1. INTRODUCTION
This announcement explains material changes to the accounting policies of the Group to be adopted under IFRS compared to those previously adopted in the UK GAAP financial statements for the year ended 31 December 2004. A full set of the principal IFRS accounting policies will be published in the Group's interim financial statements for the six months ending 30 June 2005. This announcement also provides additional information on how IFRS may impact certain areas of the interim financial statements.

The financial information prepared under IFRS presented in this announcement is unaudited.

2. BASIS OF PREPARATION OF IFRS FINANCIAL INFORMATION

Accounting standards and interpretations
The IFRS financial information presented in this announcement has been prepared on the basis of all prevailing and applicable IFRS including International Accounting Standards (“IAS”) and interpretations issued by the International Accounting Standards Board (“IASB”) and its committees up to 30 April 2005. These standards and interpretations are subject to ongoing amendment by the IASB, and subsequent endorsement by the European Commission, and are therefore subject to possible change.

Further standards and interpretations may also be issued that will be applicable for financial years beginning on or after 1 January 2005 or that will be applicable to later accounting periods but may be adopted early. The Group's first IFRS financial statements may, therefore, be prepared in accordance with different accounting policies to those used to prepare the financial information presented in this announcement. In addition, as IFRS is a new reporting basis for UK companies, accounting practice and interpretations of accounting standards will develop as companies gain more experience of the new framework. Accordingly there may be changes in the common approaches currently adopted and the final application of IFRS in the financial statements for the year ending 31 December 2005 may be subject to change.

In preparing the IFRS financial information, the Group has assumed that the European Commission will endorse the amendment to IAS19 “Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures”.

Throughout this announcement references to the transition date relate to 1 January 2004, being the first day of the comparative accounting period under which financial statements are to be presented under IFRS.

Format of primary financial statements
The primary financial statements set out in this announcement are presented in accordance with IAS1 “Presentation of Financial Statements”. However, there may be changes in the formats generally adopted as best practice develops and the final presentational application of IFRS in the financial statements for the year ending 31 December 2005 may be subject to change.

3. IFRS TRANSITIONAL ARRANGEMENTS
The transitional arrangements for IFRS are set out in IFRS1 “First-time Adoption of International Financial Reporting Standards”. The Group's transition date to IFRS is 1 January 2004, being the first day of the comparative period to the 31 December 2005 financial statements. In general, IFRS1 requires retrospective adoption of IFRS as if they were applicable prior to 1 January 2004 except in a number of specific cases where an optional exemption is granted by the standard. The Group has taken advantage of the following exemptions:

a)  Business combinations
IFRS3 “Business Combinations” permits business combinations to be accounted for in accordance with its provisions for all transactions from 1 January 2004 or to restate all earlier transactions from a selected date. The Group has elected not to restate business combinations that took place before 1 January 2004.

c)  Foreign currency translation reserve
The Group has elected to reset the foreign currency translation reserve to zero at 1 January 2004. Any gains and losses arising on future disposals of foreign operations will only include the effect of retranslation adjustments from 1 January 2004.

d)  Financial instruments
The Group has taken the option to implement IAS32 “Financial Instruments: Disclosure and Presentation” and IAS39 “Financial Instruments: Recognition and Measurement” from 1 January 2005 and not to restate the 2004 financial statements. Therefore, financial instruments will continue to be accounted for and presented in accordance with UK GAAP for the year ended 31 December 2004. At 1 January 2005, there will be an adjustment to reflect the movements from the UK GAAP carrying values to the IAS39 values. It is the Group's intention to apply hedge accounting where the requirements of IAS39 are met.