Continued progress on all essential areas / 23% growth in revenues, 24% growth in EBITDA
Continued progress on all essential areas / 23% growth in revenues, 24% growth in EBITDA
November 8, 2007 at 12:03 AM CET
Continued progress on all essential areas / 23% growth in revenues, 24% growth in EBITDA Strong progress in the US despite a weak dollar. The software development company, To-Increase B.V. grew by 74% • The Groups business model has been sharpened and the activities in all our countries has to fit this model. As a consequence the Group has decided to liquidate/sell the operations in the Czech Republic, Austria and Finland and classify these as discontinued operations. The subsidiaries in these three countries had revenues in Q1-3/2007 of DKK 12.5M, and reported in total an EBITDA of DKK -2.5M. In addition to this is cost totalling DKK -6.1M related to liquidate/sell the activities in the three countries. • Columbus IT's revenues from continued operations for Q1-3/2007 amounted to DKK 618M (DKK 503M in 2006), corresponding to an growth of 23% compared to the same period last year. • Operating profit (EBITDA) from continued operations for the period was DKK 22.6M (DKK 18.2M in 2006), corresponding to an increase of 24%. The result is in line with the management's expectations. • The Group's software development company, To-Increase B.V. which is the worlds largest vendor of verti-cal standard industry applications for Microsoft Dynamics, had revenues to other Microsoft resellers of DKK 25M in Q1-3/2007, corresponding to an increase of 74% compared to the same period last year. EBITDA for Q1-3/2007 amounted to DKK 8.7M, corresponding to an increase of 24% compared to the same period last year. • Revenues in the Russian subsidiary in Q1-3/2007 amounted to DKK 74.2M, corresponding to an increase of 54% compared to the same period last year. EBITDA for the period amounted to DKK 7.6M, which is an increase of DKK 18.2M compared to the same period last year. • Revenues in the American subsidiaries in Q1-3/2007 amounted to DKK 96.7M, corresponding to an increa-se of 20% compared to the same period last year. EBITDA for the period amounted to DKK 12.1M, which is an increase of DKK 8.8M compared to the same period last year. The American subsidiaries have despite a declining dollar rate succeeded in growing operating profit by 367% compared to the same period last year. • Revenues in the Danish subsidiary, the largest Microsoft partner in DK in 06/07, amounted in Q1-3/2007 to DKK 176.4M, corresponding to an increase of 7% compared to the same period last year. EBITDA for the period amounted to DKK 10M, which is a decline compared to the same period last year. • The groups British subsidiary continues its very positive development. Revenues in the British subsidiary in Q1-3/2007 amounted to DKK 35.3M, corresponding to an increase of 69% compared to the same period last year. EBITDA for the period amounted to DKK 5.9M compared to DKK 2.7M for the same period last year. • The result before taxes from continued operations amounted to DKK 6.2M for Q1-3/2007 (DKK 5.5M in 2006). • Total equity at the end of Q3/2007 amounted to DKK 215.3M (DKK 172.1M in 2006), resulting in a solvency ratio of 41% (37% in 2006). Previously announced expectations for 2007 was total revenues for the Group at a level of DKK 870-890M and an EBITDA of DKK 35-40M. In those figures was an expectation to reve-nues from the discontinued operations at a level of DKK 35-40M, and EBITDA from these activities at a le-vel of DKK -2 to -3M. Following the results of Q1-Q3 2007 revenues from the Groups continued operations for 2007 are expected to be at level of DKK 870-890M, and EBITDA at a level of DKK 38-43M. Ib Kunøe Michael Gaardboe Chairman CEO Columbus IT Partner A/S Columbus IT Partner A/S For further