group Total
UK GAAP $m $m $m $m $m
Net Revenue 271 377 584 663 5,367
Costs (99) (169) (357) (586) (2,996)
Operating profit before provision 172 208 227 77 2,371
Charge for debts (1) (1) (12) 22 (214)
Impairment/other - - - (3) 1
Operating profit before taxation 171 207 215 96 2,158
Change
Operating income - - - 7 15
Operating expenses (1) (1) (3) 168 147
Operating profit before provision (1) (1) (3) 175 162
Charge for debts - - - - -
Impairment/other - - - (67) (69)
Operating profit before taxation (1) (1) (3) 108 93
Audited IFRS
Operating income 271 377 584 670 5,382
Operating expenses (100) (170) (360) (418) (2,849)
Operating profit before provision 171 207 224 252 2,533
Charge for debts (1) (1) (12) 22 (214)
Impairment/other - - - (70) (68)
Operating profit before taxation 170 206 212 204 2,251
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
SEGMENTAL INFORMATION BY CLASS OF BUSINESS
For the year ended 31 December 2004
Corporate
Consumer Wholesale items not
Banking Banking allocated Total
UK GAAP $m $m $m $m
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/(loss) before provisions 1,305 1,162 (96) 2,371
Charge for debts (242) 28 - (214)
Amounts written off fixed assets (1) - (1)
Income from joint venture 1 1 - 2
Operating profit/(loss) before taxation 1,064 1,190 (96) 2,158
Change
Operating income 7 8 - 15
Costs (12) (22) - (34)
Amortisation of goodwill - - 181 181
Total operating expenses (12) (22) 181 147
Operating profit/(loss) before provisions (5) (14) 181 162
Charge for debts - - - -
Amounts written off fixed assets - - (67) (67)
Income from joint venture (1) (1) - (2)
Operating profit/(loss) before taxation (6) (15) 114 93
Audited IFRS
Operating income 2,700 2,574 108 5,382
Total operating expenses (1,400) (1,426) (23) (2,849)
Operating profit/(loss) before provisions 1,300 1,148 85 2,533
Charge for debts (242) 28 - (214)
Amounts written off fixed assets - (1) (67) (68)
Operating profit/(loss) before taxation 1,058 1,175 18 2,251
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
EARNINGS PER ORDINARY SHARE
12 months ended 6 months ended
31.12.04 30.06.04
Average Average
IFRS number IFRS number
Profit of shares Cents Profit of shares Cents
Earnings per Ordinary Share $m ('000) per share $m ('000) per share
Basic earnings per ordinary share 1,520 1,172,921 129.6 727 1,170,699 62.1
Effect of dilutive potential ordinary shares:
Convertible bonds 23 34,488 11 34,488
Options - 3,444 - 2,252
Diluted earnings per ordinary share 1,543 1,210,853 127.4 738 1,207,439 61.1
Normalised earnings per ordinary share
The Group measures earnings per share on a normalised basis.
The following table shows the calculation of normalised earnings per share, i.e.
based on the Group's results excluding amounts written off fixed assets, profits
/losses of a capital nature and profits/losses on repurchase of capital
instruments.
12 months 6 months
ended ended
31.12.04 30.06.04
$m $m
Profit attributable to ordinary shareholders, as above 1,520 727
Profit on sale of shares in - KorAm (95) (95)
- Bank of China (36) (36)
Premium and costs paid on repurchase of subordinated debt 23 21
Cost of Hong Kong incorporation 18 18
Tsunami donation 5 -
Profits less losses on disposal of investment securities (33) (28)
Profit on sale of tangible fixed assets (4) (4)
Profit on disposal of subsidiary undertakings (4) (4)
Amounts written off fixed assets 68 69
Normalised earnings 1,462 668
Normalised earnings per ordinary share 124.6c 57.1c
SPECIAL PURPOSE AUDIT REPORT OF KPMG AUDIT PLC TO STANDARD CHARTERED PLC
('THE COMPANY') ON ITS PRELIMINARY AND PRO FORMA PRELIMINARY INTERNATIONAL
FINANCIAL REPORTING STANDARDS ('IFRS') FINANCIAL INFORMATION
In accordance with the terms of our engagement letter dated 25 April 2005, we
have audited the accompanying consolidated preliminary IFRS balance sheet of
Standard Chartered PLC ('the Company') as at 31 December 2004, and the related
consolidated statements of income, total recognised income and expense and cash
flows for the year then ended and the related accounting policy notes ('the
preliminary IFRS financial information') set out on pages 9 to 20 and 43 to 47.
In addition we have been engaged to audit the pro forma preliminary IFRS
financial information presented for the same year ended on the basis of the pro
forma accounting policy notes set out on pages 30 to 42 and 48 to 50 ('the pro
forma preliminary IFRS financial information'), together 'the preliminary and
pro forma preliminary IFRS financial information'.
