IFRS to wipe $4.7bn off Shell's balance sheet
Shell has revealed that international accounting standards will take $4.7bn off the company's opening balance sheet as of 1 January, 2004.
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The company says that this was caused mainly by a $4.9bn reduction owing to a change in accounting for employee benefits such as pensions.
The news came as part of a presentation to investors yesterday, but the company was quick to offer assurances that the switch will have no impact on strategy, financial framework or cashflow.
The total balance sheet hit is mitigated modestly by other standards such as IAS16 on property and plant, which brought $400,000 onto the balance sheet.
Shell also said its pension fund continues to be well funded, and that its actuarial position remained unaffected. It said its total debt will also increase by $200,000.
Shell’s group financial controller, Tim Morrison, explained to analysts that the $4.9bn hit came about after the company decided to recognise marked to market pension plans under IFRS1 in the balance sheet.
Morrison said the pension funds were ‘broadly in balance’.
He added that Shell would be continuing to provide support to analysts working on the changes brought by IFRS, and hoped to provide a comparative set of accounts for 2004 by April next year.