information, please contact: CEO Michael Gaardboe, T: +45 70 20 50 00 Translation: In the event of any inconsistency between this document and the Danish language version, the Dan-ish language version shall be the governing version. Key Figures and Ratios MDKK Q3 2006 Q3 2007 Q1-3 2006 Q1-3 2007 2006 Income Statement Net revenues 145.6 186.1 502.6 617.7 735.7 External project costs -32.2 -42.2 -131.2 -165.3 -204.9 Gross earnings I 113.4 143.9 371.4 452.4 530.8 Staff expenses -84.4 -105.7 -262.4 -319.4 -360.9 Gross earnings II 29.0 38.2 109.0 133.0 169.9 Other external costs -32.1 -36.8 -103.7 -110.0 -147.8 Other operating income 13.3 0.0 13.3 0.0 14.8 Other operating costs 0.0 0.0 -0.4 -0.4 -0.7 EBITDA 10.2 1.4 18.2 22.6 36.2 Depreciation excl. goodwill -3.5 -4.3 -10.0 -12.7 -14.1 EBITA 6.7 -2.9 8.2 9.9 22.1 Amortization and write down of goodwill 0.0 0.0 0.0 0.0 -1.8 EBIT 6.7 -2.9 8.2 9.9 20.3 Result in associated companies 0.0 0.1 -0.2 0.2 -0.1 Net financial items -0.8 -1.4 -2.5 -3.9 -5.2 Pre-tax earnings 5.9 -4.2 5.5 6.2 15.0 Tax on Q1-3 earnings -0.2 0.0 -2.1 -2.5 12.0 Earnings Q1-3 from continued operations 5.7 -4.2 3.4 3.7 27.0 Earnings Q1-3 from discontinued operations -1.7 -6.7 -5.9 -8.6 -6.8 Earnings Q1-3 4.0 -10.9 -2.5 -4.9 20.2 Allocated thus: Shareholders of Columbus IT Partner A/S 4.5 -8.2 -2.9 -1.4 21.2 Minority interests -0.5 -2.7 0.4 -3.5 -1.0 4.0 -10.9 -2.5 -4.9 20.2 Balance Sheet Long-term assets 234.4 255.2 256.1 Short-term assets 228.0 266.3 287.7 Total assets 462.4 521.5 543.8 Group shareholders' equity 161.5 207.8 201.1 Minority interests 10.6 7.5 10.9 Debt 290.3 306.2 331.8 Total liabilities 462.4 521.5 543.8 Cash flow Cash inflow from operations -9.8 -6.6 27.0 Net cash outflow for investments -29.0 -22.2 -46.4 of which for investment in tangible fixed assets -4.3 -8.3 -6.4 Cash inflow from financing activities 27.0 25.2 28.7 Total cash flow -11.8 -3.6 9.3 Key ratios Gross margin II 21.7% 21.5% 23.1% Operating profit margin 1.6% 1.6% 2.8% Return on equity -2.0% -0.7% 13.6% Equity ratio 37.2% 41.3% 40.0% Net asset value per share (BV) 2.4 2.8 2.7 Earnings per share (EPS) -0.0 -0.1 0.3 Average number of shares, in thousands 72,372 76,058 72,706 Share price, end of period 9.7 7.1 8.1 Cash flow per share -0.1 -0.1 0.4 Headcount at the end of the period 1,012 1,106 1,024 The key figures and ratios have been calculated in accordance with the Danish Society of Financial Analysts' ”Recommendations and Key Figures 2005”. 2006 numbers have been corrected to present earnings from discontinued operations separately. The interim report has not been audited The Groups business model The Groups objective is to have full ownership of our operations in the central markets, and to be repre-sented there with critical mass. Other markets are covered by partnerships, where Columbus IT aims at having control. On markets of less importance the objective is solely to be represented through franchise agreements. The sharpened business model has led to a testing of business model fit of the Groups activities in all our countries. As a consequence of this the Group has changed its presence in the Czech Republic from a partnership to a franchise agreement. Negotiation regarding changing the Groups Austrian activities to a franchise agreement did not lead to an agreeable solution. Based on the lack of strategic importance of Austrian market the Group has decided not the go ahead with the investment necessary to put the Austrian com-panies on a sound financial basis, and is in the process of closing down its Austrian activities. The pos-sibility of changing the Finnish presence to a franchise agreement is being tested as well. Consequently the Groups operations in the Czech Republic, Austria and Finland has been categorized as discontinued operations and are being reported