Interim Results 2014 Part 2

Standard Chartered PLC - Notes

1.   Basis of preparation

The Group consolidated interim financial statements consolidate those of Standard Chartered PLC (the Company) and its subsidiaries (together referred to as the Group) and equity account the Group's interest in associates and jointly controlled entities.

These interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (FCA) and with IAS 34 Interim Financial Reporting as adopted by the European Union (EU). They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at, and for, the year ended 31 December 2013, which were prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the EU.

The Risk Review and Capital sections form part of these interim financial statements as set out on page 28 and page 86.

These interim financial statements were approved by the Board of Directors on 6 August 2014. The Directors have assessed the ability of the Group to continue as a going concern. The Directors confirm they are satisfied that the Group has adequate resources to continue in business for the foreseeable future. For this reason the Group continues to adopt the "going concern" basis of accounting for preparing financial statements.

Except as noted below, the accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at, and for, the year ended 31 December 2013. The following accounting standards and amendments have been endorsed by the EU.

Accounting standards adopted for reporting periods beginning 1 January 2014

Amendment to IAS 32 Financial Instruments: Presentation clarifies the requirements for offsetting financial assets and liabilities and addresses inconsistencies noted in current practice when applying the offsetting criteria in IAS 32. These amendments require retrospective application.

Investment Entities (amendments to IFRS 10, IFRS 12 and IAS 27), requires entities meeting the definition of an investment entity to not consolidate its subsidiaries or apply IFRS 3 Business Combinations when it obtains control of another entity.

These amendments have been endorsed by EU and do not have a material impact on the Group.

IFRIC 21 Levies, an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, provides guidance when to recognise a liability for a levy imposed by a Government. IFRIC 21 identifies the obligating event for the recognition of a liability. If that obligating event occurs over a period of time, the levy is recognised proportionately. If it is a triggered by a minimum threshold, the liability is recognised when that threshold is reached. The impact of this Interpretation on the Group was not significant.

Amendments to IAS 39 Financial Instruments: Recognition and Measurement: Novation of Derivatives and Continuation of Hedge Accounting clarifies that there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The amendments did not have a significant impact on the Group's financial statements.

Amendments to IAS 36 Impairment of Assets modifies the disclosure of information relating to the recoverable amount of impaired assets, particularly if that amount is based on fair value less costs of disposal. The amendments did not have a significant impact on the Group's financial statements.

New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for periods beginning after 1 January 2015 and have not been applied in preparing these consolidated financial statements. These include:

IFRS 15 Revenue from contracts with customers which outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. IFRS 15 is effective for reporting periods beginning on or after 1 January 2017, with earlier application permitted. The EU has not yet endorsed this standard. The Group is yet to assess IFRS 15's full impact but it is not expected to be significant.

IFRS 9 Financial Instruments which will replace IAS 39 and is effective for periods on or after 1 January 2018. IFRS 9 has three main components; Classification and Measurement, Impairment and Hedge accounting. The EU has not yet endorsed this standard. The Group is yet to assess IFRS 9's full impact.

Significant judgements

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and key sources of uncertainty were the same as those applied to the consolidated financial statements as at, and for, the year ended 31 December 2013. A summary of the Group's significant accounting policies will be included in the 2014 Annual Report and Account.

Prior period restatements

In January 2014 the Group announced a change to its organisation structure. In accordance with IFRS 8, Segmental reporting, the presentation of the Group's interim results have been updated to reflect the Group's new client segments - Corporate & Institutional, Commercial, Private Banking and Retail.

While these restatements affect the reported results of the divisions that comprise the Group's business, it has no impact on the Group's overall income statement, balance sheet or reported metrics.

Change in accounting estimates

During the period the Group changed the useful economic life of technology assets from 3 to 5 years to better reflect the extended life of these assets. The change in accounting estimate has reduced amortisation costs for the 6 month period ended 30 June 2014 by $52 million relative to 30 June 2013. The expected full year impact is estimated to reduce by $110 million relative to 31 December 2013.