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Columbus Interim / Quarterly Report 2016
3396_rns_2016-04-28_5440b393-15ce-4f7a-b637-1ffdf92340ab.pdf
Interim / Quarterly Report
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Release no. 13, 2016 – Interim Management Statement for Q1 2016
April 28th, 2016
Columbus
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Release no. 13/2016
Interim Management Statement Q1 2016
Columbus delivered a good start to the year with 15% revenue growth
In accordance with the regulations for listed companies' submission of interim statements, Columbus A/S hereby submits the interim management statement for the period 01.01.2016-31.03.2016 (3 months).
Strong growth driven by the services business
Revenue in Q1 2016 amounted to DKK 275m (2015: DKK 240m), corresponding to an increase of 15% compared to the same period last year. EBITDA¹ amounted to DKK 26m (2015: DKK 14m), corresponding to an increase of 85%.
The revenue growth is primarily affected by acquisitions made in 2015 and 2016. Besides, we see a solid growth in the services business, mainly in Columbus' US business.
The increase in EBITDA is partly driven by the effect of acquisitions, and partly by a significant growth in the profitability in the services business.
The improvement of the profitability is partly driven by considerable cost reductions in Norway and partly by a significant improvement in chargeable hours in both Norway and the US.
The development in Norway and the US is in line with expectations and is a result of the recovery plans initiated by the Group in 2015.
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:
1. 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 Q1 2016 the service EBITDA increased from DKK 4.6m to DKK 17.0m, corresponding to an increase of DKK 12.4m. The main reason for this improvement is an increase in chargeable hours from 56% to 60%. The increase primarily comes from the US and Norway, and from the 2015 acquisitions and the acquisition of Systemhosting on 1 February 2016.
Columbus, Lautrupvang 6, DK-2750 Ballerup
Tel: +45 70 20 50 00, Fax: +45 70 25 07 01
www.columbusglobal.com, CVR.: 13 22 83 45
¹ EBITDA before share based payment
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
Development in service revenue
Development in service EBITDA
Development in sale of Columbus Software
2. 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 Q1 2016 the sale of Columbus Software increased by 7%. The revenue from Columbus Software subscriptions increased by 15%. Considering the strong sale of Columbus Software in Q1 2015, the development is satisfactory and in line with expectations.
3. 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.
Development in the consultancy business
Non-chargeable
Chargeable
Other
Non-chargeable
Chargeable
Other
Cloud
ColumbusCare contracts
Columbus Software subscriptions
External subscriptions
Q1 2015
Q1 2016
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
| DKK '000 | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Columbus licenses | 7,973 | 8,138 | 52,251 |
| Columbus subscriptions | 10,417 | 9,061 | 44,530 |
| External licenses | 18,210 | 14,910 | 107,525 |
| External subscriptions | 42,108 | 36,224 | 184,524 |
| Consultancy | 191,557 | 166,745 | 715,545 |
| Other | 5,065 | 4,774 | 19,068 |
| Total net revenue | 275,331 | 239,852 | 1,123,443 |
| EBITDA before share-based payment | 25,908 | 14,000 | 105,225 |
| Share-based payment | -546 | -315 | -1,362 |
| EBITDA | 25,362 | 13,685 | 103,863 |
Columbus maintains expectations to 2016
Columbus maintains the announced expectations to 2016 and thus expects revenues in the level of DKK 1.2bn and EBITDA¹ in the level of DKK 120m.
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
Chairman of the Board
Columbus A/S
Thomas Honoré
CEO & President
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.
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
4
Columbus 2020
Columbus' Columbus2020 strategy - towards growth
Based on Columbus' strengthened position, as a result of successful execution of the Columbus15 strategy, the company launched a growth strategy in March. The strategy is named Columbus2020 and consists of four interconnected strategic elements.
Customer Success - Taking care of our customers for life
Columbus' fundamental goal is to take care of our customers for life. Columbus aims to be widely recognized as a strategic business partner that enhances our customer's success by improving the value realization of their ERP-investments and by leading them in the digital transformation of their business. This means that Columbus will intensify the focus on creating a unique customer experience and increase customer satisfaction from the customer meet Columbus for the first time to delivering unique solutions, high quality services and streamlined project delivery and support 24/7.
