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Vedanta Resources (VED)

  Print      Mail a friend       Annual reports

Tuesday 27 September, 2005

Vedanta Resources

Adoption of IFRS

Vedanta Resources PLC
27 September 2005



27 September 2005

Vedanta Resources plc Adoption of International Financial Reporting Standards

Vedanta will report its results for the six months to 30 September 2005 and
subsequent periods in accordance with International Financial Reporting
Standards ('IFRS'). This statement presents the Group's IFRS balance sheets as
at 30 September 2004 and 31 March 2005 together with the Group's IFRS results
and cash flows for the periods then ended. It also presents and explains the
differences between the Group's results and shareholders' equity under IFRS and
the amounts previously reported for these periods under UK Generally Accepted
Accounting Principles ('UK GAAP').

Salient points for year ended 31 March 2005:-

• The change to reporting under IFRS does not affect the cash flow generation of
  Vedanta's businesses and hence will not affect any commercial decisions.
• 2004-05 IFRS reported EBITDA(1) is almost unchanged at $454 million as
  compared to $455 million under UK GAAP
• IFRS Profit for the year was $64.6 million higher than under UK GAAP
  (principally due to a $56.5 million write back of negative goodwill under IFRS).
• To enhance understanding of the performance of Vedanta's businesses an
  alternative earnings measure, Underlying profit(2), will be presented in
  addition to Profit for the year.
• IFRS Underlying profit for 2004-05 was $140.1 million which compares with
  $137.7 million for UK GAAP underlying profit for the year (which included the
  amortisation of goodwill).
• Shareholders' equity at 31 March 2005 under IFRS is $1,110.5 million which is
  six per cent higher than under UK GAAP.

(1) EBITDA represents operating profit before exceptional items plus
    depreciation and amortisation
(2) Underlying Profit excludes the effects of exceptional items and their tax
    and minority interest impact, and is a more informed measure of the recurring
    performance of the Group.


For further information, please contact:

John Smelt, Head of Investor Relations               Tel: +44 20 7659 4734
Vedanta Resources plc                                     +44 787 964 2675                                          
                                             
Ajay Paliwal, Deputy Chief Financial Officer         Tel: +44 20 7659 4735
Vedanta Resources plc                                     +44 7760 178 530

Robin Walker                                         Tel: +44 20 7251 3801
Finsbury



Reconciliation of Profit for the year from UK GAAP to IFRS
(excluding IAS 32/39)

Year ended 31 March 2005
US$ millions                                                      Profit for the
                                                                          year

UK GAAP                                                                  234.7

Negative goodwill arising during the year                56.5
Deferred tax                                             10.6
Reversal of amortisation of goodwill                     (0.4)
Share based payments                                     (2.5)
Capitalisation of major overhaul expenses                 1.8
Depreciation on capitalisation of major overhaul
expenses                                                 (1.9)
Capitalisation of interest income and expense related
to projects                                               0.9
Inventory valuation                                      (0.4)            64.6
                                                                       ---------

IFRS                                                                     299.3
                                                                       =========

Reconciliation of 'shareholders' equity' under UK GAAP to 'equity attributable
to equity holders of the parent' under IFRS (excluding IAS 32/39)

US$ millions                               31 March 2005       30 September     01 April 2004
---------------------------------------------------------------------------------------------
Shareholders' equity under UK GAAP                1047.1            956.2               990.9
Reversal of negative goodwill and amortisation      64.6              8.2                 8.6
Post retirement benefits                            (6.6)            (6.2)               (6.6)
Deferred tax                                       (88.6)           (94.8)             (100.3)
Interim dividend                                   (15.8)               -                   -
Proposed dividend                                   48.9             15.8                15.8
Minority interest                                   45.3             52.3                56.3
Capitalisation of trial run expenses                12.8             12.1                12.9
Capitalisation of major overhaul expenses            0.5              1.1                 0.6
Capitalisation of interest cost                      0.8              0.9                 0.3
Depreciation                                        (1.2)            (1.1)               (1.2)
Discounting of long term provision                   0.8              0.8                 0.3
Dismantling cost                                     0.4              0.4                 0.5
Inventory valuation                                  1.5              1.6                 1.7
---------------------------------------------------------------------------------------------
Equity attributable to equity holders of the
parent under IFRS                                1,110.5            947.3               979.8
---------------------------------------------------------------------------------------------

The Group's effective transition date for IFRS is 1 April 2004. The principal
differences between UK GAAP and IFRS, as applicable to Vedanta, are described
below.

Negative goodwill

Opening negative goodwill of $8.6 million has been credited to reserves and
negative goodwill arising during the year 2004-05, amounting $56.5 million on
acquisition of Konkola Copper Mines has been credited to the income statement.

Reversal of goodwill amortisation

The systematic amortisation of goodwill under UK GAAP, by an annual charge to
the profit and loss account, has ceased under IFRS. It has been replaced by
annual impairment reviews of the carrying value of goodwill. Impairment charges
relating to goodwill may occur in future reporting periods, due to the finite
life of the associated ore body and variation of commodity prices.

The impact on Profit for the year in 2004-05 of the reversal of the goodwill
amortisation charge under UK GAAP was $0.4 million. The reversal of negative
goodwill has resulted in an adjustment to the UK GAAP balance sheet at 31 March
2005 of $8.5 million.

Share based payments
 
Under UK GAAP, the estimated cost of employee share awards made by the Group is
charged to the profit and loss account over the relevant performance period.
IFRS requires the economic cost of share option plans to be recognised by
reference to fair value on the grant date, and charged to the Income Statement
over the expected vesting period. Under IFRS, the additional charge in 2004-05
was $2.5 million.

Post-retirement benefits

Under UK GAAP, the Group applied SSAP 24, 'Accounting for Pension Costs' under
which post retirement benefit surpluses and deficits were spread over the
expected average remaining service lives of relevant, current employees. Under
IAS 19 the basis of calculating the surplus or deficit differs from SSAP 24. In
addition, IAS 19 permits three alternative ways in which the surplus or deficit
can be recognised. The Group has chosen to recognise actuarial gains and losses
directly in shareholders' equity via the Statement of Recognised Income and
Expense as at date of adoption of IFRS and going forward to expense the full
annual cost as per the actuarial valuation of the Group's post retirement
benefit plans.

The impact on retained earnings on the date of adoption of IFRS i.e. as at 1
April 2004 was a $6.6 million reduction due to the charge for post retirement
benefits as per IAS 19.

Deferred tax

UK GAAP follows the income statement method of tax effect accounting where as
IFRS requires deferred tax to be based on a balance sheet liability method.
Temporary differences are recognised as the differences between the tax base of
the asset or liability and its carrying amount in the balance sheet.

UK GAAP requires the recognition of deferred tax on all fair value adjustments
to monetary items and on fair value adjustments which reduce the carrying value
of non-monetary items. IFRS requires deferred tax to be recognised on all fair
value adjustments, other than those recorded as goodwill. IFRS profit for the
year will therefore benefit as the additional deferred tax provisions on upward
revaluations of non-monetary items are released to the income statement in line
with the amortisation of the related fair value adjustments.

For future acquisitions, these additional deferred tax provisions will be offset
by increases to the value of goodwill or other acquired assets. For acquisitions
prior to 1 April 2004, the increase in provisions has been reflected as a
reduction in opening shareholders' equity.

The impact on IFRS Profit for the year for 2004-05 was a reduction of $10.6
million. At 31 March 2005, the IFRS balance sheet includes additional provisions
of $88.6 million relating to deferred tax on fair value adjustments for prior
year acquisitions.

Dividends

Under IFRS, dividends that do not represent a present obligation at the
reporting date are not included in the balance sheet. Hence, the Company's
proposed dividends are not recognised in the Group accounts until the period in
which they are declared by the directors.

This has no effect on Profit for the year or Underlying Earnings, but increases
shareholders' equity at 31 March 2005 by $33.1 million (31 March 2004:$15.8
million).

IAS 39 and IAS 32

The Group has elected to adopt IAS 32 'Financial Instruments: Disclosure and
Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'
with effect from 1 April 2005 with no restatement of comparative information.
The financial information for 30 September 2004 and 31 March 2005 does not
therefore incorporate the effect of these Standards and is therefore presented 
under UK GAAP.

Investments 

Under IFRS, all investments have been carried at market value and consequently 
any notional gain or loss has been taken to revenue reserve, until disposal; 
these investments were held at cost under UK GAAP. The net impact of this 
adjustment at 1 April 2005 is US$1.3 million to the opening revenue reserves.

Mark to market of derivative contracts

It remains the Group's policy to generally hedge the ongoing exposures, arising
on account of fluctuations in exchange rates, prices or interest rates. All the
derivative contracts are marked-to-market and the mark-to-market difference for
all the hedges, which does not qualify for hedge accounting as per IAS 39, are
immediately recognised in the income statement. The mark-to market difference
for all qualifying fair value hedges is taken to the income statement and
mark-to-market difference for all qualifying cash flow hedges is recognised in
the balance sheet and released to the income statement upon the occurrence of
the underlying transaction.

At 1 April 2005, the marked to market value of derivative contracts, under IFRS
decreases shareholders' equity by $7.4 million.



CONTENTS
                                                                          Page
1   Introduction                                                             7
2   Basis of preparation                                                     7
3   Accounting policies under IFRS                                          10
4   Group Financial Information restated for IFRS
    4.1 Group financial information for year ended 31 March 2005:
        4.1.1 Group Income Statement                                        18
        4.1.2 Group cash flow statement                                     19
        4.1.3 Group balance sheet                                           20
        4.1.4 Statement of changes in equity                                21
        4.1.5 Reconciliation of tax                                         22
        4.1.6 EBITDA reconciliation                                         22
        4.1.7 Reconciliation of underlying profit                           22
        4.1.8 Notes to financial information                                23
    4.2 Group financial information for six months ended 30 September
    2004:
        4.2.1 Group Income Statement                                        25
        4.2.2 Group cash flow statement                                     26
        4.2.3 Group balance sheet                                           27
        4.2.4 Statement of changes in equity                                28
        4.2.5 EBITDA reconciliation                                         28
    4.3 Group balance sheet as at 1 April 2004                              29
    4.4 Group Balance Sheet as at 1 April 2005 (including IAS 32/39)        30
    4.5 Reconciliation of profit for the period ended 30 September 2004     31
    4.6 Group net asset as at 30 September 2004                             32
    4.7 Reconciliation of profit for the year ended 31 March 2005           33
    4.8 Group net asset as at 31 March 2005                                 34
    4.9 Group net asset as at 1 April 2005 (including IAS 32/39)            35
5   Directors' Responsibility statement                                     36
6   Special purpose audit report from Deloitte and Touche for year ended    37
    31 March 2005
7   Special purpose review report from Deloitte and Touche for six months   39
    ended 30 September 2004

Vedanta restatement of 2004-05 Financial Information under IFRS

1. INTRODUCTION

The European Union (EU) approved a Regulation in 2002 that requires listed
companies in the EU to prepare consolidated financial statements for accounting
periods beginning on or after 1 January 2005 in accordance with the Standards
and Interpretations included within International Financial Reporting Standards
(IFRS) that have been endorsed by the EU. Konkola Copper Mines plc, the Group's
Zambian subsidiary, which already reports under IFRS in Zambia and the
Australian companies (Copper Mines of Tasmania and Thalanga Copper Mines) are
required to adopt IFRS from 1 April 2005. Accordingly, Vedanta will prepare its
consolidated accounts for the six months ending 30 September 2005 and subsequent
reporting periods on the basis of the Standards and Interpretations within IFRS
that have been (or, in the case of the interim accounts, are expected to be)
endorsed by the EU.

