REYKJAVIK, Iceland--(BUSINESS WIRE)--Nyherji hf. announces its results for the full year 2014 with total annual profit of ISK 259 million. Further information can be found in the Annual Results 2014 Presentation available on the Investor Relations section of the Nýherji website; to download click here.
- Total annual profit amounted to ISK 259 million and ISK 110 million in Q4 [2013: Total loss ISK 1,608 million, Q4 2013: Total loss ISK 496 million]
- EBITDA amounted to ISK 827 million (7.2%) in 2014 and ISK 241 million (7.3%) in Q4 [2013: ISK 302 million (2.8%), Q4 2013: ISK 58 million (1.9%)]
- Operating profits amounted to ISK 528 m. for year as a whole and ISK 167 m. in Q4 [2013: Loss: ISK 146 million, Q4 2013 loss: ISK 157 million]
- Product and service sales amounted to ISK 11,572 million and ISK 3,315 million in Q4 [2013: ISK 10,940 million, Q4 2013: ISK 3,052 million]
- Margin amounted to ISK 3,012 million (26.0%) in 2014 and ISK 840 million (25.3%) in Q4 [2013: ISK 2,430 million (22.2%), Q4 2013: ISK 655 million (21.5%)]
- Positive operating results from all the companies in the group for the year
- TEMPO operations separated from TM Software ehf.
- In December TM Software acquired the FOLIO financial management solution to integrate into the TEMPO’s suite
- Nýherji is a “model company with good corporate governance” in the opinion of the Corporate Governance Research Centre of the University of Iceland
“The operations of the Nýherji group turned in a good performance in 2014,” said Finnur Oddsson, Group CEO, “Earnings before depreciation and amortization amounted to ISK 827 million or 7.2% of turnover. Net earnings amounted to ISK 259 million, which corresponds to a 31% return on equity. Over the past years, Nýherji’s operations have been subject to considerable volatility, which distorts comparisons between years. Nevertheless it is clear that the last operating year was the best for more than 20 years in the company's history and a very positive turnaround from 2013.
The good results for 2014 are welcome confirmation that the new priorities in Nýherji’s management are yielding value for its owners, customers and society as a whole. Although many big steps have been taken over the past years, there is still considerable work ahead to boost the results and enhance the capital position of the company, which is too low. We are therefore focusing on further streamlining operations and changing the organization of Nýherji. The separation of TEMPO operations from TM Software ehf. is an important step in that direction. In this way we have managed to sharpen our focus on specialised software development in TM Software. At the same time, the TEMPO brand name will become more visible and there will be more opportunities to collaborate with external entities to boost rapid growth, through networking and financing of product development and marketing.”
Income statement 2014
|Income Statement - key figures|
|in ISK m.||
|Sold products and services||11,572||10,940|
|Cost of goods sold and cost of sold services||(8,560)||(8,511)|
|Impairment on goodwill||0||(103)|
|Net financial expenses||(292)||(216)|
|Profit (loss) before tax||236||(362)|
|Profit (loss) for the period from continuing operations||268||(310)|
|Losses from discontinued operations||(26)||(1,303)|
|Profit (loss) for the year||241||(1,613)|
|Items transferred directly for equity||17||5|
|Total profit (-loss for year)||259||(1,608)|
- The sale of products and services amounted to ISK 11,572m in 2014, compared with ISK 10,940m in 2013, representing an increase of 5.8% Year-on-Year
- Margin amounted to ISK 3,012m (26.0%) compared to ISK 2,430m (22.2%) the previous year. During the period ISK 223m were capitalised for development costs due to Tempo software solutions in TM Software ehf. Excluding this capitalization the margin for 2014 is ISK 2,789m (24.1%).
- Operating costs amounted to ISK 2,484m for the year, which is 21.5% of earnings compared with 22.6% of earnings in 2013.
- Net financial expenses amounted to ISK 292m in 2014, compared to ISK 216m in 2013. The difference is mainly due to an adjustment of financial expenses as the result of a downward revision of financial expense calculations in 2013.
- In March 2014, Nýherji’s Danish operations were sold and operational losses amounted to ISK 26m.
- EBITDA amounted to ISK 827m in 2014, compared to ISK 302m in 2013. All companies in the Nýherji group had positive EBITDA for the year. Without capitalization, EBITDA would have been ISK 604m
- Total profits for 2014 amounted to ISK 259m compared to a total loss of ISK 1,608m in 2013.
