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 2.810 TWh – in 2030 4.900 TWh (est.)

Ownership

SPV 1SPV 1

Landsvirkjun Landsbanki

SPV 2SPV 2

50% 50%

Investors Investors

HydroKraft Invest hf.

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 Sources1983-2010

0

2000

4000

6000

8000

10.000

12.000

14.000

16.000

18.000

'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 1 2007 Landsvirkjun is rated Aaa/A+ by Moody’s and Standard & Poor’s

Landsvirkjun is the marketleader in generationProduces 84% of the electricity used in Icelandsupplies 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 31.12.2007: 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 2003-2005– 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 - 2006 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 / EURBeginning of 2006 74.70At year-end 2006 93.72Average 2006 87.57At 29 March 2007 88.45

Net interest revenues

46%

Net financial income

22%

Net fee and commission

income32%

Income by origin

Income bysegment

17%

34%

42%

7%

Retail Banking

Corporate Banking

Securities and Treasury

Asset Management &Private Banking

Landsbankinn - Extensive Operations in 15 countries

HKI objectives

Background & owners

HKI Targets

1

2

3

World Hydro Electrical Potential

Gross Theoretical : 40.500 TWh/a

Technically Feasible: 14.300 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

Thank you