As part of the Group's transition to IFRS, the directors have prepared IFRS
financial information for the opening balance sheet as at 1 April 2004, six
months ended 30 September 2004 and the year ended 31 March 2005 ('the 2004-05
IFRS financial information'), which is included on pages 19 to 36 of this Press
Release. It is intended that this financial information will be included as the
comparative information in the Group's half year report for the period ending 30
September 2005 and its financial statements for the year ending 31 March 2006
respectively.

The basis of preparation and accounting policies used in preparing the 2004-05
IFRS financial information are set out below, which describe how IFRS has been
applied under IFRS 1, including the assumptions made by the Group about the
Standards and Interpretations expected to be effective, and the policies
expected to be adopted, when the Group issues its first complete set of IFRS
financial statements for the year ending 31 March 2006. However, the basis of
preparation and accounting policies may require certain adjustment before the
Group issues its first complete set of IFRS financial statements. This is
because the standards currently in issue and endorsed by the EU are subject to
Interpretations issued from time to time by the International Financial
Reporting Interpretations Committee ('IFRIC'), and further Standards may be
issued by the International Accounting Standards Board ('IASB') that will be
adopted by the Group in its first complete set of IFRS financial statements for
the year ending 31 March 2006.

Additionally, IFRS is currently being applied in a large number of countries for
the first time. Due to a number of new and revised Standards included within
IFRS, there is not yet a significant body of established practice on which to
draw in forming opinions regarding interpretation and application. Accordingly,
practice is continuing to evolve.

At this preliminary stage, therefore, the full financial effect of reporting
under IFRS as it will be applied in the Group's first complete set of IFRS
financial statements for the year ending 31 March 2006 may be subject to change.

2. BASIS OF PREPARATION

Except as described below, the 2004-05 IFRS financial information on pages 19 to
36 has been prepared on the basis of all IFRS Standards and Interpretations
published by 31 March 2005.

A number of IFRS Standards and Interpretations are not yet mandatory but can be
adopted early under their respective transition arrangements. The Group has
early adopted IFRS 6 'Exploration for and Evaluation of Mineral Resources' and
IFRS 2 'Share-based Payment'.

The Group's transition date to IFRS is 1 April 2004. The rules for first-time
adoption of IFRS are set out in IFRS 1 'First-time adoption of International
Financial Reporting Standards'. In preparing the 2004-05 IFRS financial
information, these transition rules have been applied to the amounts reported
previously under generally accepted accounting principles in the United Kingdom
('UK GAAP').

IFRS 1 generally requires full retrospective application of the Standards and
Interpretations in force at the first reporting date. However, IFRS 1 allows
certain exemptions in the application of particular Standards to prior periods
in order to assist companies with the transition process. Vedanta has applied
the following exemptions:

   • The Group has not restated business combinations that occurred before
     the date of transition to comply with IFRS 3 'Business Combinations'. This
     means that:
     - The 2003 merger of the economic interests of Vedanta and Twin Star into 
       the listed company structure continues to be accounted for as a merger;
     - Additional deferred tax provisions in respect of upward revaluations of
       non-monetary assets held by previously acquired entities have been 
       recognised as a reduction of equity attributable to equity holders of the 
       parent on the date of transition;

   • The Group has deemed cumulative translation differences for foreign
     operations to be zero at the date of transition. Any gains and losses on
     subsequent disposals of foreign operations will not therefore include
     translation differences arising prior to the transition date;
   • The Group has elected to adopt IAS 32 'Financial Instruments: Disclosure
     and Presentation' and IAS 39 'Financial Instruments: Recognition and
     Measurement' with effect from 1 April 2005, with no restatement of
     comparative information for 2004-05. Accounting policy note 3 explains the
     basis of accounting for financial instruments in the 2004-05 IFRS financial
     information; and
   • The Group has applied IFRS 2 'Share-based Payment' retrospectively to
     all share-based payments which had not vested at 1 April 2004, the date
     chosen by the Group as the effective date for application of IFRS 2.

In addition, IFRS 1 requires that estimates made under IFRS must be consistent
with estimates made for the same date under UK GAAP except where adjustments are
required to reflect any differences in accounting policies.

UK GAAP FINANCIAL INFORMATION

The UK GAAP financial information for the year ended 31 March 2005, presented on
pages 19 to 25, is based on the Group's full financial statements for that year,
which were prepared in accordance with UK GAAP and on the historical cost basis.
These financial statements have been filed with the Registrar of Companies.

The auditors' report on the financial statements for the year ended 31 March
2005 was unqualified and did not contain statements under section 237(2) of the
United Kingdom Companies Act (regarding adequacy of accounting records and
returns) or under section 237(3) (regarding provision of necessary information
and explanations).

The UK GAAP financial information for the period ended 30 September 2004,
presented on page 26 to 33, is based on the Group's half year report for that
period, which was prepared using accounting policies consistent with those
applied in the Group's full financial statements for the year ended 31 March
2005. This interim financial information is unaudited but reviewed.

Certain changes have been made to the presentation of the UK GAAP financial
information reported in the Group's full financial statements for the year ended
31 March 2005 and half year report for the period ended 30 September 2004, as
follows:
   • The formats of the balance sheet, profit and loss account and cash flow
     statement have been modified to align them with the IFRS formats, to
     simplify presentation of the adjustments required to arrive at the IFRS
     figures; and
   • Operating profit has been restated to present the net impact of the
     share of profit/ (loss) of associate after tax as a separate line item. 
     This has no effect on total equity, Profit for the year or Underlying 
     earnings;
   • Items of income and expense that are material and require separate
     disclosure, in accordance with IAS 1.87, are classified as 'exceptional
     items' on the face of the income statement. Exceptional items that relate 
     to the underlying performance of the business are classified as 'Operating
     exceptional items' and include impairment charges and reversals. 
     Exceptional items not relating to underlying business performance are 
     classified as 'non-operating exceptional items' and are presented below 
     'Total profit from operations and associates' on the income statement. 
     Non-operating exceptional items include profits and losses on disposals of 
     investments, fixed assets and businesses, and costs of, or reversals of, 
     provisions for fundamental reorganisations or restructuring. An analysis of 
     exceptional items is provided in the notes to the financial information.

3. ACCOUNTING POLICIES ADOPTED UNDER IFRS

First time adoption of IFRS

The transition date to IFRS for the Group is 1 April 2004 and the end of the
last period presented under previous GAAP (UK GAAP) shall be 31 March 2005. The
rules for first-time adoption of IFRS are set out in IFRS 1 'First-time adoption
of International Financial Reporting Standards'. These transition rules have
been applied to the amounts reported previously under UK GAAP to arrive at the
IFRS financial statements. While the applicable Standards and Interpretations in
force at the first reporting date, 1 April 2004, have been applied to financial
statements from that date, the Group has availed itself of certain exemptions
given under IFRS 1 in application of particular Standards to prior periods.
These exemptions are:

   • The Group has elected to adopt IAS 32 and IAS 39 with effect from 1
     April 2005 with no re-statement of comparative information for 2004-05.
   • The Group will not restate business combinations that occurred before
     the transition date in order to comply with IFRS 3 'Business Combinations'.
   • The Group will set the cumulative translation differences arising on
     translation of net assets of foreign operations to zero at the date of
     transition. In the event that a foreign subsidiary is disposed of then
     cumulative translation differences arising after the transition date will 
     be taken to the profit and loss account as part of gains and losses that 
     arise on disposal.
   • The Group has recognised in full all actuarial gains and losses on
     defined benefit pension schemes and similar benefits as at the date of
     transition to IFRS.

The following Standards have been adopted early by the Group:

   • IFRS 6 'Exploration for and Evaluation of Mineral Resources' is
     applicable to the Group from 1 April 2006. However, the Group has adopted
     this standard early from 1 April 2004.
   • IFRS 2 'Share based payments' has been adopted early by the Group from 1
     April 2004, for its grant of equity instruments to its employees.

All other Standards and Interpretations issued up to 31 March 2005 have been
applied in the preparation of the financial statements for year the ended 31
March 2005 and the interim accounts for the six months ended 30 September 2004.

Principal Accounting Policies

Basis of preparation

The consolidated financial statements have been prepared on a historical cost
basis, except for derivative financial instruments and available-for-sale
financial assets that have been measured at fair value. The carrying values of
recognised assets and liabilities that are hedged are adjusted to record changes
in the fair values attributable to the risks that are being hedged. The
consolidated financial statements are presented in US dollars and all values are
rounded to the nearest million except where otherwise indicated.

Basis of Consolidation

The consolidated financial information incorporates the results of the Company
and all its subsidiaries, being the companies that it controls. This control is
normally evidenced when the Group is able to govern a company's financial and
operating policies so as to benefit from its activities or where the Group owns,
either directly or indirectly, the majority of a company's equity voting rights
unless in exceptional circumstances it can be demonstrated that ownership does
not constitute control.

The financial statements of subsidiaries are prepared for the same reporting
year as the parent company, using consistent accounting policies. Adjustments
are made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profits arising
from intra-group transactions, have been eliminated in full. Unrealised losses
are eliminated unless costs cannot be recovered.

Acquisitions and Disposals

The results of subsidiaries acquired or sold during the year are consolidated
for the periods from, or to, the date on which control passed. Acquisitions are
accounted for under the acquisition method.

Excess purchase consideration, being the difference between the fair value of
the consideration given and the fair value of the identifiable assets and
liabilities acquired, is capitalised as an asset on the balance sheet.

To the extent that such excess purchase consideration relates to the acquisition
of mining properties and leases, that amount is capitalised within tangible
fixed assets as 'mining properties and leases'. Other excess purchase
consideration relating to the acquisition of subsidiaries is capitalised as
'goodwill' within intangible fixed assets. Goodwill arising on acquisitions is
reviewed for impairment annually.

Goodwill relating to associates is included within the carrying value of the
associate. The unamortised balance is reviewed for impairment on a annual basis.

Where the fair values of the identifiable assets and liabilities exceed the cost
of acquisition, the surplus (negative goodwill) is credited to the income
statement in the period of acquisition.

Goodwill arising on acquisitions before 1 April 2004, the date of transition to
IFRS, has been retained at the previous UK GAAP amounts as at that date, subject
to being tested for impairment at that date.

Where it is not possible to complete the determination of fair values by the
date on which the first post-acquisition financial statements are approved, a
provisional assessment of fair values is made and any adjustments required to
those provisional fair values, and the corresponding adjustments to purchased
goodwill, are finalised within 12 months of the acquisition date.

Internally generated goodwill is not recognised.