Balance sheet 31.12.2014
|Balance sheet 31.12.2014 - key figures|
|in ISK m.||31.12.2014||31.12.2013|
|Total Equity and liabilities||5.771||6,031|
- Current assets dropped between years, due to a ISK 250m decrease in cash, while accounts receivable and other short-term claims decreased by ISK 78m between years, but inventories increased by ISK 200m on the other hand.
- Long-term obligations increased by ISK 561m at year-end 2013, since a short-term loan amounting to ISK 650m was refinanced in the second quarter.
- Short-term debts at year end 2013 decreased by ISK 1,119m, since interest-bearing short-term debts dropped by ISK 684m. Moreover, accounts payable and other short-term debts decrease by ISK 436m from the beginning of the year
- Interest-bearing debts decreased by ISK 123m and amounted to ISK 3,028m at the end of 2014
- The current ratio is 1.27 representing an increase from the end of 2013 when the ratio was 0.91.
The equity ratio is 16.7% representing an increase from the end of 2013 when it was 11.0%.
Cash flow 2014
|Cash flow - key figures|
|in ISK m.||12M 2014||12M 2013|
|Cash from operations||318||561|
|(Decrease) increase in cash||(366)||243|
|Impact of exchange rate changes on cash||(6)||(10)|
|Cash at beginning of year||451||218|
|Cash at end of year||79||451|
- Cash from operations amounted to ISK 318m in 2014, compared to ISK 561m in 2013. Changes in operation-related assets and debts were negative by ISK 219m in 2014, compared with a positive change of ISK 600m in 2013.
- Cash from operations amounted to ISK 79m at the end of 2014, compared to ISK 451m at the end of 2013.
Q4 2014 Operating results
|Quarterly overview - key figures|
|in ISK m.||
|Sold products and services||3,315||2,545||2,853||2,859||3,052|
|Cost of goods sold and cost of sold services||(2,475)||(1,876)||(2,104)||(2,106)||(2,397)|
|Impairment on goodwill||0||0||0||0||(103)|
|Operating profits (-loss) before financial income and financial expenses||167||112||134||116||(157)|
|Net financial expenses||(111)||(98)||(52)||(31)||(1)|
|Profit (loss) before tax||55||13||82||86||(158)|
|Profit (loss) for the period from continuing operations||124||12||65||67||(125)|
|(Loss) from discontinued operations||0||0||0||(26)||(390)|
|Profit (loss) for the period||124||12||65||41||(515)|
|Translation difference/foreign subsidiaries||(2)||0,5||4||15||28|
|Translation difference transferred to operating unit due to sale of subsidiary||0||0||0||0||(9)|
|Total profits (-losses) for the period||110||12||69||56||(496)|
- The sale of products and services amounted to ISK 3,315m in Q4 2014, compared with ISK 3,052m in the same period in 2013, representing an increase of ISK 263m, i.e. 8.6%.
- The margin was ISK 840m (25.3%) in Q4 compared to a margin of ISK 655m (21.5%) in the same period the previous year. In Q4, ISK 68m were capitalised for the development costs of Tempo Software ehf. solutions. Without capitalization, the margin would have been ISK 772m (23.3%)
- Operating costs were ISK 674m in Q4 2014, representing an increase of ISK 36m from the same period the previous year.
- Net financial expenses amounted to ISK 111m in Q4, which is considerably higher than last year. The main reason for higher financial expenses is that in Q4 2013 there was an adjustment of interest expenses due to an upward revision by ISK 96m
- EBITDA was ISK 241m in Q4 2014, compared to an EBITDA of ISK 58m in the same period in 2013. All companies in the Nýherji group had positive EBITDA for the quarter. Without capitalization, EBITDA would have been ISK 173m.
- Total profits for the quarter amounted to ISK 110m, compared to a total loss of ISK 496m in the same period a year before.
