Substantial progress in Columbus IT - Outlook for both revenue and EBITDA for 2007 is adjusted upwards
Substantial progress in Columbus IT - Outlook for both revenue and EBITDA for 2007 is adjusted upwards
August 9, 2007 at 9:21 AM CEST
Substantial progress in Columbus IT - Outlook for both revenue and EBITDA for 2007 is adjusted upwards • Columbus IT's revenues for H1/2007 amounted to DKK 441M (DKK 365M in 2006), corresponding to an increase of 21% compared to the same period last year. • Operating profit (EBITDA) for the period was DKK 20.0M (DKK 5.3m in 2006), which is above the management's expectations. • The Group's software development company, To-Increase B.V., continues its strong growth and had revenues to other Microsoft resellers of DKK 18M in H1/2007, corresponding to an increase of 102% compared to the same period last year. EBITDA for H1/2007 amounted to DKK 7.8M, corresponding to an increase of 90% compared to the same period last year. • Revenues in the Russian subsidiary in H1/2007 amounted to DKK 44.5M and EBITDA for the period amounted to DKK 4.8M. This is a strong improvement compared to the same period last year and a steady continuation of the very positive development from H2/2006. The Russian subsidiary is clear of its earlier crises and maintains its profitable growth. • Revenues in the American subsidiaries in H1/2007 amounted to DKK 68.7M and EBITDA for the period amounted to DKK 9M. This is a strong improvement compared to H1/2006, which contrary to usual practice was not good, and a continuation of the very positive results from H2/2006. • Revenues in the Danish subsidiary in H1/2007 amounted to DKK 128.3M, corresponding to an increase of 9% compared to the same period last year. EBITDA for the period amounted to DKK 9M which is a decline compared to the same period last year. • The groups British subsidiary is in a very positive development. Revenues in the British subsidiary in H1/2007 amounted to DKK 24.6M compared to DKK 14.9M for the same period last year. EBITDA for the period amounted to DKK 4.2M compared to DKK 2.1M for the same period last year. • The result before taxes amounted to DKK 8.5M for H1/2007 (DKK -4.6m in 2006). • Total equity at the end of H1/2007 amounted to DKK 227.5M (DKK 161.4M in 2006), resulting in a solvency ratio of 39% (34% in 2006). • As a consequence of the H1 performance previously announced expectations for 2007 are adjusted upwards from total Group revenues on the level of DKK 810-830M to DKK 870-890M. Expectations for 2007 EBITDA are adjusted upwards from DKK 33-37M to DKK 35-40M. Ib Kunøe Michael Gaardboe Chairman CEO Columbus IT Partner A/S Columbus IT Partner A/S For further information, please contact: CEO Michael Gaardboe or CFO Sven Madsen, T: +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. Key Figures and Ratios MDKK Q2 2006 Q2 2007 H1 2006 H1 2007 2006 Income Statement Net revenues 196.6 250.7 364.7 440.9 756.7 External project costs -57.7 -79.1 -100.8 -124.1 -211.1 Gross earnings I 138.9 171.6 263.9 316.8 545.6 Staff expenses -95.2 -114.6 -183.9 -220.4 -375.0 Gross earnings II 43.7 57.0 80.0 96.4 170.6 Other external costs -34.0 -39.5 -74.3 -75.7 -153.8 Other operating income 0.0 0.0 0.0 0.0 15.1 Other operating costs 0.0 -0.6 -0.4 -0.7 -0.7 EBITDA 9.7 16.9 5.3 20.0 31.2 Depreciation excl. goodwill -3.6 -4.3 -6.8 -8.6 -14.7 EBITA 6.1 12.6 -1.5 11.4 16.5 Amortization and write down of goodwill 0.0 0.0 0.0 0.0 -2.4 EBIT 6.1 12.6 -1.5 11.4 14.1 Result in associated companies -0.2 0.0 -0.2 0.1 -0.1 Net financial items -2.1 -1.6 -2.9 -3.0 -5.8 Pre-tax earnings 3.8 11.0 -4.6 8.5 8.2 Tax on H1 earnings -1.5 -2.4 -2.0 -2.5 12.0 Earnings H1 2.3 8.6 -6.6 6.0 20.2 Allocated thus: Shareholders of Columbus IT Partner A/S 1.3 8.1 -7.5 6.8 21.2 Minority interests 1.0 0.5 0.9 -0.8 -1.0 2.3 8.6 -6.6 6.0 20.2 Balance Sheet Long-term assets 226.7 259.5 256.1 Short-term assets 250 317.3 287.7 Total assets 476.7 576.8 543.8 Group shareholders' equity 150.0 217.5 201.1 Minority interests 11.4 10.0 10.9 Debt 315.3 349.3 331.8 Total liabilities 476.7 576.8 543.8 Cash flow Cash inflow from operations -7.1 9.1 27.0 Net cash outflow for investments -19.3 -22.2 -46.4 of which for investment in tangible fixed assets -33.3 -5.7 -6.4 Cash inflow from financing activities 15.3 18.5 