November 6, 2019 at 9:11 AM CET

Interim Management Statement Q3 2019

 

Interim Management Statement Q3 2019

Release no. 20/2019

 

Columbus delivers organic growth and strong EBITDA in Q3

In the first three quarters of 2019 Columbus delivered an organic revenue growth of 3% and an increase in EBITDA of 48%. The revenue growth is primarily driven by Commerce, Columbus Care, M3 and increased sale of cloud services. Columbus maintains guidance for the year.

 

In accordance with the regulations for listed companies’ submission of interim statements, Columbus A/S hereby submits the interim management statement for the period 01.01.2019-30.09.2019 (9 months).

 

Organic growth of 3%

Revenue in Q3 YTD 2019 amounted to DKK 1,400m (Q3 YTD 2018: DKK 1,382m), corresponding to an increase of 1% compared to the same period last year. Isolated for the SAP ERP Business and Columbus Latvia divested in 2018 (constituting DKK 19.8m), Columbus delivered an organic growth of 3%.

In general, all Columbus’ business units delivered growth in Q3 YTD, where especially Columbus Care, Commerce and Columbus M3 business units showed strong progress with double-digit growth.

The sale of cloud services continued to show strong growth due to the increasing conversion to cloud-based solutions.

EBITDA increased from DKK 112m to DKK 165m, a growth of 48%.

Adjusted for the IFRS16 effect, EBITDA increased by 19% to DKK 133m. EBITDA is positively affected by other operating income and negatively affected by a provision for a customer engagement.

The result before tax increased by 42% to DKK 94m. Revenue and EBITDA were not significantly impacted by currency fluctuations.

In Q3 isolated, revenue grew by 5% driven by 6% growth in the services business. We see organic growth in all our business units, except Columbus US and Columbus Norway.

 

Progress in the services business

In Q3 YTD, the service revenue increased by 4% organically (without the divested SAP ERP business). Reported growth is 2%. The increase in the service revenue was primarily driven by increased sale of Columbus Care services and a general progress in the services business where especially the business areas M3 and Commerce showed strong progress.

Chargeable hours constituted 52% in Q3 YTD (2018: 54%). The decline is primarily caused by lower efficiency in Russia and UK. 


Despite the decline in chargeable hours, the services business delivered overall growth and progress.

 

Cloud sales increased by 54%
Columbus Software declined by 10% in Q3 YTD. The sale of perpetual license declined by 44% and subscriptions declined by 5%.

 

Sale of Columbus Cloud increased by 54% which is a strong progress.

 

We expect to pick up the software sales in Q4 due to a strong pipeline and some large deals in process.

Recovery of Columbus US according to plan

We are in the process of a turnaround led by our new CEO Chris Alagna. The turnaround will address sales and marketing execution, delivery organization and digital leadership offerings. We expect to see declining revenue continuing for the rest of 2019 with positive revenue and EBITDA growth during 2020.

Challenging customer engagement

Columbus Norway is challenged by a customer engagement, which was part of the acquisition of iStone. The development in the project means that we have made necessary provisions in order to complete the project. In addition, we have further strengthened the staffing and management of the project. 

Columbus UK maintains momentum despite the Brexit uncertainty
Despite the Brexit uncertainty the UK business unit maintains their strong market position and with a strong Q3 delivering 4% growth, Columbus UK is back in positive growth. In local currency the growth was 5% in Q3.

 

Progress in 9 Doors to Digital Leadership

The sale of the new business areas continues to deliver growth, where especially Analytics & Business Insight, M3 services and Customer Experience show strong growth numbers.

During Q3, we launched more services addressing industry specific business pain points.  

 

Progress in the sale of Columbus Cloud

The sale of Columbus Cloud continued to show good progress. In Q3 YTD Columbus Cloud delivered a total revenue growth of 54%.

In Q3 YTD, we increased our cloud contract value by 78%. As the sale of cloud subscriptions is recognized on an ongoing basis instead of upfront at the time of sale and delivery, we are not able to fully recognize the revenue. 

