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Fly Play hf.

Pre-Annual General Meeting Information • Dec 14, 2007

6604_egm_2007-12-14_d4194d17-5986-4096-b639-aedce2575093.pdf

Pre-Annual General Meeting Information

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FL Group's shareholders meeting

14 December 2007

Agenda

    1. Proposal to authorize the Board of Directors to increase the share capital by issuing up to ISK 3,659,265,291 new shares of nominal value 1 ISK each at the rate 14 7 in order to finance the purchase of a 14.7 Property Portfolio from Baugur Group hf. and affiliates. The shareholders shall not have pre-emptive rights to the new shares
    1. Prop g py osal to chan ge the Address of the Com pan y to Sidumuli 24, Reykjavi k
    1. Proposal to change the object of the Company to general investment activities
    1. Election of Board of Directors
    1. Other

  • » The Board of Directors proposes that the Shareholders Meeting agrees to authorize the Board of Directors to increase the company's share capital by issuing up to ISK 3,659,265,291 new shares of nominal value 1 ISK each in order to finance the purchase of a Property Portfolio from Baugur Group hf hf. and affiliates. The new shares will be alloted to Baugur Group hf., in accordance with an agreement dated December 4, 2007. The price of the new shares will be 14.7 per share. The shares will be issued without the shareholders having pre-emptive rights to purchase the shares. The shares may be paid for by means of other valuables than cash.

  • » It is proposed that Paragraph 2 of Article 4 of the Company's Articles of Association will be as follows:
  • » "The Board of Directors may increase the share capital of the company by up to ISK 5,675,999,576 of nominal value with sale of new shares as follows:

[Items a-c will be unchanged, but new item will be added, item d, that will be as follows:]

» The company's Board of Directors is authorized to increase the company's share capital by issuing up to 3,659,265,291 new shares of nominal value 1 ISK each at the rate 14.7. The shares may only be used to finance a purchase of a Property Portfolio from Baugur Group hf. and affiliates and allotted to Baugur Group hf., i d ith t f D b 4 2007 Th B d f Di t i th i d t i th in accor dance with an agreement as of Decem ber 4, 2007. The Board of Directors is authorize to issue the new shares without the peremptory purchase provisions of Article 34 of Act Respecting Public Limited Liability Companies No. 2/1995 and the provisions of Article 4 of the company's Articles of Association being applicable. In accordance with the above the company's Board of Directors decides on the issues stipulated in Article 36 of the Act Respecting Public Limited Liability Companies, i.e. the subscription period and payment meth d df h h h h d h h d h h b h od and from which time the new shares are grante d rights in t he company. In accor dance with the above it shall be permitted to pay for the shares by the means of other valuables than cash. "

Jon Asgeir Johannesson

C a a o t e oa d o ecto s, G oup h airman of he Boarof Directors, FL roup

Main changes

  • »Equity increased to ISK 180 billion
  • » R fi i enancing st th rengens the Company and increases li idit liquidity
  • »Acquisition of property companies for ISK 54 billion
  • »Changes in management
  • »Opportunities in main investments, Glitnir, TM and Landic
  • » Continuing emphasis on growing the Company s' Private Equity division
  • »Plans to establish a fund in 2008 with external investors
  • » Reducedmarket risk
  • »Streamlining of operations

Jon Sigurdsson C O, G oup EO, FL roup

ACQUISITION OF PROPERTY ASSETSPROPERTYASSETS

»Acquisition of a diversified property portfolio from Baugur Group

  • »Acquisition of 12 property companies and funds spread across Europe for ISK 53.8 bn
  • » Selected assets intended to be sold back-to-back to Landic Property for ISK 13.7 bn
  • » Purchase of property and back-to-back sale to Landic Property is subject to final consents and approvals
  • »In line with increased focus on Private Equity
  • »Companies with a leading market position, generating strong cash flows
  • » Kaup g thin Bank & KPMG haveprovided a fairness o pinion on the valuation methodology and assum ptions

»A new platform for further growth

»Landic Property will be FL Group's platform for investments in property

Landic Property | A strong diversified property company

  • » Largest investment by value, a 39.8% holding in the company
  • » Landic Property is a leading Nordic real estate a estate company with a substantial market share in Iceland, Sweden and Denmark
  • » Circa 500 properties with approximately 2.7m sqm of rental space, split into office space, retail i d i l d h l il, in dustrial anhotels
  • »Assets valued at over ISK 400 bn
  • More than 3,800 lease agreements
  • Over 270 employees
  • » A key strategic asset for FL Group
  • »A platform for further growth
  • Valuable experience in deals with a property angle

Landic Property | A strong diversified property company

» Strong tenant base includes both governmental bodies, leading retail companies, airlines and banks:

