AI assistant
Columbus — Interim / Quarterly Report 2016
Nov 2, 2016
Preview isn't available for this file type.
Download source fileColumbus delivers 71% growth in earnings*
In the first three quarters of 2016 Columbus delivers revenue growth of 7% and
increases EBITDA(1) by 71%. The strong growth is driven by the services
business.
Release no. 29/2016
In accordance with the regulations for listed companies’ submission of interim
statements, Columbus A/S hereby submits the interim management statement for
the period 01.01.2016-30.09.2016 (9 months).
Strong growth driven by the services business
Revenue in Q3 YTD 2016 amounted to DKK 855m (2015: DKK 800m), corresponding to
an increase of 7% compared to the same period last year. EBITDA* amounted to
DKK 87.6m (2015: DKK 51.1m), corresponding to an increase of 71% compared to
the same period last year.
In local currencies, the revenue increased by 10%. The revenue is primarily
affected by the negative development in GBP and RUB compared to 2015.
The revenue growth is primarily driven by a solid growth in the services
business and acquisitions made in 2015 and 2016.
In February 2016, Columbus acquired the Danish consultancy and hosting business
SystemHosting A/S and in July the US ERP consultancy, CSG.
The increase in EBITDA is driven by increased earnings in the services business
and by previously mentioned acquisitions. The increased profitability is caused
by an improvement in chargeable hours in both Columbus Norway and Columbus US.
Financial value drivers (KPI’s)
In connection with Columbus’ new five-year strategy, the Group has determined
three value drivers, which reflect the new strategic direction. The value
drivers measure the development in relation to significant success criteria for
future growth and value creation.
Value drivers:
- Improve profitability in the services business
Columbus’ services business is the largest revenue contributor in the Group.
Columbus aims to deliver higher productivity and quality in the services
business to optimize delivery, minimize risk and control cost. The value driver
”Service EBITDA” reflects the achievement of this target.
In Q3 YTD the service EBITDA increased from DKK 17m in 2015 to DKK 52m i 2016,
an increase of DKK 35m. The main reason for this improvement is an increase in
chargeable hours from 54% to 58%. The increase primarily comes from an increase
in chargeable hours in the US and in Norway, and secondarily from the effect
of acquisitions.
- Scaling of own software sales
Columbus Software generates high earnings while creating high value for
customers. We aim to grow our software sales within Columbus Software licenses,
subscriptions and cloud solutions.
In Q3 YTD the sale of Columbus Software increased by 2% compared to the same
period last year. Subscriptions increased by 4%, whereas the sale of software
licenses decreased slightly.
The reason for the decreasing sale of licenses is, generally seen, that the
digital market development - and thereby the expected cloud conversion – is
taking place faster than anticipated. Furthermore, Microsoft announced in
October 2016 that their new SW portfolio (Dynamics365) will only be offered as
cloud subscriptions and no longer as perpetual licensing. Due to these new
terms and conditions companies are initially reluctant to replace or upgrade
their business applications. At the same time the new license terms result in a
lower revenue from sale of software, as sale of cloud subscriptions is
recognized on an ongoing basis instead of upfront at the time of sale and
delivery. When customers subscribe to Microsoft Software, they also wish to
subscribe to Columbus Software instead of buying licenses. Therefore, the
Microsoft cloud conversion also leads to a cloud conversion of Columbus
Software. In case the realized cloud revenue in Q3 YTD had been sold as
perpetual licensing instead of as cloud subscriptions, Columbus’ software
revenue in Q3 YTD would have increased by 7%.
- Growth in recurring revenue
Columbus expects to grow the recurring revenue as this creates more stability
in the business. The recurring and predictable revenue consists of Columbus
Software subscriptions, third party software subscriptions, cloud revenue and
ColumbusCare contracts.
These revenue categories support a positive development in the customer
relations, where Columbus becomes the strategic business partner.
Recurring revenue increased by 8%, primarily affected by the acquisition of the
cloud and hosting company, SystemHosting, which Columbus acquired in February
2016. The proportion of recurring revenue constitutes 24% of the total revenue
and is at the same level as last year. The development is in line with
expectations.
DKK ´000 YTD 2016 YTD 2015 2015
Columbus Software licenses 30,793 31,135 52,251
Columbus Software subscriptions 32,178 30,881 44,530
External software licenses 61,655 66,919 107,525
External software subscriptions 136,126 131,482 184,524
Consultancy 577,685 525,730 715,545
Other 17,057 14,166 19,068
Total net revenue 855,494 800,313 1,123,443
EBITDA before share-based payment 87,632 51,111 105,225
Share-based payment -3,399 -944 -1,362
EBITDA 84,233 50,167 103,863
Expectations to 2016
Columbus maintains the announced expectations to revenue, EBITDA1, Service
EBITDA and dividend in 2016:
-- Revenue in the level of DKK 1.2bn
-- EBITDA1 in the level of DKK 124m
-- Service EBITDA of DKK 84m
-- 10% dividend on nominal share capital
The expectations to Columbus Software are reduced from DKK 105m to the level of
DKK 95m due to the fact that the cloud conversion is taking place faster than
anticipated.
Latest developments
No events or transactions with a material effect on the company’s financial
position have occurred since the balance sheet date.
