Nyherji reports H1 total profit of ISK 237 million

Transcription

1 Nyherji reports H1 total profit of ISK 237 million Equity ratio of 43.8% at the end of Q2 REYKJAVIK 18 August, Nyherji announced today financial results for the second quarter and the first half of Key Points: Sales of goods and services amounted to ISK billion in the second quarter (4.9% decrease in income from Q2 2016) and ISK billion in the first half (6.7% increase from H1 2016) [Q2 2016: ISK billion, H1 2016: ISK billion]. Margin amounted to ISK 904 million (25.0%) in the second quarter and ISK billion (24.7%) in the first half of 2017 [Q2 2016: ISK 931 million (24.5%), H1 2016: ISK billion (25.5% )]. EBITDA amounted to ISK 211 million (5.9%) in the second quarter and ISK 453 million in the first half (6.0%) [Q2 2016: ISK 259 million (6.8%), H1 2016: ISK 439 million (6.2%)]. Total profit for the second quarter was ISK 166 million and ISK 237 million in the first half [Q2 2016: ISK 73 million, H1 2016: ISK 111 million]. Equity ratio stood at 43.8% at the end of Q2, as compared with 39.7% at the end of March. Finnur Oddsson, Group CEO commented: "Nyherji Group's profit for the first half was satisfactory at ISK 237 million, compared with ISK 111 million the previous year. Nevertheless, there are challenges to the Group's operations, with continued wage drift and high levels of volatility in the Icelandic króna exchange rate, generally having a negative impact on operations and reducing the competitiveness of Icelandic companies, both in the short and long term. Q2 saw a decline in revenue and operating profit, which, while not acceptable, can be explained in part by the strong appreciation of the króna during this period, as a sizeable fraction of the Group's income is in foreign currency, and this also affects pricing. The company has to some extent mitigated the risk of currency fluctuations with currency hedges that have strengthened our bottom line results. Continued sales and service of software solutions, technology consulting and operating services, remain key contributors to the Group's growth in the first half of the year, with greater demand in recent months for such solutions, cloud services and increased automation. Sales of PCs and audio-visual equipment have been thriving, while sales of IT infrastructure in the second quarter saw a decline. Tempo s revenue continues to build rapidly, up by 36%, in USD terms, over the previous year. An important strategic milestone was reached with the launch of the new Tempo Cloud for JIRA. Customer migration to this new solution is complete and Tempo s functionality is greatly improved with this new release, enabling integration with additional cloud services beyond JIRA. We are now looking at the opportunities available for further growth and product development in a much larger market than has hitherto been available to Tempo. Business at Applicon, TM Software and the software division of Nyherji has continued to expand during the period. From our on-going proprietary software solution development portfolio, we have launched 1

2 Driver Guide from TM Software, a solution for car rental and CCQ, a cloud-based quality management solution, both of which have been well received. We intend to expand CCQ and Driver Guide internationally in the near future. Overall we are very pleased with Nyherji Group s position, not only with respect to the outlook for our client project pipeline, but also to our financial strength, with our equity ratio now standing at 44%. While the company has gained strength, challenging operational factors in Iceland and international competition is increasingly weighing on domestic operations. Operating result in the first half of 2017 Half-year Overview - Key Figures ISK millions H H Sold products and services 7,605 7,126 Cost of goods sold and cost of sold services (5,725) (5,310) Margin 1,880 1,816 Operating costs (1,705) (1,618) Operating profits before financial income and financial expenses Net financial expenses 105 (83) Profit before tax Income tax (32) (19) Profit for the period Translation difference/foreign subsidiaries (11) 14 Total profit for the period EBITDA Sales of goods and services amounted to ISK billion in the first half of 2017, compared with ISK billion for the same period in 2016, an increase of 6.7% between years. Margin amounted to ISK billion (24.7%) in the first half of 2017, compared with ISK billion (25.5%) over the same period in Operating expenses amounted to ISK billion in the first half of 2017 (22.4% of income), compared with ISK billion (22.7% of income) in the first half of Salaries and wage-related expenses as a ratio of income were 40.3% in the first half, compared with 37.9% in the first half of

