Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698061019304.pdf (Liberia)
Eyrir Invest ehf.

Financial Statements for the year 2011 EUR Eyrir Invest ehf.

Skólavörðustígur 13 101 Reykjavík Iceland Reg.

no.

480600-2150 Contents Endorsement and Statement by the Board of Directors and the CEO .................................................................

Independent Auditor's Report ...............................................................................................................................
Statement of Comprehensive Income ..................................................................................................................

Statement of Financial Position .............................................................................................................................

Statement of Changes in Equity ...........................................................................................................................
Page 3 6 7 8 9 Statement of Cash Flows ...................................................................................................................................... 10 Notes .................................................................................................................................................................... 11 ___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 2 Endorsement and Statement by the Board of Directors and the CEO Eyrir Invest ehf.

is an international investment company that focuses on investments in industrial companies and ventures that have the potential to become global market leaders.

Through leadership these companies are able to create economies of scale and value for customers, employees and shareholders.

The Company began its operation on 8 June 2000.


The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and additional Icelandic disclosure requirements for financial statements of listed companies.

The Company's functional currency is EUR.

Operations in 2011 According to the statement of comprehensive income, profit for the year amounted to EUR 1,0 million and total comprehensive income amounted to EUR 0.5 million.
As stated in the statement of financial position total assets amount to EUR 395 million, equity at the end of the year amounts to EUR 202 million and equity ratio is 51%.

The Company's core holdings are a 36% share in Marel hf.

and a 17% holding in Stork BV through London Acquisition Luxco S.a.r.l.

Stork owns and operates Fokker Technologies and Stork Technical Services (STS).

• • • Marel is a global provider of advanced equipment, systems and services for the poultry, fish and meat processing industry.
Marel has offices and subsidiaries in over 30 countries and employs approximately 4,000 people.

Marel's revenues in 2011 amounted to EUR 668 million, following a 15% organic growth.

Marel is the largest company listed on Nasdaq OMX Iceland and 99% of its revenues derive outside Iceland.

industries.
industries.

Stork Technical Services is a world class, knowledge-based service provider to the oil, gas, power and chemical In May 2011 STS increased its geographical footprint by the acquisition of RBG Ltd. which has already been rebranded as Stork Technical Services.

STS employs around 14,500 employees dedicated to serve the oil, gas and power business in Benelux, North Sea, Caspian region, Middle East, North and South America.

Revenues in 2011 were approximately EUR 1.4 billion.
Fokker Technologies is a tier one supplier to the aerospace industry with customers such as Boeing, Airbus, Lockheed Martin and Gulf Stream.

Fokker Technologies is also a provider of service and spare parts to discontinued production fleet such as Fokker.

Employees are around 4,000 and revenues are close to EUR 700 million.

In the first half of 2011, Eyrir invest ehf.

sold all of its shares in Össur hf.

after having been a major shareholder in the company for seven years, during which time Össur hf.
grew considerably.

Following the sale of the Össur hf's shares, the Company repaid some of it's borrowings.

Total borrowings have decreased by EUR 45.5 million during the year.

On 1 January 2012, management of the pensions previously under the purview of the Stork Pension Fund was officially taken over by the industry-wide pension fund Metal-Electro (PME) in the Netherlands.

The transfer of the pension arrangements was the result of a principle agreement announced on 19 April 2011.
In addition to the Stork Pension Fund, the parties to the agreement included Stork BV and a number of companies that were formerly part of the Stork Group.

The agreement and subsequent transfer of the pension arrangements to PME is beneficial to Marel and Stork BV as it eliminates open-ended financial exposure to pension obligations in the future.

At the same time, it safeguards employee's interest by establishing a stable and more secure foundation for the pension plans for the long-term future.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 3 Endorsement and Statement by the Board of Directors and the CEO, contd In the past years the Company has accounted for the holdings in Marel using the equity method.
The Board of Directors of Eyrir has decided to account for the Company's shares in Marel at fair value as the Board believes that in doing so the accounts give clearer and more transparent view of the Company's financial position in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

Eyrir Invest book value of its share in Stork via London Acquisition is according to fair value method for non listed assets; using comparable transaction multiples and trading multiples.
Information on risk management are accounted for in the notes to the Financial Accounts.

Eyrir Invest aims to distribute risk by diversifying its holdings to different growth industries, see further note 5.

Corporate governance The Company's corporate governance policy is based on the Guidelines on Corporate Governance issued in June 2009 by the Icelandic Chamber of Commerce, NASDAQ OMX Iceland hf.

and Confederation of Icelandic Employers.


The Guidelines can be found on the Iceland Chamber of Comers website, www.chamber.is.

The Board of Directors has established written rules of procedure that addresses the domain of the Board and its role in relation to the CEO.
These rules stipulate among other things the convening of Board meetings, comprehensive rules on Board members suitability to participate in handling matters concerning the Company's operations, rules on confidentiality, information provided to the Board by the CEO and further rules.

The Board as a whole comprises the Audit Committee and all Board members excluding the Chairman comprise the Remuneration Committee.

Majority of the Board is independent of the Company and major shareholders.
For the operation year 2011 the Board of Directors held eight board meetings and one meeting in the Remuneration Committee.

Audit Committee meetings coincide with Board meetings.

On all occasions the majority of the Board members and Committee members were present.

Shareholders and appropriation of profit Shareholders at year-end were 16 and increased by two from the beginning of the year.

At year-end 2011 the Pension Fund of Commerce subscribed to 101 million new shares in the Company.
The Fund now holds 9.1% of total shares in the Company.

The share subscription was fully paid in cash on 12 January 2012.

Four shareholders held more than 10% of outstanding shares each at the end of the year 2011.
They are: Þórður Magnússon* ................................................................................................................ Árni Oddur Þórðarson* ............................................................................................................ Horn Fjárfestingarfélag hf.

....................................................................................................... Landsbankinn hf.
...................................................................................................................... 18.4% 15.7% 12.5% 12.5% *Shares held by Þórður Magnússon, Árni Oddur Þórðarson and by companies fully under their control and ownership.

Þórður Magnússon is Chairman of the Board and Árni Oddur Þórðarson the Company's CEO.
The Board of Directors proposes that no dividends will be paid for the operational year 2011 and refers to the financial statements regarding appropriation of the profit for the period and changes in shareholders' equity.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 4 Endorsement and Statement by the Board of Directors and the CEO, contd Statement by the Board of Directors and the CEO According to our best knowledge it is our opinion that the Annual Financial Statements give a true and fair view of the financial performance of the Company for the financial year 2011, its assets, liabilities and financial position as at 31 December 2011 and its cash flows for the financial year 2011.
Further, in our opinion the Financial Statements and Endorsement of the Board of Directors and the CEO give a fair view of the development and performance of the Company's operations and its position and describes the principal risks and uncertainties faced by the Company.

The Board of Directors and the CEO have today discussed the Annual Financial Statements of Eyrir Invest ehf.

for the year 2011 and confirm them by means of their signatures.
The Board of Directors and the CEO recommend that the Financial Statements will be approved at the Annual General Meeting of Eyrir Invest ehf.

Reykjavík, 20 February 2012.


The Board of Directors: Þórður Magnússon, Chairman Hermann Már Þórisson Jón Helgi Gudmundsson Sigurjón Jónsson Ólafur S. Gudmundsson CEO: Árni Oddur Þórðarson ___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 5 Independent Auditor's Report To the Board of Directors and Shareholders of Eyrir Invest ehf.
We have audited the accompanying financial statements of Eyrir Invest ehf., which comprise the statement of financial position as at 31 December 2011, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing.

Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.
An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements give a true and fair view of the financial position of Eyrir Invest ehf.
as at 31 December 2011, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.

Emphasis of matter Without qualifying our opinion, we draw attention to note 11 in the financial statements which describes changed accounting treatment for Eyrir Invest ehf.

investment in the associated company, Marel hf., as of year-end 2011.
Report on the Board of Directors report Pursuant to the legal requirement under Article 106, Paragraph 1, Item 5 of the Icelandic Financial Statement Act No.

3/2006, we report, to the extent of our competence, that the report of the Board of Directors accompanying the financial statements includes the information required by the Financial Statement Act if not disclosed elsewhere in the Financial Statements.

Reykjavík, 20 February 2012.

KPMG ehf.


Matthías Þór Óskarsson ___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 6 Statement of Comprehensive Income for the year 2011 Notes 2011 2010 Investment income Change in fair value of investment securities ............................................... Income from change in accounting treatment of an associate ..................... Share of profit of equity accounted associate .............................................. Net interest expenses .................................................................................. Net foreign exchange gain (loss) .................................................................. Net operating revenue Operating expenses Salaries and salary related expenses ............................................................ Other operating expenses ............................................................................ Operating expenses 11 12 6 18 7 8 ( ( 30,977) 30,107 11,650 12,920) 4,763 2,623 64,851 0 7,491 15,873) 3,254) 53,215 ( ( 934 732 1,666 836 560 1,396 Profit for the year ........................................................................................ 957 51,819 Other comprehensive income Foreign currency translation difference of foreign associates ...................... Net profit on hedges in investment in foreign associates ............................ Share of comprehensive income from associates ........................................
Translation difference and hedges transferred to profit and loss ................. Other comprehensive expense for the year ............................................ 0 0 488) 0 488) 4,649 2,763 264) 25,787) 18,639) ( ( ( ( ( Total comprehensive income for the year ................................................. 469 33,180 Earnings per share for profit Basic and diluted (expressed in EUR cent) .................................................. Earnings per share for comprehensive income Basic and diluted (expressed in EUR cent) ................................................... 17 17 0.09 0.05 5.14 3.29 The notes on pages 11 to 29 are an integral part of these financial statements.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 7 Amounts are in EUR thousand Statement of Financial Position as at 31 December 2011 Assets Cash and cash equivalents ............................................................................ Share subscription .........................................................................................
Restricted cash .............................................................................................. Investment securities .................................................................................... Investments in equity accounted associates .................................................
Receivables ................................................................................................... Operating assets ........................................................................................... Notes 9 16 10 11 12.13 14 15 2011 2010 9,419 15,377 1,055 364,931 0 2,282 2,082 12,311 0 10,447 256,835 143,602 1,201 2,050 Total assets 395,146 426,446 Equity Share capital .................................................................................................. Share premium .............................................................................................. Reserves .......................................................................................................
Retained earnings .......................................................................................... Total equity 16 Liabilities Borrowings .................................................................................................... Trade and other payables .............................................................................. Total liabilities 18,19 6,546 112,598 5,186 78,163 202,493 192,414 239 192,653 5,912 97,855 5,674 77,207 186,648 237,890 1,908 239,798 Total equity and liabilities 395,146 426,446 The notes on pages 11 to 29 are an integral part of these financial statements.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 8 Amounts are in EUR thousand Statement of Changes in Equity for the year 2011 Notes Share capital Share premium Translation reserve Retained earnings Total equity 2010 Equity 1.1.2010 ..................................... Total comprehensive income for the year .......................................... Equity 31.12.2010 ................................. 5,912 97,855 24,313 25,389 153,469 16 5,912 97,855 ( 18,639) 5,674 51,819 77,207 33,180 186,648 2011 Equity 1.1.2011 ..................................... Issue of share capital ............................ Total comprehensive income for the year .......................................... Equity 31.12.2011 ................................. 16 16 5,912 634 97,855 14,743 5,674 77,207 186,648 15,377 6,546 112,598 ( 488) 5,186 957 78,163 469 202,493 The notes on pages 11 to 29 are an integral part of these financial statements.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 9 Amounts are in EUR thousand Statement of Cash Flows for the year 2011 Notes 2011 957 2010 51,819 Cash flows from operating activities Profit for the year ..........................................................................................
Adjustments for: Change in fair value of investment securities ............................................ Income from change in accounting treatment of associates ..................... Share of profit of associates ...................................................................... Depreciation .............................................................................................. Net interest expenses ............................................................................... Net foreign exchange (gain) loss ...............................................................
Working capital used in operations Change in operating assets and liabilities ...................................................... Cash (used in) from operations before interest Interest paid .................................................................................................. Interest received ........................................................................................... Net foreign exchange gain received .............................................................. Net cash used in operating activities Cash flows from investing activities Restricted cash, decrease ............................................................................ Investments in shares ...................................................................................
Proceeds from the sale of investment securities .......................................... Acquisition of operating assets ..................................................................... Net cash from investing activities 11 12 15 6 15 30,977 30,107 ) 11,650 ) 84 12,920 4,763 ) 1,582 ) ( ( ( ( ( ( ( 904 ) 2,486 ) 11,578 ) 503 874 12,687 ) ( ( ( ( 64,851 ) 0 7,492 ) 80 15,873 3,254 1,317 ) 1,618 301 6,683 ) 1,866 0 4,516 ) 17,477 150 ) 26,061 11 ) 43,377 ( ( ( ( ( ( 9,392 21,962 ) 73,162 125 ) 60,467 Cash flows from financing activities New borrowings ............................................................................................
Repayment of borrowings ............................................................................. Net cash used in financing activities 3,143 53,815 ) 50,672 ) ( ( 0 29,851 ) 29,851 ) ( ( Increase in cash and cash equivalents ........................................................ ( 2,892 ) 9,010 Cash and cash equivalents at 1 January .................................................... 12,311 3,301 Cash and cash equivalents at 31 December ............................................... 9 9,419 12,311 Investing and financing activities without cash flow effect: Share subscription ......................................................................................... Share capital .................................................................................................. Share Premium ..............................................................................................
Proceeds from borrowings ............................................................................

