Lion Nathan said today that it expects the impact of implementing the Australian equivalents to International Reporting Standards (AIFRS) on the group to be the reduction of Lion Nathan's net asset value by US$1.7 billion.

Lion's chief financial officer Jamie Tomlinson said: "This is a non-cash accounting adjustment and shareholders can be assured that this does not affect the value of the brands or the company's other assets. It also has no impact on our ability to pay dividends or our debt servicing capacity."

Tomlinson highlighted three key impacts for Lion Nathan. The first was the removal of internally generated brands and the revaluation component of acquired brands. These, and other less significant charges, result in a A$1.7 billion reduction in net assets.

The second impact is the elimination of goodwill amortisation, which results in the net profit for the half year ended 1 March 2005 being restated to A$135.4m, A$7.8m higher than previously reported.

Thirdly, there is the increased volatility in reported earnings following the application of new standards, and specifically the tests for impairment of certain assets and businesses.