Nýherji: Good operations
Nýherji’s results were good for 2014 and considerably better than the previous year. Earnings amounted to ISK 8,350 m. and increased by 2.4% Year-on-Year. Product sales performed well, particularly in the latter part of the year and the demand for technical and specialised services rose in line with expectations. Many companies signed up for technical services, hosting and management with Nýherji, including VÍS, Icelandic Group, Festi and Reginn. A groundbreaking solution was installed for Meniga for the management of a server environment for their international clients on the Nýherji Cloud. There was very good growth in the sale of Nýherji’s printing solutions, Rent A Prent. Nýherji now remotely manages over 1,100 printing devices in 120 companies and 230 locations around the country.
In the autumn, Nýherji launched the promotion and sale of software solutions in the field of marketing, security, e-commerce and smart devices – and they were all well received. Striking results were achieved in the sale of Lenovo computer hardware, since about 12 thousand Lenovo devices were sold, representing an increase in sales of over 30% between years. The sale of IBM System X services now comes under the Lenovo brand name, as part of Lenovo’s increased emphasis on the sale of middleware equipment to companies. These changes now make Lenovo the third biggest producer of servers in the world. With the new structuring of the mother company, Heildverslun & Dreifing (Wholesale & Distribution), more weight was placed on collaborating with resellers, which resulted in greater demand for individual hardware from leading brands such as Sony, Canon, Bose and Lenovo.
The new structure of Nýherji came into effect at the beginning of October and immediately yielded benefits with more targeted sales activities and increased cost-effectiveness. At the same time Nýherji has continued to enhance the quality of service to its customers and boosted awareness of the importance of service among its staff.
Systematic endeavours are being made to reduce risk in the company’s operations. A great deal of emphasis has been placed on the management of security issues, with the ongoing certification of Information Security Management. In the autumn, an agreement was then reached with the creditors of Roka ehf. on the winding up of the company and the lawsuit against Nýherja hf. was dropped, reducing the risk of shocks to its operations.
Nýherji is a “model company with good corporate governance” in the opinion of the Corporate Governance Research Centre of the University of Iceland, following a detailed report from Capacent.
The outlook for Nýherji’s operations for the first quarter of 2015 is good.
TM Software: 84% growth in foreign revenue
The operations of TM Software, which specialises in the development of specialised software solutions, performed well in Q4 and the year as a whole. The company’s revenue grew by 31% from the same period in the previous year and amounted to ISK 1,663m The foreign revenue from Tempo’s project management and time tracking solution increased by 84% between years and accounted for 45% of the total income of the company.
Important development and service contracts were signed in the final quarter of 2014, both domestically and abroad. Specialised development projects in Iceland in the field of web solutions have steadily increased and abroad the web solution division has been working on projects with partners in North America and Europe.
Towards the end of 2014, TM Software acquired the FOLIO financial management solution from the Canadian company Kitologic Inc. This acquisition enables TM Software to offer strong comprehensive solutions to companies under the TEMPO brand name, i.e. Timesheet, Planner, Books and Folio. The number of average full-time equivalent positions in TM Software increased by 25 this year.
One of TM Software’s biggest projects last year was the development and installation of the Vera Health website. The website, which was designed for the Directorate of Health and Healthcare in the greater Reykjavik area enables the public to communicate electronically with the health service and access their patient records, in addition to the option of registering information regarding one's own health.
TM Software’s results for 2014 were good and exceeded expectations.
TEMPO operations separated from TM Software ehf.
More than 6,000 companies in more than 100 countries now use TEMPO software. The turnover for last year was close to USD 6 million, compared to about USD 3 million in 2013. To support the ongoing growth of TEMPO, as well as boost and sharpen the activities of TM Software, a decision was made to separate TEMPO from the operations of TM Software and create a separate company for it: Tempo Software ehf.
The objective of separating Tempo from other TM Software operations is to increase its visibility and boost TEMPO’s development as a brand. At the same time, there will be more opportunities to collaborate with external entities to boost rapid growth, through networking and the financing of product development and marketing.
Following this change there are now two very strong companies in the field of software development with clearly delimited priorities, products and market segments. Specialised solutions in, among other things, the fields of healthcare and tourism, will continue to be developed under TM Software, which currently employs 70 people. The sale and development of TEMPO solutions will be transferred to a newly founded company employing 50 people. TM Software will continue to emphasise innovation and specialised software solutions, but Tempo Software will focus on the development and sale of TEMPO solutions on the international market.
Tempo Software ehf. will start operations on 1 February 2015 and the CEO of the company will be Ágúst Einarsson. The CEO of TM Software ehf. will be Hákon Sigurhansson.
