2016/17 interim results: operating income on ordinary activities up +68%

  • November 29, 2016Regulated information

On November 28th, 2016, Wavestone's Supervisory Board met to approve the Group's 2016/17 interim financial statements for the six-month period ended September 30th, 2016, the details of which are summarized below. The Statutory Auditors have performed a limited review of the Group's interim financial statements.

Audited consolidated data (a)
at 09/30 (€m) – Limited review
% change   H1
pro forma (b)
Revenues 162.0 91.4 +77%   151.6
Operating income on ordinary activities
Ebit margin
Other operating income and expenses
Operating profit
Cost of net financial debt
Other financial income and expenses
Income tax expenses
Group share of net income
Net margin

a) Arthus Tech consolidated since 07/01/15 and the European activities of Kurt Salmon* since 01/01/16.

b) Pro-forma H1 2015/16 financial information based on 12-month consolidation of the European activities of Kurt Salmon as if the acquisition had taken place on 04/01/15.


At end-September 2016, Wavestone reported a 77% growth in consolidated 2016/17 interim revenues to €162.0m, of which €58.2m from the European activities of Kurt Salmon. On a like-for-like and constant forex basis, consolidated growth came out at 16% over the six-month period.

Wavestone's staff totaled 2,500 employees at end-September 2016 (including 738 staff members attached to the European activities of Kurt Salmon1), compared with 2,511, six months earlier.

The Group maintained its strong recruitment drive over the period. The staff turnover rate for the Kurt Salmon European activities1 rose to a high 27% year-on-year compared to an historical level of 20%. The rate for the rest of the scope remained at a low 12% over the year.


Favorable operating indicators despite deterioration in utilization rate of Kurt Salmon European activities1

Over the first six months of the 2016/17 fiscal year, the utilization rate of Kurt Salmon's European activities1 was at 68%, versus a 70-75% annual target, due to inadequate performances during the summer. For the rest of Wavestone, the consultant utilization rate over the period came out at the high level of 84%.

Pricing trends remained favorable in the first half-year with the average daily rate of Kurt Salmon's European activities coming out at a solid €1,080. For the rest of Wavestone, average prices rose to €763, up 2.5% on FY 2015/16.

Excluding the European activities of Kurt Salmon1, the order book remained stable at 3.4 months over the first half.

For the record, at this stage, the Company is unable to communicate any information on its consolidated indicators, since the data of Solucom and Kurt Salmon1 are not comparable due to differences in their management regulations.


Interim net income up 47%

On the back of favorable operating indicators, the company posted a 68% increase in operating income on ordinary activities to €15.8m and a solid EBIT margin of 9.8% vs. the H1 2015/16 level of 10.3% (8.8% pro forma). For Wavestone excluding Kurt Salmon the EBIT margin is at 13.1%.

Over the period, Wavestone booked other operating expenses of €0.6m, including reorganization costs incurred on the physical merging of the company's teams, outstanding acquisition-related costs and skills-sponsorship costs. Factoring in these elements, operating income came out at €15.2m, up 67%, year-on-year.

The cost of financial debt increased over the period due to the banking facility contracted by the company to finance the acquisition of Kurt Salmon's European activities1. Other financial expenses include Wavestone's final earn-out commitment on the Hudson & Yorke acquisition, which was paid as a result of the good performance of UK activities in the first half-year.

In addition, group share of net income increased 47% over the six-month period to €7.7m making for a net margin of 4.7%.


Financial situation still sound despite increase in WCR in H1

Wavestone's balance sheet remained solid at the interim stage with shareholders' equity at €90.3m.

As every year, cash levels dipped in the first half. Working capital requirement rose as a result of sustained growth in activity, a slight increase in DSO levels and a reduction in social security debt. At the same time, the firm pursued investments: €4.7m over the period, the bulk of which in costs related to office remodeling required for the physical merging of the firms' teams.

In addition, the firm distributed a total dividend payout of €2.0m for the fiscal year ended 03/31/2016.

At the end of September, the company had free cash of €25.4m for financial debt of €99.2m.

Consolidated data
(M€) – Limited review
09/30/2016 03/31/2016   Consolidated data
(M€) – Limited review
09/30/2016 03/31/2016
Non-current assets
o/w goodwill
  Shareholders' equity 90.3 85.0
Current assets
o/w trade receivables
  Non-financial liabilities 127.1 128.2
Cash and cash equivalents 25.4 39.8   Financial liabilities
o/w less than 1 year
Total 316.6 311.8   Total 316.6 311.8


Construction of Wavestone on the right track

Regarding the construction of the new firm, several major steps were achieved in the first half with the launch of the new brand, the definition of the value offering and the finalization of the physical merger of the firms' teams.

The new operating model was adopted rapidly and has already produced several concrete results: multiple collaborations between the teams, favorable response of clients to the new firm's value proposition, and successful synergy generation reflected by major projects.

Several challenges still need to be addressed in the second half, notably improving the performances of the European activities1 of Kurt Salmon and stabilizing its consultant turnover rate.

The second semester 2016/17 will also be used to establish and promote the new brand, to deploy the Human Resources model, to implement Wavestone's new ERP model and to finalize the organization of the firm's operating teams.


Wavestone 2021, 4 strategic objectives for 2021

A few months after its creation, Wavestone has set some ambitious strategic goals for the years ahead.

The challenge will be to position Wavestone as a key player in the consulting market, a company with a strong international profile which combines operating performance and social responsibility and which provides support to help its clients carry out their most strategic transformations.

These ambitions reflect the potential of the newly-created firm. To meet this challenge, the company has defined four objectives to achieve by 2021:

  • Make Wavestone the leading consulting brand in France in the digital transformation field;
  • Generate annual revenues of €500m for an EBIT margin of 15%;
  • Boost international sales to €100m;
  • Ensure that every year between now and 2021 Wavestone is ranked within the top 3 of its category in terms of CSR


2016/17 financial objectives confirmed

As concerns fiscal 2016/17, even if the subdued performances of Kurt Salmon European activities1 could affect the group's results, Wavestone confirms its 2016/17 full-year objectives: a growth of over 45% in consolidated revenues to over €340m and an operating income on ordinary activities of more than €34m (implying a double-digit EBIT).


Upcoming events: Publication of Q3 2016/17 revenues: Tuesday, January, 31st 2017, after Euronext market close.


About Wavestone

In a world where permanent evolution is the key to success, Wavestone's mission is to enlighten and partner business leaders in their most critical decisions.

Wavestone draws on some 2,500 employees across four continents. It is a leading player in European independent consulting, and the number one in France.

Created from the merger, at the beginning of 2016, of Solucom and Kurt Salmon's European activities (excluding Retail & Consumer Goods consulting), Wavestone is a company listed on Euronext Paris and eligible for the PEA-PME – a French investment instrument that encourages individuals to invest in smaller and intermediate firms. In 2016, Wavestone has been labeled Great Place To Work®.

Chief Executive Officer
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Financial news
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1 excluding retail & consumer goods consulting activities

2 Gaïa-Index ranking

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Regulated information

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