2018/19 EBIT margin resilient at 14.1% – Prudent objectives for 2019/20, but a continued focus on growth

  • May 28, 2019Regulated information

At its meeting of May 27, 2019, Wavestone's Supervisory Board approved the consolidated annual accounts as at March 31, 2019, 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 03/31 (in €m)
2018/19 2017/18 Change
Revenue 391.5 359.9 +9%
EBIT margin
Amortization of client relationships
Other operating income and expenses
Operating income
Cost of financial debt
Other financial income and expenses
Income tax expenses
Group share of net income
Net margin


Revenue totaled €391.5 for 2018/19, an increase of +9%, and equivalent to +5% organic growth

At the end of the fiscal year, Wavestone's consolidated revenue stood at €391.5m, an increase of +9%. Over the course of the year, Wavestone acquired the firms Xceed and Metis Consulting, which have been consolidated since April 1, 2018 and November 1, 2018, respectively.

At constant scope and exchange rates, organic growth reached +5%.


Outperforming the annual recruitment plan and reducing staff turnover in H2

Throughout the year, Wavestone pursued an active recruitment policy, enabling it to achieve about 800 gross hires, compared with the target of at least 600 set at the beginning of the year.

Meanwhile, after the reappearance of pressures on human resources at the start of the year, the staff turnover rate slowed in H2, to stand at 18% over the full 12-month period, compared with 21% (on an annual equivalent basis) over H1. The company confirms its goal of progressively converging on a turnover level of less than 15%.

At March 31, 2019, Wavestone had 3,094 employees, compared with 2,793 on March 31, 2018.


Consultant utilization rate under pressure in 2018/19, while sales prices increased

Consultant utilization rate stood at 75% over the year, compared with 77% in 2017/18. After the downturn experienced in the summer of 2018, consultant utilization rate remained under pressure until the end of the year, despite the company's increased efforts on business development since the fall.

Sales prices rose by +2.8% over the 2018/19 fiscal year, a better result than the company's target range of +1% to +2%. Reflecting this, average daily rates reached €872 over the year, compared with €848 in 2017/18.

At March 31, 2019, the firm's order book stood at 3.6 months of work, compared with 3.7 months at the end of the 2017/18 fiscal year.


Group share of net income rose by +16% in 2018/19

EBIT amounted to €55.2m in 2018/19, up +9% compared with the year before. EBIT margin stood at 14.1%, a level identical to 2017/18. It should be noted that net depreciation and provisions, which stood at €3.5m, are, in large part, due to amortizations totalling €3.7m.

Operating income increased +12% to €52.4m, which includes a reduction in the amortization of customer relationships and other operating income and expenses.

Group share of net income rose by +16%, to €31.0m, compared with €26.6m for the previous year. Net margin stood at 7.9%, compared with 7.4% in 2017/18.


Cash flow higher than the level of acquisitions

Over the 2018/19 fiscal year, Wavestone generated a gross cash flow margin of €43.1m, a year-on-year increase of +27%. After accounting for an increase in working capital requirements of €10.4m, cash flow from operations was €32.6m.

Investment transactions amounted to €23.3m, largely accounted for by the acquisitions of Xceed (in the UK) and Metis Consulting (in France), for €21.6m. Flows related to financing consumed €11.1m, mainly due to share buybacks costing €8.1m and dividend payments of €4.1m.

At March 31, 2019, Wavestone's consolidated equity amounted to €150.8m, for a net financial debt of €38.7m compared with €34.6m at the end of March 2018.

Consolidated audited data
(in €m)
03/31/2019 03/31/2018   Consolidated audited data
(in €m)
03/31/2019 03/31/2018
Non-current assets
of which goodwill
  Shareholders' equity 150.8 130.2
Current assets
of which trade receivables
  Non-financial liabilities 144.0 144.4
Cash and cash equivalents 50.7 52.1   Financial liabilities
of which less than one year
Total 384.2 361.3   Total 384.2 361.3

At its next shareholders' annual general meeting, on July 25, 2019, Wavestone will propose a dividend payment of €0.23 per share for the 2018/19 fiscal year—an increase of +14%.


Business development efforts are being intensified in 2019/20

The outturn of the 2018/19 fiscal year proved disappointing. While an increase in the value of the company's services led to a significant increase in sales prices, it was mirrored by an insufficient rate of order intake, leading to a material reduction in consultant utilization rate.

The economic climate is increasingly uncertain, something that is beginning to affect demand for consulting services. Target clients are showing greater caution and being more judicious, especially in the banking sector.

Given this backdrop, in 2019/20, the firm is intensifying its business development efforts—by increasing the size of its sales force, intensifying prospecting activity, and more precise steering of business development activity. In parallel, Wavestone will further focus efforts on sectors with the highest potential, such as the public sector, transport and energy-utilities. 


A continued focus on growth and confirmation of Wavestone 2021 ambitions

Despite this more fragile business climate, Wavestone is confident in the firm's prospects. The company believes it should maintain a steady pace of recruitment, even though this might put a brake on improvements in consultant utilization rate in the short term. Therefore, Wavestone is again targeting over 600 gross hires in the current fiscal year.

The firm will continue to pursue its external growth strategy and hopes to make one or two acquisitions during the year, primarily prospects linked to international expansion.

For the longer term, Wavestone confirms the ambitions set out in its strategic plan, Wavestone 2021. However, the plan's objectives, in terms of sales growth and levels of international business activity, are becoming increasingly challenging as a result of more lackluster growth in recent months, and valuations that remain high for acquisitions.


2019/20 objectives: revenue growth of at least +5%; EBIT margin of over 13%

Given its performance over the recent months and the current market uncertainty, the company has chosen to set prudent targets for the 2019/20 fiscal year.

As a result, Wavestone expects revenue growth of over +5% for 2019/20 (including a full-year contribution from Metis Consulting), with a corresponding EBIT margin of over 13%.

These objectives are calculated on a constant forex basis and exclude new acquisitions.


Next events: publication of Q1 2019/20 revenue, Wednesday, July 24, 2019, after Euronext market closing; and the shareholders' annual general meeting, Thursday, July 25, 2019, at 9:00am at the Pavillon Gabriel (5 Avenue Gabriel, 75008 Paris).


About Wavestone
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 some 3,000 employees across 8 countries. It is a leading independent player in European consulting, and the number one in France.
Wavestone is listed on Euronext Paris and recognized as a Great Place to Work®.

Pascal Imbert
Tel.: +33 (0)1 49 03 20 00
Sarah Lamigeon
Communications Director
Tel.: +33 (0)1 49 03 20 00
Mathieu Omnes
Investor and Analyst Relations
 Tel.: +33 (0)1 53 67 36 92
Nicolas Bouchez
Press relations
Tel.: +33 (0)1 53 67 36 74

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Regulated information

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