Investments in Associates

In the consolidated financial information, investments in associates are
accounted for using the equity method. An associate is an entity over which the
Group exercises significant influence and normally owns between 20% and 50% of
the voting equity but is neither a subsidiary nor a joint venture. Goodwill
arising on the acquisition of associates is accounted for in accordance with the
policy set out above and is included in the carrying value of investments in
associate.

The consolidated income statement includes the Group's share of associates
results. The investment is initially recorded at the cost to the Group in the
consolidated Balance Sheet and then, in subsequent periods, the carrying value
of investment is adjusted to reflect the Group's share of the associate's
profits or losses and for impairment of goodwill and any other changes to the
associate's net assets.

Other Investments

Fixed asset investments, other than investments in subsidiaries and associates,
are recorded at cost less provision for impairment.

Property, plant and equipment - Mining Properties and Leases

Exploration and Evaluation expenditure is written off in the year in which it is 
incurred.

The costs of mining properties and leases, which include the costs of acquiring
and developing mining properties and mineral rights, are capitalised as tangible
fixed assets under the heading 'Mining Properties and Leases' in the year in
which they are incurred.

When a decision is taken that a mining property is viable for commercial
production, all further pre-production primary development expenditure other
than land, buildings, plant and equipment, etc is capitalised as part of the
cost of the mining property until the mining property is capable of commercial
production. Capitalisation of pre-production expenditure ceases when the mining
property is capable of commercial production. From that point, capitalised
mining properties and lease costs are amortised on a unit-of-production basis
over the total estimated remaining commercial reserves of each property or group
of properties.

Stripping costs/secondary development expenditure incurred during the production
stage of operations of an ore body are charged to the income statement
immediately.

Exploration and Evaluation assets acquired are recognised as assets at their
cost of acquisition subject to meeting the commercial production criteria
mentioned above and are subject to impairment review.

In circumstances where a property is abandoned, the cumulative capitalised costs
relating to the property are written off in the period.

Commercial reserves are proved and probable reserves. Changes in the commercial
reserves affecting unit of production calculations are dealt with prospectively
over the revised remaining reserves.

Other property, plant and equipment

The initial cost of property, plant and equipment comprises its purchase price,
including import duties and non-refundable purchase taxes, and any directly
attributable costs of bringing an asset to working condition and location for
its intended use. Expenditure incurred after the fixed assets have been put into
operation, such as repairs and maintenance, are normally charged to the profit
and loss account in the period in which the costs are incurred. Major shut-down
and overhaul expenditure is capitalised.

Assets in the Course of Construction

Assets in the course of construction are capitalised in the capital
work-in-progress account. Upon completion, the cost of construction is
transferred to the appropriate category of tangible fixed assets. Costs
associated with the commissioning of an asset are capitalised where the asset is
available for use but incapable of operating at normal levels until a period of
commissioning has been completed.

Depreciation

Mining properties and other assets in the course of development or construction,
and freehold land, are not depreciated. Capitalised mining properties and lease
costs are amortised once commercial production commences, as described in
'Property, plant and equipment - Mining Properties and Leases'. Leasehold land
and buildings are depreciated over the period of the lease.

Other buildings, plant and equipment, office equipment and fixtures, and motor
vehicles are stated at cost less accumulated depreciation and any provision for
impairment. Depreciation commences when the assets are ready for their intended
use. Depreciation is provided at rates calculated to write off the cost, less
estimated residual value, of each asset on a straight-line basis over its
expected useful life, as follows:

Buildings:                 
    Operations                           30 years
    Administration                       50 years
Plant and equipment                 10 - 20 years
Office equipment and fixtures        3 - 20 years
Motor vehicles                       9 - 11 years

Major overhaul costs are depreciated over the estimated life of the economic
benefit derived from the overhaul. The carrying amount of the remaining previous
overhaul cost is charged to income statement if the next overhaul is undertaken
earlier than the previously estimated life of the economic benefit.

Property, plant and equipment held for sale or which is part of a disposal group
held for sale is not depreciated. Property, plant and equipment held for sale is
carried at the lower of its carrying value and fair value less disposal cost and
is presented separately on the face of the balance sheet.

Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in
its present condition. Management must be committed to the sale which should be
expected to qualify for recognition as a completed sale within one year from the
date of classification.

Impairment

The carrying amounts of property, plant and equipment, investments in
associates, other investments and goodwill are reviewed for impairment if events
or changes in circumstances indicate that the carrying value of an asset may not
be recoverable. If there are indicators of impairment, an assessment is made to
determine whether the asset's carrying value exceeds its recoverable amount.
Whenever the carrying value of an asset exceeds its recoverable amount, an
impairment loss is charged to the income statement.

For mining properties and leases, investments in associates, other investments
and goodwill, the recoverable amount of an asset is determined on the basis of
its value in use, being the present value of estimated future cash flows
expected to arise from the continuing use of an asset and from its disposal at
the end of its useful life, discounted using a market-based, risk-adjusted,
discount rate.

For other property, plant and equipment, the recoverable amount of an asset is
also considered on the basis of its net realisable value, where it is possible
to assess the amount that could be obtained from the sale of an asset in an
arm's length transaction, less the cost of disposal.

Recoverable amounts are estimated for individual assets or, if this is not
possible, for the relevant cash-generating unit.

Government Grants

Government grants relating to tangible fixed assets are treated as deferred
income and released to the income statement over the expected useful lives of
the assets concerned. Other grants are credited to the income statement as the
related expenditure is incurred.

Stocks

Stocks and work-in-progress are stated at the lower of cost and net realisable
value, less any provision for obsolescence.

Cost is determined on the following bases:

• purchased concentrate is recorded at cost on a first-in, first-out ('FIFO')
  basis; all other materials including stores and spares are valued on weighted
  average basis;

• finished products are valued at raw material cost plus costs of conversion,
  comprising labour costs and an attributable proportion of manufacturing
  overheads based on normal levels of activity; and

• by-products and scrap are valued at net realisable value.

Net realisable value is determined based on estimated selling price, less
further costs expected to be incurred to completion and disposal.

Taxation

Current tax is provided at amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date.

Deferred income tax is provided, using the balance sheet method, on all
temporary differences at the balance sheet date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes.
Exceptions to this principle are:

   • tax payable on the future remittance of the past earnings of
     subsidiaries, associates and joint ventures except where the timing of the
     reversal of the temporary differences can be controlled and it is probable
     that the temporary differences will not reverse in the foreseeable future;
   • deferred income tax is not recognised on goodwill impairment which is
     not deductible for tax purposes or on the initial recognition of an asset or
     liability in a transaction that is not a business combination and, at the
     time of the transaction, affects neither the accounting profit nor taxable
     profit or loss; and
   • deferred tax assets are recognised only to the extent that it is more
     likely than not that they will be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date. Income tax relating to items
recognised directly in equity are recognised in equity and not in the income
statement.

Pensions

The Group operates or participates in a number of pension schemes, the assets of
which are (where funded) held in separately administered funds. The cost of
providing benefits under the plans is determined each year separately for each
plan using the projected unit credit method by independent qualified actuaries.

Actuarial gains and losses arising in the year are recognised in full in the
income statement of the year.

For defined contribution schemes, the amount charged to the income statement in
respect of pension costs and other post-retirement benefits is the contributions
payable in the year.

Employee Share Awards

Certain employees (including directors) of the Group receive part of their
remuneration in the form of share-based payment transactions, whereby employees
render services in exchange for shares or rights over shares ('equity-settled
transactions').

The cost of equity-settled transactions with employees is measured at fair value
at the date at which they are granted. The fair value of share awards with
market-related vesting conditions has been determined by an external valuer and
the fair value is expensed on a straight-line basis over the vesting period
based on the Group's estimates of shares that will eventually vest. The estimate
of the number of awards likely to vest is reviewed at each balance sheet date up
to the vesting date at which point the estimate is adjusted to reflect the
current expectations. No adjustment is made after the vesting date even if the
awards are forfeited or not exercised.

Provisions for Liabilities and Charges

Provisions are recognised when the Group has a present obligation (legal or
constructive), as a result of past events, and it is probable that an outflow of
resources, that can be reliably estimated, will be required to settle such an
obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows to net present value
using an appropriate pre-tax discount rate that reflects current market
assessments of the time value of money and, where appropriate, the risks
specific to the liability. Unwinding of the discount is recognised in the income
statement as a borrowing cost. Provisions are reviewed at each balance sheet
date and are adjusted to reflect the current best estimate.

Restoration, Rehabilitation and Environmental Costs

An obligation to incur restoration, rehabilitation and environmental costs
arises when environmental disturbance is caused by the development or ongoing
production of a mine. Costs arising from the installation of plant and other
site preparation work, discounted to net present value, are provided for and a
corresponding amount is capitalised at the start of each project, as soon as the
obligation to incur such costs arises. These costs' are charged to the income
statement over the life of the operation through the depreciation of the asset
and the unwinding of the discount on the provision. The cost estimates are
reviewed periodically and are adjusted to reflect known developments which may
have an impact on the cost estimates or life of operations. The cost of the
related asset is adjusted for changes in the provision due to factors such as
updated cost estimates, changes to lives of operations, new disturbance and
revisions to discount rates. The adjusted cost of the asset is depreciated
prospectively over the lives of the assets to which they relate. The unwinding
of the discount is shown as a financing cost in the income statement.

Costs for restoration of subsequent site damage which is caused on an ongoing
basis during production are provided for at their net present values and charged
to the profit and loss account as extraction progresses. Where the costs of site
restoration are not anticipated to be material, they are expensed as incurred.

Revenue Recognition

Turnover represents the net invoice value of goods and services provided to
third parties after deducting discounts, volume rebates, outgoing sales taxes
and duties, and is recognised usually when all significant risks and rewards of
ownership of the asset sold are transferred to the customer and the commodity
has been delivered to the shipping agent. Revenues from sale of material
by-products are included in turnover.

Dividend income is recognised when the shareholders' rights to receive payment
is established.

Interest income is recognised on an accrual basis in the income statement.

Leases

Rentals under operating leases are charged on a straight-line basis over the
lease term, even if the payments are not made on such a basis.

Foreign Currency Translation

In the financial statements of individual group companies, transactions in
currencies other than the local functional currency are translated into local
currency at the exchange rates ruling at the date of transaction. Monetary
assets and liabilities denominated in other currencies are translated into local
currency at exchange rates prevailing on the balance sheet date.

For the purposes of consolidation, the income statement items of those entities
for whom the US dollar is not the reporting currency are translated into US
dollars at the average rates of exchange during the period. The related balance
sheets are translated at the rates ruling at the balance sheet date. Exchange
differences arising on translation of the opening net assets and results of such
operations, and on foreign currency borrowings to the extent that they hedge the
Group's investment in such operations, are reported in the consolidated
statement of total recognised income and expense. All other exchange differences
are included in the income statement.

On disposal of a foreign entity, the deferred cumulative exchange differences
recognised in equity relating to that particular foreign operation would be
recognised in the income statement.

