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Fly Play hf.

Investor Presentation • Feb 13, 2008

6604_er_2008-02-13_ab15b70e-5cba-4ed8-a9fb-02477154cbee.pdf

Investor Presentation

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Analyst presentation 13 February 2008

Disclaimer

Any statement contained in this presentation that refers to FL Group's estimated or anticipated future results or future activities are forward-looking statements which reflect the Company's current analysis of existing trends, information and plans. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially depending on factors such as the availability of resources, the timing and effect of regulatory actions and other factors. FL Group does not undertake the obligation to update or alter these forward-looking statements beyond looking its duties as an issuer of listed securities on the OMX Nordic the Exchange in Reykjavik, Iceland.

Today's speaker and agenda

Jon Sigurdsson Chi f E ti OffiefExecutive Officer

  • »Financial highlights
  • »Business unit overview
  • »Moving forward
  • »Q&A

Key business highlights

» Extreme market conditions during second half of the year »

» Significant impact on the company's operations and financial performance

Portfolio rationalised»

  • »Sale of non-core assets
  • » Exposure to aviation sector decreased significantly significantly» Stron

»Market exposure

» During Q4 and in January FL Group h d d it k thas decrease its mar eby around ISK 130 billion

»Operations streamlined

  • Closure of Copenhagen office
  • » Focus on reducing operating expenses
  • » Refinancing of borrowings maturing in 2008
  • g support for core assets g pp
  • »Glitnir Bank, TM and Landic Property
  • » Key focus on liquidity and strong t exposure capital base

FINANCIAL HIGHLIGHTS

Financial highlights

  • » Net loss after tax of ISK 67.3 billion in 2007 ISK 63 2 billion in 4Q 2007, 63.2
  • » Total asset of ISK 422 billion at year-end, ISK 377 billion in investment operations
  • T t l it f ISK 156 billi t d»To
  • Equity ratio of 37%, 41% in investment operations
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»Financial statements are prepared in accordance with IFRS and audited by KPMG

» Ke considerationsKey

  • »Listed holdings are valued using the marked to market method
  • »Unlisted assets are reported on fair market value in accordance with IFRS
  • » TM i d i 3Q i f ll lid t d f 1 O t b 2007 TM, acquire in is ully consolid aed as ocober

Income statement for the full year

In
ta
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s
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en
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9
8
2		 8
5
4
In
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8
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Op
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7
7
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(
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(
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er		 -6
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8
,		 4
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8 ,
5
5
  • » Market turmoil in second half of the year resulted in significant decrease in investment income
  • » Stronger cash position throughout the year is reflected by increased finterest income from previous year
  • » Interest expenses increase in line with increased investment activity
  • Consolidation of TM changes » TMcomposition of income statement, decreases comparability between years

