At its meeting of June 1, 2021, Wavestone's Supervisory Board approved the consolidated annual accounts as at March 31, 2021, which are summarized below. Auditing of the accounts is complete and the auditors are in the process of issuing their report.
|Consolidated audited data at 3/31 (in €m)||2020/21||2019/20||Change|
|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 |
A strong end-of-year position for 2020/21: decline in annual revenue limited to -1%
At the end of the 2020/21 fiscal year, Wavestone's consolidated revenue stood at €417.6m.
Buoyed by a progressive improvement in business activity in H2, the company recorded a limited decline in annual revenue of -1% (identical decline at constant scope and exchange rates). This trend demonstrates the firm's solid outperformance of the market, in a consulting sector where revenue fell by about 13% worldwide over 2020 (source: Source Global Research), and by 11% in France (source: Syntec Conseil).
Recruitment plan targets exceeded: 3,453 employees at the end of March 2021
Wavestone achieved about 450 gross hires over the 2020/21 fiscal year, exceeding the target of 400 hires set at the point where it resumed recruitment activity in September 2020.
With staff turnover reducing to 11% over the fiscal year (compared with 14% a year earlier), the contraction in Wavestone's workforce was limited to -1% over the 12-month period.
At March 31, 2021, Wavestone had 3,453 employees, compared with 3,498 a year earlier.
A marked increase in consultant utilization rate over the year, but sales prices eroded
As a result of good levels of order intake in H2, the consultant utilization rate was 71% for the whole of the 2020/21 fiscal year – an identical level to 2019/20. It reached 75% over H2, rising from 65% at the end of H1 2020/21.
The average daily rate stood at €842 in 2020/21; down -4% compared with the average price of €878 recorded in 2019/20. This decline is in line with the -3% to -5% range forecast at the start of the fiscal year.
The firm's order book stood at 4.1 months of work at March 31, 2021, compared with 3.7 months at the end of September 2020, and 3.5 months at the end of March 2020.
A resilient EBIT margin of 12.8%
EBIT amounted to €53.3m in 2020/21, a reduction of -4% compared with the 2019/20 fiscal year.
As a reminder, this EBIT figure includes a provision of -€3.2m, reflecting the decision by Wavestone's Management Board to submit, for shareholder approval, at the Annual General Meeting of July 27, 2021, the reimbursement of monies received under furlough arrangements during the 2020/21 fiscal year.
The performance plan initiated at the beginning of the fiscal year, aimed at reducing the firm's cost base in challenging business conditions, resulted in savings of €19.5m in 2020/21 – exceeding the €15m initially targeted.
EBIT margin was 12.8% for the fiscal year, compared with 13.2% in 2019/20. The objective of delivering a double-digit EBIT margin has therefore been solidly achieved.
To reflect the effects of the [email protected] project, €8.3m of provisions and depreciation were accounted for under other operating income and expenses. As a reminder, [email protected] aims to reinvent the organization of work within the company, and will result in a reduction of about 40% in the footprint of Wavestone's Paris office (1). For information, only €5.3m of the €8.3m figure relates to future disbursements.
After taking into account these provisions and depreciation, other non-current charges (mostly comprising the €0.2m related to the acquisition of Everest Group's consulting practice in the US in May 2021), and the depreciation of client relationships (€1.5m), operating income stood at €43.3m in 2020/21, down by -19% compared with 2019/20.
The cost of net financial debt was halved to €1.1m in 2020/21, following the establishment of the new financing contract in March 2020 and deleveraging.
Other financial incomes and expenses amounted to €1.5m and include forex effects and costs related to hedging instruments.
After taking into account the tax charge, the group share of net income was €25.4m: a decrease of -19%, an identical level to the decline in operating income. Net margin stood at 6.1% in 2020/21, compared with 7.4% a year earlier.
Record cash flow from business activities in 2020/21: €70.8m
In 2020/21, Wavestone generated a record operating cash flow of €70.8m, up 28% compared with the previous fiscal year – a result of the rigorous optimization of working capital requirements.
With no external growth activity during the year, and due to the prudent approach taken throughout the period, investment operations consumed only €0.8m over the fiscal year.
