FL GROUP hf. - Quarterly report

FL Group's - nine months results

FL Group reports net loss of ISK 4 billion in the first nine months
- Short term impact on performance due to market turmoil -
- Financial position and fundamentals remain strong -


Reykjavik, Iceland 2 November 2007 - FL Group (OMX: FL), the international
investment company, today announces its results for the third quarter ending 30
September 2007. 


Financial highlights
Net loss after tax of ISK 4.0 billion (EUR 45.6 million) in nine months and ISK
27.1 billion (EUR -307.9 million) in 3Q reflecting mark to market adjustments
due to global market turmoil. 

Total assets increased to ISK 369.4 billion at the end of 3Q from ISK 262.9
billion at the end of 2006, representing 40.5% increase during the first nine
months. 

Total shareholders' equity was ISK 149.2 billion at the end of the quarter, an
increase of ISK 6.5 billion from end of 2006.  In October FL Group issued
additional equity of ISK 7.9 billion in relation to its acquisition of shares
in TM, bringing pro forma shareholders' equity to ISK 157.1 billion. 

Financial position and liquidity remains strong, equity ratio of 40.4% and cash
position of ISK 29.5 billion. 

Conservative revaluation of unlisted assets contributing, ISK 3.0 billion.

Increase in operating expenses driven by expanded operations and close to ISK 1
billion in non-recurring expenses (e.g. employee terminations) and non-cash
charges (e.g. intrinsic value of stock options). 


Operational highlights
Business model re-formed into three reporting units driving increased focus on
revenue generation: FIG, Private Equity and Capital Markets. 

Board of AMR (parent company of American Airlines) urged to consider spinning
off its frequent flyer unit. 

Acquisition of 83.7% stake in TM, an Icelandic insurance company, in 3Q,
additional shares bought in October brings the current holding to 97.9%. The
Company will be consolidated into Group's accounts in 4Q 2007. 

Geysir Green Energy announced its intention to merge with Reykjavik Energy
Invest. 
 
Preliminary approach was made to Inspired Gaming in the UK, to acquire the
company. 


FL Group's Chief Executive Officer, Hannes Smarason, commented: 
“The third quarter of 2007 was a period of exceptional turbulence in financial
markets and many of our key investments were challenged.  As we mark all assets
to market, fluctuations are directly reflected in our income statement.
However, the fundamentals of our business remains strong and we have seen good
earnings from our portfolio companies, both listed and unlisted, in recent
quarters.  We continue to diversify our portfolio and the strategic acquisition
an Icelandic insurance company in the quarter underpins our strategy. 
We are well positioned to exercise quick decision-making, strategic flexibility
and hands-on investment approach to drive long term value creation.” 

More in attatchments



Investor and media enquires

Halldor Kristmannsson
Managing Director of Corporate Communications & IR
Tel: (+354) 591 4400 / (+354) 669 4476
E-mail: halldor@flgroup.is




About FL Group 
FL Group is an international investment company focusing on three areas of
investment, FIG, Private Equity and Capital Markets.  FIG is a special
investment function responsible for strategic investments in banking, insurance
and other financials.  Private Equity oversees FL Group‘s private equity
holdings in addition to some listed positions that fit specific investment
criteria.  The company's Capital Markets function oversees investments in
listed securities as well as derivatives and other alternative trading for
hedging or investment purposes. 

With head office in Reykjavik and offices in London and Copenhagen, FL Group
invests in companies worldwide.  The Company is listed on the OMX Nordic
Exchange in Reykjavik, Iceland (OMX: FL), with over 4,000 shareholders. 

More information on www.flgroup.is

Attachments:

fl group - 3q 2007.pdf

fl group - 3q release - english.pdf