- Statement regarding the effects of the situation on financial markets on issuers

The following is a summary of the direct and indirect impact of the exceptional
circumstances currently prevailing on financial markets on the operations and
balance sheet of Atorka Group hf.  The Financial Supervisory Authority, FME,
requests all issuers of equities admitted to trading on a regulated securities
market in Iceland to publish such a summary. 

Here are Atorka‘s answers to the 7 questions from the Financial Supervisory
Authority. 

1. Review of developments in the issuer's operations in light of the economic
situation and discussion of significant events which have taken place since the
publication of the most recent interim financial statements. 

The principal occurrences affecting Atorka's operations since publication of
its most recent interim financial statements are the major depreciation of the
Icelandic krona(ISK), a large drop on equity markets, plus the publication of
new statistics on the contraction of the global economy. Furthermore, Iceland's
three largest banks have been nationalised and there is great uncertainty as to
the situation of all of their related financial instruments.  As a consequence,
Atorka's balance sheet has increased, both in terms of its assets and its
liabilities, like it has been doing all this year.  Great uncertainty remains
concerning all its financial instruments with the nationalised banks. As far as
Atorka's profit and loss account is concerned, there is a drop in share price
of listed assets, which has negative impact, but Atorka has been selling
substantial part of its listed assets.  Great part of Atorka's investment
projects is financed by large banks outside of Iceland.  Interest rate cuts on
most financial markets have a positive impact on most of Atorka's investment
projects.  This will assist Atorka's foreign investment projects, which are
financed in the currencies of the countries in question. On the other hand, the
policy rate increase in Iceland, plus high inflation, will increase the
Atorka's financing expenditure. The increase in commodity prices has negatively
impacted the operations of those companies sensitive to such fluctuations
while, conversely, the major decline in commodity prices in recent weeks will
have a corresponding positive impact in coming quarters. 

2. Significant points to consider in evaluating the issuer's financial position
and performance. 

The most significant aspects to consider in evaluating Atorka's financial
position and its performance are the progress of its investment projects,
listed asset developments, exchange rate and interest rate developments.
Atorka‘s investments are almost exclusively in manufacturing and service
(non-financial) operations. Its investment projects are in particular in the
renewable energy, plastic packaging, water purification, environmental
technology and logistics sectors. Most of these projects have long-term
financing or low debts and in general their operations have been performing
well. A substantial portion of the operations of the Atorka's investment
projects are outside of Iceland. The greatest share of domestic operations is
in renewable energy. 

3. Discussion of possible uncertainty in evaluating the issuer's assets and
liabilities due to the exceptional circumstances and what the impact of this
uncertainty could be. 

Atorka's main uncertainty in evaluating assets and liabilities due to the
exceptional circumstances is due to difficulty in predicting what will happen
to the financial instruments the company has with its commercial banks in
Iceland. Both the current and future status of derivative contracts, concluded
to minimise the company's currency risk and reduce its financing cost and which
were a key factor in its risk management, is unclear.  Atorka is working on a
solution for this. 

4. What impact has the falling ISK exchange rate had on the issuer?

The principal effect of the ISK slide has been to inflate Atorka's balance
sheet while at the same time reducing its equity ratio accordingly. 

5. Whether special risks now exist, above and beyond the normal risks in the
issuer's operating sector, including business and financial risks which may
impact the issuer. 

Under the circumstances currently prevailing in Iceland, there is heightened
risk in all sectors, not least in financially related sectors.  Most of the
uncertainty is that it is still not clear what assets and liabilities will be
put in the new banks and what will remain in the old banks and what the banks
will do with these assets and liabilities in the future. 

6. Impact of the external environment on the issuer and measures taken to
prevent, mitigate or compensate for damage it may suffer as a result. 

The main impact of the external environment on Atorka, as previously mentioned,
results from ISK weakening against other currencies, a higher interest rate
level, higher inflation and risk relating to the nationalisation of the
Icelandic banks. The measures taken by the com¬pany this year in response are
sale of assets and debt reduction. Atorka has, furthermore, availed itself of
currency hedges, to the extent this is possible, to protect itself from these
negative impacts. 

7. Expected developments and the issuer's future prospects, including specific
assumptions and factors of uncertainty. 

Future developments and prospects for Atorka for a shorter time depend to a
great extent upon external factors, such as how effectively the banking system
in Iceland is restructured and how successfully trading in the ISK on FX
markets can be relaunched, as well as upon global economic developments. 
Atorka´s portfolio of companies are in many sectors and in companies that are
operated in markets with good underlying growth and it is Atorka´s view that
the long term prospects of these companies are good.