Repayment of borrowings ............................................................................. ( ( 15,377 634 ) 14,743 ) 24,208 24,208 ) 0 0 0 4,701 4,701 ) ( ( The notes on pages 11 to 29 are an integral part of these financial statements.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 10 Amounts are in EUR thousand Notes 1.

2. a. b. c. d. Reporting Entity Eyrir Invest ehf.

(the "Company") is an international investment company incorporated and domiciled in Iceland.

The registered office of the Company is at Skólavörðustígur 13 in Reykjavík, Iceland.
The financial statements of Eyrir Invest ehf.

as at and for the year ended 31 December 2011 comprise the Company and it's share in associates until the end of December 2011, see further note 11.

Eyrir Invest ehf.

is an international investment company that focuses on investments in industrial companies and ventures that have the potential to become global market leaders.

Through leadership these companies are able to create economies of scale and value for customers, employees and shareholders.
Basis of preparation Assets and liabilities in the statement of financial position are presented in liquidity order which is considered more appropriate for the Company than the current/non-current presentation.

For each asset and liability item that combines amounts expected to be recovered or settled after more than 12 months, a payment schedule is disclosed.
Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and additional Icelandic disclosure requirements for financial statements of listed companies.

The financial statements were approved by the Board of Directors of Eyrir Invest ehf.

on 20 February 2012.


Basis of measurement The financial statements have been prepared on the historical cost basis except for the following: * investment securities, which are measured at fair value with fair value changes recognised in profit or loss.

* the investment in associate, which is accounted for using the equity method until 30 December 2011.

From 31 December 2011 the Company accounts for the associate as an investment security at fair value through profit or loss.

See further note 11.


The methods used to measure fair values are discussed further in note 3b.

Functional and presentation currency The financial statements are presented in Euro, which is the Company's functional currency.

All financial information presented in Euro has been rounded to the nearest thousand, unless otherwise stated.
Use of estimates and judgements The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

judgements in applying In particular, information about significant areas of estimation uncertainty and critical accounting policies that have the most significant effect on the amount recognised in the financial statements is described in note 4i.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 11 Amounts are in EUR thousand Notes, contd.

: 3.

Accounting policies related to financial instruments The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

Financial instruments a.


(i) Non-derivative financial instruments Non-derivative financial subscriptions and other receivables, cash and cash equivalents, borrowings, trade and other payables.

instruments comprise investments in equity and debt securities, loans, share Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.
Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Cash and cash equivalents comprise of cash held at bank.

Accounting for finance income and expenses is discussed in note 3c.
Financial assets designated at fair value through profit or loss The Company designates its investment securities as financial assets at fair value through profit or loss upon initial recognition since the Company manages the investment securities and makes purchase and sale decisions based on their fair value.

Upon initial recognition attributable transaction costs are recognised in profit or loss when incurred.
Financial assets designated at fair value through profit or loss are measured at fair value and changes therein are recognised in profit or loss.

Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses for financial assets.

(ii) Share capital Ordinary shares Ordinary shares are classified as equity.

Incremental costs directly attributable to issue of shares and share options are recognised as a deduction from equity.
Repurchase of share capital When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a deduction from equity.

Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.

When treasury shares are sold subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from share premium.
Dividends Dividends are recognised as a decrease in equity in the period in which they are declared.

b.

Fair value measurement principles for financial instruments A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.

Fair values have been determined for measurement and / or disclosure purposes based on the following methods.
When applicable, the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

information about further ___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 12 Amounts are in EUR thousand Notes, contd.

: 3.

Accounting policies related to financial instruments, contd.
: Fair value measurement principles for financial instruments, contd.

: b.

Investment securities (i) Investment securities in the statement of financial position consist of investments in equity and debt securities.

The fair value of listed securities in an active market is determined by reference to their quoted market bid price at the reporting date without any deduction for estimated future selling costs.
When a quoted market price is not available on a stock exchange or from a broker / dealer for non-exchange- traded financial instruments, the fair value of the investment is estimated using valuation techniques, including use of recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions.
Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate used is a market rate at the reporting date applicable for an instrument with similar terms and conditions.

Where other pricing models are used, inputs are based on market data at the reporting date.
Fair values for unquoted equity investments are estimated, if possible, using applicable price / earnings ratios for similar listed companies adjusted to reflect the specific circumstances of the issuer.

(ii) Receivables The fair value of receivables, which is determined for disclosure purposes, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.
(iii) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
Investment income c. (i) Net income from securities Net income from investments in securities comprise net gain or loss on the sale of shares, changes in the fair value of the investments, other than foreign exchange economic hedges, transaction costs, dividend income and interest income.

