1. Converting to, and reporting under, IFRS John Kent 2 October 2007 IFRS Conversion Services Audit

2. 1 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Disclaimer The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

3. 2 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contents What are the main impacts of IFRS compared to UK GAAP? How to plan a conversion to IFRS The ongoing effects of IFRS on reporting and on the audit process

4. 3 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. What are the main impacts of IFRS compared to UK GAAP? Business combinations Financial instruments Deferred tax Leases Development costs Segmental reporting Pensions Other Share options (FRS 20 deals with from 2006) Source: KPMG survey of FTSE 100 companies 2005 IFRS accounts

5. 4 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. How to plan a conversion to IFRS Question 1: What are the key accounting and disclosure differences between current GAAP and IFRS? Question 2: What is the estimated directional impact on profit and equity, if reported under IFRS? Question 3: What is the impact on systems and processes – quick fix or major overhaul? Question 4: Who is impacted by the conversion and what are their training needs? Question 5: What would a high level conversion plan look like and what is its likely impact on resources?

6. 5 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. The ongoing effects of IFRS on reporting and on the audit process More information to be disclosed More information to be audited

7. 6 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. The growth of the international standards (by number of pages in the bound volume) YearPages 20031,952 20042,250 20052,304 20062,385 20072,513 Source: IASB bound volumes

8. 7 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. The changing size of financial statements (in pages) Last UK GAAP1st IFRS2 nd IFRS BP131180 (49p / 37%) 228 Tesco68 116 (48p / 70%) - HSBC378424 (46p / 12%) 458 Kingfisher72108 (36p / 50%) 108 GSK184192 (8p / 4%) 192 Source: published accounts Key: (additional no. pages / % increase)

9. 8 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Financial Reporting Review Panel comments Tendency to use “boiler-plate” descriptions for disclosure of accounting policies Disclosures relating to subjective or complex judgements made by management were sometimes bland and uninformative “The Panel encourages companies to describe the accounting policies applied in practice, including information specific to their particular circumstances.” Source: FRRP PRELIMINARY REPORT: IFRS IMPLEMENTATION “The Panel encourages companies to avoid “boiler-plate” descriptions and to include specific information relevant to understanding key sources of estimation uncertainty. Source: FRRP PRELIMINARY REPORT: IFRS IMPLEMENTATION

10. 9 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Financial Reporting Review Panel comments Goodwill / intangible assets  explain the factors giving rise to goodwill, and describe, for any intangible assets that were not recognised, why their value could not be reliably measured Impairment testing “The Panel reminds preparers of this new disclosure requirement which in some cases was not met, and in others, was addressed by a bland statement with little specific information content.” Source: FRRP PRELIMINARY REPORT: IFRS IMPLEMENTATION “Preparers are advised to review the sufficiency of their disclosure to support their impairment testing of goodwill and intangible assets with indefinite useful lives.” Source: FRRP PRELIMINARY REPORT: IFRS IMPLEMENTATION

11. 10 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Man Group plc report and accounts 2006

12. 11 © 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Man Group plc report and accounts 2006

13. John Kent KPMG LLP (UK) +44 (0)20 7694 8792 john.kent@kpmg.co.uk www.kpmg.co.uk