New Composition Of The ICEX-15 Index For 1 April To 30 June 2004

ICEX is now for the first time making the selection for the ICEX-15 Index based on the new method announced in a news release on 16 July 2003. In this instance only, the composition of the index will apply for three months, or until the end of June. A new selection will then be made, which will apply for the next six months as usual.

The main changes in the selection methodology for the ICEX-15 Index are:

• equirements are set for maximum end-of-day spread;
• market capitalisation is adjusted for free-float ;
• companies selected for the Index will be required to publish all their announcements simultaneously in Icelandic and English.

The objective of the change is to increase share liquidity. Details of the methodology are available on the ICEX website: http://news.icex.is/attachments/other/hlutabrefavisitolur.pdf but roughly speaking the procedure is as follows. To start with, 20 companies are selected on the basis of on-exchange trading in their shares over the past 12 months. These 20 companies are ranked according to their free-float adjusted market capitalisation. The 15 companies with the highest free-float adjusted market cap are selected for the Index, provided they comply with the requirement that their average end-of-day spread does not exceed 1.5%. If they do not fulfil this condition, companies lower on the list of 20 may be selected instead if their average end-of-day spread is within 1.5%.

The selection of the ICEX-15 Index in this instance is based on trading data for the period 1 March 2003 to 29 February 2004, and on spreads for the period 1 August 2003 to 29 February 2004. The reference period for spread is shorter in order to avoid considering spread retroactively, since the new methodology was announced in July last year. Free-float adjustment is based on the list of 10 largest shareholders at the end of the reference period.

The table below shows the companies selected for the ICEX-15 Index for the coming three months, together with their weighting in the Index (based on free-float adjusted market cap as of 27 February), the free-float adjustment percentage, their share of the total turnover of the ICEX-15 companies and average end-of-day spread for the period 1 August 2003 to 29 February 2004.

Three new companies are included in the Index: Marel hf., Opin Kerfi Group hf. and Medcare Flaga hf. Shares in Medcare Flaga are included in the Index for the first time. The company was listed on 27 November 2003. Shares of Opin Kerfi Group were last included in the index during the first half of 2001 and Marel?s shares during the first half of 2002.

As previously mentioned, it is a requirement for selection that the average end-of-day spread is within 1.5%. A total of 13 companies in the ICEX-15 Index fulfilled the spread requirements. Two companies (Medcare Flaga hf. and Solumidstod hradfrystihusanna hf.) which were ranked 16-20 on the basis of free-float adjusted market cap fulfilled the spread requirements and as a result were included in the Index, replacing two other companies (Kaldbakur hf. and Kogun hf.), which would have otherwise been included on the basis of their free-float market cap.

If the ICEX-15 Index had been selected on the basis of the previously applied methodology, Icelandair, Tryggingamidstodin and Kaldbakur would have been included, instead of Medcare Flaga, Solumidstod hradfrystihusanna and Opin Kerfi Group.

The table below shows the weighting of the various sectors in the Index, based on free-float adjusted market cap at the end of February, together with their share in the turnover of companies included in the Index and the weighted average spreads for the sectors.