Successful execution of the Columbus2020 strategy with a revenue of DKK 1.2bn, a growth of 2%. EBITDA increased by 3% to DKK 149m, and result after tax increased by 18% to DKK 96m. Release no. 4/2018 Columbus A/S has today published the Annual Report 2017, cf. release no. 3/2018. In 2017 Columbus delivered a revenue of DKK 1.2bn, and EBITDA* amounted to DKK 149m, corresponding to an increase of 2% and 3%, respectively, compared to 2016. The result after tax increased by 18% to DKK 96m. The revenue growth was primarily driven by the emerging cloud business, growth in the services business and acquisitions made in 2016 and 2017. The increase in EBITDA* was primarily due to growth in profitability in the services business, which increased by 19%, but was negatively affected by the development in Columbus’ business in the US. Based on the result for the year and cash flow, the Board of Directors proposes that the General Meeting adopts a dividend payment of 10% of the nominal share capital. Management initiatives in 2017 -- Execution of the Columbus2020 strategy -- Execute cloud transition plan -- Acquisitions: -- Tridea Partners -- Offer to buy iStone AB -- Recovery initiatives for Columbus US Succesful execution of Columbus2020 Columbus continued the execution of Columbus2020 as planned. In 2017 Columbus focused particularly on improving customer success and customer loyalty, and during the year the number of loyal customers increased considerably. In 2017, Columbus launched a range of new services within Application Management and Infrastructure Management, which means that Columbus is now able to support the customers’ entire applications and IT infrastructure. Cloud market leaders During 2017, Columbus converted the Company’s software portfolio into cloud-based solutions and developed new services to support the customers running their applications in the cloud. Today, Columbus is among the market leaders in implementing business application projects in the cloud. Acquisition of iStone On 30 November, Columbus announced an offer to acquire the Swedish IT services company iStone with 600 employees. The acquisition was completed 2 January 2018. The acquisition will grow Columbus’ revenue by approx. 50% and position Columbus as market leader within digital transformation in the Nordic region as well as increase global reach significantly. Challenges in Columbus US During first half of 2017, Columbus’ business in the US faced market challenges that led to declining sales. The challenge with the US market has continued through Q4 and we experienced sales execution below expectations and unexpected losses on customer engagements of DKK 4m. Overall the challenges in the US business had a negative impact on revenue of approximately DKK 70 million and a negative impact on EBITDA of approximately DKK 31m. During 2017, the US business has adjusted the cost level in order to compensate for the reduced revenue. Financial statements for 2017 The revenue increased by 2% to DKK 1.2bn in 2017. In local currency revenue increased by 3%. EBITDA2 increased by 3% to DKK 149m. Revenue is in the lower end of the announced expectations. The revenue from Columbus’ services business increased by 3% to DKK 823m. Service EBITDA increased by 19% to DKK 109m which is in the lower end of the announced expectations. The revenue from Columbus Software decreased by 9% to DKK 83m (2016: 91m). The decrease is due to the cloud conversion, as license sales decreased by 37%. However, sale of subscriptions increased by 7% and own cloud revenue increased by 216% to DKK 6.2m. This development is in line with expectations. Recurring revenue increased from 25% of total revenue to 28%. The increase is primarily due to an increase in sale of Columbus Care which grew by 43% and growth in the sale of cloud based solutions. The development is in line with the announced expectations. EBITDA after share-based payment increased by 6% to DKK 146m compared to 2016 (DKK 139m). Profit after tax increased by 18% to DKK 96m (2016 DKK 82m) and is considered satisfactory. Expectations for 2018 2018 will be focused on growing the business organically with retained profitability while ensuring a successful integration of iStone and other acquisitions. Management will also have high focus on getting the US business back on track. Specific targets for 2018: -- Revenue in the level of DKK 2bn -- EBITDA* in the level of DKK 200m -- Columbus Software in the level of DKK 90m -- 10% dividend on nominal share capital Expected integration and restructuring costs of DKK 10-15m in relation to the integration of iStone and HiGH Software are included in the expectations to EBITDA* for 2018. Columbus increases expectations to acquisition price and contribution from the iStone acquisition At the time of announcement of the iStone acquisition, Columbus expected iStone to deliver revenue in the level of SEK 800m (DKK 600m) and an EBITDA in the level of SEK 41m (DKK 31m) i 2017. Due to a high activity level and a good final sprint, iStone ended the year better than expected. Thus, the preliminary unaudited financial statements for 2017 for iStone show a revenue of SEK 830m (DKK 623m) and an EBITDA of SEK 56m (DKK 42m). At closing on 2 January 2018, the total acquisition price for iStone was expected to amount to between SEK 430m (DKK 