Thank you for all suggestions.
Problem now solved. Thanks Peter and Marek for all your diagrams and photos.
It appears that the top of the dipstick tube sits approx 2" lower or further into the engine bay than it should do. Thereby allowing the dipstick to protrude into the sump further than it should, causing a higher reading.
Part number C34427 which attaches to the end of the tube before it goes into the sump, may not have been fitted during the PO restoration. Can't tell until I remove heat shields and panels. This particular part looks to be approx 2" in length judging by the parts manual.
Pics attached.

1971, S3, 2+2, manual. Red.