Gunnar Tryggvason Acting CEO

HKI objectives Background & owners HKI Targets 1 2 3

Hydrokraft’s Vision Global Demand for Energy is forecast to rise by more than 50% over the next 25 years Increased importance of Renewables to meet growing demand for energy Renewables can make major contributions to: –diversity and security of energy supply –economic development –addressing local environmental pollution –mitigating CO2 emissions at the global level The development of renewable energy technologies are important for the future of a sound global energy economy Hydropower can make a major contribution

Stable and high prices in Europe

Hydro plays a significant role Renewables in world electricity production (2004) In 2004 Hydro generated TWh – in TWh (est.)

Ownership SPV 1 LandsvirkjunLandsbanki SPV 2 50% Investors HydroKraft Invest hf.

HydroKraft’s Strategy HydroKraft’s aim is to invest in renewable energy, primarily in hydropower Main focus is on investing in projects which are operational but require: –Technical upgrade or major maintenance with potential of increasing capacity –Financial restructuring –Operational reorganisation Generation of electricity with hydropower is reliable and established technology of which the founders of HydroKraft have proven knowledge and excellent track record

HKI objectives Background & owners HKI Targets 2 3 1

ICELAND - Electricity Production by Sources ' 84 ' 86 ' 88 ' 90 ' 92 ' 94 ' 96 ' 98 ' 00 ' 02 ' 04 ' 06 ' 08 ' 10 Geothermal Oil Hydropower ' 83 GWh/a

Landsvirkjun - Background  Established by the Icelandic State and the City of Reykjavík in 1965 to undertake the first major power project in Iceland  Owned by the State 100% since Jan  Landsvirkjun is rated Aaa/A+ by Moody’s and Standard & Poor’s  Landsvirkjun is the marketleader in generation Produces 84% of the electricity used in Iceland supplies electricity wholesale to distribution companies and power intensive industries  70% ownership of Landsnet (the Transmission Company) Current legal mandate is primarily to operate in the energy sector, both locally and internationally

Landsvirkjun – Key numbers Production 2007:7,4 TWh Revenue 2007:182 m€ Assets :2,57 b€

18 May 2006 Kárahnjúkar dam

Landsbanki’s engagement in the Icelandic Energy Sector Active provider of corporate advisory in the energy sector in Iceland Provider of finance for new capacity in small scale hydropower projects –Projects developed in –New projects under construction Support to development of new large scale hydro power plants –Provision of financial services and support to main contractor of Kárahnjúkar power plant (690 MW)

Landsbankinn Results Income Statement Profit before taxes EUR 510m Profit after taxes EUR 459m ROE before taxes 40% ROE after taxes 36% Cost-Income Ratio 43% Balance Sheet Total assets EUR 23.2bn Shareholders equity EUR 1.5bn Tier 1 Capital Ratio 13.0% CAD Ratio 14.8% ISK / EUR Beginning of At year-end Average At 29 March Income by origin Income by segment

Landsbankinn - Extensive Operations in 15 countries

HKI objectives Background & owners HKI Targets 1 2 3

World Hydro Electrical Potential Gross Theoretical : TWh/a Technically Feasible: TWh/a Economically Feasible:8.100 TWh/a Generation:2.800 TWh/a Only 35% of economically feasible been utilized. The feasibility is increasing with higher power prices.

Types of investment Power production systems in which hydro plays a big role Technical, financial or operational transformation is likely to increase the investment value significantly Exit foreseeable in 3-5 years

First target market SE-Europe: Big hydro Power deficit Emerging markets Lack of investment in the past FDI welcomed Unexploited potential

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