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:
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 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.
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 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%.
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.
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 Chairman 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. |
*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 share-based payment | -468,738 | -452,212 | -606,755 | |
| 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 areas | Description | Geografical 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 |
| 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 software licenses | 0 | 18,833 | 6,466 | 36,806 | -450 | 61,655 |
| External software subscriptions | 0 | 48,066 | 15,102 | 73,758 | -800 | 136,126 |
| 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 Europe | Eastern Europe | North America | HQ, GDC and Eliminations | Total |
| YTD 2015 | ||||||
| Columbus Software licenses | 22,766 | 10,689 | 2,484 | 4,597 | -9,401 | 31,135 |
| Columbus Software subscriptions | 24,651 | 9,027 | 808 | 3,950 | -7,555 | 30,881 |
| External software licenses | 0 | 23,319 | 10,739 | 32,836 | 25 | 66,919 |
| External software subscriptions | -128 | 49,585 | 16,489 | 65,723 | -187 | 131,482 |
| 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 |
