Fly Play hf.

Interim / Quarterly Report • Aug 29, 2008

FL GROUP hf.

(now called Stodir)

1 January - 30 June 2008 Condensed Consolidated Interim Financial Statements

FL GROUP hf. Síðumúli 24 108 Reykjavík

Reg. no. 601273-0129

Contents

Endorsement and Statement by the Board		Consolidated Interim Statement of
of Directors and the CEO
Independent Auditors' Review Report	4	Condensed Consolidated Interim
Consolidated Interim Income Statement	5
Consolidated Interim Balance Sheet

Condensed Consolidated Interim Financial Statements of FL GROUP hf. 30 June 2008 __________________________ 2 ___________________________

3	Changes in Equity	7
4	Condensed Consolidated Interim
5	Statement of Cash Flows	8
6	Notes	9

Endorsement and Statement by the Board of Directors and the CEO

The Condensed Consolidated Interim Financial Statements of FL GROUP hf. (now called Stodir) for the period from 1 January to 30 June 2008 have been prepared in accordance with International Financial Reporting Standard (IFRS) for Interim Financial Statements (IAS 34). The Interim Financial Statements comprise the consolidated interim financial statements of FL GROUP hf. and its subsidiaries.

According to the Consolidated Interim Income Statement net loss for the period amounted to ISK 59,456 million. According to the Consolidated Interim Balance Sheet, equity at the end of the period amounted to ISK 86,946 million, including share capital in the amount of ISK 11,413 million.

The Company´s Board of Directors called an Extraordinary General Meeting on 9 May 2008 which approved delisting of the Company. The Company's shares were on 3 June 2008 delisted from the OMX Nordic Exchange, Iceland.

On 3 July 2008 the Company made an agreement to acquire A and B shares in Baugur Group hf. presenting 39% of voting rights and as a part of the transaction, Stodir's equity will increase by ISK 25 billion. The agreement is expected to be concluded in September 2008.

Statement by the Board of Directors and the CEO

The Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2008 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.

To the best of our knowledge the Condensed Consolidated Interim Financial Statements give a true and fair view of the consolidated financial performance of the Company for the period from 1 January to 30 June 2008, its assets, liabilities and consolidated financial position as at 30 June 2008 and its consolidated cash flows for the period then ended.

Further, in our opinion, the Condensed Consolidated Interim Financial Statements and the Endorsement of the Board of Directors and the CEO give a fair view of the development and performance of the Group's operations and its financial position and fairly describes the principal risks and uncertainties faced by the Group.

The Board of Directors and the CEO have today discussed the Condensed Consolidated Interim Financial Statements of FL GROUP hf. for the six-month period ended 30 June 2008 and confirm them by means of their signatures.

Reykjavík, 29 August 2008

The Board of Directors:

Ingibjörg Pálmadóttir, Chairman of the Board of Directors Árni Hauksson Eiríkur S. Jóhannsson Katrín Pétursdóttir Þorsteinn M. Jónsson

Jón Sigurðsson CEO:

To the Board of FL GROUP hf.

We have reviewed the accompanying Condensed Consolidated Financial Statements of FL GROUP hf., which comprise the consolidated balance sheet as at 30 June 2008 and the consolidated income statement, statement of changes in equity and cash flow statement for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standards as adopted by the EU. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity . A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the entity as at 30 June 2008 and of its financial performance and its cash flows for the six-month period then ended in accordance with International Financial Reporting Standards as adopted by the EU.

Reykjavík, 29 August 2008

KPMG hf.