as Earnings from discontinued operations. The subsidiaries in these three countries had revenues in Q1-3/2007 of DKK 12.5M, and reported in total an EBITDA of DKK -2.5 for the period. In addition to this is cost totalling DKK -6.1M related to liquidating/selling the activities in the three countries. Total earnings from discontinued operations in Q1-3/2007 amounted to DKK -8.6M compared to DKK -5.6 for the same period last year. Developments in Q1-3/2007 in continued operations Columbus IT's revenues for Q1-3/2007 amounted to DKK 618M, up from DKK 503M for the same period last year, corresponding to an increase of 23%. Revenues 2007 2006 Q1-3 MDKK % MDKK % Hardware 8 1% 14 3% Software 216 35% 163 32% Service 394 64% 326 65% Total 618 100% 503 100% Revenues 2007 2006 Q1-3 MDKK % MDKK % Dynamics AX 365 59% 343 68% Dynamics NAV 148 24% 92 18% Other MBS products 38 6% 32 6% Other 67 11% 36 7% Total 618 100% 503 100% The growth in revenues is relating both to software, which rose to DKK 216M compared to DKK 163M for the same period last year corresponding to an increase of 33%, and to consulting and services, which rose to DKK 394M compared to DKK 326M for the same period last year corresponding to an increase of 21%. All product groups have grown compared to the same period last year. Highest growth is in the Group's Dynamics NAV-related revenues which compared to the same period last year have increased by 61%, and in Q1-3/2007 constitutes 24% of the total revenues. As the table below shows, there is growth in revenues in all regions, and the majority of the Group's sub-sidiaries have realized an activity level in line with or above expectations. Revenues EBITDA Headcount (MDKK) (MDKK) (as of September 30) Q1-3 2007 2006 2007 2006 2007 2006 Nordic 217 196 11 21 282 246 Western Europe 153 129 11 12 212 205 Eastern Europe 123 84 8 -7 392 353 Rest of the world 125 94 13 3 208 160 Parent Company 0 0 -20 -11 13 18 618 503 23 18 1,106 982 Note: Revenue figures state the revenue generated outside the Group in the regions. The Parent Company's figures are re-ported before costs being billed to subsidiaries. Thus, the subsidiaries' figures are reported exclusive of costs billed by the Par-ent Company. The Group's financials show net expenses of DKK 3.9M compared to net expenses of DKK 2.5M for the same period last year. Corporation tax in profit-making foreign subsidiaries means that the total calculated tax charge for Co-lumbus IT for the period is DKK 2.5M. The result for the period was DKK 3.7M, corresponding to an im-provement of 9% compared to the same period last year. Regional development Nordic 2007 2006 Revenues - Q1-3 MDKK % MDKK % Hardware 6 3% 13 7% Software 65 30% 61 31% Service 146 67% 122 62% Total 217 100% 196 100% Nordic 2007 2006 Revenues - Q1-3 MDKK % MDKK % Dynamics AX 126 58% 125 64% Dynamics NAV 44 20% 30 15% Other MBS products 31 14% 25 13% Other 16 8% 16 8% Total 217 100% 196 100% Q1-3/2007 revenues for the Nordic region increased by DKK 21M, corresponding to a 11% increase compared to the same period last year. The increase is due to a higher level of activity in both the Dan-ish subsidiary where revenues were increased by 7% compared to the same period last year, and in the Norwegian subsidiaries where revenues were increased by 34% compared to the same period last year. The Nordic Region accounts for 35% of the Group's revenues. The region's EBITDA is down by 48% compared to the same period last year, to DKK 11M for Q1-3/2007. The fall is due to a decline in EBITDA for both the Danish subsidiary and the Norwegian subsidi-aries. The Danish subsidiary had a good year in 2006. 