Third Quarter 2016 Presentation October 27, 2016 Finnur Oddsson | - PowerPoint PPT Presentation

Third Quarter 2016 Presentation October 27, 2016 Finnur Oddsson | Group Chief Executive

Contents ① Highlights and Update on Operations ② Financial Report ③ Outlook

Highlights and Update on Operations

Financial Highlights Q3 2016 9M 2016 ISK 3.429bn +13.6% YOY ISK 10.555bn +9.2% YOY Revenue Gross Profit ISK 860m +3.9% YOY ISK 2.67bn +8.5% YOY Net Profit ISK 93m ISK 204m ISK 247m 7.2% Q3 ISK 686m 6.5% YTD EBITDA Positive results across the Group with strong operating prospects

Update on Group operations Group Nyherji Applicon IS SE TM Software TEMPO • Nyherji Group operations performed on target over the third quarter • All Group companies showed positive results • Interest-bearing debt reduced significantly • Equity continues to strengthen • Significant growth in software-related activities • The Group deploys Facebook’s Workplace for all employees

Update on Group operations Group Nyherji Applicon IS SE TM Software TEMPO • Nyherji’s revenues and earnings were in line with expectations • Strong sales of PC equipment and audio- visual solutions to businesses and individuals • Attractive opportunities associated with potential outsourcing project • Substantial investment in knowledge of specialized software solutions • Positive outlook for the fourth quarter

Update on Group operations Group Nyherji Applicon IS SE TM Software TEMPO Applicon ehf • Operations improved over the same period last year but slightly below expectations so far this year • Sales of software licenses from SAP, Kjarni and related implementation projects performed well • Icelandic experts involved in the implementation of SBAB • Good order book and prospects Applicon AB • Revenues and earnings increased significantly compared with the same period last year • Good projects in all areas: Capital Markets, Finance & Leasing and Core Banking • Important contract for the sale and implementation of core banking systems for SBAB Bank AB • Agreement with SBAB strengthens market positioning

Update on Group operations Group Nyherji Applicon IS SE TM Software TEMPO Applicon AB • SBAB is the fifth largest bank in Sweden • Focused on mortgages and savings solutions for individuals, with a retail loan book of 350,000 customers • Rated Aaa by Moody's • Solution provided by Applicon: • SAP lending, insurance, systems and integration by Applicon with payment systems • SAP HANA (in memory technology) • Operational support and long-term maintenance

Update on Group operations Group Nyherji Applicon IS SE TM Software TEMPO • Revenue rose by 26% in the quarter compared with the same period last year • Increased focus on innovation and product development in specific areas • Travel Hackathon and Innovation Days • Strong order book and a healthy outlook

Update on Group operations Samstæðan Nýherji Applicon IS SE TM Software TEMPO • Tempo’s total income was USD $3.2 million for the quarter, a 43% increase from the previous year • The largest increase in sales of cloud solutions • Rapidly growing reseller channel of approximately 120 independent firms delivering combined Atlassian and Tempo solutions • Staff number swelled to almost 100 employees across three sites, Iceland, Montreal and San Francisco • Positive outlook

Financial Report

Key figures for 9M 2016 Revenue EBITDA EBITDA% Margin % ISK 10.555bn ISK 686m 6.5% 25.4% Wages & Related Operating Expense / Current Ratio Equity Ratio Expenses / Revenue Revenue 1.39 32.5% 36.9% 22.4% Cash from DSO DPO Inventory Turnover Operations at Close 33 42 6.4 of Period ISK 500m

Income Statement – 9M 2016 EBITDA 6,5% ISK millions 9M 2016 9M 2015 7,2% 7,1% 800 3,4% 3,2% 3,1% 693 686 10,555 9,669 Sold products and services 700 586 600 Cost of goods sold and cost of sold services (7,879) (7,203) 500 384 400 2,676 2,465 Margin 244 300 163 200 Operating costs (2,364) (2,024) 100 0 Operating profits before financial income 312 441 and financial expenses (98) (184) EBITDA% Net financial expenses EBITDA Profit before tax 214 258 9M Income and Change vs. Previous Year 12.000 20% (41) (57) Income tax 10.555 9.669 10.000 173 201 Profit for the period 8.257 15% 7.888 17,1% 8.000 Translation difference/foreign subsidiaries 31 (8) 9,2% 6.000 10% 204 193 Total profit for the period 4.000 4,7% 5% EBITDA 2.000 686 693 0 0% Income Change