Dividend income is recognised in the statement of comprehensive income on the date the entity's right to receive payments is established.

(ii) Interest income Interest income comprises interest income on funds invested.
Interest income is recognised as it accrues, using the effective interest method.

(iii) Foreign exchange gain (loss) Net foreign exchange gain (loss) comprises foreign exchange changes arising from assets and liabilities de- nominated in foreign currencies and gains and losses arising from derivatives hedging economically the foreign currency risk.

Net currency gains and losses are reported on a net basis.

4.

Other accounting policies a.


Foreign currency Foreign currency transactions Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate ruling at that date.

Foreign currency gain or loss arising on translation are recognised in the statement of comprehensive income.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 13 Amounts are in EUR thousand Notes, contd.

: 4.

Other accounting policies, cond.

: b.

Associates An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The operating results and assets and liabilities of associates are accounted for in these financial statements using the equity method of accounting until 30 December 2011 (equity accounted associates) and are recognised initially at cost.
From 31 December 2011, the Company measures it's share in associates at fair value through profit and loss, see further note 11.

The application of the equity method While investments in associates are equity accounted the Company's investment includes goodwill identified on acquisition, net of any accumulated impairment losses.
The financial statements include the Company's share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Company, from the date that significant influence commences until the date that significant influence ceases.
When the Company's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee.
c. (i) Operating assets Buildings and other operating assets Buildings and other operating assets are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset.
(ii) Subsequent costs The cost of replacing part of an item of operating asset is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and the cost of the item can be measured reliably.

The carrying amount of the replaced part is derecognised.

All other costs are recognised in the statement of comprehensive income as an expense as incurred.
(iii) Depreciation Depreciation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful live of each part of operating assets.
The estimated useful lives are as follows: Buildings ......................................................................................................................................... Other operating assets ................................................................................................................... 50 years 3-5 years Depreciation methods, useful lives and residual values are reviewed at each reporting date.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 14 Amounts are in EUR thousand Notes, contd.

: 4.

Other accounting policies, contd.

: d. (i) Impairment Financial assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

All impairment losses are recognised in the statement of comprehensive income.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

For financial assets measured at amortised cost, the reversal is recognised in the statement of comprehensive income.

(ii) Non-financial assets The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount.

A cash-generating unit largely are independent from other assets and groups.

Impairment losses are recognised in the statement of comprehensive income.
identifiable asset group that generates cash flows that is the smallest The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
e. Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.

Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in the statement of comprehensive income when they are incurred.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 15 Amounts are in EUR thousand Notes, contd.

: 4.

Other accounting policies, contd.

: f. Income tax expense Income tax expense comprises current tax and deferred tax.
Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

g. h. i.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Earnings per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
New standards and interpretations not yet adopted The Company has adopted all IFRSs, interpretations and amendments to existing standards that are effective for the year ended 31 December 2011 and relevant to the Company.

The Company has not adopted early any IFRSs, interpretations or amendments effective after 31 December 2011.
Accounting estimates and judgements Key sources of estimation uncertainty Determination of fair values of financial instruments As stated in note 3b the Company’s investment securities and derivatives are measured at fair value in the statement of financial position.

For part of these financial instruments, quoted market prices are readily available.
However, certain financial instruments, for example, over-the-counter derivatives or unquoted securities are fair valued using valuation techniques, including reference to the current fair values of other instruments that are substantially the same, subject to the appropriate adjustments.

Fair value estimates are made at a specific point in time, based on market conditions and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters of significant judgement, e.g.

interest rates, volatility, estimated cash flows etc., and therefore, cannot be determined with precision.

Determination of impairment of financial assets Assets accounted for at amortised cost are evaluated for impairment on the basis described in accounting policy 4d(i).
The assessment for impairment is based upon management’s best estimate of the present value of the cash flows that are expected to be received.

In estimating these cash flows, management makes judgements about a counterparty’s financial situation and the net realisable value of any underlying collateral.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 16 Amounts are in EUR thousand Notes, contd.

: 4.

Other accounting policies, contd.

: i.

Accounting estimates and judgements, contd.

: Determination of impairment of non-financial assets Non-financial assets are regularly valuated for impairment.

The assessment for impairment is based upon management’s estimates of future cash flows and discount rate.
Critical accounting judgements in applying the Company’s accounting policies Classification of securities The Company’s accounting policies provide scope for securities to be designated at fair value through profit or loss.

By making this designation, the management has determined that it has met the necessary criteria as set out in accounting policy 3a(i).

5.
5.

Financial risk management Overview The Company maintains, when available, positions in both derivative and non-derivative financial instruments in accordance with its investment strategy.

The Company's investment portfolio comprises quoted and non-quoted equity and debt investments.

At year-end 2011, the Company holds no positions in derivative financial instruments.
The Company’s investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests.
The most important types of financial risk to which the Company is exposed from its use of financial instruments are: * credit risk * liquidity risk * market risk This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital.

Further quantitative disclosures are included throughout these Financial Statements.
The Board of Directors of the Company has overall responsibility for the establishment and oversight of the Company’s risk management.

The Board has commended the CEO day to day developing and monitoring of the Company’s risk management policies.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

Credit risk Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations.
The Company aims to minimize this risk factor by only entering agreements with solid and well known financial institutions in addition to closely monitoring the credit risk on an ongoing basis.

Transactions involving derivative financial instruments are usually with counterparties with whom the Company has signed master netting agreements.

Master netting agreements provide for the net settlement of contracts with the same counterparty in the event of default.
The impact of the master netting agreements is to reduce credit risk.

There were no significant concentrations of credit risk to counterparties at 31 December 2011.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 17 Amounts are in EUR thousand Notes, contd.

: 5.

Financial risk management, contd.


: Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets.

The Company’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due and not risking damage to the Company’s reputation.
The Company's financial instruments can include investments in unlisted equity investments and derivative contracts traded over-the-counter, which are not traded in an organised public market and which generally may be illiquid.
As a result, the Company may not be able to liquidate quickly some of its investments in these instruments at an amount close to its fair value in order to meet its liquidity requirements, or to respond to specific events such as a deterioration in the credit-worthiness of any particular issuer.