2007 however has been marked by a fewer new customer adds, and sales prices have not kept up with the growth in salaries in the market. Both devel-opments have resulted in lower EBITDA in 2007 compared to 2006. Furthermore the Danish subsidiary has invested in building up a strong competence within Microsoft CRM. Columbus IT has been elected Microsoft CRM partner 2007 in Denmark. Western Europe 2007 2006 Revenues - Q1-3 MDKK % MDKK % Hardware 1 1% 1 1% Software 56 36% 42 32% Service 96 63% 86 67% Total 153 100% 129 100% Western Europe 2007 2006 Revenues - Q1-3 MDKK % MDKK % Dynamics AX 76 50% 83 64% Dynamics NAV 67 44% 37 29% Other MBS products 3 2% 5 4% Other 7 4% 4 3% Total 153 100% 129 100% In Western Europe revenues for Q1-3/2007 amounted to DKK 153M which is an improvement of DKK 24M, corresponding to a 19% increase compared to the same period last year. For Q1-3/2007, the Group's software development company, To-Increase, had revenues of DKK 25M to other Microsoft re-sellers corresponding to a 74% increase compared to the same period last year. Likewise revenues in the British subsidiary have grown markedly to DKK 35M for Q1-3/2007, corresponding to a 69% increase compared to the same period last year. The region accounted for 25% of the Group's revenues. EBITDA for the region is down DKK 1M compared to the same period last year, to DKK 11M for Q1-3/2007. The EBITDA of To-Increase grew by 24% compared to the same period last year to DKK 8.7M in Q1-3/2007. The Groups Dutch consulting unit has had some challenges in 2007, and the company's revenues have decreased by DKK 5.6M, while the company's EBITDA has decreased by DKK 2.7M compared to the same period last year. The growth in the British subsidiary has lead to a growth in EBITDA of 119% compared to the last period last year, to DKK 5.9M for Q1-3/2007. Eastern Europe 2007 2006 Revenues - Q1-3 MDKK % MDKK % Hardware 1 1% 0 0% Software 50 41% 27 32% Service 72 58% 57 68% Total 123 100% 84 100% Eastern Europe 2007 2006 Revenues - Q1-3 MDKK % MDKK % Dynamics AX 82 67% 68 81% Dynamics NAV 7 6% 3 4% Other MBS products 4 3% 2 2% Other 30 24% 11 13% Total 123 100% 84 100% Revenues in Eastern Europe amounted to DKK 123M for Q1-3/2007 which is an improvement of DKK 39M or 46% compared to the same period last year. Revenues of the Russian subsidiary increased from DKK 48.1M for Q1-3/2006 to DKK 74.2M in Q1-3/2007, corresponding to an increase of 54%. The Esto-nian subsidiary had growth in revenues of 46% compared to the same period last year, and had reve-nues of DKK 17.2M in Q1-3/2007. Revenues of the Lithuanian subsidiary decreased by DKK 1.3M com-pared to the same period last year, corresponding to a decline of 10%. Revenues of the Polish company on the contrary increased from DKK 3.5M in Q1-3/2006 to DKK 11.7M in Q1-3/2007. The revenue growth in Poland is worked up by the acquired Polish company, which in Q3/2006 was merged with the Group's existing Polish company. The region accounted for 20% of the Group's revenues. The region's EBITDA increased by DKK 15M compared to the same period last year to DKK 8M in Q1-3/2007. The implemented restructuring measures in the Russian company in 2006 have brought the company back on a profitable track and the Russian company delivered an EBITDA of DKK 7.6M in Q1-3/2007. Rest of the world 2007 2006 Revenues - Q1-3 MDKK % MDKK % Hardware 0 0% 0 0% Software 45 36% 33 35% Service 80 64% 61 65% Total 125 100% 94 100% Rest of the world 2007 2006 Revenues - Q1-3 MDKK % MDKK % Dynamics AX 81 65% 67 71% Dynamics NAV 30 24% 22 24% Other MBS products 0 0% 0 0% Other 14 11% 5 5% Total 125 100% 94 100% In the Rest of the World region in Q1-3/2007, total revenues amounted to DKK 125M, which is an im-provement of DKK 31M corresponding to a 33% increase compared to the same period last year. In Q1-3/2007, revenues in the two American subsidiaries grew from DKK 80.7 in Q1-3/2006 to DKK 96.7M in Q1-3/2007 corresponding to an increase of 20%. The Mexican and the Brazilian