H1 2017/18 EBIT margin of 9.9% – Annual profitability objective revised upwards

  • December 5, 2017Regulated information

At its meeting on December 4, 2017, the Wavestone Supervisory Board approved the consolidated half-year financial statements for the six months ended September 30, 2017 which are summarized below. A limited review of these accounts has been carried out by the company's statutory auditors.

Consolidated data
at 09/30 (in €m) – Limited review
Change   H1
Revenue 166.5 162.0 +3%   162.0
Operating income on ordinary activities
EBIT margin
Amortization of customer relationships
Other operating income and expenses
Operating income
Cost of net financial debt
Other financial income and expenses
Income tax expenses
Group share of net income
Net margin

1 The column, “H1 2016/17 restated”, takes into account the impact of the Purchase Price Allocation of Kurt Salmon's European activities (excluding consulting retail and consumer goods sectors) carried out after closing on 09/30/2016.


In H1 2017/18, Wavestone generated consolidated revenue of €166.5m, up 3% compared with the same period last year (on a like-for-like and constant forex basis). The negative working day impact amounts to ?3%, consolidated over the entire period.

The half-year was marked by a muted first quarter, with revenue down 3%, due to a low consultant utilization rate and a negative working day impact of -4%. This was followed by a return to sustained growth of 10% in Q2, underpinned by a combination of headcount growth and improved utilization rates.


A new HR model that is beginning to deliver results

At September 30, 2017, Wavestone had 2,647 employees, compared with 2,628 at March 31, 2017.

Recruitment activity remains strong and in line with the annual hiring plan, despite an increasingly competitive labor market.

The staff turnover rate in H1 was 17% at an annual rate. The new HR models and processes put in place are enabling the firm to progressively bring unusually high levels of staff turnover in some teams under control. While remaining cautious about where this indicator will stand at the end of the year, the company's medium-term aim remains a staff turnover rate of less than 15%.


An improving consultant utilization rate

The utilization rate in H1 2017/18 stood at 77%, compared with 76% for the 2016/17 fiscal year. Progress in this area was confirmed and strengthened in Q2.

The average daily rate increased to €845 in H1, a stable performance compared with the previous year (also €845). Although the company has decided to make utilization rate the short-term priority, the trend in daily rates for the full year should be positive, with price rises of up to +1% now expected.

The order book represented 3.3 months of work at the end of September 2017, compared with 3.2 months at the end of June 2017.


EBIT margin of 9.9%

Operating income on ordinary activities for the half year amounted to €16.4m, up 4% from the previous year, despite the half-year's negative working day impact. The EBIT margin was 9.9%, compared with 9.8% a year earlier.

After the inclusion of €1.3m for the amortization of customer relationships for Kurt Salmon's European operations, and with practically no other operating income and expenses, operating income stood at €15.2m, up 9% from the previous half-year.

The cost of net financial debt decreased slightly to €1.0m. This is still essentially composed of the interest expense related to financing the acquisition of Kurt Salmon's European activities1.

At the end of H1 2017/18, the group share of net income had risen 17% to €8.0m; it represents a net margin of 4.8%, compared with 4.2% a year earlier.


A steep but one-off deterioration in working capital

Wavestone recorded an unusual deterioration in its trade receivable position during H1. This was linked to delayed payment collection amounting to a sum of €20m compared with the firm's norms. The effects of this delay had been fully rectified by the end of November. Long-term control of accounts receivable nevertheless remains a high priority in the coming quarters.

This one-off deterioration penalized the half-year cash flow generated by operations, which amounted to €(14.4)m, compared with €(7.4)m a year ago.

Investment flows amounted to €1.5m. Financing operations accounted for €8.1m, including €3.0m in dividends paid at the end of July for the 2016/17 fiscal year, €4.7m in repayments of loans.

At September 30, 2017, the firm's consolidated equity amounted to €111.2m, and net financial debt stood at €76.4m, compared with €56.5m at March 31, 2017. By March 31, 2018, the company has an objective to reduce net financial debt to a level significantly lower than that at March 31, 2017.

Consolidated data
(in €m) – Audited data
09/30/2017 03/31/2017   Consolidated data
(in €m) – Audited data
09/30/2017 03/31/2017
Non-current assets
o/w goodwill
  Shareholders' equity 111.2 104.1
Current assets
o/w trade receivable
  Non-financial liabilities 132.2 134.2
Cash and cash equivalents 14.5 38.7   Financial liabilities
of which less than one year
Total 334.3 333.5   Total 334.3 333.5


A clearly established market dynamic

A dynamic of market growth has now been permanently established, driven by the rise of digital and an economic environment that is freeing up business investment.

The catalysts for this growth are numerous and powerful: mobile banking, industry 4.0, connected vehicles, but also artificial intelligence, cyber threats, regulatory requirements, or M&A activity.


Toward complete success of the Wavestone project

The stumbling blocks that the firm has faced in recent quarters are now well on the way to being resolved.

The challenges for H2 are to consolidate and strengthen the improvement in operating performance, to reinforce efforts in the company's priority areas—maintaining the momentum of the H1 breakthroughs on the bank of the future and connected vehicles, and to pursue activities related to new external growth, especially internationally.

Although question marks remain for Q4 of the fiscal year, progress in H1, combined with current market dynamics, has reinforced Wavestone's confidence in how the next six months will unfold.

At the end of the fiscal year, the firm should be able to confirm—as expected—the complete success of the Wavestone project.


EBIT margin objective revised upwards

At the end of H1, the annual objective of generating revenue greater than €350 million, excluding new acquisitions, has been clearly confirmed.

In profitability terms, Wavestone is revising upwards its initial objective of a double-digit EBIT margin and is now targeting an EBIT margin greater than 11%, excluding new acquisitions.

excluding consulting in the retail and consumer goods sectors


Next event: Q3 2017/18 revenue: Tuesday, January 30, 2018, after Euronext market closing.


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 2,600 employees across four continents. It is a leading player in European independent consulting, and number one in France.

Wavestone is listed on Euronext Paris and eligible for the PEA-PME (a French investment instrument that encourages individuals to invest in smaller and intermediate firms). Wavestone was labeled a Great Place To Work® in 2017.

Chairman of the Management Board
Tel: 01 49 03 20 00
Director of Communications
Tel: 01 49 03 20 00
Mathieu OMNES
Investor/Financial-analyst relations
 Tel: 01 53 67 36 92
Press relations
Tel: 01 53 67 36 74


1 excluding consulting in the retail and consumer goods sectors

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Regulated information

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