Borrowing costs

Interest on borrowings directly relating to the financing of a qualifying
capital project under construction is capitalised and added to the project cost
during construction until such time the assets are substantially ready for their
intended use i.e. when they are capable of commercial production. Where funds
are borrowed specifically to finance a project, the amount capitalised
represents the actual borrowing costs incurred. Where the funds used to finance
a project form part of general borrowings, the amount capitalised is calculated
using a weighted average of rates applicable to relevant general borrowings of
the Group during the period.

All other borrowing costs are recognised in the income statement in the period
in which they are incurred.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand
and short-term deposits with banks and short-term, highly liquid investments
that are readily convertible into cash and which are subject to insignificant
risk of changes in the principal amount.

Derivative Financial Instruments

In order to hedge its exposure to foreign exchange, interest rate and commodity
price risks, the Group enters into forward, option, swap contracts and other
derivative financial instruments. The Group does not hold nor issue derivative
financial instruments for speculative purposes.

The Group uses the derivative financial instruments described above to manage
exposure to foreign exchange, interest rate and commodity price risks.

The policy for accounting for financial instruments from 1 April 2005 is as
follows:

Derivative financial instruments are initially recorded at their fair value on
the date of the derivative transaction and are re-measured at their fair value
at subsequent balance sheet dates.

Changes in the fair value of derivatives that are designated and qualify as fair
value hedges are recorded in the income statement. The hedged item is recorded
at fair value and any gain or loss is recorded in the income statement and is
offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash
flow hedges are recorded in equity. Amounts deferred to equity are recycled in
the income statement in the periods when the hedged item is recognised in the
income statement.

Derivative financial instruments that do not qualify for hedge accounting are
marked to market at the balance sheet date and gains or losses are recognised in
the income statement immediately.

Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting. At that
time, any cumulative gain or loss on the hedging instrument recognised in equity
is kept in equity until the forecast transaction occurs. If a hedged transaction
is no longer expected to occur, the net cumulative gain or loss recognised in
equity is transferred to net profit or loss for the year.

Derivatives embedded in other financial instruments or other host contracts are
treated as separate derivatives when their risks and characteristics are not
closely related to those of host contracts and the host contracts are not
carried at fair value with unrealised gains or losses reported in the income
statement.

4.    Group financial information restated for IFRS
4.1.1 Group Income Statement
Year ended 31 March 2005 (excluding IAS 32/39)
                                                                                   US$ million
----------------------------------------------------------------------------------------------
                                                   31 March 2005                 31 March 2005
                                                         UK GAAP    Adjustments           IFRS
----------------------------------------------------------------------------------------------
Revenue
Continuing operations                                    1,635.0             -         1,635.0
Acquisitions                                               249.2             -           249.2
----------------------------------------------------------------------------------------------
Group Revenue                                            1,884.2             -         1,884.2
Cost of sales                                           (1,414.8)         (0.9)       (1,415.7)
----------------------------------------------------------------------------------------------
Gross profit                                               469.4          (0.9)          468.5
----------------------------------------------------------------------------------------------

Other operating income                                      25.9             -            25.9
Distribution costs                                         (51.5)            -           (51.5)
Administrative Expenses                                    (90.1)         (2.5)          (92.6)
Operating exceptional items                                (21.9)            -           (21.9)
----------------------------------------------------------------------------------------------
Operating profit                                           331.8          (3.4)          328.4
----------------------------------------------------------------------------------------------
Investment revenues                                         41.3          (3.8)           37.5
Finance costs                                              (37.7)          7.6           (30.1)
Share of loss of associate                                  (2.7)         (2.9)           (5.6)
Non-operating exceptional item                              (0.4)         56.5            56.1
Profit before taxation                                     332.3          54.0           386.3
Income tax expense                                         (97.6)         10.6           (87.0)
----------------------------------------------------------------------------------------------
Profit for the year                                        234.7          64.6           299.3
----------------------------------------------------------------------------------------------

Attributable to:
Equity holders of the parent                               120.0          58.9           178.9
Minority interest                                          114.7           5.7           120.4
----------------------------------------------------------------------------------------------
                                                           234.7          64.6           299.3
----------------------------------------------------------------------------------------------

Basic earnings per ordinary share (US Cents)                41.9          20.6            62.5
Diluted earnings per ordinary share (US Cents)              41.0          20.5            61.5


4.1.2 Group Cash Flow Statement
For year ended 31 March 2005 (excluding IAS 32/39)

                                                                                   US$ million
                                                         UK GAAP    Adjustments           IFRS
----------------------------------------------------------------------------------------------
Operating activities
Profit before taxation                                     332.3          54.0           386.3
Adjustments for:
Depreciation                                               101.7           2.1           103.8
Goodwill amortisation                                       (0.4)          0.4               -
Investment income                                          (41.3)          3.8           (37.5)
Interest expense                                            37.7          (7.6)           30.1
Other non-cash items                                        28.3         (55.6)          (27.3)
Others                                                       3.1           2.9             6.0
----------------------------------------------------------------------------------------------
                                                           461.4             -           461.4
Increase in trade and other receivables                    (79.1)            -           (79.1)
Increase in Inventories                                    (61.0)            -           (61.0)
Decrease in trade payables                                 (18.1)            -           (18.1)
----------------------------------------------------------------------------------------------
Cash generated from operations                             303.2             -           303.2
Interest / investment income received                       60.6             -            60.6
Interest paid                                              (64.1)            -           (64.1)
Income taxes paid                                          (65.8)            -           (65.8)
Dividends paid                                             (15.8)            -           (15.8)
----------------------------------------------------------------------------------------------
Net cash from operating activities                         218.1             -           218.1
----------------------------------------------------------------------------------------------

Cash flows from investing activities
Purchase of subsidiary company                             (28.3)            -           (28.3)
Payment to acquire tangible fixed assets                  (535.3)            -          (535.3)
Proceeds from sale of fixed assets                          14.1             -            14.1
Dividends paid to minority interest of 
subsidiary companies                                        (7.7)            -            (7.7)
Purchase of current asset investments                     (193.4)            -          (193.4)
Investment in associate                                     (6.2)            -            (6.2)
Buyback of shares from minorities                           (2.3)            -            (2.3)
Cash acquired with subsidiary                               41.2             -            41.2
Other movements                                                -          29.4            29.4
----------------------------------------------------------------------------------------------
Net cash used in investing activities                     (717.9)         29.4          (688.5)
----------------------------------------------------------------------------------------------

Cash flows from financing activities
Issue of ordinary shares                                     0.1             -             0.1
Decrease in short term borrowings                          (96.6)            -           (96.6)
Increase in long term borrowings                           607.0             -           607.0
Issue of shares to subsidiary undertakings
to Minority interests                                        1.7             -             1.7
----------------------------------------------------------------------------------------------
Net cash from financing activities                         512.2             -           512.2
Net increase in cash and cash equivalents                   12.4          29.4            41.8
----------------------------------------------------------------------------------------------
Exchange Difference                                         (3.5)            -            (3.5)
Cash and cash equivalents at beginning of period            52.7       1,094.6         1,147.3
----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                  61.6       1,124.0         1,185.6
==============================================================================================

4.1.3 Group Balance Sheet
As at 31 March 2005 (excluding IAS 32/39)

                           
                                                                                   US$ million
                                                         UK GAAP    Adjustments           IFRS
----------------------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill                                                    10.8           1.4            12.2
Negative goodwill                                          (63.4)         63.4               -
Property, plant and equipment                            2,275.0          13.6         2,288.6
Investment in associate                                      3.3             -             3.3
Other investments                                           24.8             -            24.8
Other non-current assets                                       -          34.6            34.6
Deferred tax asset                                          90.0             -            90.0
----------------------------------------------------------------------------------------------
                                                         2,340.5         113.0         2,453.5
----------------------------------------------------------------------------------------------
Current assets
Inventories                                                336.3           1.4           337.7
Trade and other receivables                                374.2         (34.6)          339.6
Current asset investments                                1,386.0      (1,124.0)          262.0
Cash and cash equivalents                                   61.6       1,124.0         1,185.6
----------------------------------------------------------------------------------------------
                                                         2,158.1         (33.2)        2,124.9
----------------------------------------------------------------------------------------------
TOTAL ASSETS                                             4,498.6          79.8         4,578.4
----------------------------------------------------------------------------------------------
Current liabilities
Short term loans                                           194.7             -           194.7
Convertible loan notes                                      23.7             -            23.7
Other current liabilities                                  708.1         (33.1)          675.0
Provisions                                                  37.0             -            37.0
Income tax payable                                          15.1             -            15.1
----------------------------------------------------------------------------------------------
                                                           978.6         (33.1)          945.5
----------------------------------------------------------------------------------------------
Net current assets/(liabilities)                         1,179.5          (0.1)        1,179.4
----------------------------------------------------------------------------------------------
Non-current liabilities
Creditors falling due after more than one year           1,344.7             -         1,344.7
Deferred tax liabilities                                   146.3          88.6           234.9
Provisions                                                 240.9           6.3           247.2
Non equity minority interests                               59.4             -            59.4
----------------------------------------------------------------------------------------------
                                                         1,791.3          94.9         1,886.2
----------------------------------------------------------------------------------------------
Total liabilities                                        2,769.9          61.8         2,831.7
----------------------------------------------------------------------------------------------
Net Assets                                               1,728.7          18.0         1,746.7
==============================================================================================
Equity
--------
Share capital                                               28.7             -            28.7
Shares to be issued                                          0.9          (0.9)              -
Share based payment reserve                                    -           2.5             2.5
Share premium account                                       18.6             -            18.6
Other reserves                                              31.3          12.6            43.9
Profit and loss Account                                    967.6          49.2         1,016.8
----------------------------------------------------------------------------------------------
Equity attributable to equity holders of the parent      1,047.1          63.4         1,110.5
Minority interest                                          681.6         (45.4)          636.2
----------------------------------------------------------------------------------------------
Total Equity                                             1,728.7          18.0         1,746.7
==============================================================================================

4.1.4 Statement of changes in equity under IFRS
Year ended 31 March 2005          
                                                                                             US$ million
                                                 Shares 
                                                 based                               Profit        
                                 Share           payment    Share        Other     and Loss 
                                 Capital         reserve    Premium   reserves*    Reserves        Total
--------------------------------------------------------------------------------------------------------
As at 1 April 2004                  28.6               -       18.6      12.7        919.9         979.8
Profit for the year                    -               -          -         -        178.9         178.9
Loss on reduction of 
minority interest                      -               -          -         -        (32.4)        (32.4)
CTA reserve                            -               -          -      13.2            -          13.2
Transfers                              -               -          -      18.0        (18.0)            -
Shares issued under reward plan      0.1               -          -         -            -           0.1
Share based payment reserve            -             2.5          -         -            -           2.5
Dividends paid                         -               -          -         -        (31.6)        (31.6)
--------------------------------------------------------------------------------------------------------
As at 31 March 2005                 28.7             2.5       18.6      43.9      1,016.8       1,110.5
========================================================================================================

*As at 31 March 2005, other reserves comprise merger reserve of US$4.4 million
 and the general reserves established in the statutory accounts of the Group's
 Indian subsidiaries. Under Indian law, a general reserve is created through a
 year on year transfer from the profit and loss account. The amount transferred
 is 5% of the profits for the year for each Indian company as stated in Indian
 GAAP. The purpose of these transfers is to ensure that distributions in a year
 are less than the total distributable results for that year. This general
 reserve becomes fully distributable in future periods.