28.7 Total cash flow -11.1 5.4 9.3 Key ratios Gross margin II 21.9% 21.9% 22.5% Operating profit margin -0.4% 2.6% 1.9% Return on equity -4.9% 3.6% 13.6% Equity ratio 33.9% 39.4% 40.0% Net asset value per share (BV) 2.2 2.9 2.7 Earnings per share (EPS) -0.1 0.1 0.3 Average number of shares, in thousands 71,970 75,850 72,706 Share price, end of period 9.7 7.3 8.1 Cash flow per share -0.1 0.1 0.4 Headcount at the end of the period 964 1,096 1,024 The key figures and ratios have been calculated in accordance with the Danish Society of Financial Analysts' ”Recommendations and Key Figures 2005”. The interim report has not been audited Developments in H1/2007 Columbus IT's net revenues for H1/2007 amounted to DKK 441M, up from DKK 365M for the same period last year. Revenues 2007 2006 H1 MDKK % MDKK % Hardware 10 2% 8 2% Software 163 37% 131 36% Service 268 61% 226 62% Total 441 100% 365 100% Revenues 2007 2006 H1 MDKK % MDKK % Dynamics AX 259 59% 249 68% Dynamics NAV 113 26% 72 20% Other MBS products 27 6% 22 6% Other 42 10% 22 6% Total 441 100% 365 100% The growth in revenues is relating both to software, which rose to DKK 163M compared to DKK 131M for the same period last year corresponding to an increase of 24%, and to consulting and services, which rose to DKK 268M compared to DKK 226M for the same period last year corresponding to an increase of 19%. 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 57%, and now in H1/2007 constitutes 26% of the total revenues. As the table below shows, there is growth in revenues in all regions, and the majority of the Group's subsidiaries have realized an activity level in line with or above expectations. Revenues EBITDA Headcount (MDKK) (MDKK) (as of June 30) H1 2007 2006 2007 2006 2007 2006 Nordic 162 142 10 14 288 224 Western Europe 115 98 10 6 223 219 Eastern Europe 79 61 6 -1 384 366 Rest of the world 85 64 9 2 192 137 Parent Company 0 0 -15 -16 10 18 441 365 20 5 1,097 964 Note: Revenue figures state the revenue generated outside the Group in the regions. The Parent Company's figures are reported before costs being billed to subsidiaries. Thus, the subsidiaries' figures are reported exclusive of costs billed by the Parent Company. The Group's financials show net expenses of DKK 3.0M compared to net expenses of DKK 2.9M for the same period last year. Corporation tax in profit-making foreign subsidiaries means that the total calculated tax charge for Columbus IT for the period is DKK 2.5M. The result for the period was DKK 6.0M, which is an improvement of DKK 12.6M compared to the same period last year. Regional development Nordic 2007 2006 Revenues - H1 MDKK % MDKK % Hardware 7 4% 7 5% Software 52 32% 49 34% Service 103 64% 86 61% Total 162 100% 142 100% Nordic 2007 2006 Revenues - H1 MDKK % MDKK % Dynamics AX 93 58% 94 66% Dynamics NAV 34 21% 21 15% Other MBS products 23 14% 17 12% Other 12 7% 10 7% Total 162 100% 142 100% H1/2007 revenues for the Nordic region increased by DKK 20.2M, corresponding to a 14% increase compared to the same period last year. The increase is due to a higher level of activity in both the Danish subsidiary where revenues were increased by 9% compared to the same period last year, and in the Norwegian subsidiaries where revenues were increased by 36% compared to the same period last year. The Finnish subsidiary, which was acquired in Q3/2006, contributes with revenues of DKK 4.3M. The Nordic Region accounts for 37% of the Group's revenues. The region's EBITDA is down DKK 4M compared to the same period last year, to DKK 10M for H1/2007. The fall is due to a decline in EBITDA for the Danish subsidiary compared to the same period last year, which was marked by few larger deals. In addition to this the results in the Norwegian subsidiaries are affected by extraordinary costs due to the ongoing merger of the two Norwegian companies. The operating result of the Finnish subsidiary ended in a deficit of DKK 0.2M for H1/2007. Western Europe 2007 2006 Revenues - H1 MDKK % MDKK % Hardware 1 1% 1 1% Software 44 38% 37 38% Service 70 61% 60 61% Total 115 100% 98 100% Western Europe 2007 2006 Revenues - H1 MDKK % MDKK % Dynamics AX 59 51% 60 61% Dynamics NAV 53 46% 35 36% Other MBS products 2 2% 3 3% Other 1 1% 0 0% Total 115 100% 98 100% In Western Europe revenues for H1/2007 