Jón S. Helgason Sæmundur Valdimarsson

Consolidated Interim Income Statement for the Six Months Ended 30 June 2008

			Q2			Q1 - 2
			1 April - 30 June				1 January - 30 June
	Notes		2008		2007		2008		2007
Investment income:
Net (expense) income from investment securities
and derivatives	3	(	4,273 )		7,658	(	27,208 )		20,131
Interest income			3,248		473		5,831		1,970
Interest expenses		(	8,491 )	(	3,263 )		15,829 ) (		6,280 ) (
Net foreign exchange gain (loss)			937		4,208		18,028 ) (		8,834
		(	8,579 )		9,076	(	55,234 )		24,655
Net insurance income:
Insurance premium			3,460		0		6,636		0
Operating expenses:
Insurance claims		(	3,588 )		0	(	6,915 )		0
Operating expenses - investments		(	634 )	(	1,022 )		1,222 ) (		1,905 ) (
Operating expenses - insurance		(	865 )		0	(	1,738 )		0
		(	5,087 )	(	1,022 )		9,875 ) (		1,905 ) (
(Loss) profit before income tax		(	10,206 )		8,054	(	58,473 )		22,750
Income tax	4	(	1,435 )	(	12 )		983 ) (		376
(Loss) profit for the period		(	11,641 )		8,042	(	59,456 )		23,126
Attributable to:
Equity holders of the Company		(	11,647 )		8,042	(	59,478 )		23,126
Minority interest			6		0		22		0
(Loss) profit for the period		(	11,641 )		8,042	(	59,456 )		23,126
Earnings per share:
Basic (loss) earnings per share (ISK)		(	0.88 )		1.09	(	4.50 )		3.03
Diluted (loss) earnings per share (ISK)		(	0.88 )		1.08	(	4.48 )		3.00

	Notes	30.6.2008	31.12.2007
Assets:
Cash and cash equivalents		15,311	21,125
Unpaid share capital		0	7,500
Equity investments	5	156,258	218,998
Bonds and debt investments		22,855	16,021
Derivatives		5,506	6,604
Restricted cash		19,672	53,060
Loans and receivables, including insurance receivables		69,166	42,348
Reinsurance assets		20,475	13,937
Deferred tax asset		7,530	8,623
Operating assets		1,518	2,167
Intangible assets		34,027	31,937
Total assets		352,318	422,320
Share capital Share premium Other reserves Accumulated deficit		11,413 148,688 6,571 ( 80,015 )	13,494 160,965 1,626 ( 20,559 )
Total equity attributable to equity holders of the Company		86,657	155,526
Minority interest		289	318
Total equity		86,946	155,844
Liabilities:
Derivatives		14,566	13,488
Short positions		0	3,350
Trade and other payables		16,076	14,469
Insurance liabilities		41,374	29,626
Borrowings	6	192,728	204,979
Income tax liability		628	564
Total liabilities		265,372	266,476

Consolidated Interim Statement of Changes in Equity for the Six Months Ended 30 June 2008

			Other reserves
	Share capital	Share premium	Share option reserve	Transl- ation reserve		(Accumu lated deficit) retained earnings		Equity holders Company	of the Minority interest	Total equity
1 January to 30 June 2008
Equity 1.1.2008	13,494	160,965	759	867	(	20,559 )		155,526	318	155,844
Translation difference Loss for the period				4,679	(	59,456 )	(	4,679 59,456 )		4,679 59,456 ) (
Total loss for the period Sale of subsidiary Own shares, change Stock options	2,081 ) (	12,277 ) (	266	4,679	(	59,456 )	( (	54,777 ) 0 14,358 ) 266	0 29 ) (	54,777 ) ( 29 ) ( 14,358 ) ( 266
Equity 30.6.2008	11,413	148,688	1,025	5,546	(	80,015 )		86,657	289	86,946
1 January to 30 June 2007
Equity 1.1.2007	7,763	70,530	339	609		63,425		142,666	10	142,676
Translation difference Profit for the period				794 ) (		23,126	(	794 ) 23,126		794 ) ( 23,126
Total profit for the period Dividends				794 ) (		23,126		22,332	0	22,332
(ISK 1.93 per share) Sale of subsidiary Own shares, change	4	918 ) (			(	14,983 )	( (	14,983 ) 0 914 )	10 ) (	14,983 ) ( 10 ) ( 914 ) (
Stock options		157	194					351		351
Equity 30.6.2007	7,767	69,769	533	185 ) (		71,568		149,452	0	149,452

Condensed Consolidated Interim Statement of Cash Flows for the Six Months ended 30 June 2008

