Nyherji : Strong income growth and positive performance in Q1

Nyherji's operations have progressed well over the quarter and are on track.

Sales of computers and audiovisual solutions remain, as ever, a major part of our operations, however revenues from hosting and operating services are rising proportionately, with new projects such as the outsourcing of IT operations from Arion Bank contributing from the start of the year.

The growth of software-related operations have been driving the Company's income growth over the recent quarters, and increased emphasis on product development is now starting to be visible in sales of our own solutions.

We see substantial gains in subscription income from Kjarni, payroll and human resource application from our Applicon subsidiary, up almost a third year-on-year, and ongoing work on innovation and development projects holds promise for the future. Implementation of core banking systems for SBAB in Sweden is off to a good start and represents a substantial engagement for our professional consulting teams, both is Sweden and in Iceland.

TM Software is continuing to deliver robust revenue growth, show strong performance and exciting product development projects.

Tempo also continues to perform very well with revenue for the quarter at USD $4.4 million, a 46% increase. Customer numbers grew to 10,000, a major milestone reflecting the strength of Tempo offerings. There are now more than 100 Tempo partners and distributors worldwide, and approximately fifteen employees working at our offices in Canada and the United States, with further growth planned. Overall I am pleased to report a positive outlook and solid demand across most areas of the Group, in particular hosting, operating services and our various software solutions.

Financial Highlights:

• Sales of goods and services up 20% to ISK 3.996 billion in Q1 [Q1 2016: ISK 3.332 billion]
• Gross margin of ISK 976 million (24.4%) in Q1 [Q1 2016: ISK 885 million (26.6%)]
• EBITDA of ISK 242 million (6%) in Q1 [Q1 2016: ISK 180 million (5.4%)]
• Total profit for the first quarter amounted to ISK 71 million (1.8%) [Q1 2016: ISK 38 million (1.1%)]
• Equity ratio was 39.7% at the end of the first quarter, compared with 33.7% at the end of 2016
• Interest-bearing long-term debt was reduced by ISK 300 million in the first quarter
• Employees exercised share options at a total purchase price of ISK 149 million in Q1 in early April