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
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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
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Ib Kunøe Chairman Columbus A/S |
Thomas Honoré CEO & President Columbus A/S |
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For further information, please contact: CEO & President, Thomas Honoré .: +45 70 20 50 00 |
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| 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 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 helps 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. |
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| Process Excellence – Quality in everything we do | ||||||
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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 |
meeting 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. |
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| 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 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, implementation and service of standard business systems. |
Western Europe Eastern Europe North America |
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| Information about the Group’s segments is stated below. | ||||||
| Consultancy | ||||||
| DKK ´000 | ISV |
Western Europe |
Eastern Europe |
North America |
HQ, GDC and Eliminations | Total |
| YTD 2017 | ||||||
| Columbus Software licenses | 14,350 | 7,563 | 1,859 | 1,416 | -7,263 | 17,925 |
| Columbus Software subscriptions | 36,358 | 11,918 | 951 | 4,203 | -12,535 | 40,895 |
| External licenses | 0 | 29,157 | 11,594 | 29,008 | -160 | 69,599 |
| External subscriptions | 0 | 50,780 | 17,018 | 77,456 | -406 | 144,848 |
| 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 | ||||||
| DKK ´000 | ISV |
Western Europe |
Eastern Europe |
North America |
HQ, GDC and Eliminations | Total |
| YTD 2016 | ||||||
| Columbus Software licenses | 25,080 | 10,605 | 1,774 | 2,910 | -9,576 | 30,793 |
| Columbus Software subscriptions | 27,521 | 10,126 | 907 | 5,091 | -11,467 | 32,178 |
| External licenses | 0 | 18,833 | 6,466 | 36,806 | -450 | 61,655 |
| External subscriptions | 0 | 48,066 | 15,102 | 73,758 | -800 | 136,126 |
| 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 |