Unlisted financial instruments were 40.1% of total assets at year-end 2011 (2010: 40.8%).
To mitigate this risk the Company has a policy of adequate cash at any given time and in addition to that having a large part of its asset in listed financial investments, that are considered to be readily realisable in normal market conditions.

The Company maintains no lines of credit with financial institutions at year-end 2011.
Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company’s market risk is managed by the employees in accordance with policies and procedures in place.
Details of the Company’s investment portfolio at the reporting date are disclosed in the schedule of investments included in note 11.

Currency risk The Company is exposed to currency risk on sales and purchases of equity and debt securities, and borrowings that are denominated in a currency other than the functional currency of the Company.

The Company uses, when efficient, forward exchange contracts to hedge its currency risk.

When necessary, forward exchange contracts are rolled over at maturity.
At year-end 2010 and 2011, there were no active forward exchange contract market in Iceland.

The Company’s total net currency balance is monitored on a regular basis and treated as any other calculated financial position.

Interest rate risk The majority of the Company’s financial assets are non-interest-bearing.

Interest-bearing financial assets are subject to limited exposure to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates.
The Company is exposed to interest risk from interest bearing liabilities and that risk is mitigated by active risk management.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 18 Amounts are in EUR thousand Notes, contd.

: 5.

Financial risk management, contd.


: Other market price risk Equity price risk arises from financial assets at fair value through profit or loss, primarily equity securities.

Price risk is the risk that value of the instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.
For the Company's financial assets that are carried at fair value, with fair value changes recognised in the statement of comprehensive income, all changes in market conditions will directly affect investment income.

Price risk is mitigated by the Company's Management by constructing a diversified portfolio of investments and instruments traded on various markets.

In addition market fluctuations are monitored on intraday basis which enables the Company to react quickly to any changes in the market.
The Company's financial investments in shares is diversified by industries as follows: Food Systems; Marel ............................................................................................ Health services; Össur .......................................................................................... Technical services - Oil & gas; Stork ..................................................................... Aerospace services; Stork ..................................................................................... 2011 2010 56.7% 0.0% 23.8% 19.5% 100.0% 35.9% 20.7% 23.9% 19.5% 100.0% Capital management The Board's policy is to maintain a strong capital base to sustain future development of the business.
It is the strategy of the Company to pay as dividend 10 - 25% of each year profit.

However, in recent years no dividends have been paid to maintain a strong capital base and to support further value creation in the Company's core holdings.

At the end of 2011 the equity ratio is 51.2%.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
The Company’s return on capital was 0.5% in 2011 (2010: 33.8%).

There were no changes in the Company’s approach to capital management during the year.

The Company is not subject to externally imposed capital requirements, except when stated in loan agreements.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 19 Amounts are in EUR thousand Notes, contd.


: Investment income 6.


Net interest expenses is specified as follows: Interest expenses ...................................................................................................... Interest income ......................................................................................................... Net interest expenses .............................................................................................. Salaries and salary-related expenses 7.
Salaries and salary-related expenses are specified as follows: 2011 2010 ( ( 13,423) 503 12,920) ( ( 17,873) 2,000 15,873) Salaries and performance-based payments ...............................................................
Contributions to defined contribution plans .............................................................. Other salary-related expenses ................................................................................... Salaries, Board of Directors ....................................................................................... Total salaries and salary-related expenses ................................................................. Full time equivalent positions at the end of the year ................................................. Average number of full time equivalent positions during the year ............................ Salaries to the Chairman of the Board and the CEO are specified as follows: 753 76 75 30 934 8 8 713 74 41 8 836 8 8 Þórdur Magnússon, Chairman of the Board ................ Árni Oddur Thórdarson, CEO ...................................... Salaries 74 200 Other benefits 14 20 Defined contribution plan Total salaries & benefits 7 19 95 239 The CEO and the Chairman of the Board do not have any share options at year-end 2011.
Share options can only be issued to them if approved by a Shareholders' meeting.

Salaries paid to four other members of the board during the year 2011 amounted to EUR 30 thousand (2010: 8 thousand).

Other operating expenses 8.

Other operating expenses specify as follows: Depreciation ..............................................................................................................
Grants ........................................................................................................................ Other operating expenses ......................................................................................... Total other operating expenses ................................................................................. 2011 84 73 575 732 2010 80 32 448 560 Cash and cash equivalents 9.

Cash and cash equivalents consists of bank deposits.

Restricted cash 10.
Restricted cash 10.

Bank deposits amounting to EUR 1,055 thousand (2010: EUR 10,447 thousand) are restricted to use for the Company at year-end.

Deposits are cash held by financial institutions as collateral for borrowings.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 20 Amounts are in EUR thousand Notes, contd.

: Investment securities 11.


Investment securities are specified as follows: Listed securities: Marel hf.

* ................................................................... Össur hf.

** ................................................................. Total listed securities .................................................. Unlisted securities: London Acquisition Luxco S.á.r.l.
*** ......................... Other unlisted shares ................................................. Total unlisted securities .............................................. Fair value of investment securities at year-end .........
Ownership 35.6% 0% 17.0% Fair value 31.12.2011 206,409 0 206,409 157,620 902 158,522 364,931 Ownership - 13.85% 17.0% Fair value 31.12.2010 - 82,711 82,711 173,579 545 174,124 256,835 *At year-end 2011 the Company changed its accounting treatment for its investment in the associate Marel hf., in which the Company held 35.6% of the share capital as at 31 December 2011.
Until 30 December 2011 the Company accounted for this investment using the equity method but as of 31 December 2011 this investment is measured at fair value in accordance with IAS 39 Financial Instruments: Recognition and Measurement and recognises the changes in the fair value of the investment in profit or loss in the period in which those changes occur.

The fair value of the investment in Marel hf.


amounted to EUR 206.4 million as at 31 December 2011 while its carrying amount measured in accordance with the equity method amounted to EUR 176.9 million.
The Company recognised EUR 30.1 million in the line item “Income from change in accounting treatment of an associate” in the statement of comprehensive income for the year 2011 representing the positive difference between the fair value of the investment and its carrying amount measured in accordance with the equity method as at year-end 2011.
Prior to the change in the accounting treatment described in this note, the Company accounted for its investments in its Marel using the equity method and for its investment in other core assets at fair value through profit or loss.

