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 Stock market • Values and corporate culture • Number of shares 400 m • Share price at year end 3.65 Nýherji as a leading service company • Highest price 3.67 Speed and flexibility • Lowest price 2.89 Collaboration within and outside the Group • Clearer focus and simpler operations Annual General Meeting Changes in structure and personnel • 4:00 PM March 14 • CEO, managing directors, chief human resources officer • Consolidation of sales units and service centre • Divestment of business units and fewer companies

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

Sales of products and solutions Smarter IT solutions for the business sector 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 TM Software Applicon • Positive results • Good earnings in line with • Earnings beat management management estimates estimates • But not quite as good as estimated • 25% rise in turnover and 75% • Extensive project in collaboration increase in revenues from outside with Applicon Sweden for • Good demand for IT services Iceland Landshypotek • Robust sales of core siolutions from • Significant R&D investment • International innovation award IBM from SAP • Tempo with over 5 thousand • Significant growth in Lenovo sales corporate users • Growth in software sales and to businesses and consumers services will generate revenues on a continuing basis • Foreign revenues expected to make up an even higher share of total turnover • New product, Planner, launched in January with more in the pipeline

Businesses outside Iceland Applicon Applicon Dansupport Denmark Sweden Denmark • Revenues decreased • Positive second half • Good performance, in line substantially, fell short of turnaround with estimates estimates. • Landshypotek project proved • Company sold to Jansson • Continued losses costly – but will now generate Kommunikation A/S at end of revenues and opportunities 2013 • Lack of demand, insufficient use of personell. • Increased share of revenue- • Consolidated balance sheet generating projects since not included at yearend. completion of LH. • Company put in a sale process. • More demand than the company can handle

Finances

Key Indicators Revenues EBITDA without EBITDA EBITDA% ISK 13,129 one-off costs. ISK 230 million 1,8% million ISK 371 million Operat. costs/ EBITDA % w/o Working capital Equity ratio revenues one-off costs ratio 11% 21,4% 2,8% 0,91 Cash from Inventory DSO DPO operations turnover 32 days 34 days 561 million 5,6

Income Statement Q4 2013 EBITDA (ISK million) Q4 Q4 In ISK million 2013 2012 Goods and services sold 3.715 3.622 146 125 125 Cost of goods and services sold (2.991) (2.893) 123 55 Gross profit 724 729 87 60 Operating cost (804) (658) 71 Goodwill impairment (367) (92) 38 26 EBIT (447) (21) -4 EBITDA 38 146 Net (Loss) Profit for the period (496) 121 EBITDA EBITDA without one-off costs

Revenue distribution and EBITDA Revenue distribution EBITDA – Foreign and Domestic companies 182 180 132 124 100 71 Services 60 49 sold 46% Goods sold 23 22 22 54% -22 -45 -55 -56 -76 Foreign companies Domestic companies

Income Statement 2013 Revenues (ISK million) In ISK million 2013 2012 14.182 Goods and services sold 13.129 14.182 13.129 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 2012 2013

Balance Sheet December 31, 2013 Working capital ratio 1,2 1,0 0,9 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 Equity ratio Short-term liabilities 3.276 3.034 28% 26% Total equity and liabilities 6.031 8.099 11% Interest bearing liabilites amount 3.150, decrease of 120 million in 2013.

Cash Flow Statement In ISK million 2013 2012 Cash on hand at end of period (In ISK million) Cash from operations 561 237 451 Cash from investing activites (268) (304) Cash from financing activities (50) (42) 316 218 Change in cash 243 (110) Effects of changes in foreign (10) 12 exchange rates on cash Cash at beginning of year 218 316 2011 2012 2013 Cash at end of period 451 218

Outlook

Outlook • • The outlook for the Group is The IT consumption pattern to generally good change significantly • • More profitable units; divestment of Stiff competition unprofitable units • Performance subject to economic • Pent up need for IT investment in the trends Icelandic corporate sector • Collective bargaining agreements • Nýherji well equipped to meet demand as it arises • Debt levels, general interest rates and inflation • Continued growth in software sales to customers outside Iceland

What has changed? Businesses Balance Sheet Icelandic Businesses outside Iceland Dansupport sold Rising revenues Write-off of Applicon DK in and earnings at New Approach intangible assets a sale process TMS Growth at Sharper focus Applicon Svíþjóð Applicon and on core profitable collaboration activities with SE

Disclaimer Statements contained in this presentation may be based on management’s current estimates and expectations, and not on facts t hat 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.