Income Statement – Q3 2016 EBITDA ISK millions Q3 2016 Q3 2015 8,0% 7,4% 7,2% 6,3% 300 Sold products and services 3,429 3,019 247 4,8% 240 250 (2,569) (2,192) Cost of goods sold and cost of sold services 189 2,5% 176 200 860 828 150 Margin 120 100 61 (746) (678) Operating costs 50 Operating profits before financial income 0 114 150 and financial expenses (16) (72) Net financial expenses EBITDA% EBITDA 98 78 Profit before tax Q3 Income and Change vs. Previous Year (22) (20) Income tax 4.000 20% 18,6% 3.429 Profit for the period 76 58 3.000 15% 2.545 2.418 Translation difference/foreign subsidiaries 17 24 3.019 13,6% 2.000 10% Total profit for the period 93 82 5,3% 1.000 5% EBITDA 247 240 0 0% Income Change

Balance sheet – key figures Equity Ratio 32,5% 35% 30,8% ISK millions 30.09.2016 31.12.2015 29,5% 28,0% 30% 3,352 3,187 Fixed assets 25% 20,1% 17,9% 20% 16,7% 16,7% 16,0% 3,238 3,719 Current assets 14,6% 13,0% 15% 6,590 6,907 Total Assets 10% 5% 0% 2,142 1,930 Equity 2,126 2,521 Long-term obligations Current Ratio 2,322 2,455 Short-term debts 1,52 1,46 1,6 1,41 1,39 1,35 1,28 1,28 6,590 6,907 1,27 1,26 Total Equity and liabilities 1,25 1,4 1,2 0,94 1 0,8 0,6 0,4 0,2 0

Cash flow – key figures Cash from operations (ISK millions) 966 765 506 470 ISK millions 9M 2016 9M 2015 318 274 765 470 Cash from operations 180 141 135 88 91 (696) (417) Investing activities (364) (25) Financing activities (294) 28 Increase (decrease) in cash Change in cash at the end of the quarter (15) (4) Impact of exchange rate changes on (ISK millions) 500 cash 809 79 Cash at beginning of year 255 500 103 Cash at end of year 162 160 141 103

Nyherji shareprice movement • Nyherji shareprice NASDAQ NYHR.IC Listed on the main board since 1995 • Issued shares: 450 million 25 • Market Cap - 30.09.2015 - ISK 5.465bn - 30.09.2016 - ISK 7.493bn • Change YoY: +37% 20 • 377 employees are shareholders 16,7 10 Largest Shareholders % 15 Vænting hf. 15.1% Lífeyrissjóður verslunarmanna 10.2% Stafir lífeyrissjóður 7.8% 10 Kvika banki hf 6.5% Fiskveiðihlutafélagið Venus 6.0% Landsbankinn hf. 5.1% 5 Sjóvá Almennar tryggingar 4.6% Sameinaði lífeyrissjóðurinn 4.1% 0 Íslandsbanki hf. 3.3% Vátryggingafélag Íslands hf. 2.8%

Outlook

Operating outlook • Nyherji’s order book, both at a Group and subsidiary level remains healthy and profitable • Considerable demand for services and increased interest in outsourcing • Revenue growth and profitability looking set to continue

Q&A

Forward Looking Statements • Statements in this presentation that are not historical facts are forward-looking statements. Although such statements are based on management’s current estimates and expectations, forward-looking statements are inherently uncertain. • Nyerhji cautions 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. The Company does not undertake to update any forward-looking statements. • All forward-looking statements are qualified in their entirety by this cautionary statement.