Idemitsu Kosan Co., Ltd. ("Idemitsu") hereby announces the major impact of "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements (May 17, 2006, ASBJ PITF No. 18)" ("PITF No. 18") on its consolidated financial statements following its application beginning in the fiscal year ending March 2009, as follows.
1.Overview
When acquiring Snorre oil fields in 1989, Idemitsu's Norwegian consolidated subsidiary Idemitsu Petroleum Norge AS entered into an agreement providing that it would pay a premium to the seller on a portion of its crude oil and gas revenues based on prevailing crude oil and gas prices. While such premiums were recorded solely as expenses at the time of the sale of crude oil or gas in the past, future premium obligations will be recorded on the balance sheet at their market values beginning in the fiscal year ending March 2009 as a result of the change in accounting policies.
2.Background for the Change in Accounting Policies
While financial statements of foreign subsidiaries were prepared based on the accounting standards of the location of such subsidiaries for consolidated financial reporting, such financial statements will be prepared based on International Financial Reporting Standards (IFRS) as a result of PITF No. 18 taking effect beginning in the fiscal year ending March 2009.
3.Impact on Financial Performance, etc.
Reasonable estimates of future payment obligations will be calculated based on the volume of crude oil reserves, crude oil futures prices and other factors and recorded as assets and liabilities on the consolidated balance sheet. The impact on financial performance as of the beginning of fiscal year 2008 was approximately 190 billion yen. There is no impact on consolidated net assets as a result of recording such liabilities.
Further, the resulting impact on consolidated performance is expected to be minimal.
Note that there is no impact on non-consolidated financial reporting as a result of these changes.
For inquiries regarding this press release, please contact
Ms. Iinuma
PR Section IR&PR Office
Idemitsu Kosan, Co., Ltd.
Tel: +81-3-3213-3115
