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Columbus — Interim / Quarterly Report 2017
Nov 2, 2017
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Download source fileColumbus delivers 11% growth in EBITDA
In the first three quarters of 2017 Columbus delivers revenue growth of 6% and
increases EBITDA by 11%. The growth in EBITDA is driven by strong product
sales.
Release no. 22/2017
In accordance with the regulations for listed companies’ submission of interim
statements, Columbus A/S hereby submits the interim management statement for
the period 01.01.2017-30.09.2017 (9 months).
EBITDA growth driven by product sales
Revenue in Q3 YTD 2017 amounted to DKK 907m (2016: DKK 855m), corresponding to
an increase of 6% compared to the same period last year.
The revenue growth is driven by an increase in product sales of 5% and progress
in the services business of 7%.
EBITDA* amounted to DKK 97.3m (2016: DKK 87.6m), corresponding to an increase
of 11% compared to the same period last year. Consequently, the EBITDA margin
increased to 10.7% (2016: 10.2%).
The increase in EBITDA* is also driven by increased earnings in the services
business and in product sales. Product sales have lead to a number of larger
projects, higher earnings and higher margin on sale of products.
The net result before tax increased by 4% to DKK 61.2m. The result is
negatively affected by financial expense of DKK 5.1m compared to DKK 1.3m in
the same period 2016. This increase primarily concerns exchange rate
adjustments in relation to group receivables.
General progress in the services business
Service EBITDA in Q3 YTD 2017 increased by 7%, from DKK 60.9m to DKK 65.1m.
The growth in earnings is driven by a general high activity level in the
services business as well as increased utilization of Columbus’ Global
Delivery Center.
Expectations to 2017 -- Revenue in the level of DKK 1.35bn
-- EBITDA* in the level of DKK 150m
-- Service EBITDA in the level of DKK 120m
-- Columbus Software revenue in the level of DKK 80m
-- 10% dividend on nominal share capital
However, Service EBITDA is negatively affected by continued challenges in
Columbus’ SMB business in the US.
The US SMB market has been affected by a change in technology, leading to a
hesitant market. This temporary challenge has caused a decrease in revenue of
DKK 36m and a decrease in EBITDA* of DKK 19m. Further, the US SMB business was
impacted by a loss of DKK 4m on customer engagements in H1 2017.
The market hesitation is expected to continue in Q4, but with an adjusted cost
level in the US SMB business earnings are expected to improve in Q4. Besides, a
positive development in the US SMB market is expected in 2018.
Chargeable hours declined from 56% to 52% in the first three quarters of the
year compared to the same period in 2016. The decline is primarily caused by a
decrease in chargeable hours in the US SMB business due to the above-mentioned
market challenges.
The challenges in the US market resulted in a lower Service EBITDA than
expected.
Columbus Software as expected
In Q3 YTD 2017 the sale of Columbus
Software decreased by 7%. Sale of subscriptions increased by 27% due to a
satisfactory renewal rate. However, license sales decreased by 42% due to the
cloud conversion. Own cloud revenue showed good progress and constituted DKK
4.4m.
The sale of Columbus Software developed according to plan.
ColumbusCare and cloud drive growth in recurring revenueIn Q3 YTD 2017
recurring revenue increased by 18%. The increase is driven
By considerable growth in sale of ColumbusCare contracts, which increased
significantly by 62% while the total cloud revenue grew by 223%.
Recurring revenue constituted 27.2% of total revenue (Q3 YTD 2016: 24.5%).
DKK ´000 YTD 2017 YTD 2016 2016
Columbus Software licenses 17,925 30,793 44,187
Columbus Software subscriptions 40,895 32,178 46,876
External licenses 69,599 61,655 86,495
External subscriptions 144,848 136,126 195,164
Services 619,388 577,685 796,401
Other 14,086 17,058 23,584
Total net revenue 906,741 855,495 1,192,707
EBITDA before share-based payment 97,346 87,632 144,070
Share-based payment -1,737 -3,399 -5,524
EBITDA 95,609 84,233 138,546
Expectations to 2017
Columbus maintains the announced expectations to EBITDA* in the level of DKK
150m, as higher product sales are expected which will compensate for the
reduced Service EBITDA.
Expectations to 2017:
-- Revenue in the level of DKK 1.35bn
-- EBITDA* in the level of DKK 150m
-- Service EBITDA in the level of DKK 120m
-- Columbus Software revenue in the level of DKK 80m
-- 10% dividend on nominal share capital
As a consequence of the situation in the US described above, the expectations
to Service EBITDA are adjusted to 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.
”I am satisfied with the total result for the first three quarters. We see
progress in our product sales and at the same time we continue the growth in
our ColumbusCare and cloud businesses. We expect that the market hesitation in
the US will continue in Q4, but with an adjusted cost level in Columbus’ US SMB
business, we expect improved earnings. Besides, we expect a positive
development in the US SMB market in 2018”, says Thomas Honoré, CEO & President
in Columbus A/S.
- EBITDA before share-based payment
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.
