Release no. 30/2014
In accordance with the regulations for listed companies’ submission of interim statements, Columbus A/S hereby submits the interim management statement for the period 01.01.2014-30.09.2014 (9 months).
Profit before tax increased from DKK 13.3 to 30.1m in Q3 YTD
Revenue in Q3 YTD amounted to DKK 627.1m (2013: 636.2m), corresponding to a decrease of 1%. In local currency revenues increased by 1%. EBITDA1 amounted to DKK 45.5m (2013: 41.3m), corresponding to an increase of 10% compared to Q3 YTD 2013.
Profit before tax2 YTD improved by 127% compared to the same period last year. The improved result is a consequence of three elements: 1) EBITDA increase of 10%. 2) A significant financial income primarily due to the increase in USD. 3) The completed closure of the Middle East activities in 2013.
Focus on the execution of Columbus15
Columbus is now in the third year of executing the Columbus15 strategy and continues the strong focus on selling Columbus software, consulting and services to the industries food, retail and manufacturing, optimizing the services business and reducing costs and managing risk in the entire organization. The execution of Columbus15 is successful and Columbus continues to execute the strategy.
Recovering of the subsidiaries in US and Norway
Columbus’ subsidiary in the US is facing challenges in sales execution, which consequently means a decline in both revenue and earnings. Columbus US is currently executing recovery plans comprising a re-organization of their senior management structure, and a strengthening of the sales management and the sales team.
In Columbus Norway, we lost a large number of consultants in Q2 due to headhunting activities from a competitor. This has led to extraordinary legal fees, recruiting costs and free work when completing projects with new consultants. Columbus Norway is executing recovery plans including a re-organization of their senior management structure.
We expect that both subsidiaries will gradually improve performance during 2015.
Strong focus on industry solutions continues
The strong focus on customers in the industries food, retail and manufacturing is successful. Revenues from key industries increased to 79% of total revenues in Q3 YTD. The retail segment has experienced the greatest development with an increase of 12 percentage points. The acquisition of Omnica in January, a leading retail and eCommerce company in the UK, means that Columbus has strengthened its offerings to this segment.
Revenue decline of 1%
Revenue declined by 1% despite a 7% increase in consultancy revenue. The decline is due to lower external software sales, declining by DKK 35.2m corresponding to 21%. The decline in sales is primarily due to discontinued sales of low margin software in Russia and secondarily due to the lack of sales in US.
| DKK ´000 | YTD 2014 | YTD 2013 | Q3 2014 | Q3 2013 |
| Columbus licenses | 16,707 | 18,884 | 5,291 | 6,031 |
| Columbus subscriptions | 21,949 | 19,716 | 6,527 | 5,226 |
| External licenses | 46,277 | 60,980 | 14,163 | 10,381 |
| External subscriptions | 83,054 | 103,521 | 24,640 | 26,761 |
| Consultancy | 445,935 | 417,713 | 136,216 | 129,464 |
| Other | 13,153 | 15,387 | 3,820 | 4,748 |
| Net revenues | 627,075 | 636,201 | 190,657 | 182,611 |
| EBITDA before share-based compensation | 45,521 | 41,288 | 9,238 | 6,630 |
| Share-based compensation | -2,136 | -1,179 | -842 | -781 |
| EBITDA | 43,385 | 40,109 | 8,396 | 5,849 |
Columbus Software at the same level as in 2013
Revenue from Columbus Software amounted to DKK 38.7m in Q3 YTD, which is in line with 2013. However, Columbus subscriptions increased by 11% compared to 2013. This is recurring revenue, which is an important part of ensuring continuous earnings.
Continuous improvement of the consultancy business
The sale of consultancy services increased by 7% in Q3 YTD due to an increase in productivity in the consultancy business, consequently invoicable hours increased from 52% to 54%. The positive development is in line with expectations.
Global Delivery continues the positive trend
Columbus Global Delivery Center continues to expand the capacity and delivered 4,262 days of customer support and implementations in Q3 YTD. This corresponds to an increase of 37% compared to the same period last year.
Expectations to revenue and EBITDA are maintained
The announced expectations to 2014 are being maintained, and thus Columbus expects revenue in the level of DKK 900m and an EBITDA1 in the level of DKK 80m.
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 Thomas Honoré, T: +45 70 20 50 00.
