Shell adopting International Financial Reporting Standards

Royal Dutch/Shell Group announced plans to adopt International Financial Reporting Standards (IFRS), effective Jan. 1, 2005.

The change was prompted by a European Union requirement that most publicly traded companies start using IFRS next year. The EU is striving to increase corporate transparency.

Tim Morrison, Shell's controller, told analysts during a recent conference call that the change will cut asset values on Shell's balance sheet by $4.7 billion and that debt will increase by $200 million. The changes relate mostly to pensions.

"There is no impact on the actuarial position or funding of the pension funds, which continue to be well funded," Morrison said. "It's basically a reduction in the pension prepayment."

Reserves

Shell will continue following US Securities and Exchange Commission rules regarding its oil and natural gas reserves, Morrison noted.

Meanwhile, Shell is considering whether it will reduce its oil and natural gas reserves again this year. It would be the fifth time that Shell has adjusted its reserves since Jan. 1 (OGJ Online, Nov. 1, 2004).

The boards of Royal Petroleum Co. and Shell Transport & Trading Co. have proposed to shareholders that the companies be merged under a single parent company, Royal Dutch Shell PLC (OGJ Online, Oct. 28, 2004).