| Year ended 31 December 2004 £m |
Year ended 31 December 2003 £m |
|
|---|---|---|
| Profit on ordinary activities before taxation is stated after charging/(crediting): | ||
| Depreciation of tangible fixed assets | 85 | 108 |
| Other amortisation | – | 1 |
| Development costs net of recoveries and amounts capitalised | 3 | 14 |
| Operating exceptional items (note 8) | (11) | 369 |
| Property lease rentals payable (net of recoveries) | – | 1.0 |
| Auditors’ remuneration – statutory audit: | ||
| Fees due to the lead auditor KPMG Audit Plc | 1.2 | 1.0 |
| Fees due to other auditors | 0.6 | 0.1 |
| 1.8 | 1.1 | |
| Auditors’ remuneration – other fees paid to the lead auditors and their associates for services: | ||
| Audit–related regulatory reporting services (including services to the Company of £0.4 million) | 0.4 | 0.3 |
| Further assurance services (including services to the Company of £0.1 million) | 0.2 | 0.1 |
Statutory fees paid to the lead auditor includes £0.7 million (2003: £0.5 million) in respect of the audit of the Company.
Expenditure on audit–related regulatory reporting services in 2004 principally related to review of interim financial statements, US regulatory reporting requirements and transition to IFRS.
Further assurance services in 2004 related principally to due diligence assistance and corporate social responsibility reviews. During 2004, additional fees of £1.3 million were paid to KPMG Audit Plc for assurance services provided in connection with the Group's acquisitions of the international assets of Edison Mission Energy. These fees have been capitalised as part of the costs of acquisition.
The Audit Committee and the firm of external auditors have safeguards to avoid the possibility that the auditors' objectivity and independence could be compromised. These safeguards include the implementation of a policy on the use of the external auditor for non–audit related services. This policy incorporates the provisions of the Sarbanes–Oxley Act 2002 and subsequent Securities and Exchange Commission (SEC) rules.
Where it is deemed that the work to be undertaken is of a nature that is generally considered reasonable to be completed by the auditor of the Group for sound commercial and practical reasons, the conduct of such work will be permissible provided that it has been pre–approved by the Audit Committee. Examples of pre–approved services include the completion of regulatory audits, provision of taxation and regulatory advice, reporting to the SEC and the completion of certain financial due diligence work. All these services are also subject to a predefined fee limit. Any work performed in excess of this limit must be approved by the Chief Financial Officer and the Audit Committee.