subsidiaries, which were acquired in Q2 and Q3/2006 respectively contributes in Q1-3/2007 with revenues of DKK 10.8M. The region accounted for 20% of the Group's revenues. EBITDA in the region amounted to DKK 13M, which is an increase of DKK 3M compared to the same period last year. The optimization measures undertaken by the two American subsidiaries during 2006 have shown to be quite effective and the companies delivered a combined EBITDA of DKK 12.1M in Q1-3/2007. The subsidiaries in Colombia, Chile and Costa Rica delivered a combined EBITDA of DKK 1.7M compared to DKK 0.3M for the same period last year. The Mexican and the Brazilian subsidiaries, which both are in a set-up phase, delivered a combined EBITDA of DKK -0.7M in Q1-3/2007. EBITDA of the Parent Company amounted to DKK -20M in Q1-3/2007 before billing subsidiaries for costs, compared to DKK -11M for the same period last year, which however was influenced by the earn-ings related to the sale of 49% of the shares in the Groups French activities. Directed rights issues In January 2007, Columbus IT issued shares in Columbus IT Partner A/S, to settle the outstanding pur-chase price relating to the Polish company, Creative Innovation Group Sp. Z o.o. Please refer to stock exchange release no. 1 of January 8, 2007. In May 2007, Columbus IT issued shares in Columbus IT Partner A/S, to settle the second part of the purchase sum relating to the American company, VerticalSoft Inc. Please refer to stock exchange re-lease no. 9 of May 18, 2007. Accordingly, a total of 1,320,465 shares were issued in Q1-3/2007, which had a positive net impact on equity of DKK 10.8M. Accounting policies This quarterly report has been drawn up in accordance with the provisions of the Interim Reporting No-tice and Copenhagen Stock Exchange requirements for interim reporting Investments Total investments in tangible and intangible assets, except for goodwill, in Q1-3/2007 totalled DKK 17.2M compared to 18M for the same period in 2006. DKK 8.9M was attributable to investments in de-velopment projects, while the remaining DKK 8.3M was attributable to the acquisition of tangible assets. Liquidity status Columbus IT held cash funds of DKK 39M on June 30, 2007 compared to DKK 23M last year. Cash funds are mainly held in various foreign subsidiaries. Forex The Group did not enter into any hedging contracts in the preceding part of the year. In international contracts, exchange risks are limited by servicing operations from local companies so that Group income and costs in foreign currencies are matched insofar as possible. Equity Development in shareholders' equity (MDKK) Q1-3/2007 2006 Equity January 1 201.1 147.3 Forex adjustments for foreign subsidiaries, etc. 0.8 -3.8 Earnings for the period -4.9 21.2 Warrant scheme exercised 0.0 0.5 Capital increases 10.8 35.9 Group shareholders' equity as of September 30 and December 31 207.8 201.1 Minority interests' equity as of September 30 and December 31 7.5 10.9 Total equity as of September 30 and December 31 215.3 212.0 Safe Harbor statement The statements about the future made in this report reflect the Management's current expectations for certain future events and financial results. By their very nature, some uncertainties attach to statements about the future, and the results finally achieved could, therefore, vary considerably from the expectations expressed. Further, some expectations are based on assumptions for future events, which may turn out to be incorrect. Factors that could mean significantly different results from the expectations expressed include, but are not restricted to, devel-opments in trading conditions and the financial markets, and the fiscal impact of unforeseen events: changes in Danish regula-tions and legislation and EU regulations; rising competition for business