IAS 21 - Recycling of consolidated currency translation adjustments from non US
dollar operations on their disposal
IAS 21 requires cumulative currency translation adjustments ('CTA') arising on
translation of a foreign operation to be recycled through the income statement
when that entity is disposed of. Currently, under UK GAAP, the CTA is not
included in the gain or loss calculated if that operation is sold. In accordance
with IFRS 1, the Group has taken the exemption from recycling foreign currency
gains or losses arising before 1 January 2004. The translation adjustment
arising during the year is US$13.3 million, being included in other reserves.


4.1.5 Tax reconciliation under IFRS for year ended 31 March 2005
--------------------------------------------------------------------------------
                                                                           IFRS
                                                                    US$ million
--------------------------------------------------------------------------------
Profit before tax                                                         386.3
--------------------------------------------------------------------------------
At Indian statutory income tax rate of 36.59%                             141.7
Accelerated capital allowances                                              1.2
Utilisation of tax losses                                                  (3.0)
Disallowable expenses                                                      12.4
Non-taxable income                                                        (26.5)
Impact of tax rate differences                                            (15.4)
Tax holiday and similar exemptions                                        (27.5)
Dividend distribution tax on overseas subsidiaries                          3.0
Minimum alternative tax                                                     1.1
--------------------------------------------------------------------------------
At effective income tax rate of 22.5%                                      87.0
================================================================================

4.1.6 EBITDA Reconciliation under UK GAAP and IFRS for year ending 31 March 2005
                                                                     
                                                                        2004-05
                                                                      $ million
--------------------------------------------------------------------------------

EBITDA as per UK GAAP                                                     455.0
IAS 16- Overhaul expenses capitalised                                       1.9
IAS 2- Share based payment                                                 (2.5)
IAS 2 - Inventory Valuation                                                (0.4)
--------------------------------------------------------------------------------
EBITDA as per IFRS                                                        454.0
--------------------------------------------------------------------------------
EBITDA represents operating profit before exceptional items plus depreciation
and amortisation

4.1.7 Reconciliation of underlying (1) profit for the year under UK GAAP to IFRS
for year ended 31 March 2005
                                                                                   US$ million
                                                         UK GAAP    Adjustments           IFRS
----------------------------------------------------------------------------------------------
Equity shareholders share of profit for the 
financial year                                             120.0          58.9          178.9
Operating exceptional items                                 21.9             -           21.9
Tax effect on operating exceptional items                   (1.5)            -           (1.5)
Minority interest effect of operating exceptional items     (3.1)            -           (3.1)

Non-operating exceptional items                              0.4         (56.5)         (56.1)
Tax effect on non-operating exceptional items               (0.1)            -           (0.1)
Minority interest effect of non-operating
exceptional items                                            0.1             -            0.1
----------------------------------------------------------------------------------------------
Underlying profit as per IFRS                              137.7           2.4          140.1
----------------------------------------------------------------------------------------------

(1) Underlying Profit excludes the effects of exceptional items and their tax 
and minority interest impact.

4.1.8 Notes to financial information
Segment Analysis
Year ended 31 March 2005

Business segments

The following tables present revenue and profit information and certain asset
and liability information regarding the Group's business segments for the year
ended 31 March 2005.
                                                                     ($ million)
     Year ended 31 March 2005                                                                      Total 
                                         Continuing Operations                                Operations
                                Aluminium       Copper       Zinc       Other    Elimination
-----------------------------------------------------------------------------------------------------------
Revenue
Sales to external customers        281.7       1,014.7      486.4       101.4             -      1,884.2
Inter-segment sales                 26.3         193.0          -           -        (219.3)           -
-----------------------------------------------------------------------------------------------------------
Segment revenue                    308.0       1,207.7      486.4       101.4        (219.3)     1,884.2
===========================================================================================================
Result
Operating profit                    57.4         105.0      189.2       (23.2)                     328.4
Non-operating exceptional items                                                                     56.1
                                                                                                -----------
Operating profit after exceptional                                                                 384.5
Net finance income                                                                                   7.4 
Share of associate's loss                                                                           (5.6)
                                                                                                -----------
Profit before taxation                                                                             386.3
                                                                                                -----------
Income tax expense                                                                                 (87.0)
                                                                                                -----------
Profit for the year                                                                                299.3
                                                                                                ===========

Assets and liabilities
  Segment assets                   965.9       1,703.2      877.5       712.0             -      4,258.6
  Investment in an associate                                                                         3.3
  Unallocated assets                                                                               316.5
  Total assets                                                                                   4,578.4
  Segment liabilities              694.7       1,081.2      337.8       552.4             -      2,666.1
  Unallocated liabilities                                                                          165.6
  Total liabilities                                                                              2,831.7

Other segment information
Capital expenditure:
Tangible fixed assets              438.3          49.5      245.8        70.7             -        804.3
Depreciation                        18.3          55.9       28.8         0.8             -        103.8
Impairment losses                      -             -          -        17.8             -         17.8


Operating exceptional Items
                                                                        2004-05
                                                                      $ million
--------------------------------------------------------------------------------
Restructuring and redundancies                                            (4.1)
Impairment of assets                                                     (17.8)
--------------------------------------------------------------------------------
                                                                         (21.9)
--------------------------------------------------------------------------------

Non-operating exceptional Items
                                                                        2004-05
                                                                      $ million
--------------------------------------------------------------------------------
Loss on sale of assets                                                    (0.4)
Release of negative goodwill                                              56.5
--------------------------------------------------------------------------------
                                                                          56.1
--------------------------------------------------------------------------------

4.2 Group financial information for six months ended 30 September 2004

4.2.1 Group Income Statement
Six months ended 30 September 2004
                                                                    US$ million
--------------------------------------------------------------------------------
                                                UK GAAP   Adjustments     IFRS
--------------------------------------------------------------------------------
Revenue
Group Revenue                                     677.4             -    677.4
Cost of sales                                    (507.5)          1.0   (506.5)
--------------------------------------------------------------------------------
Gross profit                                      169.9           1.0    170.9
--------------------------------------------------------------------------------

Other operating income                              9.7             -      9.7
Distribution costs                                (18.7)            -    (18.7)
Administrative Expenses                           (38.2)         (1.8)   (40.0)
Operating exceptional items                        (2.6)            -     (2.6)
--------------------------------------------------------------------------------
Operating profit                                  120.1          (0.8)   119.3
--------------------------------------------------------------------------------
Investment income                                  20.3          (3.2)    17.1
Finance costs                                     (28.9)          4.8    (24.1)
Share of loss of associate                         (0.8)         (1.0)    (1.8)
Non-operating exceptional item                      1.4             -      1.4
--------------------------------------------------------------------------------
Profit before taxation                            112.1          (0.2)   111.9
Income tax expense                                (41.5)          0.2    (41.3)
--------------------------------------------------------------------------------
Profit for the period                              70.6             -     70.6
================================================================================

Attributable to:
Equity holders of the parent                       34.9          (0.6)    34.3
Minority interest                                  35.7           0.6     36.3
--------------------------------------------------------------------------------
                                                   70.6             -     70.6
================================================================================

Basic earnings per ordinary share (US Cents)       12.2          (0.2)    12.0
Diluted earnings per ordinary share (US Cents)     11.6          (0.2)    11.4
================================================================================

4.2.2 Group Cash Flow Statement
For the six months ended 30 September 2004
                                                                   US$ million
                 Particulars                    UK GAAP    Adjustment     IFRS
--------------------------------------------------------------------------------
Operating activities
Profit before taxation                            112.1         (0.2)    111.9
Adjustments for:
Depreciation                                       37.1          1.0      38.1
Goodwill amortisation                               0.2         (0.2)        -
Investment income                                 (20.3)         3.2     (17.1)
Interest expense                                   28.9         (4.8)     24.1
Others                                             (0.6)        (1.0)     (1.6)
Other non-cash items                                0.2          2.0       2.2
--------------------------------------------------------------------------------
                                                  157.6            -     157.6
Increase in trade and other receivables           (38.2)           -     (38.2)
Increase in Inventories                           (79.6)           -     (79.6)
Increase in trade payables                         57.0            -      57.0
--------------------------------------------------------------------------------
Cash generated from operations                     96.8            -      96.8
Interest / investment income received              33.1            -      33.1
Interest paid                                     (31.8)           -     (31.8)
Income taxes paid                                 (15.0)           -     (15.0)
Dividends paid                                    (15.8)           -     (15.8)
--------------------------------------------------------------------------------
Net cash from operating activities                 67.3            -      67.3
--------------------------------------------------------------------------------

Cash flows from investing activities
Purchase of additional holding in subsidiary
companies                                          (4.4)           -      (4.4)
Payment to acquire tangible fixed assets         (270.2)           -    (270.2)
Proceeds from sale of fixed assets                  1.6            -       1.6
Dividends paid to minority interest of
subsidiary companies                               (1.7)           -      (1.7)
Sale of current asset investments                   0.2            -       0.2
Purchase of fixed asset investment                 (0.2)           -      (0.2)
Sale of current asset investments                 207.1            -     207.1
Other movements                                       -       (281.6)   (281.6)
--------------------------------------------------------------------------------
Net cash used in investing activities             (67.6)      (281.6)   (349.2)
--------------------------------------------------------------------------------

Cash flows from financing activities
Proceeds from rights issue of subsidiary           
company                                             0.6            -       0.6
Decrease in short term borrowings                (195.8)           -    (195.8)
Increase in long term borrowings                  169.0            -     169.0
--------------------------------------------------------------------------------
Net cash used in financing activities             (26.2)           -     (26.2)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net decrease in cash and cash equivalents         (26.4)      (281.6)   (308.0)
Exch Diff                                          (1.1)        (0.1)     (1.2)
Cash and cash equivalents at beginning of          52.7      1,094.6   1,147.3
period      
--------------------------------------------------------------------------------                                    
Cash and cash equivalents at end of period         25.2        812.9     838.1
================================================================================

