Nyherji : 16% revenue growth in the fourth quarter

Financial Highlights:

• Revenue from goods and services stood at ISK 4.233 billion for the fourth quarter, year-on-year (YoY) growth of 15.5%, and was ISK 14.788 billion for the full year (FY) 2016, 10.9% up on 2015. (Q4 2015: ISK 3.663 billion, FY 2015: ISK 13.332 billion).
• Gross profit was ISK 1.108 billion (26.2%) for the fourth quarter and ISK 3.784 billion (25.6%) for FY 2016, as compared with Q4 2015: ISK 956 million (26.1%) and FY 2015: ISK 3.421 billion (25.7%).
• EBITDA amounted to ISK 335 million (7.9%) in the fourth quarter and ISK 1.021 billion (6.9%) for the FY 2016 (Q4 2015: ISK 315 million (8.6%), FY 2015: ISK 1.008 billion (7.6%)).
• Net profit in the fourth quarter amounted to ISK 180 million and ISK 383 million for the full year 2016 (Q4 2015: ISK 135 million, FY 2015: ISK 328 million).
• Earnings per share were ISK 0.83 (2015: ISK 0.84).
• The Board of Directors proposes that no dividend will be paid out to shareholders in 2017.
• A General Meeting will be held on March 3, 2017.
• Equity ratio of 34% at the close of 2016, compared with 28% at the end of 2015.
• Strong revenue growth occured in software-related activities.
• Nyherji took over the operation of IT systems for Arion Bank at the end of the fourth quarter.
• Activity increased for core banking solutions, with new projects for Landshypotek and implementation at SBAB in Sweden.

We are pleased with the Nyherji Group operations in 2016, which was one the best years in the company's history. Despite a slow start to the year, overall annual income growth has been satisfactory, at about 11%, and strongest in software-related activities. Tempo now has close to 10,000 customers and revenue growth of 40% year-on-year, while at Applicon AB, TM Software and Nyherji's other software units, grew revenue in the range of 20 and 45%.

These robust results where achived despite an unusually high salary levels due to collective bargaining and substantial investment in solution development, service capabilities and more robust operational infrastructure. This investment has enabled us to improve service levels and customer satisfaction and it is gratifying to see a range of project initiatives in recent months result in exciting collaborations with new customers, including SBAB Bank in Sweden and Arion Bank in Iceland. Increased interest from companies and organizations to outsource their IT operations is a welcome and timely development, as we have outstanding capabilities and facilities and have never been better positioned to provide secure and attractively priced services for our customers.

Operations have been well-balanced over the last three years, during which time our equity has strengthened considerably. We expect ongoing stability and growth in our operation, despite some foreseeable challenges, e.g., due in part to increasing wage costs. We are continuing to invest in and exploit a number of exciting opportunities for Nyherji, Applicon, TM Software and Tempo, and looking forward, we are confident that the outlook remains positive overall.