			Q1 - 2 1 January - 30 June
	Notes		2008	2007
Net cash (used in) provided by operating activities		(	22,745 )	8,722
Net cash provided by (used in) investing activities			54,082 (	59,032 )
Net cash (used in) provided by financing activities		(	37,428 )	35,182
Decrease in cash and cash equivalents		(	6,091 ) (	15,128 )
Effect of exchange rate fluctuations on cash held			277	167
Cash and cash equivalents at 1 January			21,125	46,233
Cash and cash equivalents at 30 June			15,311	31,272

1. Significant accounting policies

a. Reporting entity

FL GROUP hf.'s registered office is at Síðumúli 24, Reykjavík, Iceland. The Condensed Consolidated Interim Financial Statements of FL GROUP hf. ("the Company") as at and for the six months ended 30 June 2008 comprise the Company and its subsidiaries, together referred to as the "Group".

FL GROUP hf. is an international investment company with core investments in financials and insurance along with private equity investments with special focus on property companies as well as proprietary trading. The company operates offices in Reykjavík and London.

b. Statement of compliance

These Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting. They do not include all of the information required for a complete set of consolidated annual financial statements, and should be read in conjunction with the Consolidated Financial Statements of the Company as at and for the year ended 31 December 2007.

The Interim Financial Statements were authorised for issue by the Board of Directors on 29 August 2008.

c. Basis of preparation

The accounting policies and methods of computation applied by the Company in these Condensed Consolidated Interim Financial Statements are the same as those applied by the Company in its Consolidated Financial Statements as at and for the year ended 31 December 2007. The Consolidated Financial Statements for the Group as at and for the year ended 31 December 2007 are available upon request from the Company's registered office at Síðumúli 24, Reykjavik or at www.stodir.is or at The OMX Nordic Exchange website, www.omxnordicexchange.com.

The Condensed Consolidated Interim Financial Statements are prepared in Icelandic Krona, which is the Company's functional currency. All financial information has been rounded to the nearest million, unless otherwise stated.

d. Use of estimates and judgements

The preparation of interim financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Segment reporting

1. Segment information is presented in the Condensed Consolidated Interim Financial Statements to reflect the Group's management and internal reporting structure for the year 2008 and is divided into two segments, investment and insurance. The investment segment consists of FL GROUP's operations excluding TM hf. and its subsidiaries, which represent the insurance operations of the Group.

Inter-segment pricing is determined on an arm's length basis.

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

1 January - 30 June 2008		Investment activities		Insurance	Eliminations Consolidated
Net investment loss	(	57,607 )	(	1,050 )	3,423	(	55,234 )
Net insurance income: Insurance premium		0		6,636	0		6,636
Operating expenses:
Insurance claims		0	(	6,915 )	0	(	6,915 )
Other expenses	(	1,222 )	(	1,738 )	0	(	2,960 )
Segment result before income tax	(	58,829 )	(	3,067 )	3,423	(	58,473 )
Income tax	(	649 )	(	334 )	0	(	983 )
Loss for the period	(	59,478 )	(	3,401 )	3,423	(	59,456 )

Segment information is not reported for first half of 2007 as the Group's activities were solely investment activities.

Investment income

1. Net (expense) income from investment securities and derivatives is specified as follows:

		2008		2007
		1.1.-30.6.		1.1.-30.6.
Net (loss) gain on financial assets designated at
fair value through profit or loss	(	30,013 )		25,978
Net gain (loss) on financial assets held for trading		2,805	(	5,847 )
Net (expense) income from investment securities and derivatives	(	27,208 )		20,131

Notes, contd.:

Income tax

1. The effective income tax rate of the Company in the first six months of the year 2008 was minus 1.7%. The difference between the expected and effective income tax rate for the period is partly attributable to two factors:

In May 2008 the Icelandic Parliament approved a decrease in the income tax rate from 18% to 15% as of 1 January 2008. Due to this the deferred tax asset at year-end 2007 has decreased by ISK 1,400 million compared to 31 December 2007. The decrease was recognised in the current period, ISK 1,397 million as expense in the income statement and ISK 3 million as a decrease in equity due to items previously recognised in equity.