Financing flows amounted to €47.2m, which includes €38.3m in net loan repayments, and €7.8m in lease liability repayments (under IFRS 16).
Net cash position of €31.8m at March 31, 2021
At March 31, 2021, Wavestone's equity had increased to €206.1m.
Driven by cash flow generation, the net cash (2) position amounted to €31.8m at the end of the 2020/21 fiscal year, against a net financial debt (2) of €29.1m at the end of March 2020.
As a reminder, the firm has not taken a French-government-provided loan (PGE) and has not refinanced its trade receivables.
|Consolidated audited data at 3/31 (in €m)||3/31/2021||3/31/2020||Consolidated audited data at 3/31 (in €m)||3/31/2021||3/31/2020|
|Non-current assets||212.6||232.8||Shareholders' equity||206.1||177.1|
|of which goodwill||162.0||166.5|
|including rights to use leased assets||21.0||30.6||Financial liabilities |
of which less than one year
|Current assets||145.8||151.7||Lease liabilities||30.3||37.7|
|of which trade receivables||125.7||128.4|
|Cash and cash equivalents||88.0||65.1||Non-financial liabilities||154.0||140.5|
At the Shareholders' Annual General Meeting of July 27, 2021, the Management Board and Supervisory Board will propose the payment of a dividend of €0.23 per share for the 2020/21 fiscal year; this is identical to the dividend paid in 2019 for the 2018/19 fiscal year, prior to suspending the dividend payment in 2020 as a result of the Covid-19 crisis. Exceptionally, this dividend represents a payout ratio of 18%, compared with the usual policy of paying a dividend of 15% of the group share of net income.
A strong start to the 2021/22 fiscal year, maintaining of a bullish stance
The strong momentum built at the end of the 2020/21 continued over the first two months of the new 2021/22 fiscal year.
Wavestone confirms the continuation of its more bullish approach in the new fiscal year, with the return to growth a priority.
Given this, recruitment and staff turnover have again become key areas of focus for the firm. Wavestone plans to recruit 800 new employees in 2021/22 (compared with 450 gross hires in 2020/21 and 900 in 2019/20). The company anticipates a rise in staff turnover rate, after the low reached in 2020/21, but aims to limit this to about 15% over the whole of the fiscal year.
On sales prices, pressure remains high. After the decline recorded in 2020/21 (-4%), Wavestone has set an objective of stabilizing average daily rates over 2021/22, compared with the last fiscal year.
In addition, consultant utilization rate is expected to remain robust. The firm's goal is to maintain a rate close to that of H2 2020/21 (75%) for the whole of the new fiscal year.
2021/22 financial objectives
At the end of April 2021, Wavestone gave some initial indications of its objectives for the 2021/22 fiscal year: revenue of about €450m and an EBIT margin close to 13%, including the re-emergence of growth-related expenses which will be partially offset by savings from [email protected]
After acquiring the consulting practice of Everest Group in the US, which has been integrated into Wavestone's consolidated financial statements since May 1, 2021, the firm has increased its revenue objective to €460m.
The profitability objective remains to generate an EBIT margin of about 13%.
These objectives are calculated on a constant forex basis and exclude new acquisitions.
After the completion of this initial operation in the United States, Wavestone aims to continue its policy of targeted acquisitions throughout the fiscal year; acquisitions in the US will remain the priority, but this does not rule out tactical acquisitions in France.
Next events: Q1 2021/22 revenue, Monday, July 26, 2021, after Euronext market closing; and the Shareholders' Annual General Meeting, Tuesday, July 27, 2021, at 9:00am.
In a world where knowing how to drive transformation is the key to success, Wavestone's mission is to inform and guide large companies and organizations in their most critical transformations, with the ambition of a positive outcome for all stakeholders. That's what we call "The Positive Way.”
Wavestone draws on over 3,000 employees across 8 countries. It is a leading independent player in European consulting.
Wavestone is listed on Euronext, Paris.
