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
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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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