Digital Leadership - Accelerate business innovation
Columbus held our customers in the digital transformation of their business. With Digital Leadership Columbus has two focus areas. Firstly, Columbus will continue to strengthen our leadership position within ERP by investing in new companies, applications, methodologies and business processes that optimizes and improves the implementation of ERP-solutions. Secondly, Columbus will establish a leadership position within Digital Transformation. Many companies are about to or in the process of transforming their business in order to succeed in the digital economy. Columbus will develop solutions and services within cloud, mobile, social, analytics and Internet of Things that help companies take advantage of the digital opportunities.
Process Excellence - Quality in everything we do
In Columbus, we constantly strive to optimize and streamline our business operations in order to achieve strong sales excellence and deliver projects, services and support of high quality to our customers. Our goal is to create the best customer experience in the industry. The focal point is quality in everything we do - from the initial contact with customers, over sales and design of the business solution to the implementation process and lifetime support. This means an intense focus on optimizing and streamlining our processes globally.
Our People - Attract, develop and retain the best people
Columbus' greatest asset is our employees and therefore it is crucial that we attract and retain the best people in the industry. We want to attract highly skilled people by providing challenging career opportunities, attractive working conditions and professional and personal growth. Columbus want to create a customer culture, where exceeding the customers' expectations sets the direction in everything we do. This means that Columbus always strives to deliver projects on time, within budget and at the highest quality.
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
Income statement
| DKK '000 | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Net revenue | 275,331 | 239,852 | 1,123,443 |
| External project costs | -52,677 | -50,684 | -274,962 |
| Gross profit | 222,654 | 189,168 | 848,481 |
| Staff expenses and remuneration | -160,439 | -143,788 | -606,755 |
| Other external costs | -36,223 | -33,404 | -150,013 |
| Other operating income | 0 | 2,082 | 13,549 |
| Other operating costs | -84 | -57 | -37 |
| EBITDA before share-based payment | 25,908 | 14,000 | 105,225 |
| Share-based payment | -546 | -315 | -1,362 |
| EBITDA | 25,362 | 13,685 | 103,863 |
| Depreciation | -7,501 | -6,000 | -29,020 |
| Operating profit (EBIT) | 17,861 | 7,685 | 74,843 |
| Financial income | 90 | 13,543 | 9,183 |
| Financial expense | -1,754 | -75 | -626 |
| Pre-tax earnings | 16,197 | 21,153 | 83,400 |
Financial income and expenses
Financial income and expenses primarily concerns exchange rate adjustments in relation to group receivables and monetary items.
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
Balance sheet
| DKK '000 | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| ASSETS | |||
| Goodwill | 339,962 | 279,145 | 319,249 |
| Other intangible assets | 29,977 | 20,390 | 21,604 |
| Development projects finalized | 55,781 | 41,873 | 56,996 |
| Development projects in progress | 5,319 | 6,620 | 2,065 |
| Intangible assets | 431,039 | 348,029 | 399,914 |
| Leasehold improvements | 123 | 135 | 96 |
| Property, plant and operating equipment | 16,170 | 10,880 | 12,535 |
| Tangible assets | 16,293 | 11,015 | 12,631 |
| Deferred tax assets | 18,581 | 12,256 | 18,951 |
| Total long-term assets | 465,913 | 371,300 | 431,496 |
