Nyherji Group Announces Profitable First Quarter

Nyherji hf. today announced its quarterly results statement for Q1 2015 with net profit of ISK 41 million and revenue growth of 14.1% compared with the same period in 2014.

Financial Highlights

• Income from product and service sales for the year amounted to ISK 3.263 billion [2014: ISK 2.859 billion], revenue growth of 14.1% compared with the same period last year
• Net profit for Q1 of ISK 41 million [2014: ISK 56 million]
• Profit before tax of ISK 114 million [2014: ISK 86 million]
• EBITDA amounted to ISK 225 million (6.9%) [2014: ISK 191 million (6.7%)]
• Operating profit amounted to ISK 147 million [2014: ISK 116 million]
• Gross profit of ISK 808 million (24.8%) [2014: ISK 753 million (26.3%)]
• All group entities showed a positive operating performance in the first quarter
• Operating expenses were ISK 661 million in the first quarter of 2015, 20.3% of revenue, compared to 22.3% of revenues in the first quarter of 2014
• Net financial expenses totaled ISK 33 million in the first quarter of 2015, compared with ISK 31 million in the first quarter of 2014

"Nýherji Group demonstrated solid performance in the first quarter with all of the Group operating companies generating a profit,” commented Finnur Oddsson, Group Chief Executive, "The Group has delivered healthy profits for the fifth consecutive quarter, showing increased stability of our operations. We have demonstrated significant revenue growth compared with the same period last year, particularly in Nýherji and Tempo. Performance is now slightly above our estimates. Since the fall we have continued to drive the implementation of a new corporate structure that will achieve our parallel goals to be increasingly streamlined with more efficient sales activities and improved services."

OPERATING RESULTS FOR Q1, 2015

• Income from product and service sales for the year amounted to ISK 3.263 billion [2014: ISK 2.859 billion], revenue growth of 14.1% compared with the same period last year
• Net profit for Q1 of ISK 41 million [2014: ISK 56 million]
• Profit before tax of ISK 114 million [2014: ISK 86 million]
• EBITDA amounted to ISK 225 million (6.9%) [2014: ISK 191 million (6.7%)]
• Operating profit amounted to ISK 147 million [2014: ISK 116 million]
• Gross profit of ISK 808 million (24.8%) [2014: ISK 753 million (26.3%)]
• All group entities showed a positive operating performance in the first quarter
• Operating expenses were ISK 661 million in the first quarter of 2015, 20.3% of revenue, compared to 22.3% of revenues in the first quarter of 2014
• Net financial expenses totaled ISK 33 million in the first quarter of 2015, compared with ISK 31 million in the first quarter of 2014

• Current assets increased by ISK 228 million since the end of 2014, from ISK 2.732 billion to 2.960 billion, primarily in cash and receivables
• Interest-bearing debt increased by ISK 210 million since the year-end, from ISK 3.028 billion to ISK 3.238 billion
• Equity ratio remains unchanged from year-end at 16.7%

• Cash flow from operations is ISK 91 million in the first three months of the year compared with ISK 141 million in the same period in 2014
• Financing activities during the first three months of the year are positive for ISK 159 million compared to a negative movement of ISK 111 million in the same period in 2014
• Cash and cash equivalents at the end of the period amounted to ISK 211 million compared with ISK 350 million in the same period in 2014

Nyherji Group: Solid operation in most areas

Operational performance for the parent company was in line with forecasts. Year on year revenue increase was primarily on account of increased equipment sales, for example Lenovo and server equipment from IBM. There has also been growth in the sales of audio solutions, telephony solutions and increased demand for hosting and facilities management services.

TM Software: Promising operational outlook

TM Software experienced a successful quarter with results closely in line with budget. After the New Year operations of the Tempo division were formally separated from TM Software as a new operating company. The remaining activities of TM Software are now split into two areas: the Healthcare Division and the Solutions Division, which undertakes development of proprietary solutions for TM Software and custom solutions for clients. Outlook for the company is positive.

Tempo Software: Continued significant revenue growth

Tempo, now an independent operating company, showed very strong performance for the quarter. Customer numbers continue to increase to approximately 7,000 companies covering over 100 countries. Approximately half of the company's revenues come from Europe and 35% from North America. The company released new versions of all the company's products -- Tempo Time Sheets, Tempo Planner, Tempo and Tempo Folio Books. The outlook is one of continued revenue growth and profitability. Currently around 60 people work for TEMPO today and the organization is expected to increase by 20 employees during the year.

Applicon: Results in line with expectations

Applicon performance was in line with expectations despite extensive development of its own solutions, especially payroll and human resources core systems. During the quarter, core systems have been sold to several large corporations and a number of implementation projects were initiated. Sales projects for SAP HANA featured prominently in the quarter and the project pipeline for the next quarter is looking promising.

Applicon AB in Sweden: Results of programs

Applicon AB went well and was above projections. The operations are now delivering positive results and prospects are good for the year.

Prospects

Prospects for Nýherji Group are good, with modest growth in revenue expected for Nýherji and its subsidiaries in 2015.

Shareholders

The market value of the company at the end of the first quarter of 2015 was ISK 3.075 billion. Closing stock price for the quarter was ISK 7.50 per share. Issued shares on March 31, 2014 were 410 million and 335 employees were shareholders.

Presentation on April 30, 2015

A presentation for investors and analysts will be held on Thursday, April 30, 2015 in the Company's headquarters at Borgartun 37 in Reykjavik, commencing at 09:00. Finnur Oddsson, CEO, will present the results. A live webcast and transcript of the meeting is available and the presentation at the meeting may be accessed on the company's website, www.nyherji.is, after the meeting.

FINANCIAL CALENDAR FOR 2015

Proposed publication of interim financial statements for 2015:

• August 26, 2015: Interim results for Q2 and H1 2015
• October 28, 2015: Interim results for Q3 and first nine months of 2015
• January 28, 2016: Interim results for Q4 2015

INTERIM REPORT

This interim statement was approved at a board meeting of Nýherji hf. on the 29th April 2015, in accordance with International Financial Reporting Standards (IFRS). The interim financial report has neither been audited nor reviewed by the Company's auditors.

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ABOUT NYHERJI HF

Nyherji hf. (NASDAQ OMX: NYHR.IC) is an established Nordic IT services provider with offices in Iceland and Sweden. For over two decades the company has been a world-class technology supplier, application developer, systems integrator, facilities manager and expert business process consultancy, with corporate roots that can be traced back to 1899 and the inception of "office machines”. Nyherji aims to be the technology partner of choice for businesses, from the smallest to the largest enterprises. With expertise in understanding and linking the needs of enterprise customers to competitive technology solutions, Nyherji uses its deep knowledge of mission-critical processes, hardware and application requirements, to focus on government and industries sectors with high support needs such as healthcare, ?nancial services, logistics and aviation. For more information, please visit www.nyherji.is/english/investor-relations/

FORWARD LOOKING STATEMENTS

Statements in this press release that are not based on historical facts are forward-looking statements. Although such statements are based on management’s current estimates and expectations, forward-looking statements are inherently uncertain. We therefore caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements, and that we do not undertake to update any forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement.