- Spölur ehf has implemented the International Financial Reporting Standards(IFRS) from 1 October 2006

Spölur ehf has implemented the International Financial Reporting
Standards(IFRS) from 1 October 2006, which conforms to the requirements made of
companies which have its security bonds listed on European stock exchanges.
This Press Release is intended to inform the market about the effect that these
changes will have on financial reporting from 2007. 

There are two items in particular that will effect the finances and performance
of Spölur ehf as a result of implementing IFRS: impact of using the effective
interest method and methods of depreciating properties, plants and equipment
have changed. 

Overall, the profit from operations for year ended 30 September 2006 becomes
568.1 million ISK, which was previously shown as 570.1 million. As a percentage
of sales, net profit becomes 0,84%, compared with 1,22%. Net profit for year
ended 30 September 2006 decreased from 12.1 million ISK to 8.3 million. 

With the change, the company's equity increased on 1 October 2006 by about 35.7
million ISK. On 30 September 2006 it became 452.4 million ISK, while in the
previous accounting method equity was 416.7 million. The equity ratio therefore
increased from 8.2% to 8.9%. 

The figures that are published here have been audited.

The following is a more detailed account of specific items: See attachment.


Borrowings - net of transaction cost

In accordance with IAS 39, borrowings are subsequently stated at amortised
cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the period of the
borrowings using the effective method. The effect of changes to the income
statement in 2006 is such that charged transaction cost is 2.6 million ISK.
Borrowings in revalued financial statements of 30 September 2006 includes the
net of transaction cost which will be recognised over the period of the
borrowings using the effective interest method. 


Depreciation of fixed assets

Methods for depreciating properties, plants and equipment have changed in that
they are depreciated during their estimated lifetime/service life down to their
residual value. The depreciation base will therefore be the difference between
the purchase price and the estimated residual value, instead of purchase price.
The effect of this is that depreciation, particularly tunnel, increases in the
revalued financial statements from 220 million ISK to 222 million. 


For further information please contact Gylfi Þórðarson, Spölur ehf Chief
Executive Officer in telephone +354 4335910.