However, cloud sales will bring revenue going forward, ensuring a growth in recurring revenue.

 

Columbus Care and cloud drive growth in recurring revenue

In Q3 YTD 2019 recurring revenue increased by 7% and constituted 24% of the total revenue. The progress was driven by a considerable increase in sale of Columbus Care contracts of 20% as well as an increase in total cloud revenue of 50%.

 

Columbus maintains the announced expectations to 2019

  • Revenue in the level of DKK 2bn
  • EBITDA in the level of DKK 240m
  • Columbus Software revenue in the level of DKK 110m
  • 10% dividend on nominal share capital

 

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 very satisfied with the announced results, as we have delivered organic growth and strong EBITDA growth. Overall, we see strong growth across our Business Units and in our new business areas within the 9 Doors to Digital Leadership with new growth opportunities for us to pursue”, says CEO and President in Columbus, Thomas Honoré.

 

Investor presentation

Columbus’ Executive Board will present the results for Q3 2019 at a conference call today at 13:00 CET.

Please use the following dial-in numbers:

Denmark: +45 32 72 04 17

UK/International: +44 (0) 844 481 9752

USA: +1 6467413167

Conference ID: 9489276

It is also possible to follow the online webcast via this link: https://edge.media-server.com/mmc/p/3qjqvrs4

A recorded version of the presentation will be available on the website after the webcast has concluded:

www. columbusglobal.com.

DKK ´000 YTD 2019 YTD 2018 2018
Columbus Software licenses 13,748 24,610 29,373
Columbus Software subscriptions 41,518 43,931 57,949
Columbus Cloud 15,441 10,025 15,547
External licenses 51,967 52,449 74,029
External subscriptions 142,043 148,560 206,658
External cloud 25,050 16,924 24,095
Services 1,083,428 1,063,261 1,432,109
Other 26,779 22,074 35,492
Total net revenue 1,399,974 1,381,834 1,875,252
       
EBITDA before share-based payment 167,849 119,019 181,183
Share-based payment -2,995 -7,392 -9,774
EBITDA 164,854 111,627 171,409

 

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

 

Income statement

DKK ´000 YTD 2019 YTD 2018 2018
       
Net revenue 1,399,975 1,381,834 1,875,252
External project costs -334,099 -293,225 -391,276
Gross profit 1,065,876 1,088,609 1,483,976
       
Staff expenses and remuneration -837,843 -813,397 -1,091,192
Other external costs -132,842 -160,812 -220,048
Other operating income 1 72,686 4,619 8,472
Other operating costs -27 0 -25
EBITDA before share-based payment 167,849 119,019 181,183
       
Share-based payment -2,995 -7,392 -9,774
EBITDA 164,854 111,627 171,409
       
Depreciation, amortization and impairment 2 -66,523 -51,717 -63,893
Operating profit (EBIT) 98,331 59,910 107,516
       
Financial income 2,135 9,102 13,663
Financial expenses 3 -6,351 -2,786 -5,738
Profit before tax 94,115 66,226 115,441

1)     Other operating income is related to an expected reduction in contingent consideration debt related to the acquisitions of HiGH Software and iStone.
2)     Depreciation, amortization and impairment contain depreciations of right-of-use assets in the amount of DKK 28.2m.
3)     Financial expenses include interest expenses of right-of-use assets in the amount of DKK 3.5m.

 

Balance sheet

DKK ´000 YTD 2019 YTD 2018 2018
       
ASSETS      
       
Goodwill 929,404 896,959 933,872
Customer base 53,617 67,403 64,350
Other intangible assets 8,143 1,750 6,661
Development projects finalized 56,723 65,744 67,480
Development projects in progress 26,481 10,068 11,723
Property, plant and equipment 22,935 25,142 24,190
Right-of-use assets 85,964 0 0
Deferred tax assets 26,929 21,344 24,389
Other receivables 7,485 7,009 8,289
Total non-current assets 1,217,682 1,095,418 1,140,954
       