Therefore, the change described in this note brings consistency in the Company’s accounting treatment for these core investments whereby both investments are now measured at fair value through profit or loss.
It is the view of the Company´s management that measurement of the investment in Marel hf.

at fair value through profit or loss results in the financial statements of the Company providing more relevant information to the Company’s management and to existing and potential investors in the Company about the effects of the core investments on the Company’s financial position and performance.

Measurement of the investment in Marel hf.


at fair value through profit or loss in the Company’s financial statements is fully in accordance with the Company’s objective and strategy for holding the investment in Marel hf.

with a view to profiting from the total return in the form of dividends and changes in fair value of the investment.

** In the first half of 2011, Eyrir sold all of its shares in Össur after having been a major shareholder in the company for seven years.
The sale price amounted to EUR 73.2 million.

Following the sale of the shares the Company repaid some of its borrowings.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 21 Amounts are in EUR thousand Notes, contd.

: Investment securities, contd.

: *** London Acquisition Luxco S.á.r.l.


is a holding company owned by funds that are controlled by Candover Investments plc.

and Eyrir Invest ehf.

London Acquisition sole asset is the Dutch company Stork B.V.

When measuring fair value of the Company's shares in London Acquisition S.á.r.l.

the Company's managements uses comparison with market multiples of comparable companies, multiples in recent transactions with comparable companies and taken into consideration projected discounted cash flow.
Investments in equity accounted associates 12.

Investments in equity accounted associates are specified as follows: 31 December 2011 Ownership Share in profit Marel hf., Iceland ....................................................................................................... 35.6% 11,650 Total share in profit of associates amounts to 11.7 million EUR and comprises share of Marel hf.

's profit for the year 2011.


31 December 2010 Ownership Share in profit Carrying amount Market exceeding value market value Book value Marel hf., Iceland ................................ 31.9% 4,194 143,602 151,024 7,422 13.

Key financial information of associated companies: 31 December 2010 Total assets Total liabilities Total revenue Total expenses Profit Marel hf.
............................................. 877,623 534,354 601,337 587,711 13,626 * Further financial information on Marel can be found at www.marel.com.

Receivables 14.
Receivables 14.

Receivables are specified as follows: Capital gain tax .......................................................................................................... Receivable from sale of investment securities .......................................................... Other receivables ......................................................................................................
Receivables ............................................................................................................... 2011 101 0 2,181 2,282 2010 371 578 252 1,201 At 31 December 2011 and 31 December 2010 no allowance was conceded for doubtful receivables.

No impairment loss was recognised during the years.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 22 Amounts are in EUR thousand Notes, contd.

: Operating assets 15.

Operating assets are specified as follows: Other operating assets Buildings Gross carrying amount Balance at 1.1.2010 ...........................................................................

Additions during the year ................................................................... Balance at 31.12.2010 .......................................................................
Sales and disposals during the year ...................................................
Additions during the year ................................................................... Balance at 31.12.2011 ....................................................................... Depreciation and impairment losses Balance at 1.1.2010 ........................................................................... Depreciation ...................................................................................... Balance at 31.12.2010 .......................................................................
Sales and disposals during the year ................................................... Depreciation ...................................................................................... Balance at 31.12.2011 .......................................................................
Carrying amounts 1.1.2010 ............................................................................................ 31.12.2010 ........................................................................................ 31.12.2011 ........................................................................................ Depreciation ratios ............................................................................. 2,110 0 2,110 0 0 2,110 112 42 154 0 42 196 1,998 1,956 1,914 2% Total 2,404 11 2,415 109) 125 2,431 ( 285 80 365 109) 93 349 ( ( 294 11 305 109) 125 321 ( 173 38 211 109) 51 153 121 94 168 20-30% 2,119 2,050 2,082 The insurance value of the real estate amounted to EUR 1,815 thousand at year-end 2011.
The tax assessment value of the buildings amounted to EUR 567 thousand at year-end.

The insurance value of other operating assets amounted to EUR 376 thousand at year-end 2011.

Equity 16.

Issued capital The Company's share capital at the beginning of the year amounted to ISK 1,008 million and is fully paid.

On 30 December 2011, the share capital was increased by ISK 101 million at exercise price of ISK 24.25.

The share increase was paid on 12 January 2012.


The holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Share capital according to the statement of financial position amounted to EUR 6.5 million at year-end 2011, share capital is specified as follows: Amounts Share capital according to the Articles of Association (issued capital) ............................................... Share increase on 30 December 2011 ............................................................................................... Share capital at year-end .................................................................................................................... 1,007,681 101,000 1,108,681 Share premium Share premium represents excess of payment above nominal value (ISK 1 per share) that shareholders have paid for shares sold by the Company.
According to Icelandic Companies Act, 25% of the nominal value of share capital must be held in reserve which can not be paid out as dividend to shareholders.

Translation reserve Foreign exchange differences arising from the translation of the financial statements of equity accounted associates are recognised directly in a separate component of equity.

When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss.
___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 23 Amounts are in EUR thousand Notes, contd.

: Earnings per share 17.
Earning per share for profit: Profit for the year ...................................................................................................... 2011 957 2010 51,819 Weighted average number of share capital (basic and diluted) In thousand shares Share capital at 1 January .......................................................................................... Effect of share increase .............................................................................................
Weighted average number of share capital .............................................................. 1,007,681 553 1,008,234 1,007,681 0 1,007,681 Earnings per share: Basic and diluted earnings per share (EUR cent) ...................................................... 0.09 5.14 Earnings per share for comprehensive income: Total comprehensive income (expense) .................................................................... 469 33,180 Earnings per share: Basic and diluted earnings per share (EUR cent) ...................................................... 0.05 3.29 Borrowings 18.
Borrowings, including accrued effective interest, are specified as follows: EUR ................................................................................................... ISK, unindexed ................................................................................... ISK, indexed ....................................................................................... USD ................................................................................................... GBP ................................................................................................... JPY .................................................................................................... NOK ................................................................................................... CHF ....................................................................................................
Borrowings ........................................................................................

