Investor NewsHistoric Year at OrigoJanuary 30, 2019

Record operating and net profit. Net profit of ISK 5.4 billion for the year.

Finnur Oddsson, CEO:

"Origo's results in 2018 were the best in the company's history. Fourth quarter sales totalled ISK 4,461 million, up 13.1% from the same period in the preceding year. Net earnings in Q4 2018 totalled ISK 5,285 million versus ISK 167 million in the same period in 2017, a result which was significantly impacted by profit generated by the sale of a stake in Tempo. Looking at the year overall, sales of goods and services were up 4.3%, finishing at ISK 15,717 million. Our net earnings for the full year were up significantly, amounting to ISK 5,420 million versus ISK 433 million in 2017. EBITDA was ISK 1,128 million (7.2%) for the full year 2018, versus 928 (6.2%) in 2017. Our EBITDA trended upwards as the year progressed, totalling ISK 423 million (9.5%) in the fourth quarter, a new record for the company.

It is fair to say 2018 was a milestone year in the history of Origo and its predecessors. Origo was created at the beginning of year with the merger of three companies, and the rebranding and consolidation yielded immediate positive results for Origo and our customers as reflected in improved efficiency, economics and earnings. The year was an eventful one for Origo. In addition to strong sales of IT equipment to enterprise customers, in recent months we have been particularly focused on strengthening our offering in the areas of software and business solutions, both by developing our own solutions and through acquisitions of business and operating units. The company's revenue composition has changed with an increased emphasis on subscription services, consultancy and sales of various software and business solutions, including both internally developed and third-party solutions. These changes have helped deliver a broader solution offering, higher revenue and improved earnings.

Our rebranding efforts has been highly successful, with Origo already having established itself as a leading IT service company among enterprises and consumers alike. We notice increased interest in the company in several areas and it is clear that our thorough preparations, carried out in collaboration with consultants and our staff, have delivered a strong brand and high awareness of the nature of our operations. As an example of this, Origo is the first brand in customers' minds when it comes to choosing an IT company, according to a Gallup survey conducted in late 2018. Origo has gained a strong position in most age groups, and we are happy to note an increased awareness and knowledge of our brand among the younger groups, for instance among the 18-24 and 35-44 demographics. Furthermore, 91% of Icelanders recognise the Origo brand according to a recent Gallup survey, an impressive result in less than 12 months. We owe this accomplishment partly to the tone of the Origo brand, which is light and spunky while also signifying humility, helpfulness and technical prowess. This positive feedback lets us feel that we are doing something right, and it clearly has value for the company going forward.

Our sale of a 55% stake in Tempo last November was an important step for both Origo and the operations of Tempo. Origo is in a very healthy financial position after the sale and well positioned to support both internal and external growth as well as meeting any challenges that might lie ahead. The sale of Tempo is a testament to the terrific work done by the staff of Tempo and Origo in recent years. It also reaffirms the value represented by Icelandic ingenuity, which recently has been receiving increased attention and support from the government, which is to be celebrated.

With the combined support of Diversis and Origo, we expect Tempo to enter into a new phase of development and revenue growth and would not be surprised to see the value of the company rising substantially in the near future. In view of this, we have stressed the importance of Origo maintaining a significant stake in the company, for the benefit of Origo shareholders.

2018 was particularly good for us and we have never been as well positioned to advance our operations or face unexpected problems as they come. On that note, it is clear that conditions in the labour market may present challenges, but it is in everyone's best interest to maintain stability, control inflation and protect the gains in purchasing power that have been achieved in recent years, as well as the competitiveness of the Icelandic business sector. We are confident that this will be done."

Highlights:

  • Goods and services sold totalled ISK 4,461 million in Q4 2018 (up 13.1% from Q4 2017) and ISK 15,717 million (up 4.3% from 2017) for the full year 2018 [Q4 2017: ISK 3,944 million, 2017: ISK 15,064 million]
  • Gross profit was ISK 1,185 million (26.6% of revenue) in the fourth quarter and ISK 4,173 million (26.6%) for the full year 2018 [Q4 2017: ISK 1,044 million, 2017: ISK 3,783 million]
  • EBITDA totalled ISK 423 million (9.5% of revenue) in Q4 2018 and ISK 1.128 million (7.2%) for the full year 2018 [Q4 2017: ISK 246 million, 2017: ISK 928 million]
  • Net profit of ISK 5,285 million in Q4 2018 and ISK 5,420 million for the full year 2018 [Q4 2017: ISK 167 million, 2017: ISK 433 million]
  • Origo sold 55% stake in Tempo to Diversis Capital. The Tempo sale accounts for ISK 5,098 million of Origo's earnings.
  • The equity ratio was 66.1% at year-end 2018, up from 41.6% at year-end 2017
  • The working capital ratio was 1.95 at year-end 2018, up from 1.3 at year-end 2017

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