Inventories 0 7 5
       
Trade receivables 268,086 260,394 316,111
Contract assets 31,093 26,750 25,317
Corporate tax receivables 8,978 6,468 1,278
Deferred tax assets 7,595 3,532 4,521
Other receivables 15,218 9,753 11,327
Prepayments 24,981 33,202 25,136
Receivables 355,951 340,099 383,690
       
Cash 101,181 83,086 108,909
       
Total current assets 457,132 423,192 492,604
       
TOTAL ASSETS 1,674,814 1,518,610 1,633,558

 

DKK ´000 YTD 2019 YTD 2018 2018
       
EQUITY AND LIABILITIES      
       
Share capital 155,778 152,234 152,234
Reserves on foreign currency translation -53,303 -45,468 -44,503
Retained profit 613,079 485,557 528,608
Group shareholders' equity 715,554 592,323 636,339
Minority interests 2,609 3,743 3,381
Equity 718,163 596,066 639,720
       
Deferred tax 21,337 27,120 25,016
Other provisions 42,710 0 12,015
Contingent consideration 143,250 225,968 227,259
Debt to credit institutions 182,484 184,608 184,270
Lease liability right-of-use assets 59,058 0 0
Non-current liabilities 448,839 437,696 448,560
       
Debt to credit institutions 23,423 6,857 7,494
Contract liabilities 24,564 17,766 30,745
Trade payables 71,097 64,382 105,585
Corporate tax payables 5,212 4,365 4,514
Other Payables 293,332 325,512 323,734
Accruals 57,344 65,966 73,206
Lease liability right-of-use assets 32,840 0 0
Current liabilities 507,812 484,848 545,278
       
Total liabilities 956,651 922,544 993,838
       
TOTAL EQUITY AND LIABILITIES 1,674,814 1,518,610 1,633,558

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
             
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 2019            
             
Columbus Software licenses 10,191 2,718 2,633 1,062 -2,856 13,748
Columbus Software subscriptions 35,632 11,259 1,022 4,051 -10,446 41,518
Columbus cloud 13,165 5,174 465 153 -3,516 15,441
External licenses 1,564 30,142 7,360 14,933 -2,032 51,967
External subscriptions 7,914 60,242 12,676 65,294 -4,083 142,043
External cloud 1,797 11,163 688 11,721 -319 25,050
Services 41,429 861,776 78,377 130,553 -28,707 1,083,428
Other 1,813 24,119 722 2,538 -2,413 26,779
Total net revenue 113,505 1,006,593 103,943 230,305 -54,372 1,399,975
             
Gross profit 97,055 722,171 83,066 147,829 15,755 1,065,876
EBITDA 46,491 130,411 9,722 4,915 -26,685 164,854
             
             
    Consultancy    
DKK ´000 ISV Western
Europe
Eastern
Europe
North
America
HQ, GDC and Eliminations Total
             
YTD 2018            
             
Columbus Software licenses 18,876 7,510 2,990 1,918 -6,684 24,610
Columbus Software subscriptions 39,986 11,764 1,072 3,520 -12,411 43,931
Columbus cloud 8,855 3,304 160 26 -2,320 10,025
External licenses 1,813 30,568 3,902 17,344 -1,178 52,449
External subscriptions 6,409 62,161 13,177 70,410 -3,597 148,560
External cloud 577 6,568 317 9,475 -13 16,924
Services 42,922 813,013 72,934 158,167 -23,775 1,063,261
Other 583 17,635 1,631 3,554 -1,329 22,074
Total net revenue 120,021 952,523 96,183 264,414 -51,307 1,381,834
             
Gross profit 104,923 720,975 76,505 177,012 9,194 1,088,609
EBITDA 47,799 72,668 7,957 16,949 -33,746 111,627

 

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Link to shareholder portal


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Investor Contact

Shareholders, financial analysts, bank representatives, brokerage firms and other investment professionals may address investor specific inquiries directly to:

 

Hans Henrik Thrane
CFO, Columbus

E-mail: hht@columbusglobal.com
Phone: +45 70 20 50 00

 

 

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