Borrowings are secured as follows: Average interest rate 5.0% 6.0% 5.5% 4.7% 5.6% 4.5% - 4.2% 2011 2010 87,548 21,053 28,272 44,101 6,694 1,403 0 3,343 192,414 120,392 20,672 32,124 52,201 4,110 2,354 2,468 3,569 237,890 Secured bank loans ...................................................................................................
Unsecured bond issues and bank loans ....................................................................

Borrowings total ....................................................................................................... 162,906 29,508 192,414 182,428 55,462 237,890 The Company’s investment securities and investments in associates are collateralised to secured bank loans; book value of collateralised investments are as follows: Investment in Össur hf.
............................................................................................. Investment in London Acquisition Luxco S.a.r.l.

...................................................... Investments in Marel hf.

........................................................................................... 0 157,620 206,409 364,029 82,711 173,579 138,440 394,730 The Company previously netted it's claim on one of the failed Icelandic banks against borrowings from the same bank.
Following a ruling by The Icelandic Supreme Court the Company no longer presents the borrowing net of the claim and has expensed EUR 5.3 million in the statement of comprehensive income.

See further note 25.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 24 Amounts are in EUR thousand Notes, contd.

: 18.

Borrowings, contd.


: The Icelandic Supreme Court has ruled that loan agreements nominated in ISK with repayment defined with reference to foreign currencies are unlawful.

Based on this ruling, some of the the Company's loans have been recalculated and an gain in the amount of EUR 4.9 million is recognised in the statement of comprehensive income in the year 2011.
In February 2012 The Icelandic Supreme Court ruled that interest calculations on unlawful loan agreements in other currencies than ISK should be based on the interest in the agreement and not interest published by the Central Bank.

These rulings may have a further positive effects on the Company´s financial position.

19.
Repayment of borrowings are specified as follows: Repayments in 2011 ................................................................................................. Repayments in 2012* ............................................................................................... Repayments in 2013 ................................................................................................. Repayments in 2014 ................................................................................................. Repayments in 2015 ................................................................................................. Repayments in 2016 .................................................................................................
Subsequent ...............................................................................................................

Borrowings ................................................................................................................ 2011 2010 - 47,636 31 135,924 31 3,244 5,548 192,414 20,112 64,150 29 147,801 29 - 5,769 237,890 *At the end of 2011 Eyrir Invest ehf.

secured a new long term loan with Arion bank hf.

equal to 12.5 m EUR.


The principal of the loan is due in May 2015 and half of the principal is extendable to 2016.Glitnir hf.

has also agreed to extend a bank loan in the amount of 14 million EUR with a new due date for the principal is in December 2013 instead of September 2012.

These agreements will be executed in February 2012 and therefore not accounted for in these financial statements.

According to loan agreements the Company has to fulfil certain covenants.
At year end the Company is in full compliance with all covenants in its loan agreements.

Income tax 20.
Income tax recognised in the statement of comprehensive income is specified as follows: Reconciliation of effective tax rate: Profit before income tax .................................................................... Income tax using the Company's tax rate .................. Changes in value of shares and taxable loss 20.0%) ( 2011 957 191 ( 18.0%) 2010 51,819 9,327 not expected to be utilized ...................................... 0.0% 0 23.1% ( 11,969) Temporary difference due to unrecorded tax asset and other changes .........................................
Effective tax rate ......................................................... 20.0% 0.0% ( 191) 0 ( 5.1%) 0.0% 2,642 0 In the year 2011, the Icelandic Parliament approved to change the tax laws regarding the gain on sale of shares in other companies.

After the change the gain on sale of shares in other companies are not taxable.

Deferred income tax liability 21.


The deferred income tax liability is specified as follows: The deferred income tax liability is attributable to the following items: Investment securities and investments in equity accounted associates ................... Other balance sheet items ........................................................................................ Tax losses carried forward .........................................................................................
Temporary difference due to unrecorded tax asset (liability) .....................................

Deferred income tax liability at end of period ............................................................ ( ( 0 1,107) 16,624) 17,731 0 ( ( ( 24,602 97) 17,512) 6,993) 0 Tax asset is not recognised due to uncertainty over future utilization of the tax asset.

The Company will pay no income tax in the year 2012 due to tax losses carried forward.
2011 2010 ___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 25 Amounts are in EUR thousand Notes, contd.

: Financial instruments 22.

Financial risk management Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was: Share subscription ...........................................................................................................

Receivables ..................................................................................................................... Cash and cash equivalents ..............................................................................................
Restricted cash ................................................................................................................
Carrying amount 2011 2010 15,377 2,282 9,419 1,055 28,133 0 1,201 12,311 10,447 23,959 Liquidity risk The following are the contractual maturities of financial liabilities, including estimated future interest payments: Carrying amount Contractual cash flows Less than 1 year 162,906 29,508 239 192,653 185,967 31,848 239 218,054 32,836 23,912 239 56,987 1 - 2 years 7,570 591 0 8,161 137,572 7,345 0 144,917 2 - 5 years More than 5 years 31 December 2011 Financial liabilities: Secured bank loans ............
Unsecured bonds/loans ..... Trade and other payables 31 December 2010 Financial liabilities: Secured bank loans ............
Unsecured bonds/loans ..... Trade and other payables 190,989 46,901 1,908 239,798 218,586 52,231 1,908 272,725 12,157 16,011 1,908 30,076 47,886 28,369 0 76,255 154,091 7,851 0 161,942 Currency risk Exposure to currency risk The Company´s exposure to foreign currency risk was as follows based on notional amounts: 31 December 2011 ISK USD GBP NOK Other Financial instruments at fair value through profit or loss ...........................................
Receivables .............................................. Cash and equivalents ...............................

Restricted cash ......................................... Share subscription ....................................
Borrowings ............................................... Net balance sheet .................................... exposure ............................................... 206,986 133 9,405 1,008 15,377 49,325) ( 0 1,906 6 0 0 44,101) ( 0 0 0 0 0 6,694) ( 325 0 0 0 0 0 0 0 4 47 0 4,746) ( 183,584 ( 42,189) ( 6,694) 325 ( 4,695) ___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.
2011 26 Amounts are in EUR thousand 7,989 0 0 7,989 4,452 0 0 4,452 Notes, contd.