  • » Swedish Police Dep y artment and Stockholm Count
  • »Hagar, Magasin, Illum
  • »TeliaSonera, Nordea, LM Ericsson
  • »Scandinavian Airlines
  • »Hilton Nordica Hotel
  • » Diversified asset portfolio:
  • »Revenues for 2008 estimated approx. ISK 30 bn
  • »78% of rental income outside of Iceland
  • » 10 lar gest properties account for only 20% of revenues
  • Favourable valuation:
  • » Valuation represents a pro-forma estimated 2007 yield of approx. 8% (excl. Keops development)
  • » Double overhead cost structure and hi gh expenses in relation to acquisition and integration of Keops
  • »Nordic peers are trading in a yield range of 4.3-7.9%
  • »Valuation in line with Keops transaction this summer

10

y Council Kringlan (Reykjavík, Iceland)

Haninge Söderbymalm (Haninge, Sweden)

Huddinge Medicinaren 19 (Huddinge Sweden)

(Huddinge, Söderbymalm 3:488 (Haninge, Sweden)

Østergade 52 (Copenhagen, Denmark)

Tulpanen 3 (Mölndal, Sweden)

Kungsängen 15:1 (Kungsängen, Sweden)

Holtagardar (Reykjavík, Iceland)

Alleen & Amager Strandvej (Copenhagen, Denmark)

Hilton Nordica Reykjavik ( yj , ) Re ykjavík, Iceland)

Other assets | Solid assets with development potential

  • » Fasteignafélag Íslands (32.3%) is the parent company of Smáralind and some of the prime development plots adjacent to the Smáralind shopping mall
  • » Key figures:
  • »Total assets around ISK 25 bn, equity of ISK 13 bn
  • »Around 63,000 sqm in the premium shopping complex of Smáralind
  • » Currently 16,000 sqm are under construction at Norðurturninn with further development potential of around 100,000 sqm
  • » T ld f ransaction yield ofS ld mara in dis 7.7% using next year' d s estimate d rent revenues
  • » Thyrping (49 7%) is Iceland (49.7%) s' leading property development company specialising in company, regional planning and construction. The company has ISK 8.5 bn in total assets
  • » Current principal development projects are:
  • »Borgartun 26, a high-profile office and service complex in the heart of Reykjavik's CBD
  • » 101 Skuggi (Phase 2 and 3), a high-rise residential tower of 250 luxury apartments on the seafront in downtown Reykjavik
  • » Nesgarðar, where 190 luxury apartments will be built on a prime location the north side of the town of Seltjarnarnes, adjacent to Reykjavik
  • » Valuation of asset:
  • » Conservative valuation assumptions: A fully leased office building in fully Borgartún valued at multiples below city centre standards for new offices; e.g. Skuggahverfi valued at 20% discount to the current estimated price per sqm

  • »No specific value attributed to development pipeline and expertise

  • »Eik fasteignafelag is a property company in Iceland focusing on commercial real estate

  • »The company was acquired in April 2007 by a consortium led by FL Group
  • » M i fi a ngures:
  • »Total assets around ISK 19 billion
  • »Over 100,000 sqm are in the company's portfolio
  • » Valuations

  • »Strong asset sales and rent enhancement implies favourable valuation rent

  • »Two funds focusing on the booming Indian market

  • » Credit turmoil in Europe and US does not appear to have impacted the Indian property market
  • » Valuations:
  • » Funds were recently put in place and are valued at investment cost in the transaction
  • »No premium payable for value created since investment
T F
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Other assets to be sold to Landic

  • » The LXB funds are primarily invested in assets that have development potential.
  • » Retail, warehousing, edge of town developments, warehousing, and residential
  • » Strong tenants, including Tesco, Morrisons, Sainsbury's and House of Fraser
  • » Fund manager has an excellent track record within the UK market

WCC Europe

  • » The WCC Europe Sarl invests primarily in retail, office and warehouse property across Continental Europe
    • »4 properties in Italy
  • »4 properties in Poland
  • »3 properties in Germany
  • 1 tiH» 1 property in Hungary

  • »Investment made at investment cost of seller

  • » The Prestbury 1 fund is comprised mostly of three different asset portfolios:

  • » A portfolio of 18 pub pro perties in the UK p p pp » The portfolio currently comprises:
  • »A portfolio of 23 hospitals based in the UK
  • » A portfolio of 8 UK and German hotel and leisure properties, including Madame Tussauds in London and Thorpe Park in Surrey
  • Yields differ from one portfolio to another
  • »Investment made at investment cost of seller
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CORPORATE OVERVIEW

Business units

17

FIG~ 50% of total assets

FINANCIALS

Company financials

  • » Financial performance of the company has been very strong in recent years
  • » Market turbulence in recent months has significantly impaired this year's results
  • » Diversification of income sources is already underway with emphasis on reducing impact of market fluctuations on P&L:
  • »Increased Private Equity activity
  • »Consolidation of TM
  • »Decrease market risk
  • » Possible equity method accounting of key strategic assets
  • »Fund management revenues
  • » Increased focus on operational efficiency:
  • »Copenhagen office closed
  • »Operational cost will decrease in 2008
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Financial strength