amounted to DKK 115M which is an improvement of DKK 17M, corresponding to a 17% increase compared to the same period last year. For H1/2007, the Group's software development company, To-Increase, had revenues of DKK 18M to other Microsoft resellers which is an improvement of DKK 9.1M, corresponding to a 102% increase compared to the same period last year. Likewise revenues in the British subsidiary have grown markedly to DKK 25M for H1/2007, corresponding to a 65% increase compared to the same period last year. The region accounted for 26% of the Group's revenues. EBITDA for the region rose DKK 4M compared to the same period last year, to DKK 12M for H1/2007. The EBITDA of To-Increase grew by 90% from DKK 4.1M in H1/2006 to DKK 7.8M in H1/2007. The Groups Dutch consulting unit has had a poor start in 2007, and the company's revenues have decreased by DKK 5.7M, while the company's EBITDA has decreased by DKK 2.4M compared to the same period last year. The growth in the British subsidiary has lead to a growth in EBITDA of 103% compared to the last period last year, to DKK 4.2M for H1/2007. Eastern Europe 2007 2006 Revenues - H1 MDKK % MDKK % Hardware 2 3% 0 0% Software 31 39% 20 33% Service 46 58% 41 67% Total 79 100% 61 100% Eastern Europe 2007 2006 Revenues - H1 MDKK % MDKK % Dynamics AX 53 67% 48 79% Dynamics NAV 5 6% 3 5% Other MBS products 2 3% 2 3% Other 19 24% 8 13% Total 79 100% 61 100% Revenues in Eastern Europe amounted to DKK 79M for H1/2007 which is an improvement of DKK 18M or 30% compared to the same period last year. Revenues of the Russian subsidiary increased from DKK 33.7M for H1/2006 to DKK 44.5M in H1/2007, corresponding to an increase of 32%. The Estonian subsidiary had a growth in revenues of 28% compared to the same period last year, and had revenues of DKK 11.3M in H1/2007. Revenues of the Lithuanian subsidiary decreased by DKK 1M compared to the same period last year, corresponding to a decline of 11%. Revenues of the Polish company on the contrary increased from DKK 3.1M in H1/2006 to DKK 8.7M in H1/2007. 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 18% of the Group's revenues. The region's EBITDA increased by DKK 7M compared to the same period last year to DKK 6M in H1/2007. 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 4.8M in H1/2007. The Polish subsidiary is after a loss-making Q1 once again profitable but delivers in total an EBITDA of DKK -0.2M in H1/2007. Rest of the world 2007 2006 Revenues - H1 MDKK % MDKK % Hardware 0 0% 0 0% Software 36 42% 25 39% Service 49 58% 39 61% Total 85 100% 64 100% Rest of the world 2007 2006 Revenues - H1 MDKK % MDKK % Dynamics AX 54 63% 47 74% Dynamics NAV 21 25% 13 20% Other MBS products 0 0% 0 0% Other 10 12% 4 6% Total 85 100% 64 100% In the Rest of the World region in H1/2007, total revenues amounted to DKK 85M, which is an improvement of DKK 21M corresponding to a 33% increase compared to the same period last year. In H1/2007, revenues in the two American subsidiaries grew from DKK 56.2 in H1/2006 to DKK 68.7M in H1/2007 corresponding to an increase of 22%. The Mexican and the Brazilian subsidiaries, which were acquired in Q2 and Q3/2006 respectively contributes in H1/2007 with revenues of DKK 6.2M. The region accounted for 19% of the Group's revenues. EBITDA in the region amounted to DKK 9M, which is an increase of DKK 7M 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 9M in H1/2007. The subsidiaries in Colombia, Chile and Costa Rica delivered a combined EBITDA of DKK 0.9M corresponding to an increase of 75% compared to the same period last year. The acquired Mexican and Brazilian subsidiaries, which both are in a set-up phase, delivered a combined EBITDA of DKK -0.9M in H1/2007. EBITDA of the Parent Company amounted to DKK -15M in H1/2007 before billing subsidiaries for costs, which is an improvement of DKK 1M compared to the same period last year. Directed rights issues In January 2007, Columbus IT issued shares in Columbus IT Partner A/S, to settle the outstanding purchase 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 release no. 9 of May 18, 2007. Accordingly, a total of 1,320,465 shares were issued in H1/2007, 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 Notice and Copenhagen Stock Exchange requirements for interim