4.2.3 Group Balance Sheet
As at 30 September 2004
                         
                                                                   US$ million
                                                UK GAAP    Adjustment     IFRS
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill                                          11.2        0.3        11.5
Negative goodwill                                 (7.9)       7.9           -
Property, plant and equipment                  1,520.2       13.4     1,533.6
Investment in associate                            5.1          -         5.1
Other investments                                 23.5          -        23.5
Other non-current assets                             -       23.4        23.4
--------------------------------------------------------------------------------
                                               1,552.1       45.0     1,597.1
--------------------------------------------------------------------------------
Current assets
Inventories                                      263.6        1.6       265.2
Trade and other receivables                      265.3      (23.4)      241.9
Current asset investments                        945.8     (812.9)      132.9
Cash and cash equivalents                         25.2      812.9       838.1
--------------------------------------------------------------------------------
                                               1,499.9      (21.8)    1,478.1
--------------------------------------------------------------------------------
TOTAL ASSETS                                   3,052.0       23.2     3,075.2
--------------------------------------------------------------------------------
Current liabilities
Short term loans                                   198          -       198.0
Convertible loan notes                            49.5          -        49.5
Other current liabilities                        599.6      (15.8)      583.8
Provisions                                        11.6          -        11.6
Income tax payable                                23.6          -        23.6
--------------------------------------------------------------------------------
                                                 882.3      (15.8)      866.5
--------------------------------------------------------------------------------
Net current assets/(liabilities)                 617.6       (6.0)      611.6
--------------------------------------------------------------------------------
Non-current liabilities
Creditors falling due after more than one year   621.9          -       621.9
Deferred tax liabilities                         131.3       94.8       226.1
Provisions                                        16.6        5.4        22.0
--------------------------------------------------------------------------------
                                                 769.8      100.2       870.0
--------------------------------------------------------------------------------
Total liabilities                              1,652.1       84.4     1,736.5
--------------------------------------------------------------------------------
Net assets/(liabilities)                       1,399.9      (61.2)    1,338.7
================================================================================

Equity
Share capital                                     28.6          -        28.6
Share premium account                             18.6          -        18.6
Other reserves                                    12.8          -        12.8
Profit and loss Account                          896.2       (8.9)      887.3
--------------------------------------------------------------------------------
Equity attributable to equity holders of the
parent                                           956.2       (8.9)      947.3
Minority interest                                443.7      (52.3)      391.4
--------------------------------------------------------------------------------
Total Equity                                   1,399.9      (61.2)    1,338.7
================================================================================

4.2.4 Statement of changes in equity under IFRS Period ended 30 September 2004
                                                                                                US$ million
                                      Share Cap    Share Premium    Other reserves    P&L reserves    Total
-----------------------------------------------------------------------------------------------------------
As at 1 April 2004                        28.6             18.6              12.7          919.9     979.8
Profit for the period                        -                -                 -           34.3      34.3
Loss on reduction of minority interest       -                -                 -          (19.5)    (19.5)
CTA reserve                                                                                (33.4)    (33.4)
Foreign exchange differences                 -                -               0.1              -       0.1
Dividend paid                                -                -                 -          (15.8)    (15.8)
Reward plan and LTIP credited to reserves    -                -                 -            1.8       1.8
-----------------------------------------------------------------------------------------------------------
As at 30 September 2004                   28.6             18.6              12.8          887.3     947.3
==========================================================================================================

4.2.5 EBITDA(1) Reconciliation from UK GAAP to IFRS for period ending 
      30 September 2004

                                                                        2004-05
                                                                      $ million
--------------------------------------------------------------------------------

EBITDA under UK GAAP                                                     160.0
IAS 16- Overhaul expenses capitalised                                      1.5
IAS 2- Share based payment                                                (1.7)
IAS 2 - Inventory Valuation                                                0.2
--------------------------------------------------------------------------------
EBITDA under IFRS                                                        160.0
--------------------------------------------------------------------------------
(1) EBITDA represents operating profit before exceptional items plus 
depreciation and amortisation


4.3 Group Balance Sheet
As at 1 April 2004 (excluding IAS 32/39)
                                                                    US$ million
--------------------------------------------------------------------------------
                                                   UK GAAP   Adjustments   IFRS
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill                                          12.2             -      12.2
Negative goodwill                                 (8.6)          8.6         -
Property, plant and equipment                  1,268.4          13.1   1,281.5
Investment in associate                            2.7             -       2.7
Other investments                                 27.5          (2.3)     25.2
Other non-current assets                             -          22.3      22.3
--------------------------------------------------------------------------------
                                               1,302.2          41.7   1,343.9
--------------------------------------------------------------------------------
Current assets
Inventories                                      199.9           1.7     201.6
Trade and other receivables                      245.5         (22.4)    223.1
Current asset investments                      1,188.5      (1,092.2)     96.3
Cash and cash equivalents                         52.7       1,094.6   1,147.3
--------------------------------------------------------------------------------
                                               1,686.6         (18.3)  1,668.3
--------------------------------------------------------------------------------
TOTAL ASSETS                                   2,988.8          23.4   3,012.2
--------------------------------------------------------------------------------
Current liabilities
Short term loans                                 245.8             -     245.8
Convertible loan notes                            49.5             -      49.5
Other current liabilities                        575.3         (15.8)    559.5
Provisions                                        25.3             -      25.3
Income tax payable                                11.2             -      11.2
--------------------------------------------------------------------------------
                                                 907.1         (15.8)    891.3
--------------------------------------------------------------------------------
Net current assets/(liabilities)                 779.5          (2.5)    777.0
--------------------------------------------------------------------------------
Non-current liabilities
Creditors falling due after more than one year   529.9             -     529.9
Deferred tax liabilities                         123.2         100.3     223.5
Provisions                                        14.4           6.3      20.7
--------------------------------------------------------------------------------
                                                 667.5         106.6     774.1
--------------------------------------------------------------------------------
Total liabilities                              1,574.6          90.8   1,665.4
--------------------------------------------------------------------------------
Net Assets/(liabilities)                       1,414.2         (67.4)  1,346.8
================================================================================
Equity
Share capital                                     28.6             -      28.6
Share premium account                             18.6             -      18.6
Other reserves                                    12.7             -      12.7
Profit and loss account                          931.0         (11.1)    919.9
--------------------------------------------------------------------------------
Equity attributable to equity holders of the
parent                                           990.9         (11.1)    979.8
Minority interest                                423.3         (56.3)    367.0
--------------------------------------------------------------------------------
Total Equity                                   1,414.2         (67.4)  1,346.8
================================================================================

4.4 Group Balance Sheet
As at 1 April 2005 (including IAS 32/39)
                                                                      US$ million
-----------------------------------------------------------------------------------
                                                        IFRS                   IFRS
                                                    31 March                1 April
                                                        2005    IAS 32/39      2005
-----------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill                                               12.2            -       12.2
Property, plant and equipment                       2,288.6            -    2,288.6
Investment in associate                                 3.3            -        3.3
Other investments                                      24.8          1.3       26.1
Other non-current assets                               34.6            -       34.6
Deferred tax asset                                     90.0            -       90.0
-----------------------------------------------------------------------------------
                                                    2,453.5          1.3    2,454.8
-----------------------------------------------------------------------------------
Current assets
Inventories                                           337.7            -      337.7
Trade and other receivables                           339.6            -      339.6
Other financials asset (derivatives)                                 2.5        2.5
Current asset investments                             262.0            -      262.0
Cash and cash equivalents                           1,185.6          1.0    1,186.6
-----------------------------------------------------------------------------------
                                                    2,124.9          3.5    2,128.4
-----------------------------------------------------------------------------------
TOTAL ASSETS                                        4,578.4          4.8    4,583.2
-----------------------------------------------------------------------------------
Current liabilities
Short term loans                                      194.7            -      194.7
Convertible loan notes                                 23.7        (17.7)       6.0
Other current liabilities                             675.0         (3.2)     671.8
Other financials liabilities (derivatives)                          42.1       42.1
Provisions                                             37.0            -       37.0
Income tax payable                                     15.1            -       15.1
-----------------------------------------------------------------------------------
                                                      945.5         38.7      984.2
-----------------------------------------------------------------------------------
Net current assets/(liabilities)                    1,179.4        (35.2)   1,144.2
-----------------------------------------------------------------------------------
Non-current liabilities
Creditors falling due after more than one year      1,344.7        (22.0)   1,322.7
Other financials liabilities (derivatives)                          17.5       17.5
Deferred tax liabilities                              234.9         (6.6)     228.3
Provisions                                            247.2            -      247.2
Non equity minority interests                          59.4            -       59.4
-----------------------------------------------------------------------------------
                                                    1,886.2        (11.1)   1,875.1
-----------------------------------------------------------------------------------
Total liabilities                                   2,831.7         19.0    2,850.7
-----------------------------------------------------------------------------------
Net Assets                                          1,746.7        (14.2)   1,732.5
=====================================================================================
Equity
--------
Share capital                                       28.7           -           28.7
Shares to be issued                                    -           -              -
Share based payment reserve                          2.5           -            2.5
Share premium account                               18.6           -           18.6
Other reserves                                      43.9           -           43.9
Hedging reserves                                       -        (3.2)          (3.2)
Profit and loss Account                          1,016.8        (8.9)       1,007.9
-----------------------------------------------------------------------------------
Equity attributable to equity holders of
the parent                                       1,110.5       (12.1)       1,098.4
Minority interest                                  636.2        (2.1)         634.1
-----------------------------------------------------------------------------------
Total Equity                                     1,746.7       (14.2)       1,732.5
=====================================================================================

4.5 Reconciliation of profit for the period
Six months ended 30 September 2004

------------------------------------------------------------------------------------------------------------------------
US$ million                                      IAS-23 
                                         Capitalisation                IFRS-1
                       IAS-16       IAS-2   of interest   IAS-12  Reversal of     IAS 28     IAS -2             
                     Overhaul Share based       income/ Deferred     goodwill  Associate  Inventory      Total 
             UK GAAP expenses     payment       expense      tax amortisation  reporting  valuation adjustment   IFRS
------------------------------------------------------------------------------------------------------------------------
Revenue
Continuing
operations    677.4         -           -             -        -            -          -          -         -   677.4
Cost of 
sales        (507.5)      0.6           -             -        -          0.2          -        0.2       1.0  (506.5)
------------------------------------------------------------------------------------------------------------------------
Gross profit  169.9       0.6           -             -        -          0.2          -        0.2       1.0   170.9
------------------------------------------------------------------------------------------------------------------------
Other operating
income         9.7          -           -             -        -            -          -          -         -     9.7
Distribution
costs        (18.7)         -           -             -        -            -          -          -         -   (18.7)
Administrative
Expenses     (38.2)         -        (1.8)            -        -            -          -          -      (1.8)  (40.0)
Operating
exceptional 
item          (2.6)         -           -             -        -            -          -          -         -   (2.6)
------------------------------------------------------------------------------------------------------------------------
Operating
profit       120.1        0.6        (1.8)            -        -          0.2          -        0.2      (0.8) 119.3
------------------------------------------------------------------------------------------------------------------------
Investment
income        20.3          -           -          (3.2)       -            -          -          -      (3.2)  17.1
Finance 
costs        (28.9)         -           -           3.8        -            -        1.0          -       4.8  (24.1)
Share loss of 
associate     (0.8)         -           -             -        -            -      (1.0)          -      (1.0)  (1.8)
Non-operating
exceptional 
item           1.4          -           -             -        -            -         -           -         -    1.4
------------------------------------------------------------------------------------------------------------------------
Profit before
taxation     112.1        0.6        (1.8)          0.6        -          0.2         -         0.2      (0.2) 111.9
Income tax
expense      (41.5)         -           -             -      0.2            -         -           -       0.2  (41.3)
------------------------------------------------------------------------------------------------------------------------
Profit for the
period        70.6        0.6        (1.8)          0.6      0.2          0.2         -         0.2         -   70.6
========================================================================================================================