Respective responsibilities of directors and KPMG Audit Plc
As described on page 4, the directors of the Company have accepted
responsibility for the preparation of the preliminary and pro forma preliminary
IFRS financial information which has been prepared as part of the Company's
conversion to IFRS. Our responsibilities, as independent auditors, are
established in the United Kingdom by the Auditing Practices Board, our
profession's ethical guidance and the terms of our engagement.
Under the terms of engagement we are required to report to you our opinion as to
whether the preliminary and pro forma preliminary IFRS financial information has
been properly prepared, in all material respects, in accordance with the
respective accounting policy notes to the preliminary and pro forma preliminary
IFRS financial information. We also report to you if, in our opinion, we have
not received all the information and explanations we require for our audit.
We read the other information accompanying the preliminary and pro forma
preliminary IFRS financial information and consider whether it is consistent
with the preliminary and pro forma preliminary IFRS financial information. We
consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the preliminary and pro forma
preliminary IFRS financial information.
Our report has been prepared for the Company solely in connection with the
Company's conversion to IFRS. Our report was designed to meet the agreed
requirements of the Company determined by the Company's needs at the time. Our
report should not therefore be regarded as suitable to be used or relied on by
any party wishing to acquire rights against us other than the Company for any
purpose or in any context. Any party other than the Company who chooses to rely
on our report (or any part of it) will do so at its own risk. To the fullest
extent permitted by law, KPMG Audit Plc will accept no responsibility or
liability in respect of our report to any other party.
Basis of audit opinions
We conducted our audit having regard to Auditing Standards issued by the UK
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the preliminary and pro
forma preliminary IFRS financial information. It also includes an assessment of
the significant estimates and judgements made by the directors in the
preparation of the preliminary and pro forma preliminary IFRS financial
information, and of whether the accounting policies are appropriate to the
Group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the preliminary and pro
forma preliminary IFRS financial information is free from material misstatement,
whether caused by fraud or other irregularity or error. In forming our opinion
we also evaluated the overall adequacy of the presentation of information in the
preliminary and pro forma preliminary IFRS financial information.
Emphasis of matters
Without qualifying our opinion, we draw your attention to the following matters:
• The basis of preparation set out on page 4 explains why the accompanying
preliminary IFRS financial information may require adjustment before
inclusion as comparative information in the IFRS financial information for
the year to 31 December 2005 when the Company prepares its first IFRS
financial statements.
• As described in the basis of preparation set out on page 4 as part of its
conversion to IFRS, the Company has prepared the preliminary IFRS financial
information for the year ended 31 December 2004 to establish the financial
position, results of operations and cash flows of the Company necessary to
provide the comparative financial information expected to be included in the
Company's first complete set of IFRS financial statements for the year to 31
December 2005. The preliminary IFRS financial information does not itself
include comparative financial information for the prior period.
• As explained in the accounting policy notes, no adjustments have been made
for any changes in estimates made at the time of approval of the UK GAAP
financial statements on which the preliminary and pro forma preliminary IFRS
financial information is based, as required by IFRS 1.
• IAS 32 and IAS 39 have not been applied to the preliminary IFRS financial
information as permitted by IFRS 1. There has been no related restatement
of the 31 December 2004 balance sheet. Any adjustments will be shown as an
equity movement on 1 January 2005. The pro forma preliminary IFRS financial
information has been prepared on the basis that IAS 32 and IAS 39 were
applied.
Opinions
In our opinion, the accompanying preliminary IFRS financial information for the
year ended 31 December 2004 has been prepared, in all material respects, in
accordance with the basis set out in the accounting policy notes, which describe
how IFRSs have been applied under IFRS 1, including the assumptions made by the
directors of the Company about the standards and interpretations expected to be
effective, and the policies expected to be adopted, when they prepare the first
complete set of consolidated IFRS financial statements of the Company for the
year to 31 December 2005.
In our opinion, the accompanying pro forma preliminary IFRS financial
information for the year ended 31 December 2004 has been prepared, in all
material respects, in accordance with the basis set out in the accounting policy
notes, which describe how IFRSs have been applied under IFRS 1, including the
assumptions made by the directors of the Company about the standards and
interpretations expected to be effective, and the policies expected to be
adopted, and were they to adopt IAS 32 and IAS 39 from 1 January 2004.
KPMG Audit Plc
Chartered Accountants
London
12 May 2005
SPECIAL PURPOSE REVIEW REPORT OF KPMG AUDIT PLC TO STANDARD CHARTERED PLC
('THE COMPANY') ON ITS PRELIMINARY AND PRO FORMA PRELIMINARY INTERNATIONAL
FINANCIAL REPORTING STANDARDS ('IFRS') INTERIM FINANCIAL INFORMATION
In accordance with the terms of our engagement letter dated 25 April 2005, we
have reviewed the accompanying consolidated preliminary IFRS balance sheet of
Standard Chartered PLC ('the Company') as at 30 June 2004, and the related
consolidated statements of income, total recognised income and expense and cash
flows for the six month period then ended and the related accounting policy
notes ('the preliminary IFRS interim financial information') set out on pages 9
to 20 and 43 to 47. In addition we have been engaged to review the pro forma
preliminary IFRS interim financial information presented for the same six month
period on the basis of the pro forma accounting policy notes set out on pages 30
to 42 and 48 to 50 ('the pro forma preliminary IFRS interim financial
information'), together 'the preliminary and pro forma preliminary IFRS interim
financial information'.
