At its meeting of December 3, 2018, Wavestone's Supervisory Board approved the consolidated half-yearly accounts, at September 30, 2018, which are summarized below. These accounts have been subject to a limited review by the auditors.
|Consolidated data |
at 09/30 (€m), limited review
|+21% ||50.6 |
|Amortization of client relationships |
Other operating income and expenses
|Cost of financial debt |
Other financial income and expenses
Income tax expenses
|Group share of net income |
|+33% ||26.6 |
Half-yearly growth in line with the firm's roadmap despite a mixed second quarter
In H1 2018/19, Wavestone generated a consolidated revenue of €182.6m, an increase of +10%, +7% on a constant forex basis. To note: H1 benefited from a positive day impact of +0.6%.
The firm's growth over the six-month period is in line with its roadmap, despite a contrast between the two quarters resulting from a decline in consultant utilization rate in Q2. This decline was due to a slowdown in some projects during the summer and insufficient levels of new projects in September. At the end of September, the utilization rate stood at 76%, compared with 77% over the whole of the previous fiscal year.
The average daily rate reached €868 over the period, an increase of +2.4% at the mid-year point compared with 2017/18, and higher than the firm's forecast of +1% to +2% for the whole of the 2018/19 fiscal year.
At September 30, 2018, the firm's order book stood at 3.3 months of work, compared with 3.7 months at the end of the 2017/18 fiscal year.
Staff turnover remains a major concern, but recruitment is being accelerated
H1 was marked by significant concern about staff turnover. At the end of September, the turnover rate stood at 21%, on a full year basis, compared with 16% for the whole of the 2017/18 fiscal year. Wavestone is continuing to intensify the human-resource-related actions it is taking to address this issue.
The outworking of these has seen the firm continue to hire new employees at a steady rate. Despite a highly competitive labor market, Wavestone will be stepping up recruitment activity in H2 and is confident of exceeding its target of 600 gross hires throughout the year.
At September 30, 2018, Wavestone had 2,851 employees, compared with 2,793 at March 31, 2018 (including additional employees from the integration of Xceed).
Half-yearly EBIT margin up, at 10.9%
Driven by an increase in sales prices and a positive working day impact, the EBIT margin increased to 10.9%, compared with 9.9% a year earlier. As a result, H1 EBIT increased by +21% compared with last year—to €19.9 million.
After accounting for €1.3m in amortization of customer relationships, and with other operating income and expenses very limited (-€0.2m over the half-year), operating income stood at €18.5m, an increase of +22% year-on-year.
The cost of financial debt fell slightly to €0.8m. Other financial income and expenses benefited from foreign exchange gains and stood at €0.4 million.
At the end of H1 2018/19, group share of net income rose by 33% to €10.6m, compared with €8.0m in the previous year. Net margin for H1 stands at 5.8%, compared with 4.8% a year earlier.
Well-controlled levels of financial debt
During H1 2018/19, Wavestone generated a gross cash flow margin of €15.9m, up +41%, year-on-year.
Investment operations amounted to €20.8m and included the acquisition of the UK consulting firm Xceed for €12.5m and share buybacks totaling €4.8m.
At September 30, 2018, net financial debt stood at €61.7m, compared with €76.4m a year earlier, and €34.6m at the end of March 2018. Removing the effects of the Xceed acquisition, the change in H1 net financial debt is in line with the typical seasonal pattern experienced by the firm.
|Consolidated data |
|09/30/2018||03/31/2018||Consolidated data |
|Non-current assets |
of which goodwill
|Current assets |
of which trade receivables
|Cash and cash equivalents||31.0||52.1||Financial liabilities |
of which less than one year
A focus on execution in H2
Although order taking in October and November was in line with Wavestone's roadmap, disappointing levels of activity in the previous months, and greater economic uncertainty, mean the firm is monitoring this area even more closely.
Against such a backdrop, Wavestone is placing particular emphasis on the quality of execution of its activities—both in terms of human resources and raising the consultant utilization rate.
The acquisition of Metis Consulting, consolidated from November 1, 2018
In mid-November, Wavestone announced the acquisition of the French consulting firm Metis Consulting, a supply chain specialist, with the ambition of positioning itself as a leader in this field.
More broadly, the firm will continue to develop in line with the ambitions set out in its roadmap, in particular key market transformations: the bank of the future, energy transition, autonomous vehicles and new forms of mobility, and public sector modernization.
Confirmation of the 2018/19 objectives
At the end of H1, Wavestone is in a position to confirm its 2018/19 annual objectives: revenue growth of over 8%, with an EBIT margin above 13%, including the figures for Xceed's acquisition and excluding those for Metis Consulting. These objectives are calculated on a constant forex basis and exclude new acquisitions.
Next event: Q3 2018/19 revenue: Tuesday, January 29, 2019, after Euronext market closing.
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