4.6 Group Net Assets As at 30 September 2004
         
------------------------------------------------------------------------------------------------------------------------

                                                                     IAS-37                      IAS-2
                                                IAS-23              Discoun-              IAS-7  Inven-              
                   IAS-10 Capitalis-  IAS-19   capital-   IAS-12    ting of   IFRS-1  Cash&cash   tory   Total     
             UK  Proposed ation of  Employee isation of Deferred  long term  Presen-    equiva-  valu-  adjust-  
US$m       GAAP  dividend expenses  benefits   interest     tax   provision   tation     alent   ation    ment   IFRS 
------------------------------------------------------------------------------------------------------------------------

Non-
current 
assets
G'will      3.3         -        -         -          -       -           -      8.2          -      -    8.2       11.5
Property,
plant &
equi-
pment   1,520.2         -     12.5         -        0.9       -           -        -          -      -   13.4    1,533.6
Invest-
ment in
associate   5.1         -        -         -          -       -           -        -          -      -      -        5.1
Other
invest-
ments      23.5         -        -         -          -       -           -        -          -      -      -       23.5
Other
non-
current
assets        -         -        -         -          -       -           -     23.4          -      -   23.4       23.4
------------------------------------------------------------------------------------------------------------------------
        1,552.1         -     12.5         -        0.9       -           -     31.6          -      -   45.0    1,597.1
Current 
assets
Inven-
tories    263.6         -        -         -          -       -           -        -          -    1.6    1.6      265.2
Trade 
and
other
receiv-
ables     265.3         -        -         -          -       -           -    (23.4)         -      -  (23.4)     241.9
Current 
asset
invest-
ments     945.8         -        -         -          -       -           -        -     (812.9)     - (812.9)     132.9
Cash & 
cash
equiva-
lents      25.2         -        -         -          -       -           -        -      812.9      -  812.9      838.1
------------------------------------------------------------------------------------------------------------------------
        1,499.9         -        -         -          -       -           -    (23.4)         -    1.6  (21.8)   1,478.1
------------------------------------------------------------------------------------------------------------------------

TOTAL 
ASSETS  3,052.0         -     12.5         -        0.9       -           -      8.2          -    1.6   23.2    3,075.2
------------------------------------------------------------------------------------------------------------------------
Current
liabil-
ities
Short
term
loans     198.0         -       -          -         -        -           -        -          -      -      -      198.0
Conver-
tible
loan 
notes      49.5         -       -          -         -        -           -        -          -      -      -       49.5
Other 
current
liabil-
ities     599.6     (15.8)      -          -         -        -           -        -          -      -  (15.8)     583.8
Pro-
visions    11.6         -       -          -         -        -           -        -          -      -      -       11.6
Income
tax
payable    23.6         -       -          -         -        -           -        -          -      -      -       23.6
------------------------------------------------------------------------------------------------------------------------
          882.3     (15.8)      -          -         -        -           -        -          -      -  (15.8)     866.5
------------------------------------------------------------------------------------------------------------------------
Net 
current
assets    617.6      15.8       -          -         -        -           -   (23.4)          -    1.6   (6.0)     611.6
------------------------------------------------------------------------------------------------------------------------
Non-
current
liabil-
ities
Creditors
falling
due after
more than
1 year    621.9        -        -          -         -        -           -       -           -      -      -      621.9
Deferred 
tax
liabil-
ities     131.3        -        -          -         -     94.8           -       -           -      -   94.8      226.1
Pro-
visions    16.6        -        -        6.2         -        -        (0.8)      -           -      -    5.4       22.0
------------------------------------------------------------------------------------------------------------------------
          769.8        -        -        6.2         -     94.8        (0.8)      -           -      -  100.2      870.0
------------------------------------------------------------------------------------------------------------------------
Total
Liabil-
ities   1,652.1    (15.8)       -        6.2         -     94.8        (0.8)      -           -      -   84.4    1,736.5
------------------------------------------------------------------------------------------------------------------------
Net 
Assets  1,399.9     15.8     12.5       (6.2)      0.9    (94.8)        0.8     8.2           -    1.6  (61.2)   1,338.7
========================================================================================================================

4.7 Reconciliation of profit for the year
Year ended 31 March 2005

                           
                            IFRS-1                                
                          Negative                  IAS-23                                        
                   IAS-16 Goodwill   IAS-2  Capitalisation                IFRS-1                 IAS-2         
             UK  Overhaul      KCM   Share     of interest    IAS-12   Rev.Good-      IAS 28  Inevtory   Total         
US$m       GAAP  Expenses   Acqui-   based         income/  Deferred  will Amort-  Associate    valua-  Adjust- 
                            sition   payment       expense       Tax      isation  Reporting      tion     ment    IFRS
------------------------------------------------------------------------------------------------------------------------
Contin-
uing
oper-
ations  1,635.0         -        -         -             -         -            -          -         -       -  1,635.0
Acqui-
sitions   249.2         -        -         -             -         -            -          -         -       -    249.2
------------------------------------------------------------------------------------------------------------------------
Group
Revenue 1,884.2         -        -         -             -         -            -          -         -       -  1,884.2
Cost of 
sales  (1,414.8)     (0.1)       -         -             -         -         (0.4)         -      (0.4)   (0.9)(1,415.7)
------------------------------------------------------------------------------------------------------------------------
Gross 
profit    469.4      (0.1)       -         -             -         -         (0.4)         -      (0.4)   (0.9)   468.5
------------------------------------------------------------------------------------------------------------------------
Other
operating
income     25.9         -        -         -             -                      -          -         -       -     25.9
Distri-
bution
costs     (51.5)        -        -         -             -         -            -          -         -       -    (51.5)
Admini-
strative
Expenses  (90.1)        -        -      (2.5)            -         -            -          -         -    (2.5)   (92.6)
Operating
excep-
tional
items     (21.9)        -        -         -             -         -            -          -         -       -    (21.9)
------------------------------------------------------------------------------------------------------------------------
Operating
profit    331.8      (0.1)       -      (2.5)            -         -         (0.4)         -      (0.4)   (3.4)   328.4
------------------------------------------------------------------------------------------------------------------------
Investment
income     41.3         -        -         -         (3.8)         -            -          -         -    (3.8)    37.5
Finance 
costs     (37.7)        -        -         -          4.7          -            -        2.9         -     7.6    (30.1)
Share of
result of
associate  (2.7)        -        -         -            -          -            -       (2.9)        -    (2.9)    (5.6)
Non-
operating
except-
ional
item       (0.4)        -     56.5         -            -          -            -          -         -    56.5     56.1
Profit 
before
tax-
ation     332.3      (0.1)    56.5      (2.5)         0.9          -         (0.4)         -      (0.4)   54.0    386.3
Income 
tax
expense   (97.6)        -        -         -            -       10.6            -          -         -    10.6    (87.0)
------------------------------------------------------------------------------------------------------------------------
Profit 
for the
year      234.       (0.1)    56.5      (2.5)         0.9       10.6         (0.4)         -      (0.4)   64.6    299.3
========================================================================================================================

4.8 Group Net Assets As at 31 March 2005
                                                                   IAS-37
                                                IAS-23           Discount-          
                  IAS-10 Capitali-  IAS-19   Capitali-   IAS-12    ing of    IFRS-1  IAS-7 cash     IAS-2  Total
            UK  Proposed sation of  Employee sation of Deferred  long term  Presen-      & cash Inventory adjust-
US$m       GAAP dividend  expenses  Benefits  expenses      tax  provision   tation  equivalent Equivalent  ment   IFRS
------------------------------------------------------------------------------------------------------------------------
Non-
current
assets             
Goodwill    10.8        -         -         -         -        -          -      1.4         -       -     1.4      12.2
Negative
goodwill  (63.4)        -         -         -         -        -          -     63.4         -       -     63.4        -
Property,
plant
and equip-
men     2,275.0         -      12.7         -       0.9        -          -         -        -       -     13.6  2,288.6
Invest-
ment in
asso-
ciate       3.3         -         -         -         -        -          -         -        -       -        -      3.3
Other
invest-
ments      24.8         -         -         -         -        -          -         -        -       -        -     24.8
Other
non-
current
assets        -         -         -         -         -        -          -      34.6        -       -     34.6     34.6
Deferred 
tax
asset      90.0         -         -         -         -        -          -         -        -       -        -     90.0
------------------------------------------------------------------------------------------------------------------------
        2,340.5         -      12.7         -       0.9        -          -      99.4        -       -    113.0  2,453.5
------------------------------------------------------------------------------------------------------------------------
Current
assets
Inven-
tories    336.3        -          -         -         -        -          -          -        -    1.4      1.4    337.7
Trade 
and
other
receiv-
ables     374.2        -          -         -         -        -          -      (34.6)       -      -    (34.6)   339.6
Current 
asset
invest-
ments   1,386.0        -          -         -         -        -          -          - (1,124.0)     - (1,124.0)   262.0
Cash &
cash
equiva-
lents      61.6        -          -         -         -        -          -          -  1,124.0      -  1,124.0  1,185.6
------------------------------------------------------------------------------------------------------------------------
        2,158.1        -          -         -         -        -          -      (34.6)       -    1.4    (33.2) 2,124.9
------------------------------------------------------------------------------------------------------------------------
TOTAL 
ASSETS  4,498.6        -       12.7         -       0.9        -          -       64.8        -    1.4     79.8  4,578.4
------------------------------------------------------------------------------------------------------------------------
Current
liabil-
ities
Short
term
loans     194.7        -          -         -         -        -          -          -        -      -        -    194.7
Convert-
ible
loan
notes      23.7        -          -         -         -        -          -          -        -       -       -     23.7
Other 
current
liabil-
ities     708.1    (33.1)         -         -         -        -          -          -        -       -   (33.1)   675.0
Pro-
visions    37.0        -          -         -         -        -          -          -        -       -       -     37.0
Income 
tax
payable   15.1         -          -         -         -        -          -          -        -       -       -     15.1
------------------------------------------------------------------------------------------------------------------------
         978.6     (33.1)         -         -         -        -          -          -        -       -   (33.1)   945.5
------------------------------------------------------------------------------------------------------------------------
Net 
current
assets 1,179.5      33.1          -         -         -        -          -      (34.6)       -     1.4   (0.1)  1,179.4
------------------------------------------------------------------------------------------------------------------------
Non-
current
liabil-
ities
Creditors 
due
after a
year   1,344.7         -          -         -         -        -          -          -        -       -      -   1,344.7
Deferred 
tax
liabil-
ities    146.3         -          -         -         -     88.6          -          -        -       -   88.6     234.9
Pro-
visions  240.9         -          -       6.6         -        -       (0.3)         -        -       -    6.3     247.2
Non-
equity
minority
interest  59.4         -          -         -         -        -          -          -        -       -      -      59.4
------------------------------------------------------------------------------------------------------------------------
       1,791.3         -          -       6.6         -     88.6       (0.3)         -        -       -   94.9   1,886.2
------------------------------------------------------------------------------------------------------------------------
Total
liabil-
ities  2,769.9     (33.1)         -       6.6         -     88.6       (0.3)         -        -       -   61.8   2,831.7
------------------------------------------------------------------------------------------------------------------------
Net 
Assets 1,728.7      33.        12.7      (6.6)      0.9    (88.6)       0.3       64.8        -     1.4   18.0   1,746.7
========================================================================================================================