Ib Kunøe Thomas Honoré
Chairman CEO & President
Columbus A/S Columbus A/S
For further information, please contact:
CEO & President, Thomas Honoré .: +45 70 20 50 00
Translation: In the event of any inconsistency between this document and the
Danish language version, the Danish language version shall be the governing
version.
*EBITDA before share-based payment
Income statement
DKK ´000 YTD 2016 YTD 2015 2015
Net revenue 855,495 800,313 1,123,443
External project costs -183,258 -193,139 -274,962
Gross profit 672,237 607,174 848,481
Staff expenses and remuneration before -468,738 -452,212 -606,755
share-based payment
Other external costs -116,064 -106,322 -150,013
Other operating income 546 2,494 13,549
Other operating costs -349 -23 -37
EBITDA before share-based payment 87,632 51,111 105,225
Share-based payment -3,399 -944 -1,362
EBITDA 84,233 50,167 103,863
Depreciation -24,051 -21,156 -29,020
Operating profit (EBIT) 60,182 29,011 74,843
Financial income 106 5,142 9,183
Financial expense -1,396 -230 -626
Pre-tax earnings 58,892 33,923 83,400
Financial income and expenses
Financial income and expenses primarily concerns exchange rate adjustments in
relation to group receivables and monetary items.
Balance sheet
DKK ´000 YTD 2016 YTD 2015 2015
ASSETS
Goodwill 379.687 314.390 319.249
Other intangible assets 28.769 22.179 21.604
Development projects finalized 52.906 33.283 56.996
Development projects in progress 12.210 21.089 2.065
Other tangible assets 15.821 12.890 12.631
Deferred tax assets 17.592 14.245 18.951
Total long-term assets 506.985 418.076 431.496
Inventories 328 517 1.303
Trade receivables 113.700 134.228 141.710
Contract work in progress 9.357 13.936 11.546
Corporate tax receivables 1.552 6.043 333
Deferred tax assets 7.500 7.500 7.500
Other receivables 13.240 10.320 12.058
Prepayments 8.063 6.518 9.542
Receivables 153.412 178.545 182.689
Cash 73.152 40.802 82.294
Total short-term assets 226.892 219.864 266.285
TOTAL ASSETS 733.877 637.940 697.781
Balance sheet
DKK ´000 YTD 2016 YTD 2015 2015
EQUITY AND LIABILITIES
Share capital 145,247 142,123 142,123
Reserves on foreign currency translation -14,585 -8,279 -11,006
Retained profit 295,332 216,472 255,062
Group shareholder equity 425,994 350,316 386,179
Minority interests 1,844 2,135 2,573
Equity 427,838 352,451 388,752
Deferred tax 6,436 421 6,454
Provisions 19,652 21,440 13,876
Non-current liabilities 26,088 21,861 20,330
Debt to credit institutions 27,551 16,426 420
Client prepayments 32,150 31,862 43,374
Trade payables 38,823 43,727 68,270
Corporate tax payables 11,455 8,493 10,601
Other liabilities 133,893 138,626 138,723
Accruals 36,079 24,494 27,311
Current liabilities 279,951 263,628 288,699
Total liabilities 306,039 285,489 309,029
TOTAL EQUITY AND LIABILITIES 733,877 637,940 697,781
Segment data
In order to support decisions about allocation of resources and assessment of
performance of the segments, the Group’s internal reporting to the Board of
Directors of the Parent Company is based on the following grouping of operating
segments:
Strategic business Descrip Geografical segment
areas tion
-------------------------
ISV (Independent Development and sale of No specific area
Software Vendor) industry-specific software
within Columbus' three focus
industries: Retail, food and
manufacturing
------------------------------------------------------------
Consultancy Sale and implementation of Western Europe
standard business systems. Eastern Europe
North America
Information about the Group’s segment is stated below.
Consultancy
--------------------------
DKK ´000 ISV Western Easter North HQ, GDC and Total
Europe n America Eliminations
Europe
YTD 2016
Columbus Software 25,080 10,605 1,774 2,910 -9,576 30,793
licenses
Columbus Software 27,521 10,126 907 5,091 -11,467 32,178
subscriptions
External software 0 18,833 6,466 36,806 -450 61,655
licenses
External software 0 48,066 15,102 73,758 -800 136,126
subscriptions
Consultancy 10,485 334,306 65,549 186,941 -19,596 577,685
Other 850 7,852 1,300 6,833 223 17,058
Total net revenue 63,936 429,788 91,098 312,339 -41,666 855,495
Gross earnings 56,283 326,277 70,294 205,716 13,667 672,237
EBITDA 30,431 59,537 6,285 18,395 -30,415 84,233
Consultancy
--------------------------
DKK ´000 ISV Western Easter North HQ, GDC and Total
Europe n America Eliminations
Europe
YTD 2015
Columbus Software 22,766 10,689 2,484 4,597 -9,401 31,135
licenses
Columbus Software 24,651 9,027 808 3,950 -7,555 30,881
subscriptions
External software 0 23,319 10,739 32,836 25 66,919
licenses
External software -128 49,585 16,489 65,723 -187 131,482
subscriptions
Consultancy 12,318 291,574 67,931 166,491 -12,584 525,730
Other 463 5,771 1,360 6,487 85 14,166
Total net revenue 60,070 389,965 99,811 280,084 -29,617 800,313
Gross earnings 52,061 293,284 72,695 177,415 11,719 607,174
EBITDA 28,247 30,159 5,673 7,194 -21,106 50,167