Commonwealth Bank of Australia ASX Announcement Disclosure of comparative period results under Australian equivalent to International Financial Reporting Standards Introduction The results for the six months ended 31 December 2005 are the first under the Australian equivalent to International Financial Reporting Standards (“AIFRS”). Prior period results have been restated to comply with AIFRS, except for certain standards which were adopted and applied from 1 July 2005 onwards. The Bank will release it’s interim results on 15 February 2006, and this will contain a more comprehensive disclosure than that presented in this document. The prior period results have undergone a number of restatements as a result of adopting AIFRS. The objective of this document, prior to the release of our results, is to: Communicate the major changes and the impact on the Income • Statement and Balance Sheet, Provide information on changes to the formatting, layout and definitions • within the Profit Announcement, and • Provide insight into the major accounting policies adopted by the Bank under AIFRS. These disclosures will be updated for the impact of AIFRS on the 1 July 2005 Balance Sheet and for the six months to 31 December 2005, as part of the Profit Announcement which will be released on 15 February 2006. Disclosures The following sections are included: Section A: High level summary of AIFRS impacts This highlights the major impacts of AIFRS on the Income Statement categories, the Net Profit, together with Analysis Templates and other key ratio’s. Section B: Accounting Policy This section details the Bank’s accounting policies under AIFRS and describes the changes compared with the previous policies under Australian GAAP (“AGAAP”).
Section C: Reconciliation of prior period Balance Sheets and Income Statements This provides a reconciliation of Balance Sheet and Income Statement disclosures under previous AGAAP policies, to the adjusted comparatives under AIFRS. This includes the Balance Sheets as at 1 July 2004, 31 December 2004 and 30 June 2005, together with the Income Statements for the six months ended 31 December 2004 and 30 June 2005. Section D: Detailed schedules from the Profit Announcement impacted by AIFRS This section shows the key tables which will be included within the Profit Announcement which has been affected by AIFRS. The tables include the adjusted comparative information and changes to individual line items. Teleconference A teleconference will be arranged for Friday, 10 February 2006 at 10.30 am to provide an opportunity to ask any questions in relation to these disclosures. Details of the teleconference will be posted to the CBA website www.commbank.com.au
AIFRS Comparatives
Section A High Level Summary of AIFRS Impacts 2
Summary of Major AIFRS Impacts Half Year Ended 31 Dec 05 30 Jun 05 31 Dec 04 Dec 05 vs Dec 05 vs $M $M $M Jun 05 % Dec 04 % Net Interest Income (AIFRS basis) 3,068 2,958 AIFRS Impacts: Reclassification of Securitisation OBI (1) (40) (31) Income Deferral - Banking (2) 5 6 Hybrid Instruments (3) - - Hedging & Derivatives (4) - - Net Interest Income (AGAAP equivalent) 3,033 2,933 Other Banking Income (AIFRS basis) 1,462 1,383 AIFRS Impacts: Reclassification of Securitisation to NIE (1) 41 29 Income Deferral – Banking (2) - - Hedging & Derivatives (4) - - Other Banking Income (AGAAP equivalent) 1,503 1,412 Total Banking Income (AIFRS basis) 4,530 4,341 Total AIFRS Impacts 6 4 Total Banking Income (AGAAP equivalent) 4,536 4,345 Funds Management Income (AIFRS cash basis) 638 609 AIFRS Impacts: Income Deferral - Funds Management (5) 8 6 Funds Management Income (AGAAP equivalent) 646 615 Insurance Income (AIFRS cash basis) 387 360 AIFRS Impacts: Income Deferral & DAC – Insurance (6) - - Insurance Income (AGAAP equivalent) 387 360 Operating Expenses – comparable business (AIFRS basis) 2,878 2,841 AIFRS Impacts: Volume Expense Deferral - Funds Management (5) 8 6 Share-Based Compensation & Other – Banking (6) (17) (19) Operating Expenses (AGAAP equivalent) 2,869 2,828 Bad and Doubtful Debts Expense (AIFRS) 176 146 AIFRS Impacts: Movement in General Reserve for Credit Losses (7) - - Bad and Doubtful Debts Expense (AGAAP equivalent) 176 146 Total AIFRS Impact on Net Profit Before Tax (“cash basis”) 23 23 Total AIFRS Impact on Net Profit After Tax (“cash basis”) (8) 23 23 AIFRS Non-cash items: Defined benefit superannuation plan expense 25 28 Treasury share mismatch expense/(income) 46 (7) Total AIFRS Non-Cash Items After Tax 71 21 Total AIFRS Impact on Net Profit After Tax (“statutory basis”) 94 44 Description of AIFRS Impacts: (1) Reclassification of Securitisation income from other banking income to net