Annual Results 2013 Presentation March 3, 2014 Finnur Oddsson, CEO - - PowerPoint PPT Presentation

Annual Results 2013

Presentation March 3, 2014

Finnur Oddsson, CEO

Significant Developments

Strategic focus

• Values and corporate culture

Nýherji as a leading service company Speed and flexibility Collaboration within and outside the Group

• Clearer focus and simpler operations

Changes in structure and personnel

• CEO, managing directors, chief human resources officer
• Consolidation of sales units and service centre
• Divestment of business units and fewer companies

Stock market

• Number of shares 400 m
• Share price at year end 3.65
• Highest price 3.67
• Lowest price 2.89

Annual General Meeting

• 4:00 PM March 14

10 Largest Shareholders in Nýherji

February 27, 2014

621208-1520 Vænting hf. 67.980.832 17,0% 430269-0389 Stafir lífeyrissjóður 39.264.981 9,8% 430269-4459 Lífeyrissjóður verslunarmanna 37.919.303 9,5% 670813-0370 VPS ehf. 35.095.699 8,8% 680269-6029 Fiskveiðahlutafélagið Venus hf. 26.778.483 6,7% 690689-2009 Vátryggingafélag Íslands hf. 26.493.049 6,6% 710309-1670 Drómi hf. 23.713.636 5,9% 471008-0280 Landsbankinn hf. 18.246.615 4,6% 711011-2770 P 126 ehf. 13.532.483 3,4% 040555-2699 Benedikt Jóhannesson 12.499.030 3,1% The 10 largest shareholders own approximately 75% of the share capital Other shareholders: 24.7%. Total number of shareholders: 278.

Group of IT companies

500 employees in Iceland, Denmark and Sweden

Nýherji – Iceland

Sales of products and solutions / Managed and IT services

TM Software

Sale of own software in addition to consultancy and development of web solutions and custom software applications

Iceland - Sweden

Sale and servicing of business software for the financial services industry

Dansupport A/S – Applicon A/S

These companies do not fit the new strategy adopted for the Group

Smarter IT solutions for the business sector

Sales of products and solutions Managed and IT services

Strength in collaboration and IT solutions

Highlights 2013

2013 at a glance

Goodwill impairment of ISK 1,202 million, mainly owing to losses in Denmark Net loss of ISK 1,608 million EBITDA ISK 230 million in 2013 versus ISK 481 million 2012 EBITDA without one-off costs ISK 371 million Cash from operations ISK 561 million versus ISK 237 million in 2012 Good results at domestic subsidiaries and a turnaround at Applicon Sweden Dansupport sold and Applicon in Denmark put in a sale process

Icelandic Businesses

Nýherji

• Positive results
• But not quite as good as estimated
• Good demand for IT services
• Robust sales of core siolutions from

IBM

• Significant growth in Lenovo sales

to businesses and consumers

TM Software

• Good earnings in line with

management estimates

• 25% rise in turnover and 75%

increase in revenues from outside Iceland

• Significant R&D investment
• Tempo with over 5 thousand

corporate users

• Foreign revenues expected to make

up an even higher share of total turnover

• New product, Planner, launched in

January with more in the pipeline

Applicon

• Earnings beat management

estimates

• Extensive project in collaboration

with Applicon Sweden for Landshypotek

• International innovation award

from SAP

• Growth in software sales and

services will generate revenues on a continuing basis

Businesses outside Iceland

Applicon Denmark

• Revenues decreased

substantially, fell short of estimates.

• Continued losses
• Lack of demand, insufficient

use of personell.

• Company put in a sale

process.

Applicon Sweden

• Positive second half

turnaround

• Landshypotek project proved

costly – but will now generate revenues and opportunities

• Increased share of revenue-

generating projects since completion of LH.

• More demand than the

company can handle

Dansupport Denmark

• Good performance, in line

with estimates

• Company sold to Jansson

Kommunikation A/S at end of 2013

• Consolidated balance sheet

not included at yearend.

Finances

Key Indicators

Revenues ISK 13,129 million EBITDA ISK 230 million EBITDA without

• ne-off costs.

ISK 371 million EBITDA% 1,8% Working capital ratio 0,91 Equity ratio 11% DSO 32 days DPO 34 days Inventory turnover 5,6 Cash from

• perations

561 million EBITDA % w/o

• ne-off costs

2,8%

• Operat. costs/

revenues 21,4%

Income Statement Q4 2013

In ISK million Q4 2013 Q4 2012 Goods and services sold 3.715 3.622 Cost of goods and services sold (2.991) (2.893) Gross profit 724 729 Operating cost (804) (658) Goodwill impairment (367) (92) EBIT (447) (21) EBITDA 38 146 Net (Loss) Profit for the period (496) 121

123 87 125 146

• 4

125 71 38 26 55 60

EBITDA (ISK million) EBITDA EBITDA without one-off costs

Revenue distribution and EBITDA

23

• 45
• 55

22

• 76
• 56

22

• 22

100 132 180 124 71 182 49 60

EBITDA – Foreign and Domestic companies

Foreign companies Domestic companies

Goods sold 54% Services sold 46%

Revenue distribution

Income Statement 2013

In ISK million 2013 2012 Goods and services sold 13.129 14.182 Cost of goods and services sold (10.461) (11.272) Gross profit 2.668 2.910 Operating cost (2.808) (2.691) Goodwill impairment (1.201) (92) EBIT (1.341) 128 EBITDA 230 481 Net (Loss) Profit for the period (1.608) 111 14.182 13.129 2012 2013

Revenues (ISK million)

Balance Sheet December 31, 2013

In ISK million 31.12.2013 31.12.2012 Fixed assets 3.049 4.537 Current assets 2.982 3.562 Total assets 6.031 8.099 Equity 665 2.293 Long-term liabilities 2.090 2.773 Short-term liabilities 3.276 3.034 Total equity and liabilities 6.031 8.099 1,0 1,2 0,9

Working capital ratio

26% 28% 11%

Equity ratio

Interest bearing liabilites amount 3.150, decrease of 120 million in 2013.

Cash Flow Statement

316 218 451 2011 2012 2013

Cash on hand at end of period (In ISK million)

In ISK million 2013 2012 Cash from operations 561 237 Cash from investing activites (268) (304) Cash from financing activities (50) (42) Change in cash 243 (110) Effects of changes in foreign exchange rates on cash (10) 12 Cash at beginning of year 218 316 Cash at end of period 451 218

Outlook

Outlook

• The outlook for the Group is

generally good

• More profitable units; divestment of

unprofitable units

• Pent up need for IT investment in the

Icelandic corporate sector

• Nýherji well equipped to meet

demand as it arises

• Continued growth in software sales

to customers outside Iceland

• The IT consumption pattern to

change significantly

• Stiff competition
• Performance subject to economic

trends

• Collective bargaining agreements
• Debt levels, general interest rates and

inflation

What has changed?

Balance Sheet Businesses

• utside Iceland

Icelandic Businesses Rising revenues and earnings at TMS New Approach Applicon Svíþjóð profitable Growth at Applicon and collaboration with SE Sharper focus

• n core

activities Write-off of intangible assets Dansupport sold Applicon DK in a sale process

Disclaimer

Statements contained in this presentation may be based on management’s current estimates and expectations, and not on facts that may be verified during the presentation. Such statements are inherently uncertain. Investors are cautioned that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in the presentation, and that we do not undertake to update the presentation in this respect. Statements contained in this presentation speak only as of the date of the presentation and are qualified in their entirety by this cautionary statement.