| Inventories | 1,228 | 317 | 1,303 |
| Trade receivables | 119,950 | 155,825 | 141,710 |
| Contract work in progress | 17,858 | 13,092 | 11,546 |
| Corporate tax receivables | 346 | 4,475 | 333 |
| Deferred tax assets | 7,500 | 7,500 | 7,500 |
| Other receivables | 10,368 | 11,266 | 12,058 |
| Prepayments | 10,622 | 8,023 | 9,542 |
| Receivables | 166,644 | 200,180 | 182,689 |
| Cash | 52,333 | 39,566 | 82,294 |
| Total short-term assets | 220,205 | 240,063 | 266,285 |
| TOTAL ASSETS | 686,118 | 611,363 | 697,781 |
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
Balance sheet
| DKK '000 | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Share capital | 142,123 | 137,831 | 142,123 |
| Reserves on foreign currency translation | -16,302 | -9,553 | -11,006 |
| Retained profit | 270,400 | 220,147 | 255,062 |
| Group shareholder equity | 396,221 | 348,425 | 386,179 |
| Minority interests | 2,791 | 4,665 | 2,573 |
| Equity | 399,012 | 353,090 | 388,752 |
| Deferred tax | 6,436 | 309 | 6,454 |
| Provisions | 13,049 | 17,461 | 13,876 |
| Non-current liabilities | 19,485 | 17,770 | 20,330 |
| Debt to credit institutions | 1,302 | 858 | 420 |
| Client prepayments | 30,077 | 28,068 | 43,374 |
| Trade payables | 43,080 | 47,715 | 68,270 |
| Corporate tax payables | 9,528 | 5,977 | 10,601 |
| Other liabilities | 151,660 | 132,017 | 138,723 |
| Accruals | 31,974 | 25,868 | 27,311 |
| Current liabilities | 267,621 | 240,503 | 288,699 |
| Total liabilities | 287,106 | 258,273 | 309,029 |
| TOTAL EQUITY AND LIABILITIES | 686,118 | 611,363 | 697,781 |
Release no. 13, 2016 - Interim Management Statement for Q1 2016 - April 28th, 2016
8
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 areas | Description | Geographical segment |
|---|---|---|
| ISV (Independent Software Vendor) | Development and sale of industry-specific software within Columbus' three focus industries: Retail, food and manufacturing | No specific area |
| Consultancy | Sale and implementation of standard business systems. | Western Europe |
| Eastern Europe | ||
| North America |
Information about the Group's segment is stated below.
| Consultancy | ||||||
|---|---|---|---|---|---|---|
| DKK '000 | ISV | Western Europe | Eastern Europe | North America | HQ, GDC and Eliminations | Total |
| Q1 2016 | ||||||
| Columbus licenses | 6,678 | 2,157 | 378 | 417 | -1,657 | 7,973 |
| Columbus subscriptions | 9,107 | 2,758 | 321 | 1,078 | -2,847 | 10,417 |
| External licenses | 0 | 5,140 | 2,119 | 10,964 | -13 | 18,210 |
| External subscriptions | 0 | 15,104 | 4,807 | 22,284 | -87 | 42,108 |
| Consultancy | 3,869 | 109,570 | 20,998 | 63,389 | -6,269 | 191,557 |
| Other | 196 | 2,330 | 409 | 2,082 | 49 | 5,066 |
| Total net revenue | 19,850 | 137,059 | 29,032 | 100,214 | -10,824 | 275,331 |
| Gross earnings | 18,976 | 105,945 | 23,011 | 67,480 | 7,242 | 222,654 |
| EBITDA | 9,696 | 13,934 | 2,427 | 5,278 | -5,973 | 25,362 |
| Consultancy | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| DKK '000 | ISV | Western Europe | Eastern Europe | North America | HQ, GDC and Eliminations | Total |
| Q1 2015 | ||||||
| 0 | ||||||
| Columbus licenses | 5,436 | 4,477 | 770 | 743 | -3,288 | 8,138 |
| Columbus subscriptions | 7,725 | 2,765 | 383 | 735 | -2,547 | 9,061 |
| External licenses | 0 | 5,944 | 1,129 | 8,282 | -445 | 14,910 |
| External subscriptions | -93 | 15,343 | 4,376 | 16,598 | 0 | 36,224 |
| Consultancy | 5,107 | 97,101 | 23,201 | 46,080 | -4,744 | 166,745 |
| Other | 261 | 2,199 | 235 | 2,038 | 41 | 4,774 |
| Total net revenue | 18,436 | 127,829 | 30,094 | 74,476 | -10,983 | 239,852 |
| Gross earnings | 15,883 | 97,780 | 23,933 | 48,032 | 3,540 | 189,168 |
| EBITDA | 9,649 | 8,309 | 2,099 | 969 | -7,341 | 13,685 |