FL GROUP hf. - Financial Statement Release

FL Group reports net loss of ISK 67 billion in 2007

-FL Group reports net loss of ISK 67 billion in 2007
-Global market conditions significantly affect Q4 earnings-
-Financial position and fundamentals remain strong -
-Market risk reduced significantly in Q4 and YTD 2008-



Reykjavik, Iceland 13 February 2008 - FL Group (OMX: FL), the international
investment company, today announces its results for the year 2007. 

Financial highlights

Net loss after tax of ISK 63.2 billion (EUR 694.5 million) in Q4 and ISK 67.3
billion (EUR 738.5 million) in 2007, reflecting a significant decrease in
market value of FL Group's listed assets. All of FL Group's listed holdings are
marked to market. 

Total assets increased to ISK 422.3 billion at the end of Q4 from ISK 262.9
billion at the end of 2006, representing a 60.7% increase.  Tryggingamidstodin
was fully consolidated by the end of the year. 

Total shareholders equity was ISK 155.8 billion at the end of the quarter, an
increase of ISK 13.2 billion from the end of 2006.  The increase was due to a
share issue in the second half, related to the acquisitions of property
companies and Tryggingamidstodin. 

Financial position and liquidity are strong, equity ratio is 36.9% and direct
liquidity of ISK 28.6 billion in the form of cash position and unpaid share
capital which became payable on 4 January. 

At the time of publishing the annual results, FL Group has refinanced ISK 47.1
billion of borrowings maturing in 2008, with only ISK 8.5 billion of borrowings
currently remaining. 

Negative re-valuation of ISK 3.7 billion of FL Group´s unlisted portfolio
reflected global market conditions in Q4. 

Increase in operating expenses is largely driven by increased investment
activity, non-recurring charges and expenses related to stock options. 


Operational highlights in fourth quarter 

ISK 53.7 billion acquisition of several major property companies funded with
new share capital. 

Icelandic insurance company Tryggingamidstodin acquired (99.1%), largely funded
with an equity increase. 
Jon Sigurdsson appointed Chief Executive Officer.

Comprehensive internal restructuring, market risk decreased and Copenhagen
office closed. 

Reduced exposure to the aviation sector by divesting shares in AMR and Finnair
for ISK 35.2 billion. 

Reduced exposure to non-core financial assets. Reduced stake in Commerzbank for
ISK 20.7 billion in Q4 and an additional ISK 34 billion have been sold the
first quarter 2008. 

Additional divestments in the trading portfolio in the quarter amounted to ISK
29.0 billion. 

Portfolio now is strongly balanced across different sectors, including:
banking, insurance and property - each of which has good value potential. So
does our Private Equity portfolio. 
FL Group remains committed to its key holdings, Glitnir, TM and Landic
Property, and will continue working with the management of these companies to
drive growth and profitability. 

As of today, FL Group has sold its 43,1% share in Geysir Green Energy. The
transaction amounts to ISK 10.5 billion. Estimated profit of ISK 3 billion,
which represents an increase of 40% from the original investment, has already
been accounted for in the company´s books. 

All foreign property funds, acquired from Baugur Group in December, have been
sold to Landic Property, in line with previous announcements, for a total
amount of ISK 20.6 billion. 

FL Group's Chief Executive Officer, Jon Sigurdsson, commented: 



“The fourth quarter of 2007 was an exceptionally challenging period for the
global economy and markets worldwide. FL Group has not remained unaffected, as
the value of most of our investments came under significant pressure, directly
affecting the Group's profitability.  However, our confidence in the future
remains unwavering: our fundamentals are strong, we have re-aligned our
portfolio, which has good value potential, and we have a clear strategic focus. 

We are well capitalised and have taken actions to limit our market exposure. We
have the financial capacity to face market turbulence and to support our core
holdings in Glitnir, Landic Property and TM.” 
Financial developments - Q4 and full financial year 2007

FL Group's operations are split into three business divisions: Financial
Institutions Group (“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.  The division also handles stake
building and stake disposals on behalf of FL Group's FIG and Private Equity
divisions. 

Attachments:

fl group - interim

fl group 4q press release.pdf