The accounting policies applied by the group also comply with IFRS as issued by the International Accounting Standards Board (IASB).

The IFRS standards have been applied consistently to all periods presented in the consolidated financial statements and when preparing an opening IFRS balance sheet as of 1 January 2006 (subject to certain exemptions allowed by IFRS 1) for the purpose of the transition to IFRS.

Change in parent company functional currency

StatoilHydro reports with the US dollar as the functional currency in the parent company while the group has retained NOK as the reporting currency, effective from the first quarter of 2009.

All else being equal, this is expected to reduce the volatility in net income caused by fluctuations in the USD/NOK rate. Due to the difference between functional currency and reporting currency, certain currency valuation effects will still be recorded, but they will now be recorded directly to equity under other comprehensive income.

Specifically, USD denominated assets and liabilities held by the parent company that, to date, have given rise to material currency gains and losses will no longer give rise to such effects. An example of this has been the recent currency losses on USD denominated loans.

Assets and liabilities held by the parent company and denominated in other currencies than USD, e.g. NOK, will, however, give rise to new currency gains and losses. An example of this will be the NOK denominated tax liabilities.

The change in functional currency is thus expected to reduce volatility in net income but add volatility in other comprehensive income. The change is not expected to have a material impact on the ability to pay dividends. Prior period financial statements are not required to be restated.