reporting Investments Total investments in tangible and intangible assets (except for goodwill) in H1/2007 totalled DKK 12.4M compared to 13.0M for the same period in 2006. DKK 6.7M was attributable to investments in development projects, while the remaining DKK 5.7M was attributable to the acquisition of tangible assets. Liquidity status Columbus IT held cash funds of DKK 48M 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) H1/2007 2006 Equity January 1, 2007 201.1 147.3 Forex adjustments for foreign subsidiaries, etc. -0.4 -3.8 Earnings for the period 6.0 21.2 Warrant scheme exercised 0.0 0.5 Capital increases 10.8 35.9 Group shareholders' equity as of June 30 and December 31 217.5 201.1 Minority interests' equity as of June 30 and December 31 10.0 10.9 Total equity as of June 30 and December 31 227.5 212.0 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, developments in trading conditions and the financial markets, and the fiscal impact of unforeseen events: changes in Danish regulations 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 Interim Report for the period January 1 - June 30 2007 for the Columbus IT Partner Group. The interim report has been drawn up in accordance with the provisions in International Financial Reporting Standards (IFRS) for recognition and measurement and additional Danish reporting requirements for the presentation of interim reports laid down in the Company Accounts Act, associated statutory instruments and Copenhagen Stock Exchange. We regard the accounting policies applied as appropriate and that the Interim Report gives a true picture of the Group's assets and liabilities, financial position at 30 June 2007, and the results of the Group's activities and cash flow for the period January 1- June 30 2007. Brøndby, August 9 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 - 30/6 2007 1/1 - 30/6 2006 Net revenues 440,888 364,749 External project costs -124,066 -100,835 Gross earnings 316,822 263,914 Other external costs -75,747 -74,254 Staff expenses -220,405 -183,937 Other operating income 0 0 Other operating costs -657 -393 Earnings before depreciation/amortization (EBITDA) 20,013 5,330 Depreciation -8,628 -6,809 Earnings before write down of goodwill (EBITA) 11,385 -1,479 Write down of goodwill 0 -41 Operating profit (EBIT) 11,385 -1,520 Results of associated companies 161 -203 Financial income 2,374 3,020 Financial expenses -5,381 -5,875 Pre-tax earnings 8,539 -4,578 Tax on the result for the period -2,541 -1,983 Result for the period 5,998 -6,561 Allocated thus: Shareholders of Columbus IT Partner A/S 6,794 -7,490 Minority interests -796 929 5,998 -6,561 Balance Sheet DKK 1,000 1/1 - 30/6 2007 1/1- 30/6 2006 Assets Completed development projects 39,527 31,109 Royalties 241 472 Goodwill 157,419 157,295 Development projects in progress 2,195 3,982 Intangible assets 199,382 192,858 Plant and operating equipment 14,377 13,009 Tangible assets 14,377 205,867 Holdings in associated companies 1,506 965 Other receivables 8,953 0 Deferred tax assets 35,265 19,897 Financial assets 45,724 20,862 Total long-term assets 259,483 226,729 Inventories 5,383 6,839 Accounts receivable - sales and services 202,656 159,776 Contract work in progress 31,659 23,854 Receivables from shareholders 0 7,093 Corporation tax 2,290 4,676 Other receivables 19,515 15,250 Accruals 7,778 9,058 Receivables 263,898 219,707 Cash funds 48,031 23,433 Total short-term assets 317,312 248,979 Total assets 576,795 476,708 Balance Sheet DKK 1,000 1/1 - 30/6 2007 1/1- 30/6 2006 Liabilities Share capital 95,580 90,367 Retained profit 121,906 59,672 Parent Company shareholders' equity 217,486 150,039 Minority interests' equity 10,010 11,353 Equity 227,496 161,392 Deferred tax 1,014 1,387 Subordinated loan capital 0 7,500 Credit institutions 1515 1,099 Other debt 1,596 2,091 Long-term debt 4,125 12,077 Subordinated loan capital 0 2,851 Short-term part of long-term debt 2636 532 Credit institutions 98,758 80,399 Debt to affiliated companies 6,210 0 Client prepayments 32,390 20,789 Trade accounts payable 78,882 60,173 Corporation tax 1,512 3,787 Payable purchase sum re: acquired companies 0 23,497 Other debt 118,166 98,225 Accruals 6,620 12,986 Short-term debt 345,174 303,239 Debt 349,299 315,316 Total liabilities 576,795 476,708