: Financial instruments, contd.

: 22.

Currency risk, contd.

: 31 December 2010 ISK USD GBP NOK Other Financial instruments at fair value through profit or loss ...........................................

Receivables .............................................. Cash and equivalents ...............................

Restricted cash .........................................
Borrowings ............................................... Net balance sheet .................................... exposure ............................................... 82,929 66 12,229 10,463 52,815) ( 3 578 6 0 52,199) ( 0 0 0 0 4,110) ( 324 0 0 0 2,468) ( 0 0 6 46 5,924) ( 52,872 ( 51,612) ( 4,110) ( 2,144) ( 5,872) Average rate Reporting date spot rate 2011 2010 2011 2010 ISK ................................................................................... GBP .................................................................................. USD .................................................................................. 161.87 0.87 1.39 162.34 0.86 1.33 159.28 0.84 1.29 154.23 0.86 1.33 Sensitivity analysis A 10% strengthening of the euro against the following currencies at 31 December 2011 would have increased (decreased) pre-tax profit or loss by the amounts shown below.
This analysis assumes that all other variables, in particular interest rates, remain constant.

This analysis is performed on the same basis for 2010.
Profit or loss 2011 2010 ISK ................................................................................................................................... USD ................................................................................................................................. GBP ................................................................................................................................. Other ............................................................................................................................... ( 18,358) 4,219 669 437 ( 5,287) 5,161 411 802 A 10% weakening of the euro against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk At the reporting date the interest rate profile of the Company's interest bearing financial instruments was: Carrying amount 2011 2010 Fixed rate instruments Financial liabilities ............................................................................................................ ( 25,059) ( 32,124) Variable rate instruments Financial assets ................................................................................................................ Financial liabilities ............................................................................................................ 10,474 167,355) 156,881) ( ( 22,758 202,608) 179,850) ( ( Fair value sensitivity analysis for fixed rate instruments The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model.
Therefore a change in interest rates at the reporting date would not affect profit or loss.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 27 Amounts are in EUR thousand Notes, contd.

: Financial instruments, contd.

: Interest rate risk, contd.

: 22.


Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased (decreased) pre-tax profit or loss by the amounts shown below.

This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

The analysis is performed on the same basis for 2010.
2011 Profit or loss 2010 Profit or loss 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease Variable rate instruments ................................................. Cash flow sensitivity (net) ................................................ ( ( 1,569) 1,569) 1,569 1,569 ( ( 1,799) 1,799) 1,799 1,799 Fair values Fair values versus carrying amounts The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows: 31 December 2011 31 December 2010 Carrying amount Fair value Carrying amount Fair value Investment securities ....................................................... Cash and cash equivalents ...............................................
Restricted cash ................................................................ Share subscription ........................................................... Loans and receivables ......................................................

Secured bank loans ..........................................................
Unsecured bond issues and bank loans ........................... Trade and other payables ................................................. 158,522 9,419 1,055 15,377 2,282 162,906) 29,508) 2,282) 8,041) ( ( ( ( 158,522 9,419 1,055 15,377 2,282 162,566) 29,575) 2,282) 7,768) ( ( ( ( 256,443 12,311 10,442 0 1,523 191,115) 46,901) 1,907) 40,796 ( ( ( 256,443 12,311 10,442 0 1,523 191,115) 46,901) 1,907) 40,796 ( ( ( The basis for determining fair values is disclosed in note 4.
Interest rates used for determining fair values The interest rate used to discount estimated cash flows, where applicable, are based on the government yield curve at the reporting date plus an adequate credit spread, and were as follows: Secured bank loans ..........................................................

Unsecured bond issues, indexed / non-indexed .............. 4,9% - 6,9% 5,5% - 8,8% 2.8% - 6.7% 5.5% - 9.8% 2011 2010 Guarantees 23.
Guarantees Eyrir Invest has not issued any guarantees or entered into any obligations for its associated company or other shares in companies owned by Eyrir.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 28 Amounts are in EUR thousand Notes, contd.

: Related parties 24.


Identity of related parties The Company has a related party relationship with its shareholders, associates, and with its directors and executive officers.

Shareholder relationship Landsbankinn hf.

is defined as related party due to major shareholding directly and indirectly through Horn Fjárfestingarfélag ehf., totalling 25% of outstanding shares at year-end 2011.

Eyrir Invest finances its activities with equity and long-term financing.

Landsbankinn hf.
Landsbankinn hf.

has been one of Eyrir Invest ehf's creditors since foundation.

At year-end 2011, total outstanding debts are EUR 192.4 million (2010: EUR 237.9 million).

Borrowings from Landsbankinn hf.

amount to EUR 102.8 million at year-end 2011 (2010: EUR 126.6 million) or 53% of total borrowings in both instances.

Eyrir Invest ehf.

has deposits at Landsbankinn hf., in 2011 interest income amounted to EUR 317 thousand (2010: EUR 98 thousand).

All financing activities between Landsbankinn hf.


and Eyrir Invest ehf.

are on a arms-length basis at market rates.

Other matters 25.

Litigations The Supreme Court of Iceland has confirmed the decision made by the Winding-up Committee of Kaupthing hf.

to reject claims filed directly by beneficial owners under Kaupthing's US MTN Program.

The Supreme Court ruled to allow DBTCA to file global claims on account of the Global Notes issued under the US MTN Program.
The DBTCA global claims were filed for the benefit of owners of beneficial interest in the Global Notes issued.

The Company is an undisputed owner of beneficial interest in the Global Notes (nominal value USD 10 million) and DBTCA has It is possible that this judgement may affect the Company's ability therefore filed a claim on behalf of the Company.

to exercise set-off in respect of the claim against Kaupthing.
As a prudent measure, following the ruling by the Supreme Court, the financial statements do not assume any set-off.

However, such a set-off remains possible and would result in a decrease in borrowings if successful.

___________________________________________________________________________ ___________________________________________________________________________ Financial Statements of Eyrir Invest ehf.

2011 29 Amounts are in EUR thousand