1 EBITDA before share-based compensation
2 Profit before tax, from continuing operations
Income statement
| DKK ´000 | YTD 2014 | YTD 2013 | 2013 |
| Net revenue | 627,075 | 636,201 | 879,805 |
| External project costs | -139,176 | -156,601 | -216,278 |
| Gross profit | 487,899 | 479,600 | 663,527 |
| Staff expenses | -355,284 | -351,013 | -476,207 |
| Other external costs | -87,677 | -87,985 | -116,145 |
| Other operating income | 604 | 686 | 914 |
| Other operating costs | -21 | 0 | -5 |
| EBITDA before share-based payment | 45,521 | 41,288 | 72,084 |
| Share-based payment | -2,136 | -1,179 | -1,960 |
| EBITDA | 43,385 | 40,109 | 70,124 |
| Depreciation | -17,555 | -19,037 | -25,352 |
| Earnings before write down of goodwill (EBITA) | 25,830 | 21,072 | 44,772 |
| Write down of goodwill | 0 | 0 | 0 |
| Operating profit (EBIT) | 25,830 | 21,072 | 44,772 |
| Results in associated companies | 0 | -4,109 | -4,109 |
| Financial income | 4,942 | 45 | 190 |
| Financial expense | -684 | -3,734 | -4,123 |
| Profit before tax, continuing operations | 30,088 | 13,274 | 36,730 |
Balance sheet
| DKK ´000 | YTD 2014 | YTD 2013 | 2013 |
| ASSETS | |||
| Goodwill | 187,606 | 168,564 | 167,705 |
| Other intangible assets | 2,640 | 2,128 | 1,446 |
| Development projects finalized | 35,116 | 35,686 | 43,288 |
| Development projects in progress | 11,018 | 11,895 | 3,593 |
| Intangible assets | 236,380 | 218,273 | 216,032 |
| Leasehold improvements | 161 | 912 | 781 |
| Plant and operating equipment | 7,683 | 8,818 | 8,873 |
| Tangible assets | 7,844 | 9,730 | 9,654 |
| Deferred tax assets | 17,885 | 19,733 | 19,418 |
| Total long-term assets | 262,109 | 247,736 | 245,104 |
| Inventories | 153 | 225 | 40 |
| Trade receivables | 117,400 | 117,445 | 138,929 |
| Contract work in progress | 13,133 | 17,374 | 9,471 |
| Corporation tax | 40 | 1,081 | 40 |
| Other receivables | 5,718 | 7,649 | 5,232 |
| Prepayments | 8,090 | 9,778 | 9,478 |
| Receivables | 144,381 | 153,327 | 163,150 |
| Cash | 81,788 | 49,105 | 75,410 |
| Total short-term assets | 226,322 | 202,657 | 238,600 |
| TOTAL ASSETS | 488,431 | 450,393 | 483,704 |
Balance sheet
| DKK ´000 | YTD 2014 | YTD 2013 | 2013 |
| LIABILITIES | |||
| Share capital | 137,831 | 132,793 | 132,793 |
| Reserves on foreign currency translation | -9,794 | -8,968 | -10,680 |
| Retained profit | 171,096 | 149,445 | 144,940 |
| Proposed dividends | 0 | 0 | 13,279 |
| Group shareholders equity | 299,133 | 273,270 | 280,332 |
| Minority interests | 3,357 | 7,820 | 3,646 |
| Equity | 302,490 | 281,090 | 283,978 |
| Deferred tax | 207 | 90 | 74 |
| Provisions | 5,696 | 507 | 121 |
| Debt to credit institutions | 0 | 21 | 6 |
| Other debt | 1,270 | 1,270 | 1,270 |
| Long-term debt | 7,173 | 1,888 | 1,471 |
| Credit institutions | 7,403 | 6,112 | 2,385 |
| Prepayments received from customers | 20,339 | 12,405 | 14,946 |
| Trade accounts payable | 35,267 | 33,392 | 52,694 |
| Corporation tax | 4,606 | 6,540 | 5,235 |
| Other debt | 91,049 | 92,942 | 103,704 |
| Accruals | 20,104 | 16,024 | 19,291 |
| Short-term debt | 178,768 | 167,415 | 198,255 |
| Total debt | 185,941 | 169,303 | 199,726 |
| TOTAL LIABILITIES | 488,431 | 450,393 | 483,704 |
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 |
Parent company/ Eliminations |
Total |
| YTD 2014 | ||||||
| Columbus licenses | 11,807 | 7,599 | 1,835 | 1,583 | -6,117 | 16,707 |
| Columbus subscriptions | 18,739 | 6,066 | 642 | 2,464 | -5,962 | 21,949 |
| External licenses | 0 | 23,108 | 13,305 | 10,022 | -158 | 46,277 |
| External subscriptions | 241 | 43,992 | 15,253 | 24,707 | -1,139 | 83,054 |
| Consultancy | 10,471 | 294,025 | 81,689 | 68,573 | -8,823 | 445,935 |
| Other | 625 | 7,788 | 2,026 | 2,539 | 175 | 13,153 |
| Total net revenue | 41,883 | 382,578 | 114,750 | 109,888 | -22,024 | 627,075 |
| Gross earnings | 38,029 | 286,548 | 86,949 | 74,171 | 2,202 | 487,899 |
| EBITDA | 17,516 | 33,959 | 10,281 | 1,129 | -19,500 | 43,385 |
| Consultancy | ||||||
| DKK ´000 | ISV |
Western Europe |
Eastern Europe |
North America |
Parent company/ Eliminations |
Total |
| YTD 2013 | ||||||
| Columbus licenses | 12,626 | 8,530 | 2,093 | 2,018 | -6,383 | 18,884 |
| Columbus subscriptions | 16,481 | 4,947 | 675 | 2,782 | -5,169 | 19,716 |
| External licenses | 19 | 19,935 | 27,399 | 13,668 | -41 | 60,980 |
| External subscriptions | 1,123 | 50,579 | 23,587 | 28,333 | -101 | 103,521 |
| Consultancy | 9,758 | 257,312 | 70,659 | 89,431 | -9,447 | 417,713 |
| Other | 449 | 7,659 | 2,385 | 3,379 | 1,515 | 15,387 |
| Total net revenue | 40,456 | 348,962 | 126,798 | 139,611 | -19,626 | 636,201 |
| Gross earnings | 36,460 | 266,053 | 82,294 | 99,357 | -4,564 | 479,600 |
| EBITDA | 15,600 | 29,545 | 7,686 | 12,552 | -25,274 | 40,109 |