Customer Success – Taking care of our customers for
life
Columbus’ fundamental their ERP investments and satisfaction from the
goal is to take care of by leading them in the customer meet Columbus
our customers for life. digital transformation for the first time to
Columbus aims to be of their business delivering unique
widely recognized as a This means that Columbus solutions, high
strategic business will intensify the focus quality services and
partner that enhances on creating a unique streamlined project
our customer’s success customer experience and delivery and support
by improving the value increase customer 24/7.
realization of
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Digital Leadership – Accelerate business innovation
Columbus helps our methodologies and business in order to
customers in the digital business processes that succeed in the digital
transformation of their optimizes and improves economy. Columbus will
business. With Digital the implementation of develop solutions and
Leadership Columbus has ERP-solutions. Secondly, services within cloud,
two focus areas. Columbus will establish mobile, social,
Firstly, Columbus will a leadership position analytics and Internet
continue to strengthen within Digital of Things that help
our leadership position Transformation. Many companies take
within ERP by investing companies are about to advantage of the
in new companies, or in the process of digital opportunities.
applications, transforming their
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Process Excellence – Quality in everything we do
In Columbus, we quality to our customers. over sales and design
constantly strive to Our goal is to create of the business
optimize and streamline the best customer solution to the
our business operations experience in the implementation process
in order to achieve industry. The focal and lifetime support.
strong sales excellence point is quality in This means an intense
and deliver projects, everything we do – from focus on optimizing
services and support of the initial contact with and streamlining our
high customers, processes globally.
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Our People – Attract, develop and retain the best
people
Columbus’ greatest asset providing challenging meeting the customers’
is our employees and career opportunities, expectations sets the
therefore it is crucial attractive working direction in
that we attract and conditions and everything we do.
retain the best people professional and This means that
in the industry. We want personal growth. Columbus always
to attract highly Columbus want to create strives to deliver
skilled people by a customer culture, projects on time,
where within budget and at
the highest quality.
Income statement
DKK ´000 YTD 2017 YTD 2016 2016
Net revenue 906,741 855,495 1,192,707
External project costs -193,355 -183,258 -264,601
Gross profit 713,386 672,237 928,106
Staff expenses and remuneration -505,577 -468,738 -631,675
Other external costs -110,494 -116,064 -158,982
Other operating income 53 546 6,685
Other operating costs -22 -349 -64
EBITDA before share-based payment 97,346 87,632 144,070
Share-based payment -1,737 -3,399 -5,524
EBITDA 95,609 84,233 138,546
Depreciation -29,356 -24,051 -33,275
Operating profit (EBIT) 66,253 60,182 105,271
Financial income 83 106 2,674
Financial expense -5,137 -1,396 -642
Profit before tax 61,199 58,892 107,303
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 2017 YTD 2016 2016
ASSETS
Goodwill 442,710 379,687 415,152
Customer base 29,427 28,769 30,562
License rights 9 0 17
Development projects finalized 58,518 52,906 59,354
Development projects in progress 13,495 12,210 8,491
Property, plant and equipment 13,695 15,821 17,142
Deferred tax assets 21,786 17,592 17,053
Total non-current assets 579,639 506,985 547,771
Inventories 163 328 205
Trade receivables 136,867 113,700 151,475
Contract work in progress 8,713 9,357 8,994
Corporate tax receivables 6,473 1,552 11,531
Deferred tax assets 3,108 7,500 7,500
Other receivables 8,414 13,240 8,155
Prepayments 10,706 8,063 7,206
Receivables 174,281 153,412 194,861
Cash 65,192 73,152 94,669
Total current assets 239,636 226,892 289,735
TOTAL ASSETS 819,275 733,877 837,506
Balance sheet
DKK ´000 YTD 2017 YTD 2016 2016
EQUITY AND LIABILITIES
Share capital 149,832 145,247 145,247
Reserves on foreign currency translation -25,346 -14,585 -6,475
Retained profit 385,873 295,332 331,041
Group shareholders equity 510,359 425,994 469,813
Minority interests 3,134 1,844 1,774
Equity 513,493 427,838 471,587
Deferred tax 12,691 6,436 10,614
Provisions 11,579 19,652 11,532
Non-current liabilities 24,270 26,088 22,146
Debt to credit institutions 18,978 27,551 29,091
Client prepayments 18,488 32,150 33,645
Trade payables 45,057 38,823 66,211
Corporate tax payables 17,351 11,455 24,177
Other liabilities 134,813 133,893 157,228
Accruals 46,825 36,079 33,421
Current liabilities 281,512 279,951 343,773
Total liabilities 305,782 306,039 365,919
TOTAL EQUITY AND LIABILITIES 819,275 733,877 837,506
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 Geographical 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
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Consultancy Sale, implementation and service Western Europe
of standard business systems. Eastern Europe
North America
Information about the Group’s segments is stated below.
Consultancy
---------------------------
DKK ´000 ISV Western Eastern North HQ, GDC and Total
Europe Europe America Eliminations
YTD 2017
Columbus Software 14,350 7,563 1,859 1,416 -7,263 17,925
licenses
Columbus Software 36,358 11,918 951 4,203 -12,535 40,895
subscriptions
External licenses 0 29,157 11,594 29,008 -160 69,599
External 0 50,780 17,018 77,456 -406 144,848
subscriptions
Services 12,735 337,573 71,298 210,416 -12,634 619,388
Other 352 6,567 1,514 6,379 -726 14,086
Total net revenue 63,795 443,558 104,234 328,878 -33,724 906,741
Gross profit 54,756 334,756 78,225 224,562 21,087 713,386
EBITDA 30,612 63,838 8,778 6,563 -14,182 95,609
Consultancy
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DKK ´000 ISV Western Eastern North HQ, GDC and Total
Europe Europe America Eliminations
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 licenses 0 18,833 6,466 36,806 -450 61,655
External 0 48,066 15,102 73,758 -800 136,126
subscriptions
Services 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 profit 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