Columbus and the one-off that comes every autumn

15 November 2023. Columbus, a Danish IT company based in Ballerup, launches a three-year strategy and names it New Heights, which is what you call a plan before anyone has looked down. This column is about one word, “adjusted”: the profit a company shows you after taking out the costs it calls one-off, and by the end you will spot it before the room does.

The target was written down: “an EBITDA margin of 15% by the end of 2026”. In plain words, fifteen kroner of profit kept from every hundred sold.

Keep that number. Fifteen.

This morning, coffee going cold, I counted what is left of it. On 22 October the company cut its forecast for this year to a margin of about six per cent. On Thursday it unveils a new strategy.

How does a fifteen become a six? Hold on.

Columbus sells Microsoft Dynamics work: consultants who install the software that runs a company’s orders, stock and accounts.

The first sign came a year ago, under “Outlook for 2025” in the third-quarter report: the goals of New Heights “will be revisited”. Page 10. Nobody got that far.

In January the company said it out loud: the fifteen would not arrive by the end of 2026.

The ambition, it said, would “remain unchanged”; only “the timing of the ambitions is being reviewed”. The wedding is still on. The date, the venue and the guests are under review.

In March the annual report made a smaller promise: “In 2026, we expect to return to growth and to continue improving earnings driven by enhanced efficiency”, with a margin of eight to ten per cent.

Seven months later, the numbers arrived.

A company reports its profit, then shows a second, “adjusted” profit with certain costs taken out, usually ones it calls one-off, such as paying people to leave. The adjusted number shows the business on a good day; the reported number shows what the year actually cost. When the one-off costs turn up every year, they are not one-off: they are the business.

In the third quarter, Columbus reported a margin of less than five per cent.

Adjusted, it was more than ten, above even the March promise. It is remarkable what a company can achieve once you take out the year.

The difference was DKK 20mn ($3mn) of severance to fit what the company calls “AI-driven delivery models”.

A year earlier, in the same quarter, Columbus booked DKK 11mn ($1.6mn) for redundancies and spoke of “a stronger and more agile organisation”. Once is a one-off. Twice, in the same quarter, is a calendar entry.

Nobody is accused of anything. Columbus published every number on time and printed both margins side by side, as it should.

In fairness to the chief executive, Søren Krogh Knudsen, sales growth tripled from the second quarter to the third. The machine may be turning. The promise was built for a taller machine.

This autumn’s cut affects more than 80 people, a year after the last round. They are colleagues, not adjustments.

Three signals for your own company: a target bigger than the plan beneath it; a one-off cost with a birthday; an ambition said to “remain unchanged” after its date has gone.

So the fifteen was moved, then cut by more than half. My verdict: the one-off costs have become part of how Columbus runs, and fifteen was a name for a hope, not a plan.

New Heights promised altitude and delivered a beautifully documented descent. Keep that number, I said; on Thursday we learn whether fifteen is still a target or a souvenir.

I have put 5 November in my diary. Tomorrow: a chief executive who promised a range, and is keeping the only part he promised.

Law No. 9 · Always Read the Footnote, Not Just the Number

Understand Business. Better.
Max Noble