Further amendments to Icelandic taxation legislation, adopted in May 2008, include that capital gains on equities will be tax exempt under certain conditions. The amendments take effect as of 1 January 2008. Due to this, the deferred tax asset has decreased by ISK 517 million compared to 31 December 2007. The decrease was recognised in the current period, ISK 505 million as expense in the income statement and ISK 12 million as a decrease in equity due to items previously recognised in equity.

Equity investments

1. Equity investments are specified as follows:

		Fair value including related derivatives		Fair value including related derivatives
	Ownership	30.6.2008	Ownership	31.12.2007
Listed equity investments:
Listed on the Iceland Stock Exchange:
Glitnir banki hf.	32.28%	73,977	31.97%	104,430
Other companies		9,562		15,309
Total listed on the Icelandic Stock Exchange		83,539		119,739
Listed on foreign stock exchanges:
Total listed on foreign stock exchanges		30,746		77,318
Total listed equity investments		114,285		197,057
Unlisted securities:
Total unlisted equity investments		73,549		90,019
Total equity investments		187,834		287,076
Thereof equity derivatives		( 31,576 )		( 71,428 )
Thereof equity short positions		0		3,350
Fair value of equity investments at end of June		156,258		218,998

Notes, contd.:

Borrowings

1. Repayments of borrowings are specified as follows:

	30.6.2008	31.12.2007
Repayments in 2008	5,222	55,609
Repayments in 2009	117,045	89,753
Repayments in 2010	49,807	44,697
Repayments in 2011	4,515	0
Repayments in 2012 and later	16,139	14,920
	192,728	204,979

Of repayments in the second half of the year 2008 about ISK 2 billion presents credit lines that are extendable.

Ratios

7.	The Group's primary ratios are specified as follows:
	Equity ratio - equity / capital employed	24.7%	36.9%
	Internal value of shares - equity attributable to equity holders
	of the Company / share capital	7.59	11.53

Quarterly Statements

1. Summary of the Group's operating results by quarters:

		Q1	Q2	Q1 - 2
2008		2008	2008	2008
Investment income:
Net expense from investment securities and derivatives	(	22,935 ) (	4,273 ) (	27,208 )
Interest income		2,583	3,248	5,831
Interest expenses	(	7,338 ) (	8,491 ) (	15,829 )
Net foreign exchange (loss) gain	(	18,965 )	937 (	18,028 )
	(	46,655 ) (	8,579 ) (	55,234 )
Insurance premium		3,176	3,460	6,636
Insurance claims	(	3,327 ) (	3,588 ) (	6,915 )
Operating expenses	(	1,461 ) (	1,499 ) (	2,960 )
Loss before income tax	(	48,267 ) (	10,206 ) (	58,473 )
Income tax		452 (	1,435 ) (	983 )
Loss for the period	(	47,815 ) (	11,641 ) (	59,456 )

Notes, contd.:

1. Quarterly Statements, contd.:

2007	Q1 2007		Q2 2007		Q3 2007		Q4 2007		Q1 - 4 2007
Investment income:
Net income (expense) from investment securities and derivatives	12,473		7,658	(	23,651 )	(	60,161 )	(	63,681 )
Interest income	1,497		473		973		2,038		4,981
Interest expenses	( 3,017 )	(	3,263 )	(	4,972 )	(	6,314 )	(	17,566 )
Net foreign exchange gain (loss)	4,626		4,208	(	3,121 )	(	3,238 )		2,475
	15,579		9,076	(	30,771 )	(	67,675 )	(	73,791 )
Insurance premium	0		0		0		2,769		2,769
Insurance claims	0		0		0	(	2,598 )	(	2,598 )
Operating expenses	( 883 )	(	1,022 )	(	1,193 )	(	3,054 )	(	6,152 )
Profit (loss) before income tax	14,696		8,054	(	31,964 )	(	70,558 )	(	79,772 )
Income tax	388	(	12 )		4,817		7,341		12,534
Profit (loss) for the period	15,084		8,042	(	27,147 )	(	63,217 )	(	67,238 )