Income statement for the quarter

In
ta
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m
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m
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l
l
I
S
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m
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Q
0
7		 4
Q
0
6
fro
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Ne
inc
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ies
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ive
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s
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0,
1
6
1
-		 1
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0
4
7
In
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te
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e		 2,
0
3
8		 8
5
-
In
te
t e
re
s
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se
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3
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4
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8
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6
7,
7
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3
8
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,
In
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6
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In
la
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5
9
8
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7,
5
0
4		 7,
3
3
8
Op
ing
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p
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se
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3,
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5
5
4
4		 1
1,
0
0
6
6
7
7
f
(
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)
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fo
Pr
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5
5
8
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2
7
1
In
(
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ex
p
en
se
s		 7,
3
4
1		 2,
9
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0
(
)
(
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Pr
f
los
fro
d
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t
t.
t
t
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m
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ne		 0 2
4,
3
3
5
(
)
Pr
f
lo
fo
he
d
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io
t
t
o
ss
r
p
er		 6
3,
2
1
7
-		 3
3,
9
4
5
  • » Losses in 4Q are largely explained by a significant decrease in market value of listed holdings
  • » Exceptional items in 4Q increased operating expenses from run-rate l llevels
  • » Unlisted assets re-valued by ISK -3.7 billion
  • TM consolidated for the first time»during 4Q
La
l
d
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d
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in
t
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g
s		 Ho
l
d
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g
e		 C
ha
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I
S
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l
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m
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to
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r		 d
t y
a
ea
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t y
a
ea
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n		 4
Q		 2
0
0
7
F
I
G
G
l
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ir
tn		 Ba
k
ing
n		 3
2.
0
%		 1
0
4,
4
3
0		 2
3.
0
%
-		 5.
8
%
-
T
M		 In
su
ra
nc
e		 9
9.
1
%		 4
9,
3
7
4		 0.
0
%		 2
4.
7
%
Pr
iv
Eq
i
te
ty
a
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/
l
br
Ro
Un
A
S
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ew
y		 Be
ve
ra
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6
%		 9,
9
2
7		 9.
3
%
-		 2
7.
8
%
-
d
In
Ga
Gr
ire
ing
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ou
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%		 4,
0
5
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1.
7
%
-		 1
1.
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%
d
No
ico
r
m		 Pr
ty
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er		 2
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%		 6,
8
5
9		 1
1.
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%
-		 2.
7
%
-
Ca
l
M
ke
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ta
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p
ar
Co
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z
n		 Ba
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9
3
1
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6
%
-		 9.
0
%
-
A
M
R		 Av
ia
io
t
n		 0.
0
%		 0 3
1
%
7.
-		 3.
6
%
5
-
F
Oy
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j
na		 Av
ia
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t
n		 1
2.
7
%		 1
2,
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9
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8.
5
%
-		 2
8.
2
%
-
A
k
Ka
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S
A
iv
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p		 F
ls
ina
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3.
3
%		 6,
4
0
0		 9.
8
%
-		 1
1.
2
%
-
  • » Value of listed holdings decreased significantly during very difficult market environment in 3Q and 4Q, eliminating value increases that had accumulated during the first half of the year
  • » FL Group has managed to reduce its market exposure significantly by selling assets not aligned with its strategy
O
in
t
p
er
a
g
ex
p
en
se
s
I
S
K
l
l
i
io
m
n
To
l o
in
ta
t
p
er
a
g
ex
p
en
se
s		 6,
1
2
5
T
M
In
su
ra
nc
e		 8
4
1
Sa
la
ry
e
xp
en
se
s		 7
0
1
f
f c
On
ha
e
o
rg
es		 6
9
3
h c
ha
No
n c
as
rg
es		 5
6
6
la
d
Inv
tm
t r
te
t
es
en
e
co
s		 1,
3
2
5
he
O
t
ts
r c
os		 1,
9
9
9
  • » Total operating expenses in 2007 amounted to ISK 6,125 million, of which TM accounts for ISK 841 million
  • » Exceptional items expensed during the year amount to ISK 2,018 million
  • » Non cash charges due to share options amount to ISK 566 million
  • »Salary expenses amount to ISK 701 million

» Operating expenses in the investment operations for 2008 will be reduced by 50% from previous year