3 Net financial income is approximately ISK 105 million, compared to capital costs of ISK 83 million in During the first quarter, the company made a forward agreement on foreign currency sales in order to partially hedge business units whose income is in foreign currencies, while most of the cost is in Icelandic currency. Foreign exchange gains on contracts are booked as financial income. EBITDA amounted to ISK 453 million (6.0%) in the first half of 2006, compared with ISK 439 million (6.2%) in the first half of Total profit for the first half of 2017 amounted to ISK 237 million, compared with ISK 111 million in the first half of Balance Sheet Balance Sheet Key Figures ISK millions Fixed assets 3,239 3,287 Current assets 2,982 3,624 Total Assets 6,221 6,911 Equity 2,726 2,329 Long-term obligations 1,468 2,028 Short-term debts 2,027 2,553 Total Equity and liabilities 6,221 6,911 Current ratio Equity ratio 43.8% 33.7% Current assets decreased by ISK 642 million from the end of 2016, from ISK billion to ISK billion. Cash and cash equivalents decrease by ISK 322 million during the period, mainly due to the payment of interest-bearing loans. Trade receivables and other short-term receivables decreased by ISK 408 million during the period. Interest-bearing long-term debt decreased by ISK 561 million during the period, from ISK billion at the end of 2016 to ISK billion after the first half of Equity ratio rose to 43.8% at the end of the first half of 2017, compared with 33.7% at the end of Current ratio stood at 1.47 at the end of the first half of 2017, compared with 1.42 at the end of

4 Cash Flow Cash Flow - Key Figures ISK millions H H Cash from operations Investing activities (354) (493) Financing activities (292) (334) Increase (decrease) in cash (314) (321) Impact of exchange rate changes on cash (8) (5) Cash at beginning of year Cash at close of period Cash from operations is ISK 332 million at the end of the first half of 2017, lowered from ISK 506 million at the end of the first half of The principal reason for this is the change in operating assets and liabilities. Investment movements amounted to ISK 354 million in the first half of 2017, down from ISK 493 million at the end of the first half of 2016, attributable to a decrease in investments in fixed assets in the first half of 2017 compared with the first half of Funding activities fell to ISK 292 million during the period, reduced from ISK 334 million in Cash at the end of the period totalled ISK 550 million, increased from ISK 483 million at the end of the first half of

5 Operating result in the second quarter of 2017 Operating Results Key Figures ISK millions Q Q Q Q Q Sold products and services 3,608 3,996 4,233 3,429 3,794 Cost of goods sold and cost of sold services (2,705) (3,020) (3,125) (2,569) (2,863) Margin , Operating costs (827) (879) (915) (746) (800) Operating profits before financial income and financial expenses Net financial expenses 133 (28) (13) (16) (38) Profit before tax Income tax (29) (3) 19 (22) (18) Profit for the period from continuing operations (Loss from discontinued operations) Foreign exchange conversion adjustment (15) 4 (19) 17 (2) Total profit for the period EBITDA Sales of goods and services amounted to ISK billion in the second quarter, as compared to ISK billion in the same period in 2016, a decline of 4.9%. Margin amounted to ISK 904 million (25.0%) in Q2, compared with ISK 931 million (24.5%) in Q Operating expenses were ISK 827 million in the second quarter (22.9% of income), compared to ISK 800 million (21.1% of income) in the second quarter of Net financial income amounted to ISK 133 million in the quarter, compared with capital expenses of ISK 38 million in the same quarter in During the first quarter, the company made a forward currency contract to partially offset exchange rate fluctuations attributable to operating units with income in foreign currency and costs largely in Icelandic króna. Foreign exchange gains on the contract are booked as financial income. EBITDA amounted to ISK 211 million (5.9%) in Q2, compared with ISK 259 million (6.8%) for the same period last year. Total profit for the second quarter was ISK 166 million. 5

