H1 2019/20 results: a solid EBIT margin of 10.6%

  • December 3, 2019Regulated information

At its meeting of December 3, 2019, Wavestone's Supervisory Board approved the consolidated half-yearly accounts as at September 30, 2019, which are summarized below. These accounts have been subject to a limited review by the Statutory Auditors.

Consolidated data (in €m) Limited review H1
Change   2018/19
(12 months)
Revenue 194.5 182.6 +7%   391.5
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


Over H1 2019/20, Wavestone recorded revenue of €194.5m, an increase of +7%.

At constant scope and exchange rates (excluding Metis Consulting and WGroup), the firm's six-monthly growth reached +1%. Excluding WGroup, i.e. taking the scope used to set objectives at the beginning of the fiscal year, half-yearly growth stood at +4%.


Consultant utilization rate under pressure in H1 2019/20, but sales prices hold up well

As a result of more challenging market conditions, especially in the Financial Services, Manufacturing, and Retail sectors, the company had to face the impacts of some clients delaying or suspending projects during the summer. Utilization rate fell to 72% over the first half of the year, compared with 75% for the entirety of the previous fiscal year.

The average daily rate was €876 in H1, compared with €872 for the whole of the 2018/19 fiscal year.

At September 30, 2019, the firm's order book stood at 3.3 months of work, compared with 3.6 months at the end of March 2019.


Strong momentum on human resources and a robust performance from WGroup

Wavestone maintained a strong recruitment dynamic in H1 2019/20, in line with its objective of over 600 gross hires over the whole fiscal year.

Helped by an easing of the labor market, staff turnover rates continued to fall—to 16% at September 30, 2019, on a rolling twelve-month basis—compared with an equivalent figure of 18% at March 31, 2019. The rate is now approaching the 15% target level.

At September 30, 2019, Wavestone had 3,262 employees, compared with 3,094 at March 31, 2019.

H1 saw Wavestone acquire WGroup, a US-based company that delivers IT consulting services. Its integration is well underway and has yielded the first commercial synergies between Wavestone US and WGroup. More generally, WGroup has performed well during its first months within Wavestone.


A solid half-yearly EBIT margin of 10.6%

Half-yearly EBIT stood at €20.7m, an increase of +4% compared with the first six months of 2018/19. As a result, the EBIT margin was a solid 10.6%, compared with 10.9% a year earlier, despite the reduction in utilization rate.

The application of the new leases standard IFRS 16 for the 2019/20 fiscal year, which required transfers between "external charges" and "depreciation and provisions", resulted in a €0.1m increase in EBIT. 

Operating income reached €18.6m in H1 2019/20, up +1%, compared with the previous year. This includes -€1.3m in other operating income and expenses, which mainly consist of costs associated with the acquisition of WGroup.

After taking into account financial expenses and taxes, group share of net income was €9.3m. Net margin for H1 was 4.8%, compared with 5.8% a year earlier.


Strong cash flow generation

Gross cash flow margin stood at €19.4m at the end of H1, an increase of +9%. Despite seasonal effects in H1 that are typically unfavorable to working capital requirements, close control of payment collections achieved a cash flow from operations of €12.7m, compared with €0.2m in H1 2018/19. It should be noted that this figure benefited, by +€3.3m, from the application of IFRS 16.

Investment operations consumed €24.6m over the first half of the year, of which €22.3m was related to the acquisition of WGroup. Financing flows remained balanced at -€0.5m. These included, in particular, share buybacks of €3.5m, dividend payments of €4.6m, and loans received (net of repayments) of €11.7m.

At September 30, 2019, Wavestone's consolidated equity amounted to €152.3m, for a net financial debt (excluding lease liabilities) of €61.7m, compared with the same figure of €61.7m at September 30, 2018, and €38.7m at the end of March 2018.

Consolidated data (in €m) Limited review 09/30/2019 03/31/2019   Consolidated data (in €m) Limited review 09/30/2019 03/31/2019
Non-current assets 232.8 177.4   Shareholders' equity 152.3 150.8
of which goodwill 166.6 140.6  
of which rights to use leased assets 31.7   Financial liabilities
of which less than one year
Current assets 152.4 156.1   Lease liabilities 38.3
of which trade receivables 127.0 130.4  
Cash and cash equivalents 39.8 50.7   Non-financial liabilities 132.9 144.0
Total 425.0 384.2   Total 425.0 384.2


A strong focus on business development, while maintaining momentum in recruitment

H1 2019/20 was largely disappointing, mainly because of increasingly difficult market conditions which affected the firm's business activities.

In the face of these more challenging economic conditions, Wavestone is continuing its intense business development efforts, while, in parallel, shifting focus toward the sectors and accounts with the highest potential—especially those in energy, transportation, and the public sector.

After a low point reached during summer, the consultant utilization rate began to recover gradually, even with considerable numbers of new hires joining the firm from September onwards. However, Wavestone remains cautious about the pace of recovery on this indicator in the coming months.

Having seen positive results from the recruitment-related actions it put in place at the start of 2019, the company decided to maintain a dynamic approach to hiring in H2, with the aim of underpinning its growth potential in the coming fiscal years.


Prudence on growth target and integration of WGroup into annual objectives

With WGroup's consolidation on August 1, 2019, Wavestone has updated its revenue objective and is targeting annual growth of over 8%, compared with an initial objective of more than 5%. It should be noted that, due to slower growth in H1, this new objective reflects a degree of prudence of one percentage point on non-WGroup growth.

The profitability objective remains unchanged: the company will continue to target an EBIT margin greater than 13%.

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


Next event: publication of Q3 2019/20 revenue: Thursday, January 30, 2020, after Euronext market closing.


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 over 3,000 employees across 8 countries. It is a leading independent player in European consulting.
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
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Investor and Analyst Relations
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Press relations
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Regulated information

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