20

  • » Transaction and equity increase changes balance sheet significantly
  • hl b»Share capital increases by 49%
  • » FL Group secured ISK 45 bn long-term financing
  • » A part of the financing will be used to repay Total liabilitiesthe Company's short-term debt
  • » Strong financial position:
  • » Total equity of ISK 180 bn
  • »Total assets of ISK 440 bn
  • »Cash and cash equivalents of circa ISK 35 bn
  • » Equity ratio to increase to approximately 41%
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30/11 numbers are pro-forma estimates for FL Group including TM's 30/9 numbers

Funding and capital structure

  • »Capital structure and funding options differ substantially between business units
  • » Primary objectives of funding policy is to:
  • »Minimise maturity mismatch between assets and liabilities
  • »Diversify funding sources to fulfil the needs of each business unit
  • » Maintain a healthy balance of cash or cash instruments and have liquid assets to cover maturing liabilities for the next 12 months

SUMMARY

Well positioned for future growth

»Financial strength increased

  • »Equity of ISK 180 bn and cash of ISK 35 bn
  • »Opportunities in current market conditions can be better exploited with a strong equity base

23

»Solid asset base

  • »High quality assets in the portfolio
  • »Property assets complement current asset base very well
  • »A new platform investment positioned for growth

»Operational improvements

»Operating expenses will decrease next year

»Better managed market risk

»Decreased market exposure on high beta sectors

»Strong investment platform going forward

  • »Operations run from London and Reykjavik
  • »Rigorous risk and capital management

Nick Leslau

C a a a d C e ecut ve, hairman and Chief Executive, Prestbu yr Invest e t o d gs ment Holdings

  • » The Board of Directors proposes that the Shareholders Meeting agrees to authorize the Board of Directors to increase the company's share capital by issuing up to ISK 3,659,265,291 new shares of nominal value 1 ISK each in order to finance the purchase of a Property Portfolio from fromBaugur Group hf and affiliates The new hf. affiliates. shares will be alloted to Baugur Group hf., in accordance with an agreement dated December 4, 2007. The price of the new shares will be 14.7 per share. The shares will be issued without the shareholders having preemptive rights to purchase the shares. The shares may be paid for by means of other valuables than cash.
  • » It is proposed that Paragraph 2 of Article 4 of the Company's Articles of Association will be as follows:
  • » "The Board of Directors may increase the share capital of the company by up to ISK 5,675,999,576 of nominal value with sale of new shares as follows:

[Items a a-c will be unchanged, but new item will be added, item d, that will be as follows:] c

» The company's Board of Directors is authorized to increase the company's share capital by issuing up to 3,659,265,291 new shares of nominal value 1 ISK each at the rate 14.7. The shares may only be used to finance a purchase of a Property Portfolio from Baugur Group hf. and affiliates and allotted to Baugur Group hf., in accordance with an agreement as of December 4, 2007. The Board of Directors is authorized to issue the new shares without the peremptory purchase provisions of Article 34 of Act Resp Respecting Public Limited Liability Companies No 2/1995 and No. the provisions of Article 4 of the company's Articles of Association being applicable. In accordance with the above the company's Board of Directors decides on the issues stipulated in Article 36 of the Act Respecting Public Limited Liability Companies, i.e. the subscription period and payment method and from which time the new shares are granted rights in the company. In accordance with the above it shall be permitted to pay for the shares by the means of other val bl th h " luables than cash.

» The Board of Directors proposes that the Shareholders Meeting agrees to amend Article 2 of the Articles of Association so that is henceforth read as follows:is

26

»"The address of the company is Sidumuli 24, 108 Reykjavík."

» The Board of Directors proposes that the Shareholders Meeting agrees to amend Article 3 of the Articles of Association so that henceforth reads as follows: follows:

27

» "The purpose of the company is to act as an investment company, that is to earn interest on money that shareholders have tied to activities in the operation of the company, investments, including those in subsidiaries and associated companies."

» The following persons have notified their candidature to the Board of FL Group hf. which will be elected at the Shareholders Meeting on December 14 14,

28

Board Members:

  • »Gunnar S. Sigurdsson, ID no 091169 091169-3559
  • »Hannes Smarason, ID no 251167-3389
  • »Jon Asgeir Johannesson, ID no 270168-4509
  • »Kristin Edwald, ID no 150471-5329
  • »Palmi Haraldsson, ID no 220160-3789
  • »Thordur Mar Johannesson, ID no 080773-5529
  • »Thorsteinn M. Jonsson, ID no 180263-3309

Alternates:

  • »Peter Mollerup, ID no 220173-2759
  • »Smari S. Sigurdsson, ID no 030847-3349

»Other:

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