Respective responsibilities of directors and KPMG Audit Plc
As described on page 4 the directors of the Company have accepted responsibility
for the preparation of the preliminary and pro forma preliminary IFRS interim
financial information which has been prepared as part of the Company's
conversion to IFRS. Our responsibilities are established in the United Kingdom
by the Auditing Practices Board, our profession's ethical guidance and the terms
of our engagement.
Under the terms of engagement we are required to report to you our review
conclusions as to whether we are aware of any material modifications that should
be made to the preliminary and pro forma preliminary IFRS interim financial
information which has been prepared, in all material respects, in accordance
with the respective accounting policy notes to the preliminary and pro forma
preliminary IFRS interim financial information.
We read the other information accompanying the preliminary and pro forma
preliminary IFRS interim financial information and consider whether it is
consistent with the preliminary and pro forma IFRS interim financial
information. We consider the implications for our review conclusions if we
become aware of any apparent misstatements or material inconsistencies with the
preliminary and pro forma preliminary IFRS interim financial information.
Our report has been prepared for the Company solely in connection with the
Company's conversion to IFRS. Our report was designed to meet the agreed
requirements of the Company determined by the Company's needs at the time. Our
report should not therefore be regarded as suitable to be used or relied on by
any party wishing to acquire rights against us other than the Company for any
purpose or in any context. Any party other than the Company who chooses to rely
on our report (or any part of it) will do so at its own risk. To the fullest
extent permitted by law, KPMG Audit Plc will accept no responsibility or
liability in respect of our report to any other party.
Basis of review conclusions
We conducted our review having regard to Bulletin 1999/4: Review of interim
financial information issued by the UK Auditing Practices Board. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the preliminary and pro forma preliminary IFRS interim
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards
and therefore provides a lower level of assurance than an audit. Accordingly we
do not express an audit opinion on the preliminary and pro forma preliminary
IFRS interim financial information.
Emphasis of matters
Without qualifying our review conclusions, we draw your attention to the
following matters:
• The basis of preparation set out on page 4 explains why the
accompanying preliminary IFRS interim financial information may require
adjustment before inclusion as comparative information in the Company's interim
report for the six month period to 30 June 2005 when the Company prepares its
first interim report applying IFRS.
• As described in the basis of preparation set out on page 4, as part of
its conversion to IFRS, the Company has prepared the preliminary IFRS interim
financial information for the six month period ended 30 June 2004 to establish
the financial position, results of operations and cash flows of the Company
necessary to provide the comparative financial information expected to be
included in the Company's first interim report for the six month period to 30
June 2005. The preliminary IFRS interim financial information does not itself
include comparative financial information for the prior period.
• As explained in the accounting policy notes, no adjustments have been
made for any changes in estimates made at the time of approval of the previous
UK GAAP interim report for the six month period ended 30 June 2004 on which the
preliminary and pro forma preliminary IFRS interim financial information is
based, as required by IFRS 1.
• IAS 32 and IAS 39 have not been applied to the preliminary IFRS
interim financial information as permitted by IFRS 1. There has been no related
restatement of the 30 June 2004 balance sheet. Any adjustments will be shown as
an equity movement on 1 January 2005. The pro forma preliminary IFRS interim
financial information has been prepared on the basis that IAS 32 and IAS 39 were
applied.
Review conclusions
On the basis of our review we are not aware of any material modifications that
should be made to the preliminary IFRS interim financial information as
presented for the six month period ended 30 June 2004 which has been prepared,
in all material respects, in accordance with the basis set out in the accounting
policy notes, which describe how IFRSs have been applied under IFRS 1, including
the assumptions made by the directors of the Company about the standards and
interpretations expected to be effective, and the policies expected to be
adopted, when they prepare the first complete set of consolidated IFRS financial
statements of the Company for the year to 31 December 2005.
On the basis of our review we are not aware of any material modifications that
should be made to the pro forma preliminary IFRS interim financial information
as presented for the six month period ended 30 June 2004 which has been
prepared, in all material respects, in accordance with the basis set out in the
accounting policies note, which describes how IFRSs have been applied under IFRS
1, including the assumptions made by the directors of the Company about the
standards and interpretations expected to be effective, and the policies
expected to be adopted, and were they to adopt IAS 32 and IAS 39 from 1 January
2004.
KPMG Audit Plc
Chartered Accountants
London
12 May 2005
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