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(1) Read the press release of April 27, 2021
(2) Excluding lease liabilities
Appendix 1: Consolidated income statement at 3/31/2021
|In €k – Audited data – IFRS standards||3/31/2021||3/31/2020|
|Levies and taxes||7,241||6,313|
|Net allocation for depreciation and provisions||9,720||10,373|
|Other current income and expenses||-450||73|
|Amortization of client relationships||1,493||1,553|
|Other operating income and expenses||-8,519||-627|
|Cost of gross financial debt||1,144||2,185|
|Cost of net financial debt||1,138||2,177|
|Other financial income and expenses||-1,451||-1,242|
|Income tax expenses||15,297||18,961|
|Group share of net income||25,377||31,140|
|Group share of net income per share (€) (1)||1.27||1.57|
|Group share of diluted net income per share (€)||1.27||1.57|
(1) Number of shares weighted over the period.
Appendix 2: Consolidated balance sheet at 3/31/2021
|In €k – Audited data – IFRS standards||3/31/2021||3/31/2020|
|Rights to use leased assets (1)||20,959||30,613|
|Financial assets – more than one year||2,091||1,986|
|Other non-current assets||12,789||11,535|
|Trade and related receivables||125,710||128,408|
|Cash and cash equivalents||88,009||65,131|
|Issue and merger premiums; additional paid-in capital||11,218||11,218|
|Consolidated reserves and earnings||193,944||166,655|
|Total shareholders' equity, group share||206,063||177,142|
|Financial liabilities - more than one year||48,013||56,076|
|Lease liabilities – more than one year (1)||22,260||29,616|
|Other non-current liabilities||184||959|
|Financial liabilities - less than one year||8,152||38,179|
|Lease liabilities – less than one year (1)||8,025||8,041|
|Tax and social security liabilities||98,305||80,417|
|Other current financial liabilities||20,029||21,864|
(1) A line created as a result of implementing IFRS 16
Appendix 3: Estimated consolidated cash flow statement at 3/31/2021
|In €k – Audited data – IFRS standards||3/31/2021||Restated (3) |
|Consolidated net income||25,377||31,140||31,140|
|Elimination of non-cash elements:|
|Net depreciation and provisions (1)||20,680||13,204||16,837|
|Charges/(income) related to share-based payments||2,300||3,470||-|
|Losses/gains on disposals, net of tax||12||129||-34|
|Other calculated income and expenses||1,895||-1,210||-188|
|Cost of net financial debt (inc. interest on lease liabilities)||1,470||2,565||1,616|
|Tax charges / (income)||15,297||18,961||-|
|Self-financing capacity before net financial debt and tax costs||67,030||68,260||49,371|
|Change in WCR||20,828||6,205||5,927|
|Net cash flow from operations||70,820||55,298||55,298|
|Intangible and tangible fixed asset acquisitions||-748||-3,062||-3,062|
|Change in financial assets||-114||61||61|
|Impact of changes in scope||0||-26,615||-26,615|
|Net cash flow from investments||-849||-29,530||-29,530|
|Sales (acquisitions) by the company of its own shares (2)||137||-3,522||-3,522|
|Dividends paid to parent-company shareholders||0||-4,572||-4,572|
|Dividends paid to minority interests of consolidated companies||0||0||0|
|Repayment of loans||-38,320||-111,767||-111,767|
|Repayments of lease liabilities||-7,802||-6,720||-6,720|
|Net financial interest paid||-878||-2,487||-2,487|
|Net interest paid on lease liabilities||-336||-321||-321|
|Other flows related to financing operations||27||0||0|
|Net cash flow from financing operations||-47,173||-11,168||-11,168|
|Net change in cash and cash equivalents|| ||14,599||14,599|
|Impact of translation differences||137||-123||-123|
|Opening cash position||65,068||50,592||50,592|
|Closing cash position||88,003||65,068||65,068|
(1) Including €6,491k for the amortization of property usage rights (IFRS 16) at 3/31/2021 and €6,346k, for the same, at 3/31/2020.
(2) For information, the company has delivered treasury shares to a value of €2,518k.
(3) To show tax paid directly in the change in cash and cash equivalents, in accordance with IFRS presentation standards, the table now shows self-financing capacity before the cost of financial debt and tax, and then the tax paid. See the consolidated financial statements for more details on the various presentational changes made to the items included in cash flow generated by business activity.