Ba
la
he
As
t
ts
nc
e
s
e
se		 S
h
i
i
t
t
r
o
n
g
c
a
s
p
o
s
o
n
»
I
S
K
i
l
l
io
m
n		 3
1
1
2
0
7		 3
0
0
9
0
7		 3
1
1
2
0
6
d
d
h
h
R
R
i
i
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e
c
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s
»
Ca
h a
d
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iva
ts
s
n
ca
s
q
u		 2
1,
1
2
5		 2
9,
5
1
5		 4
7,
0
2
2
d
ha
l
Un
i
i
ta
p
a
s
re
c
ap		 7,
5
0
0		 0
Eq
i
inv
ty
tm
ts
u
es
en		 2
1
8,
9
9
8		 2
6
6,
2
0
9		 1
8
1,
0
3
7		 »
ds
d
de
b
Bo
inv
t
tm
ts
n
a
n
es
en		 1
6,
0
2
1		 1
2
4
De
iva
ive
t
r
s		 6,
6
0
4		 1
9,
1
6
1		 4,
3
0
9
Re
d
h
ic
tr
te
s
ca
s		 5
3,
0
6
0		 2
6,
9
7
6		 9,
5
7
2		 f
l
d
i
t
t
r
o
e
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o
r
o
o
a
n
As
las
f
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le
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ie
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se
c
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r s
a		 0 0 9
0
4		 p
p
p
y
Lo
d
b
les
lu
d
iva
inc
ing
ins
an
s a
n
re
ce
ur
an
ce
re
c
,		 4
2,
3
4
8		 2
2,
3
2
5		 1
9,
4
8
7		 h
Re
ins
ts
ur
an
ce
a
ss
e		 1
3,
9
3
7		 0 d
d
L
t
t
o
a
n
r
a
e
a
n
o
e
r
»
De
fe
d
ta
t
rre
x
as
se		 8,
6
2
3		 0
Ta
t
x
as
se		 0 4,
3
9
7		 0
Op
ing
t
ts
er
a
a
ss
e		 2,
1
6
7		 8
3
0		 4
2
5		 l
d
i
t
t
t
t
n
s
e
e
r
a
n
s
a
c
o
n
u
b
le
In
i
ta
ts
ng
as
se		 3
1,
9
3
7		 0
l a
To
ta
ts
ss
e		 4
2
2,
3
2
0		 3
6
9,
4
4
0		 2
6
2,
8
7
1
  • »Strong cash position
  • R i d hi»Restricted cashincreases
  • » Equity investments and loans in relation to investments increase mainly due to investments in property portfolio and TM
  • » Loan trade and other receivables increases mainly from consolidation of TM and unsettled transactions

Balance sheet | Equity and liabilities


Ba
la
he
Eq
i
d
l
ia
b
i
l
i
ie
t
ty
t
nc
e
s
e
u
a
n
s
I
S
K
i
l
l
io
m
n		 3
1
1
2
0
7		 3
0
0
9
0
7		 3
1
1
2
0
6
l e
To
i
ta
ty
q
u		 1
5
5,
8
4
4		 1
4
9,
1
8
7		 1
4
2,
6
7
6
De
iva
ive
t
r
s		 1
3,
4
8
8		 9,
4
4
1		 7,
0
2
1
de
d
he
b
les
Tr
t
a
a
n
o
r p
ay
a		 1
4,
4
6
9		 9,
7
2
6		 5,
9
0
8
I
B
loa
d
bo
ing
ns
a
n
rro
w
s		 2
0
4,
9
7
9		 2
0
0,
2
9
9		 1
0
4,
9
5
5
In
l
b
l
ia
i
i
ies
t
su
ra
nc
e		 2
2
9
9,
6
6
2
2
6
6		 0 0
O
he
t
r		 3,
9
1
5		 8
7
7		 2,
3
1
1
To
l
l
ia
b
i
l
i
ie
ta
t
s		 2
6
6,
4
7
6		 2
2
0,
2
5
3		 1
2
0,
1
9
5
To
l e
i
d
l
ia
b
i
l
i
ie
ta
ty
t
q
u
a
n
s		 4
2
2,
3
2
0		 3
6
9,
4
4
0		 2
6
2,
8
7
1
  • » Total interest bearing liabilities amounted to ISK 205 billion at year-end
  • »Increased investment activity
  • » Consolidation of TM increases trade and other payables as well as borrowings
  • » Shareholders' equity at year end was ISK 156 billion
    • » ISK 1.7 bn negative effect from consolidation of TM
  • » Strong equity ratio at year-end of 37% 41% l di TMf 37%; 41% excluding
  • » In total new equity worth ISK 95 billion was issued in the year 2007
    • »Acquisition of TM
    • » Acquisition of property companies

Maturity profile has been enhanced

  • » FL Group has finalised a refinancing of a large portion of loans that were g p maturing in 2008
  • » Liabilities maturing in 2008 currently amount to ISK 8.5 billion
  • » Debt maturity profile is very healthy – providing support in a difficult market environment

