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FLAGSTONE ANNUAL REPORT 2009

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the year ended December 31, 2008 (Expressed in thousands of U.S. dollars)

For the year ended December 31, 2008

Flagstone Shareholders’ Equity

Total equity

Beginning balance

Repurchase of preferred shares Acquisition of subsidiaries

Comprehensive income: Net loss

Other comprehensive income: Change in currency translation adjustment Defined benefit pension plan obligation

Comprehensive income

Stock based compensation

Subsidiary stock based compensation Subsidiary stock issuance Fair value of issued warrant Issue of shares, net

Shares repurchased and cancelled Dividends declared Other

Ending balance

$ 1,395,263 (6,639 )

7,567

(173,703 ) (16,251 ) (17,138 )

(887 )

(173,703 ) (16,251 ) (17,138 )

(190,841 ) $ (190,841 )

(4,020 ) (449 ) —

3,565 (748 )

(6,648 ) (13,496 ) (91 )

$ 1,183,463 $

(13,496 ) (91 )

96,092 $ (8,271 ) $ 848 $ 897,344 $ 197,450

2 (7 ) (187,302 ) (887 )

(14,810 ) (887 )

(4,020 ) (126 )

3,565 (750 )

(6,641 )

Comprehensive income

$ — $

Retained comprehensive earnings

296,890 $ 7,426

Accumulated other

loss

$

Common Additional Noncontrolling voting shares

paid-in capital

853 $ 905,316 $

subsidiaries

184,778

interest in

(6,639 ) 7,567

13,599 (1,441 )

(449 ) 126

For complete financial statements including auditors’ opinion and notes please refer to our 2009 10-K which can be found on our website

at www.flagstonere.com

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