6 Parent company's operations are below expectations Nyherji, the parent company, which specializes in sales and services of information technology solutions, was below expectations over the second quarter. Revenue for the first half of the year increased by 7%, but declined in Q2. Declining revenues were mainly attributable to reduced infrastructure sales, as few major contracts were completed during the quarter. However, demand for our range of personal computers, cameras and corporate audio-visual solutions remained strong. Growth in revenue from hosting and operating services continues, by 20% between quarters. Performance is good and demand and outlook are positive. There was also growing demand for software solutions for customers, with Nyherji focusing on developing and selling solutions in this area to accommodate changing business needs. The outlook for operations is positive, but it will continue to be challenging to meet anticipated cost increases, international competition and counteract the negative effects of strengthening of the Icelandic króna on Nyherji s operations. TM Software develops a new solution for car rental TM Software s revenue increased by 7% in the first half of 2016 to reach ISK 618 million for the period. Revenues and earnings are in line with forecasts. There was solid demand for the company's healthcare and bespoke solutions, and there was continued growth in product development in the field of travel solutions. The first version of Driver Guide, a new solution for car rental services and their customers, was launched in the second quarter. The solution provides driver and passenger with real-time travel services and information, ensuring communication between tourists and car rental firms, and contributing to safer and more responsible travel. TM Software has been working on the development of the solution this year, in line with the company's increased focus on developing its own solutions for tourism. Project pipeline remains solid in most areas of TM Software and the outlook for operations is good. Tempo Cloud for JIRA creates new opportunities Tempo, which develops time management solutions, achieved revenues of USD $8.4 million in the first six months of the year, adding 36% (in USD terms) compared with the previous year. Tempo has developed a new generation of Tempo Cloud for Jira over the last 12 months, and all customers using the older version of Tempo have been transferred to the new environment. The transfer of 7,000 customers to the cloud has been a challenging task, but it has progressed well. The primary objective of the development of the new solution is to improve and simplify Tempo s solutions, increase flexibility and speed of product development, and open Tempo for integration with other cloud services in addition to JIRA from Atlassian. This phase includes new opportunities for product development and the potential to sell directly to customers without the involvement of Atlassian, at the same time expanding the markets in which Tempo can offer products. Tempo Cloud for JIRA is expected to drive Tempo's continuing strong revenue growth, both with Atlassian products and new markets. During the quarter, more than 1,500 new customers were added, reaching a total of almost 11, an increase of 33% between years. Tempo now has 95 employees, including 30 in North America. 6

7 Preparatory and promotional work for investors are currently being conducted in collaboration with AGC Partners in Boston. The company has been introduced at investor conferences, both in San Francisco and London, and has received a positive reception from interested parties. Strong income growth at Applicon in Iceland Applicon's delivered a good performance in Iceland, where it develops and sells business software. Applicon's total revenue amounted to ISK 620 million in the first half, an increase of 20% over the same period last year. The development of new solutions has resulted in increased subscription and advisory income on account of Kjarni, human resources and payroll systems. The business unit has a strong and broad project pipeline. Sales prospects for the company's solutions in the second half of the year are solid, with expected income growth and improved earnings in line with budget, as well as ongoing development of existing solutions. Applicon Sweden delivers good results Applicon Sweden delivered SEK denominated revenue growth of +20% in the first half of the year, with revenues of approximately SEK 48 million. The company specializes in software for banks and financial companies and is engaged in extensive projects for SBAB and Landshypotek Bank. The company's operating performance was positive, with healthy demand for services, especially from existing customers who are demanding additional services. Prospects are good, continued growth is expected and staff levels are increasing. Outlook Prospects for Nyherji operations are favorable. A slight growth in income and a comparable profit from operations are expected, as has been observed over the last quarter. Shareholders The market value of the company at the end of the second quarter of 2017 was ISK billion. The closing price of shares in the quarter was ISK per share. As of 30 June 2017 there are 459 million shares issued, with 537 registered shareholders. Company presentation on 21 August 2016 A presentation meeting for investors and market participants will be held on Monday 21 August 2017 at the company's headquarters at Borgartun 37 in Reykjavik at 08:30. Finnur Oddsson, CEO, will present the company's performance. The live stream of the meeting can be accessed on the company's website. The presentation of the meeting will be available afterwards on the company's website, Financial Calendar Q update Q4 and Annual Results for

8 Annual General Meeting Approval of Interim Financial Statement This interim statement was approved by a meeting of the board of Nyherji hf. on the 18th August 2017, in accordance with International Financial Reporting Standards (IFRS). About Nyherji Group Nyherji Group is a group of information technology services companies with a mission to help customers achieve even better results in their operations through the use of information technology, staff expertise and agile service. Nyherji s shares are listed on NASDAQ OMX Iceland hf. (Iceland Stock Exchange) under the stock ticker NYHR.IC The Board of Nyherji comprises Ivar Kristjansson, Chairman, Hildur Dungal, Emilía Thordardottir, Loftur Bjarni Gislason and Gudmundur Johann Jonsson. Hjalti Thorarinsson is a deputy member of the Board. Finnur Oddsson is CEO of Nyherji. For more information, please visit 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, forwardlooking 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. Contact Information NYHERJI hf. Finnur Oddsson Group Chief Executive fo@nyherji.com Tel: (+354) Gunnar Petersen Group Chief Financial Officer gp@nyherji.com Tel: (+354)