Mobile phone giant Orange has warned that the impact of international financial reporting standards on its group results could be ‘significant’, but said preparations were in hand.
But Neal Milsom, vice-president of finance for the UK, said preparations for Sarbanes-Oxley compliance has proved more onerous than efforts to meet IFRS requirements.
The company, a subsidiary of France Telecom, has been running the Sarbanes-Oxley project out of its corporate headquarters in Paris. Milsom admitted that Orange UK had been forced to boost its headcount to cope with the impact.
‘I don’t have an exact figure for how much the project is going to cost us, but it’s not in the seven figures that some people talk about,’ Milsom said.
‘We had to get the whole company behind it. In Paris, they’ve gone through the accounts line-by-line. I don’t think we have any major issues complying with it,’ he added.
Despite the added burden, Milsom said he viewed the process favourably. ‘A good business should have good controls in place,’ he said.
Rival Vodafone announced in January that the switch to IFRS would have provided a £7.3bn increase in attributable profits for the six months to 30 September 2004. Under the new rules, Vodafone is no longer required to amortise goodwill.
Meanwhile, two cases, one British and one Austrian, challenging payment of VAT on 3G licences are still awaiting hearings at the European Court of Justice. Orange, O2,
Vodafone, T-Mobile and 3 are between them hoping to claw back £4bn from the government.
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