CONVERTIBLE BONDS - CHANGED INTERPRETATION OF IAS39

Convertible bonds - accounting changes from
revised interpretation of `IAS 39 value changes
derivatives`
Please see attachment on www.newsweb.noConvertible bonds - accounting changes from
revised interpretation of `IAS 39 value changes
derivatives`

In March 2004, Bonheur invested a nominal amount
of 149,8 million in a 4.5% convertible bond
issued by its associate company Fred.Olsen
Energy ASA (FOE). The bonds can be converted at
a price of NOK 68 per share and mature in March
2009. The market value of Bonheur`s investment
in the convertible bonds issued by FOE per 3rd
quarter 2005 was 456 million (based on the FOE
share price of 207.-). At year-end 2005 the
market value of the bonds were 535 million (FOE
share at 243.-).

As a consequence of a revised IAS 39
interpretation, previously reported financial
income and tax costs related to this investment
will be reversed. In addition, an adjustment
will be made to reflect that Bonheur
consolidates Ganger Rolf (which has a parallel
investment in FOE`s convertible bonds) as an
associated company with its share of 49.5% of
the net result after tax.

The company emphasises that the accounting
changes described below are only related to IFRS
interpretation, and there are no changes in the
underlying economic value of this investment
compared to what has previously been reported.

The net accounting changes which will be
implemented in the already reported financial
statements for 2004 and for the 1st, 2nd and 3rd
quarter 2005 are estimated to be:

NOK million Acc effect 2005

Net effect on result after tax (269)
Hereof crossowner effect (89)

Acc.changes in equity (315)

(For more detailed table, see attachment)


Bonheur has in the past, with the support of
external IFRS advisors, accounted for this
investment partly as a receivable (the coupon
element of the bond) and partly as an embedded
derivative (the conversion element). Both of
these elements have been accounted for in
accordance with IAS 39. For the coupon element
this has been accounted as an `Available-for-
sale financial asset ` and hence value changes
recorded directly against equity. The
conversion option has been recorded as `IAS 39
value changes derivatives` and hence any changes
in the market value of the conversion option
have been recorded as a financial item in the
company`s quarterly Profit and Loss accounts.
The estimated tax effects of these value changes
have been reported as tax income/cost.

Following a revised interpretation of IAS 39, it
appears that the correct accounting of this
investment should be to record the conversion
option as an investment in an associate company
(and not as an IAS 39 derivative). The main
reasoning behind this is that the convertible
bonds in question are issued by an associate
company of Bonheur. The accounting treatment of
the interest element of the bond (coupon) will
continue to be recorded as an IAS 39 item, but
only with a minor P&L-element.

Contact person: Jan Erik Bjoner, Fred.
Olsen & Co. phone +47 22341272