323m) and SEK 570m (DKK 428m), of which SEK 230m (DKK 173m) was paid at closing. Based on the preliminary result for 2017 and adjusted expectations for 2018, the total acquisition price is expected to increase to between SEK 514m (DKK 386) and SEK 682m (DKK 512m). The increased acquisition price will be paid over the next three years and is expected to be financed by liquidity from operations. As a consequence of the final sprint and subsequent momentum, iStone is expected to deliver revenue in the level of SEK 840m (DKK 630m) and an EBITDA in the level of SEK 60m (DKK in 45m) in 2018. Updated long-term guidance Columbus has updated the long-term guidance for the next three years. With the acquisition of iStone and HiGH Software Columbus has taken a large step in reaching the financial goals for 2020. With the acquisition of iStone the Company’s focus will be to grow the business organically. The ambition is to grow the business at a compounded average growth rate of 3-5% each year. If Columbus makes any acquisitions during the period, expectations will be adjusted accordingly. In 2017 Columbus realized an EBITDA margin of 12%. With the acquisition of iStone, the EBITDA margin for 2018 is expected to be in the level of 10%. Columbus maintains long-term guidance of 11% EBITDA margin towards 2020. ”We are satisfied with the result for 2017 where we grew our business while developing and selling a range of new cloud-based solutions helping our customers in the digital transformation. The result has shown that Columbus can deliver on our vision about growth and innovation in a rapidly changing market”, says CEO & President in Columbus, Thomas Honoré. Investor presentation Columbus’ Executive Board will present the results for 2017 at a conference call today at 13:00CET. Please use the following dial-in numbers: Denmark: +45 35 15 81 21 UK/international: +44 (0) 330 336 9411 US: +1 323 994 2083 Conference ID 1227866 It is also possible to follow the online webcast via this link: edge.media-server.com/m6/p/u6fejqs3 A recorded version of the presentation will be available on the website after the webcast has concluded: www.columbusglobal.com. Ib Kunře Thomas Honoré Chairman CEO & President Columbus A/S 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. Columbus’ Columbus2020 strategy – towards growth Based on Columbus’ strengthened position, as a result of successful execution of the Columbus15 strategy, the company launched a growth strategy in March. The strategy is named Columbus2020 and consists of four interconnected strategic elements. Customer Success – Taking care of our customers for life Columbus’ fundamental goal their ERP investments and satisfaction from the is to take care of our by leading them in the customer meet Columbus customers for life. digital transformation of for the first time to Columbus aims to be their business delivering unique widely recognized as a This means that Columbus solutions, high quality strategic business will intensify the focus services and partner that enhances our on creating a unique streamlined project customer’s success by customer experience and delivery and support improving the value increase customer 24/7. realization of -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Digital Leadership – Accelerate business innovation Columbus helps our methodologies and business business in order to customers in the digital processes that optimizes succeed in the digital transformation of their and improves the economy. Columbus will business. With Digital implementation of develop solutions and Leadership Columbus has ERP-solutions. Secondly, services within cloud, two focus areas. Firstly, Columbus will establish a mobile, social, Columbus will continue to leadership position analytics and Internet strengthen our leadership within Digital of Things that help position within ERP by Transformation. Many companies take investing in new companies are about to or advantage of the companies, applications, in the process of digital opportunities. transforming their -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Process Excellence – Quality in everything we do In Columbus, we constantly quality to our customers. over sales and design of strive to optimize and Our goal is to create the the business solution streamline our business best customer experience to the implementation operations in order to in the industry. The process and lifetime achieve strong sales focal point is quality in support. This means an excellence and deliver everything we do – from intense focus on projects, services and the initial contact with optimizing and support of high customers, streamlining our processes globally. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Our People – Attract, develop and retain the best people Columbus’ greatest asset providing challenging meeting the customers’ is our employees and career opportunities, expectations sets the therefore it is crucial attractive working direction in everything that we attract and conditions and we do. retain the best people in professional and personal This means that Columbus the industry. We want to growth. Columbus want to always strives to attract highly skilled create a customer deliver projects on people by culture, where time, within budget and at the highest quality.