Saudi Electricity Company (SEC) (5110.SE) has announced that the company’s convergence to IFRS will lead to an increase of retained earnings account by SAR1.289bn to the opening of accounts 1/1/2016. The impact will come through: i) an increase in the book value of long-term assets by SAR6.027bn, due to extending life for assets that were previously fully depreciated; ii) decrease of SAR3.69bn of net government grants related to government loans; due to amortising the loan based on the related long-term asset life rather than the loan term; iii) decrease of SAR1.048bn in provisions for end of service benefits as per the results of implementing an actuarial study. The re-classification of depreciation calculation related to extended asset life is expected to reflect positively on the coming periods, but not on the company’s cash flows.