solutions in Denmark and abroad; trends in demand; product composition and pricing for business solutions; the development of Columbus IT Partner's international activities to which some political risks are attached, and investment in, and disposal of, national and international companies. Management Report The Boards of Directors and Management have considered and approved the Q3 Report for the period 1 January - 30 September 2007 for the Columbus IT Partner Group. The quarterly report has been drawn up in accordance with the provisions in International Financial Re-porting Standards (IFRS) for recognition and measurement and additional Danish reporting requirements for the presentation of quarterly reports laid down in the Company Accounts Act, associated statutory instruments and Copenhagen Stock Exchange. We regard the accounting policies applied as appropri-ate and that the Quarterly Report gives a true picture of the Group's assets and liabilities, financial posi-tion at 30 September 2007, and the results of the Group's activities and cash flow for the period 1 Janu-ary - 30 September 2007. Ballerup, November 8 2007 Board of Management Michael Gaardboe Sven Madsen CEO CFO Board of Directors Ib Kunøe Sven Madsen Claus Hougesen Jørgen Cadovius Chairman Income statement DKK 1000 1/1 - 30/9 2007 1/1 - 30/9 2006 Net revenues 617,678 502,580 External project costs -165,241 -131,192 Gross earnings 452,437 371,388 Other external costs -319,420 -262,393 Staff expenses -110,000 -103,689 Other operating income 0 13,350 Other operating costs -417 -363 Earnings before depreciation/amortization (EBITDA) 22,600 18,293 Depreciation -12,651 -10,033 Earnings before write down of goodwill (EBITA) 9,949 8,260 Write down of goodwill 0 -41 Operating profit (EBIT) 9,949 8,219 Results of associated companies 239 -243 Financial income 4,210 5,513 Financial expenses -8,155 -7,939 Pre-tax earnings 6,243 5,550 Tax on the result for the period -2,529 -2,128 Result for the period from continued operations 3,714 3,422 Result for the period from discontinued operations -8,656 -5,963 Result for the period -4,942 -2,541 Allocated thus: Shareholders of Columbus IT Partner A/S -1,462 -2,937 Minority interests -3,480 396 -4,942 -2,541 Balance Sheet DKK 1,000 1/1 - 30/9 2007 1/1- 30/9 2006 Assets Development projects 37,591 36,991 Royalties 188 372 Goodwill 156,971 163,424 Intangible assets 194,750 200,787 Plant and operating equipment 15,133 12,630 Tangible assets 15,133 12,630 Holdings in associated companies 1,426 925 Other receivables 8,953 0 Deferred tax assets 34,997 20,052 Financial assets 45,376 20,977 Total long-term assets 255,259 234,394 Inventories 4,696 3,868 Accounts receivable - sales and services 162,997 137,583 Contract work in progress 28,022 23,978 Receivables from shareholders 0 408 Corporation tax 3,652 4,568 Other receivables 17,498 23,166 Accruals 10,370 11,745 Receivables 222,539 201,448 Cash funds 39,048 22,739 Total short-term assets 266,283 228,055 Total assets 521,542 462,449 Balance Sheet DKK 1,000 1/1 - 30/9 2007 1/1- 30/9 2006 Liabilities Share capital 95,580 91,241 Retained profit 112,193 70,262 Parent Company shareholders' equity 207,773 161,503 Minority interests' equity 7,521 10,603 Equity 215,294 172,106 Deferred tax 1,014 1,256 Subordinated loan capital 0 9,035 Credit institutions 1373 1,056 Other debt 1,872 2,605 Long-term debt 4,259 13,952 Subordinated loan capital 0 0 Short-term part of long-term debt 2550 404 Credit institutions 105,407 88,797 Debt to affiliated companies 6,210 0 Client prepayments 30,065 17,963 Trade accounts payable 51,781 39,644 Corporation tax 578 4,262 Payable purchase sum re: acquired companies 294 21,918 Other debt 100,674 90,825 Accruals 4,430 12,578 Short-term debt 301,989 276,391 Debt 306,248 290,343 Total liabilities 521,542 462,449