The outlook for the operations of Tempo Software and TM Software are both good.
Applicon in Iceland: Results exceed estimates
Applicon ehf. specialises in consulting services and the development of business applications and business analytic tools. Revenue increased by 7.8% Year-on-Year and amounted to ISK 990 m. in 2014. The company’s annual results were good and exceeded expectations. The year was characterised by a variety of projects including, among others, the structuring of sales and distribution for Reykjavik Energy (OR), the installation of SAP and consolidated systems and consultancy in the field of financial and product management for new customers. The period was used for the development of new solutions, particularly Kjarni (kjarni.applicon.is), which is a human resources and payroll system hosted on the Nýherji Cloud. Steps were also taken with the use of SAP HANA database technology, which dramatically reduces the costs of IT management, since at the end of the year a deal was negotiated with Lýsing for the acquisition and installation of SAP HANA. Work was also done on interesting opportunities with Applicon’s sister company in Sweden.
The status of projects and outlook are good.
Applicon in Sweden Turnaround in operations but results below expectations
Applicon in Sweden specialises in consulting and services to financial undertakings, both in Sweden and countries throughout the Nordic region. The company’s annual revenue amounted to ISK 965 m. Even though the company’s results were below expectations, the company’s operations broke even, which is a positive turnaround from 2013. There was a good use of consulting services, but the poorer results are attributable to the fact that the company has placed a greater emphasis on the development and sale of cloud services, which are linked to SAP banking solutions, and are based on the newly installed banking system for the Landshypotek Bank in Sweden.
The outlook for the company is positive and work has started on bigger projects that were negotiated during the year.
The outlook for the operations of the Nýherji group is good. A moderate rise in the revenue and performance of Nýherji and its subsidiaries is expected in 2015.
The market value of the company at the end of December was ISK 2,124 million. The closing price at 31 December 2014 was ISK 5,18 per share. The number of shares issued at 31 December 2014 was 410,000,000. There were 329 shareholders at the end of December 2014.
Presentation meeting on 30 January at 14:00 hrs
A presentation for investors and market agents was held on 30 January at 14:00 hrs at the company’s headquarters in Borgartún 37 in Reykjavík. At the meeting CEO Finnur Oddsson will be presenting the company’s results and answering questions.
Financial calendar for 2015:
- 29 January 2015: Annual results for 2014
- 13 February 2015: AGM 2014
- 29 April 2015: Q1 2015 results.
- 26 August 2015 : Results for Q2 2015 and first six months of the year.
- 28 October 2015 Results for Q3 2015 and first nine months of 2015.
- 28 January 2016: Results for Q4 2015 and the whole of 2015.
- 26 February 2016: AGM 2015
Approved annual accounts
The annual accounts were approved at a meeting of the Board of Directors of Nýherji hf. on 29 January 2015. Nýherji’s annual accounts are prepared in accordance with International Financial Reporting Standards (IFRS). The annual accounts are audited by KPMG, the company’s auditors. The AGM of Nýherji hf. shall be held on Friday 13 February at 16:00 hrs in Borgartún 37, Reykjavik.
Note to investors
Statements contained in this presentation may be based on evaluations and estimates of the management of the company and not on facts that can be verified after the presentation. Such statements are inherently uncertain. The attention of investors is drawn to the fact that many factors may have an effect on the operating performance of the company and results could be different to those assumed in this presentation. This presentation shall be not updated after its publication. The assertions contained in this presentation apply only at the time of the date of this presentation and this disclaimer limits their validity.
ABOUT NYHERJI HF
Nyherji hf. (NASDAQ OMX: NYHR.IC) is an established Nordic IT services provider with offices in Iceland and Sweden. For over two decades the company has been a world-class technology supplier, application developer, systems integrator, facilities manager and expert business process consultancy, with corporate roots that can be traced back to 1899 and the inception of “office machines”. Nyherji aims to be the technology partner of choice for businesses, from the smallest to the largest enterprises. With expertise in understanding and linking the needs of enterprise customers to competitive technology solutions, Nyherji uses its deep knowledge of mission-critical processes, hardware and application requirements, to focus on government and industries sectors with high support needs such as healthcare, ﬁnancial services, logistics and aviation. For more information, please visit www.nyherji.is/english/investor-relations/
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, forward-looking 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.