In connection with the proposed share capital increase of Sparisjódur Mýrasýslu (SPM), the board of directors of SPM will present a report to a meeting of the board of representatives concerning SPM's financial results for the first half of 2008. The report contains information on SPM's finances taken from the provisional first half results, which have not been published and have not been endorsed or reviewed by SPM's auditors. The board of directors plans to deal with the definitive financial results, which will be reviewed by SPM's auditors, next week. The report of the board of directors contains the following financial information: The group's estimated loss for the first six months of 2008 is ISK 4.6 billion. Estimated shareholders' equity according to the balance sheet at the end of June 2008 is ISK 1.5 billion, compared with ISK 6.3 billion at the end of 2007. Following the ISK 2 billion share capital increase, shareholders' equity will total ISK 3.5 billion. SPM's management considers the group's equity ratio to be unsatisfactory, and it is planned to bring the equity ratio to a satisfactory level by means of the aforementioned share capital increase and other measures taken by SPM's board. According to the main conclusions of the financial results SPM's operations and operating environment have clearly experienced a major turnaround since the beginning of the year. The decrease in share prices has had a significant impact on SPM's operating results, resulting in an estimated loss of ISK 4.5 billion, and the loss from subsidiaries and associated companies is estimated at ISK 500 million, a far greater figure than budgeted for. So far this year conditions for companies and individuals have deteriorated sharply owing to the weakness of the Icelandic króna, high interest rates and the cooling down of the economy. The estimated provision for loan losses increased sharply during the period to ISK 1.9 billion, partly because of a general increase in defaults. The real decrease in property prices and share prices in recent months has negatively affected loan collateral and thus the quality of the group's loan portfolio. The board of directors of SPM wishes to make it known that the general operations of SPM from 1 July until today's date are in accordance with operating plans. The proposed participation by Kaupthing and other investors in SPM's share capital increase is likely to consolidate and significantly reinforce SPM's operations. Borgarnes, 15 August 2008