4.9 Group Net Assets As At 1 April 2005 (including IAS 32/39 Adjustments)

                                                                Fair Value of
US$ million          IFRS pre  Cash Flow  Fair Value                Financial  Convertible         Total      IFRS post 
                        32/39      Hedge       Hedge  Derivatives       Asset         debt   Adjustments          32/39
------------------------------------------------------------------------------------------------------------------------
Non-current assets    
Goodwill                 12.2          -           -            -           -            -             -           12.2
Property,plant and
equipment             2,288.6          -           -            -           -            -             -        2,288.6
Investment in
associate                 3.3          -           -            -           -            -             -            3.3
Other investments        24.8          -           -            -         1.3            -           1.3           26.1
Other non-current
assets                   34.6          -           -            -           -            -             -           34.6
Deferred tax asset       90.0          -           -            -           -            -             -           90.0
------------------------------------------------------------------------------------------------------------------------
                      2,453.5          -           -            -         1.3            -           1.3        2,454.8
------------------------------------------------------------------------------------------------------------------------
Current assets
Inventories             337.7          -           -            -           -            -             -          337.7
Trade and other
receivables             339.6          -           -            -           -            -             -          339.6
Other financial
assets (derivatives)         -        1.5         0.6          0.4           -            -           2.5            2.5
Current asset 
investments             262.0          -           -            -           -            -             -          262.0
Cash and cash
equivalents           1,185.6          -         1.0            -           -            -           1.0        1,186.6
------------------------------------------------------------------------------------------------------------------------
                      2,124.9        1.5         1.6          0.4           -            -           3.5        2,128.4
------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS          4,578.4        1.5         1.6          0.4         1.3            -           4.8        4,583.2
------------------------------------------------------------------------------------------------------------------------
Current liabilities
Short term loans        194.7          -           -            -           -            -             -          194.7
Convertible 
loan notes               23.7          -           -            -           -        (5.4)          (5.4)          18.3
Other current
liabilities             675.0          -        (3.2)           -           -           -           (3.2)         671.8
Other financial
liabilities 
(derivatives)               -        7.9        15.7          0.8           -        14.3           38.7           38.7
Provisions               37.0          -           -            -           -           -              -           37.0
Income tax payable       15.1          -           -            -           -           -              -           15.1
------------------------------------------------------------------------------------------------------------------------
                        945.5        7.9        12.5          0.8           -         8.9           30.1          975.6
------------------------------------------------------------------------------------------------------------------------
Net current assets    1,179.4       (6.4)      (10.9)        (0.4)          -        (8.9)         (26.6)       1,152.8
------------------------------------------------------------------------------------------------------------------------
Non-current liabilities
Creditors falling due
after more than 
one year              1,344.7          -       (21.3)        (0.7)          -           -          (22.0)       1,322.7
Other financial
liabilities
(derivatives)               -          -        17.5            -           -           -           17.5           17.5
Deferred tax 
liabilities             234.9       (2.1)       (2.0)         0.1         0.4        (3.0)          (6.6)         228.3
Provisions              247.2          -           -            -           -           -              -          247.2
Non equity minority
interests                59.4          -           -            -           -           -              -           59.4
------------------------------------------------------------------------------------------------------------------------
                      1,886.2       (2.1)       (5.8)        (0.6)        0.4        (3.0)         (11.1)       1,875.1
------------------------------------------------------------------------------------------------------------------------
Total liabilities     2,831.7        5.8         6.7          0.2         0.4         5.9           19.0        2,850.7
------------------------------------------------------------------------------------------------------------------------
Net Assets            1,746.7       (4.3)       (5.1)         0.2         0.9        (5.9)         (14.2)       1,732.5
========================================================================================================================


5. Directors' responsibilities

The directors are required by United Kingdom company law to prepare financial
statements for each financial period which give a true and fair view of the
state of affairs of the Group as at the end of the financial period and of the
profit or loss and cash flows for that period. To ensure that this requirement
is satisfied the directors are responsible for establishing and maintaining
adequate internal controls and procedures for financial reporting throughout the
Group.

For the year ending 31 March 2006, the directors will be preparing the Group's
financial statements in accordance with International Financial Reporting
Standards (IFRS) for the first time. As part of the transition to IFRS, the
directors are presenting financial information prepared under IFRS for the
opening balance sheet as at 1 April 2004, year ended 31 March 2005 and the six
months ended 30 September 2004.

The directors are responsible for the selection and consistent application of
the accounting policies and the selection of transition options under IFRS 1,
including the assumptions made about the standards and interpretations expected
to be effective, and the policies expected to be adopted, when the Group's first
complete set of IFRS financial statements are prepared.

The directors are responsible for maintaining proper accounting records and they
have a general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.

The directors are also responsible for the maintenance and integrity of the
Group's website. The work carried out by the independent accountants does not
involve responsibility for any changes that may have occurred to the IFRS
financial information since it was initially loaded on to the website.

Directors' declaration

The IFRS financial information for the year ended 31 March 2005 and period ended
30 September 2004 has been prepared in accordance with the basis of preparation
and accounting policies set out on pages 10 to 20. We consider that the
accounting policies and transition options we have selected are appropriate for
Vedanta's business and supported by reasonable and prudent judgements.

The IFRS financial information has been prepared on the going concern basis
since, in our opinion, each of the Vedanta Group companies has adequate
financial resources to continue in operational existence for the foreseeable
future and to pay its debts as and when they become due and payable.

By order of the board

K.K. Kaura
26 September 2005


6. INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF VEDANTA RESOURCES
PLC ON THE PRELIMINARY IFRS FINANCIAL INFORMATION

We have audited the accompanying non-statutory preliminary consolidated balance
sheet of Vedanta Resources plc ('the Company') and its subsidiaries (together
the 'Group') prepared in accordance with International Financial Reporting
Standards ('IFRS') as at 1 April 2004 (the 'opening balance sheet') and the
non-statutory preliminary comparative IFRS financial information for the year
ended 31 March 2005, which comprises the consolidated income statement prepared
in accordance with IFRS, the consolidated balance sheet prepared in accordance
with IFRS and certain information set out in Section 4 (the 'comparative IFRS
financial information') (together 'the preliminary IFRS financial information').

This report is made solely to the Board of Directors, in accordance with our
engagement letter dated 4 August 2005 and solely for the purpose of assisting
with the transition to IFRS. Our audit work will be undertaken so that we might
state to the company's board of directors those matters we are required to state
to them in an auditors' report and for no other purpose. To the fullest extent
permitted by law, we will not accept or assume responsibility to anyone other
than the company for our audit work, for our report, or for the opinions we have
formed.

Respective responsibilities of directors and auditors

The Company's directors are responsible for ensuring that the Company and the
Group maintains proper accounting records and for the preparation of the
preliminary comparative on the basis set out in Section 2, which describes how
IFRS will be applied under IFRS 1, including the assumptions the directors have
made about the standards and interpretations expected to be effective, and the
policies expected to be adopted, when the Company prepares its first complete
set of IFRS financial statements as at 31 March 2006.

Our responsibility is to audit the the preliminary IFRS financial information in
accordance with relevant United Kingdom legal and regulatory requirements and
auditing standards and report to you our opinion as to whether the preliminary
comparative IFRS financial information is prepared, in all material respects, on
the basis set out in Section 2.

Basis of audit opinion

We conducted our audit in accordance with United Kingdom auditing standards
issued by the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the comparative
IFRS financial information. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation of the the
preliminary IFRS financial information and of whether the accounting policies
are appropriate to the circumstances of the group, 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 the 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 IFRS
financial information.

Without qualifying our opinion, we draw attention to Section 2 'Basis of 
preparation' which explains why there is a possibility that the preliminary
IFRS financial information may require adjustment before constituting the final
IFRS financial information. Moreover, we draw attention to the fact that, under
IFRSs, only a complete set of financial statements comprising a balance sheet,
income statement, statement of changes in equity, cash flow statement, together
with comparative financial information and explanatory notes, can provide a fair
presentation of the Company's financial position, results of operations and cash
flows in accordance with IFRSs.

Opinion

In our opinion the preliminary IFRS financial information is prepared, in all
material respects, on the basis set out in Section 2, 'Basis of preparation',
which describes how IFRS will be applied under IFRS 1, including the assumptions
the directors have made about the standards and interpretations expected to be
effective, and the policies expected to be adopted, when the Company prepares
its first complete set of IFRS financial statements as at 31 March 2006.

Deloitte & Touche LLP

Chartered Accountants
London

26 September 2005


7. INDEPENDENT REVIEW REPORT TO THE BOARD OF DIRECTORS OF VEDANTA RESOURCES PLC
ON THE PRELIMINARY COMPARATIVE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2004

We have reviewed the accompanying preliminary International Financial Reporting
Standards (IFRS) consolidated financial information of Vedanta Resources plc
('the Company') and its subsidiaries (together, 'the Group') for the six months
ended 30 September 2004 which comprises the consolidated income statement, the
consolidated balance sheet, the consolidated statement of changes in equity, the
consolidated cash flow statement and related notes set out in Section 4 
(hereinafter referred to as 'preliminary financial information').

This preliminary financial information is the responsibility of the Company's
directors. It has been prepared as part of the Company's conversion to IFRS in
accordance with the basis set out in Section 2 which describes how IFRSs have been
applied under IFRS 1, including the assumptions the directors have made about
the standards and interpretations expected to be effective, and the policies
expected to be adopted, when the company prepares its first complete set of IFRS
financial statements as at 31 March 2006. Our responsibility is to express an
opinion on this preliminary IFRS comparative financial information based on our
review.

Our review report is made solely to the Company in accordance with Bulletin 1999
/4 issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the Company those matters we are required to state to them in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.

Review work performed

We conducted our review in accordance with Bulletin 1999/4 issued by the
Auditing Practices Board. A review consists principally of making enquiries of
management and applying analytical procedures to the preliminary financial
information and underlying financial data and, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review excludes audit procedures such as tests of control and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit performed in accordance with United Kingdom auditing
standards and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an opinion on the preliminary financial
information.

Emphasis of matter

Without modifying our review conclusion, we draw attention to the fact that Section
2 explains why there is a possibility that the accompanying preliminary
financial information may require adjustment before constituting the final IFRS
comparative information for the six months ended 30 September 2004. Moreover, we
draw attention to the fact that, under IFRSs, only a complete set of financial
statements comprising an income statement, balance sheet, statement of changes
in equity, cash flow statement, together with comparative financial information
and explanatory notes, can provide a fair presentation of the Group's financial
position, results of operations and cash flows in accordance with IFRSs.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the preliminary financial information for the six months ended
30 September 2004 which has been prepared in accordance with the basis set out
in Section 2.

Deloitte & Touche LLP
Chartered Accountants
London
26 September 2005





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