Adoption of IFRS will increase net assets by 400% at Imperial Tobacco.
The UK tobacco company presents on its website an unaudited briefing for the year ending 2005 which quantifies the impact of IFRS. The main areas to be affected are pensions, goodwill and dividends, with net assets increasing by £565m to £705m and profit before tax from £862m to £1.08bn.
Currently, the company accounts for its pension schemes in accordance with SSAP 24, Accounting for Pension Costs, whereby actuarial valuations of the schemes are carried out on a triennial basis with the last valuation being at 31 March 2004. Under, Employee Benefits, the company is required to value its pension schemes at each balance sheet date and adjustments to the pension schemes' assets and liabilities and deferred tax effects increase net assets by £112m.
In addition, under IFRS, the pension schemes' assets are valued at bid price rather than mid-market price.
Under, Business Combinations, goodwill is no longer amortised but tested annually for impairment. This results in the goodwill amortisation charge being reversed and increases both profit before tax and net assets by £198m. , Events After the Balance Sheet Date, requires that dividends declared after the balance sheet date are not recognised as a liability, which increases net assets by £278m.
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