IFRS update

Arbuthnot Banking Group PLC 14 July 2005 ARBUTHNOT BANKING GROUP PLC ('Arbuthnot' or 'the Group') UPDATE ON THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS') As disclosed in the 2004 Annual Report, Arbuthnot's consolidated accounts for the reporting period ending 31 December 2005, including relevant comparative information, will be prepared under IFRS. The Group has conducted a detailed review of the implications of the introduction of IFRS for its consolidated accounts, based on those International Accounting Standards and IFRS which are presently in force. The overall impact of adopting IFRS will not have a material effect on the Group's financial position. Details of the areas impacted by the adoption of IFRS are as follows: • The timing of recognition of some types of income differs between IFRS and UK Generally Accepted Accounting Policies ('UK GAAP'). In the year ended 31 December 2004, these timing differences would have reduced profit before tax by £100,000 and net assets by £500,000. This represents a deferral of income which, under IFRS, will be recognised in future periods. • The basis for calculating specific loan loss provisions differs between IFRS and UK GAAP. The impact in 2004 would have reduced profit before tax by £50,000 and net assets by £150,000. • Goodwill arising on past acquisitions is not amortised under IFRS but is subject to annual impairment reviews. Profit before tax and net assets under IFRS would both have increased by £200,000 in 2004. • The release of general bad debt provisions disclosed in the 2004 results amounting to £585,000 would have been reclassified as a movement on reserves under IFRS. This was a one-off item which will not recur and would have had no impact on the Group's net assets. • Under IFRS, provision is made for deferred taxation in respect of the unrealised surplus on revaluation of the Group's freehold properties. The provision at 31 December 2004 would have amounted to £1.4 million. This would have been dealt with as an adjustment to the revaluation reserve and would have had no effect on reported profits for the year. • Dividends payable are not recognised as a liability under IFRS until they are approved by shareholders. This would have had the effect of increasing the Group's net assets at 31 December 2004 by £3.0 million. 14 July 2005 Enquiries: Arbuthnot Banking Group PLC 020 7012 2400 Henry Angest Chairman & CEO Stephen Lockley Group Finance Director College Hill 020 7457 2020 Tony Friend Richard Pearson This information is provided by RNS The company news service from the London Stock Exchange