Liquidity is strong

  • » Healthy balance between maturities of assets and liabilities
  • »Strong liquidity position
  • »Liquid assets cover all maturities for
  • » Further work being completed to keep liquidity strong

BUSINESS UNITS OVERVIEW

  • »Continued support to current investments both within FIG and Private Equity
  • »Evaluating add add-on investments and other value enhancing actions on
  • »Further integration with TM and execution of strategy a key priority in 2008.
  • » Capital Markets takes advantage of volatility in markets through short term positions
  • »Execution of hedging for other business units

G
l
Ke
f
ls
i
ir
in
ia
tn
y
an
c
I
S
K
l
l
i
io
m
n		 2
0
0
5		 2
0
0
6		 2
0
0
7
Ne
in
inc
t
te
t
re
s
om
e		 2
2,
3
1
5		 3
0
8
4
7,		 3
9,
0
8
2
Ne
fe
d
iss
io
t
es
a
n
co
m
m
ns		 8,
7
7
3		 2
6,
4
5
9		 3
7,
6
4
4
Ne
ing
inc
t o
t
p
er
a
om
e		 3
6,
4
1
1		 7
2,
6
0
1		 8
5,
0
9
5
f
f
Pr
i
t a
te
ta
o
r
x		 1
8,
8
8
6		 3
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»Key financial highlights of fourth quarter

  • » Strong quarter for both net interest income and net fees & commissions
  • » Operating expenses too high, partly explained by one-off expenses
  • »Profit after tax and minorities of ISK 2.8 bn

»Outlook for 2008

  • »Good momentum in core income » Strong asset quality
  • » Loan portfolio grew strongly during 2H in 2007
  • »Focus on bringing operating expenses down
  • »One-off expenses of ISK 3.5 bn in 2007

  • » More focus on quality of loan portfolio than on growth

  • » Real estate 28% of loan portfolio, majority with LTV <80%

  • »Moderate equity exposure
  • » Debt markets remain challenging but Glitnir h t li idit iti d i f ihas strong liquidity position and is focusing on increasing the deposit base

T
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  • » Continued strong growth in premiums for own taccoun
  • » Claims for own account continue to be high
  • » Combined ratio of 117% during 4Q which is above the target ratio. Still there is positive development year-on-year
  • » Profit after tax of ISK 4.4 bn in 2007, equalling a 18.3% ROE

» Icelandic operations

  • »Premiums foa increased by 22% yoy
  • »Claims foa increased 26% yoy
  • » Weak results in 2007 but combined ratio slightly better than in 2006
  • » Two insurance classes, Seamen's accident insurances and voluntary car insurances, are performing badly

» Norwegian o perations g p

  • »Premiums foa increased by 15% yoy
  • »Claims foa increased by 15% yoy
  • »Combined ratio above Nemi's target
  • » Based on market conditions Nemi delivered good results and outperformed some of its competitors

»Changes have been made to improve results

  • »Management changes implemented Management
  • »Weaker than expected results in insurance operations but measures have been taken to improve profitability
  • »Nemi expected to achieve strong growth in premiums for own account

»Value potential

  • »Good potential in the Icelandic operations
  • »Nemi is an exciting platform for further Nordic growth
  • »Operating business which brings cash flow and stabilitiy

»Approval from the FSA pending

»Outlook

  • » Good outlook for 2008 as premiums for own account are expected to increase significantly and combined ratio expected to decline
  • »As Nemi is now part of financially stronger entity it can take larger part of the insurances that it underwrites

BUSINESS UNITS OVERVIEWPRIVATE EQUITY

Overview of key holdings

71% holding

Successful sale of property funds

  • » All foreign property funds acquired from Baugur Group in December have been sold to Landic Prop y ert
  • »Transaction value ISK 20.6 billion
  • » Consideration paid with a five year convertible bond in Landic Property
  • »First conversion possibility two years from now
  • » Transaction is in line with Landic Property's long term strategy of INDIAdiversifying its operations further
  • » Acquisition increases scale and market presence in markets outside the company's current markets