interest income. (2) Netting of Fees and Commissions against Interest Income , and measuring on an effective yield basis. (3) On reclassification of hybrid instruments from equity to loan capital, preference share dividends paid are reclassified to interest paid. (4) Reclassification of interest expense on non-hedged derivatives to other banking income, and measuring all derivatives on a Fair Value basis. (5) Capitalisation and amortisation of certain funds management revenue and expense items. (6) Principally relates to share-based compensation expense arising on the final issue under the mandatory Equity Participation Plan. (7) Recalculation of loan impairment provisions. (8) Due to the tax treatment of distributions on some hybrid instruments, and non-deductibility of other expenses (e.g. share base compensation) the tax effected AIFRS impact is larger than the pre-tax impact. 3
Summary of Major AIFRS Impacts (continued) Half Year Ended 31 Dec 05 30 Jun 05 31 Dec 04 Dec 05 vs Dec 05 vs $M $M $M Jun 05 % Dec 04 % Net Profit After Tax (“underlying basis“) (AIFRS) 1,779 1,641 AIFRS Impact 23 23 Net Profit After Tax (“underlying basis”) (AGAAP equivalent) 1,802 1,664 Net Profit ex HK sale After Tax (“cash basis”) (AIFRS) 1,759 1,733 AIFRS Impact 23 23 Net Profit ex HK sale After Tax (“cash basis”) (AGAAP equivalent) 1,782 1,756 Net Profit After Tax (“statutory basis”) (AIFRS) 1,688 1,712 AIFRS Impact 94 44 Net Profit After Tax (“statutory basis”) (AGAAP equivalent) (1) 1,782 1,756 Half Year Ended Dec 05 Jun 05 Dec 04 $M $M $M Weighted average number of shares - cash basic (number) AIFRS 1,273 1,265 AIFRS Adjustments (2) 4 4 AGAAP 1,277 1,269 Weighted average number of shares - cash diluted (number) AIFRS 1,329 1,331 AIFRS Adjustments (3) (51) (61) AGAAP 1,278 1,270 Weighted average number of shares – statutory basic (number) AIFRS 1,264 1,256 AIFRS Adjustments (4) 13 13 AGAAP 1,277 1,269 Net Assets ($M) AIFRS 22,643 22,101 AIFRS Adjustments (5) 3,417 2,966 AGAAP 26,060 25,067 Intangible Assets ($M) AIFRS 7,656 7,638 AIFRS Adjustments (6) (3,262) (3,083) AGAAP 4,394 4,555 Average Interest Earning Assets ($M) AIFRS 250,357 239,150 AIFRS Adjustments (7) (771) (748) AGAAP 249,586 238,402 Description of AIFRS Impacts: (1) Net profit after tax (“statutory basis”) (AGAAP equivalent) excludes the impact of appraisal value uplifts and goodwill amortisation from comparative periods. (2) Relates to the deduction of “Treasury Shares” held within the employee share scheme trust. (3) Relates to the dilutive impact under AIFRS which requires inclusion of hybrid instruments which have any probability of conversion to ordinary shares. (4) Relates to the deduction of all Treasury Shares. (5) Relates principally to the write-off of internally-generated appraisal value excess. (6) Relates principally to the reclassification of acquired appraisal value excess from Other assets to Intangible assets. (7) Average interest earning assets are increased under AIFRS due to the consolidation of non-home loan securitisation assets. 4
Analysis Template Half Year Ended Dec 05 Jun 05 Dec 04 Page Profit Summary – Input Schedule $M $M $M References Income Net interest income 3,068 2,958 Other banking operating income 1,462 1,383 Total banking Income 4,530 4,341 Operating income 638 609 Shareholder investment returns 9 24 Funds management income 647 633 Operating income – life insurance 363 330 Operating income – general insurance 24 30 Operating income insurance 387 360 Shareholder investment returns 83 121 Gain on disposal of the Hong Kong business - - Insurance income 470 481 Total income 5,647 5,455 Expenses Banking 2,201 2,179 Funds management 398 400 Insurance 279 262 Operating expenses 2,878 2,841 Banking 97 15 Funds management 24 12 Insurance 1 1 Which new Bank expenses 122 28 Total expenses 3,000 2,869 Profit before impairment losses on financial instruments 2,647 2,586 Charge for impairment losses on financial instruments 176 146 Profit before tax expense 2,471 2,440 Income tax – corporate 707 702 Operating profit after tax 1,764 1,738 Minority interest (OEI) 5 5 Net profit after tax & OEI – cash basis 1,759 1,733 Defined benefit superannuation plan expense (25) (28) Treasury share mismatch (46) 7 Net profit after tax & OEI – statutory 1,688 1,712 Investment return on shareholder funds 92 145 Tax expense on shareholder investment returns 26 34 Shareholder investment returns – after tax 66 111 Which new Bank transformation expenses 122 28 Tax expense on Which new Bank transformation expenses (36) (9) Which new Bank expenses – after tax 86 19 Net profit after tax – cash – underlying 1,779 1,641 5
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