TERRA FIRMA

WCC Europe

Landic is a diversified property company

  • » Landic Property is a leading real estate company with a significant operations in company Sweden, Iceland and Denmark
  • »Total assets of c. EUR 4.8 billion
  • »More than 3,800 tenants
  • L ttibl d 2 7 illi ettible space aroun

»A very good year for Landic Property

  • »Keops acquisition a key highlight
  • O ll b i i k d d th h Overall business risk reduce throug h a wider geographical footprint and a more diversified tenant base
  • » Continued good performance of underlying assets
  • » Continued emphasis on growth in key markets
  • Opening of new office in Helsinki provides a window for further growth in Finland and Baltics

  • Acquisition of property portfolio

  • » Strong and diversified asset base with significant ten largest properties providing 20% of rent income and ten largest tenants providing 26% of rent income

  • » High quality assets located in central 2.7 million sqm. l i i S d D k dI l dlocations in Sweden, Denmark and Icelan d, where demand is high
  • » Long lease contracts with a portfolio average of c. 7 years remaining and » embedded inflation adjustments
  • » Economies of scale allow the company to adjust its product offering to its clients h h ddwhen changes are nee ded
  • »Refinancing for 2008 is well advanced
  • »Will publish its annual results in March

»Our view on market development

  • Currently seeing tight and rapid contraction in » Use existing platform to expand into new credit markets
  • » Yields have drifted lower in relatively low turnover
  • Strong underlying demand in key markets for Landic

» Positive analyst comments on the Swedish property market

  • » Peak rents in Stockholm CBD are currently being reported with vacancy rates falling dramatically
  • The sector is facing flat property yields, and this will put a focus on growing the underlying earnings of property portfolios - as opposed to the transaction-driven value creation of the past few years p y

»Next steps

  • » markets
  • » Utilise opportunities that current market can offer
  • I ffi i d ii » Improve cost effi ciency an d continue in rationalise internal structure
  • » Operational improvement include
    • » Develop relationship with tenants to be able to better adapt to the clients' needs
    • » Sell off assets in urban regions and focus on central locations
    • » Improve quality of existing assets by teaming up with developers
    • » Strengthen operations of Keops Investments

Interest in Geysir Green Energy sold

  • » FL Group has completed the sale of all of its shares in Geysir Green Energy g g y to several investors, includin g a fund mana ged b y Glitnir Bank, focusing on renewable energy
  • » Total value of transaction amounts to ISK 10.5 billion
  • »In line with carrying value as at 31/12 value
  • »An increase of 40% from the original invested amount
  • » FL Group will become an investor in Glitnir 's fund with a stake worth ISK 4.5 billion
  • » Support to Glitnir's niche strategy which includes developing a fund focusing solely on renewable energy

Other notable highlights

  • » A tough year for beverage companies is now behind us
  • »Adverse summer weather conditions conditions
  • »Increased raw material and energy costs
  • » Four strategic acquisitions during the year have almost doubled the size of the business

  • »Is now the largest private label soft drink producer in Europe

  • »An offer for Inspired was not made due to conditions in the financial markets

  • »Remains a supportive shareholder

  • » Rules on takeovers and mergers prevent the company from making another approach for six months from the withdrawal of the previous approach

  • »Significant operational progress despite continued difficult market conditions

  • »Sterling continued a significant turnaround and Iceland Express had a record year
  • »Thorsteinn Orn Gudmundsson hired as CEO

MOVING FORWARD

»Refinancing

  • » A large portion of borrowings maturing in 2008 have been refinanced
  • »Liabilities maturing in 2008 currently amount to ISK 8.5 billion
  • »Company has liquidity to cover maturities for next 52 weeks

»Liquidity is strong

  • »Market exposure decreased dramatically dramatically
  • » Despite continued volatility in markets the company has managed to keep equity ratio above 30%

»Adapt to new market environment

  • »Continue to manage market exposure
  • »Keep sufficient liquidity to be able to cope with further adverse conditions

»Focus on core assets

»Glitnir Bank, TM and Landic

»Operations streamlined

  • »Closure of Copenhagen office
  • »Focus on reducing of operating expenses

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